Voluntary Arbitration Cases

Voluntary arbitration
Tuesday, September 14, 2010

10:15 AM
Eternit employees and workers union v. De veyra

Maneja v. Nlrc
san jose v nlrc 294 s 336 - 1998
sanyo v canizares 211 s 361 - 1992
vivero v. ca 344 s 268 -2000
ludo v saornido 395 s 451 - 2003
apalisok v radio philippines 403 s 238 - 2003
atlas farms v nlrc 392 s 128 - 2002
mindanao v minsteel workers org 424 s 614 - 2004
union of nestle workers v nestle 391 s 204 -2002
san miguel foods v san miguel corp employees union -ptwgo gr no 168569 - october 5 2007
landtex v ca 529 s 631 - 2007
olvido v ca gr no 141166-67 oct 15 2007
del monte v saldivar 504 phil 192 2006
sanyo phil 211 s 336 - 1998
imperial textile v sampang 219 s 651 - 1993
smc v nlrc 255 s 133 -1996
continental marble v nlrc 161 s 151 1998
Pasted from <http://us.mc556.mail.yahoo.com/mc/welcome?.gx=1&.tm=1284430153&.rand=9vro0e7j9nehr>
boss, chief, manager Page 1

Eternit employees and workers union v. De veyra
10:51 AM
This Court has consistently ruled that findings of fact of administrative agencies and quasi-
judicial bodies which have acquired expertise because their jurisdiction is confined to specific
matters are generally accorded not only respect but even finality and are binding upon this
Court unless there is a showing of grave abuse of discretion, or where it is clearly shown that
they were arrived at arbitrarily or in disregard of the evidence on record.
We have also emphasized the rule that decisions of voluntary arbitrators are final and
unappealable except when there is want of jurisdiction, grave abuse of discretion, violation of
due process, denial of substantial justice, or erroneous interpretation of the law.

Maneja v. Nlrc
12:34 PM
Union failure to object to

employee’s termination or
retirement does not place dispute
within VA jurisdiction.
G.R. No. 124013 June 5, 1998
ROSARIO MANEJA, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MANILA MIDTOWN HOTEL,
respondents.
MARTINEZ, J.:
Assailed in this petition for certiorari under Rule 65 of the Revised Rules of Court are the
Resolution 1 dated June 3, 1994 of the respondent National Labor Relations Commission in
NLRC NCR-00-10-05297-90, entitled "Rosario Maneja, Complainant, vs. Manila Midtown Hotel,
Respondent," which dismissed the illegal dismissal case filed by petitioner against private
respondent company for lack of jurisdiction of the Labor Arbiter over the case; and its
Resolution 2 dated October 20, 1995 denying petitioner's motion for reconsideration.
Petitioner Rosario Maneja worked with private respondent Manila Midtown Hotel beginning
January, 1985 as a telephone operator. She was a member of the National Union of Workers in
Hotels, Restaurants and Allied Industries (NUWHRAIN) with an existing Collective Bargaining
Agreement (CBA) with private respondent.
In the afternoon of February 13, 1990, a fellow telephone operator, Rowena Loleng received a
Request for Long Distance Call (RLDC) form and a deposit of P500.00 from a page boy of the
hotel for a call by a Japanese guest named Hirota Ieda. The call was unanswered. The P500.00
deposit was forwarded to the cashier. In the evening, Ieda again made an RLDC and the page
boy collected another P500.00 which was also given to the operator Loleng. The second call
was also unanswered. Loleng passed on the RLDC to petitioner for follow-up. Petitioner
monitored the call.
On February 15, 1990, a hotel cashier inquired about the P1,000.00 deposit made by Ieda. After
a search, Loleng found the first deposit of P500.00 inserted in the guest folio while the second
deposit was eventually discovered inside the folder for cancelled calls with deposit and official
receipts.
When petitioner saw that the second RLDC form was not time-stamped, she immediately placed
it inside the machine which stamped the date "February 15, 1990." Realizing that the RLDC was
filed 2 days earlier, she wrote and changed the date to February 13, 1990. Loleng then
delivered the RLDC and the money to the cashier. The second deposit of P500.00 by Ieda was
later returned to him.
On March 7, 1990, the chief telephone operator issued a memorandum 3 to petitioner and
Loleng directing the two to explain the February 15 incident. Petitioner and Loleng thereafter
submitted their written explanation. 4
On March 20, 1990, a written report 5 was submitted by the chief telephone operator, with the
recommendation that the offenses committed by the operators concerned covered violations of
the Offenses Subject to Disciplinary Actions (OSDA): (1) OSDA 2.01: forging, falsifying official
document(s), and (2) OSDA 1.11: culpable carelessness — negligence or failure to follow

specific instruction(s) or established procedure(s).
On March 23, 1990, petitioner was served a notice of dismissal 6 effective April 1, 1990.
Petitioner refused to sign the notice and wrote therein "under protest."
Meanwhile, a criminal case 7 for Falsification of Private Documents and Qualified Theft was filed
before the Office of the City Prosecutor of Manila by private respondent againts Loleng and
petitioner. However, the resolution recommending the filing of a case for estafa was reversed by
2nd Asst. City Prosecutor Virgilio M. Patag.
On October 2, 1990, petitioner filed a complaint for illegal dismissal against private respondent
before the Labor Arbiter. The complaint was later amended to include a claim for unpaid wages,
unpaid vacation leave conversion and moral damages.
Position papers were filed by the parties. Thereafter, the motion to set the case for hearing filed
by private respondent was granted by the Labor Arbiter and trial on the merits ensued.
In his decision 8 dated May 29, 1992, Labor Arbiter Oswald Lorenzo found that the petitioner
was illegally dismiised. However, in the decision, the Labor Arbiter stated that:
Preliminary, we hereby state that on the face of the instant complaint, it is one that revolves on the matter
of the implementation and interpretation of existing company policies, which per the last par. of Art. 217 of
the Labor Code, as amended, is one within the jurisdictional ambit of the grievance procedure under the
CBA and thereafter, if unresolved, one proper for voluntary arbitration. This observation is re-entrenched
by the fact, that complainant claims she is a member of NUWRAIN with an existing CBA with respondent
hotel.
On this score alone, this case should have dismissed outright. 9
Despite the aforequoted preliminary statement, the Labor Arbiter still assumed jurisdiction "since
Labor Arbiters under Article 217 of the same Labor Code, are conferred original and exclusive
jurisdiction of all termination case(sic.)." The dispositive portion of the decision states that:
WHEREFORE, premises considered, judgment is hereby renrdered as follows:
(1) Declaring complainant's dismissal by respondent hotel as illegally effected;
(2) Ordering respondent to immediately reinstate complainant to her previous position without loss of
seniority rights;
(3) Ordering further respondent to pay complainant the full backwages due her, which is computed as
follows:
3/23/90 - 10/31/90 = 7.26/mos.

P2.540 x 7.26/mos. P18,440.40
11/1/90 - 1/7/91 = 2.23/mos.
P3,224.16 x 2.23/mos. 7,189.87
1/8/91 - 4/29/92 = 15.7/mos.
P3,589.16 x 15.7/mos. 56,349.89
P81,980.08
(4) Moreover, respondent is ordered to pay the 13th month pay due the complainant in the amount of
P6,831.67 including moral and exemplary damages of P15,000.00 and P10,000.00 respectively, as well
as attorney's fees equivalent to ten (10) percent of the total award herein in the amount of P11,381.17;
(5) Finally, all other claims are hereby dismissed for lack of merit.
SO ORDERED.
Private respondent appealed the decision to the respondent commission on the ground inter alia
that the Laber Arbiter erred in "assuming jurisdiction over the illegal dismissal case after finding
that the case falls within the jurisdictional ambit of the grievance procedure under the CBA, and
if unresolved, proper for voluntary arbitration." 10 An Opposition 11 was filed by petitioner.
In the assailed Resolution 12 dated June 3, 1994, respondent NLRC dismissed the illegal
dismissal case for lack of Jurisdiction of the Labor Arbiter because the same should have
instead been subjected to voluntary arbitration.
Petitioner's motion for reconsideration 13 was denied by respondent NLRC for lack of merit.
In this petition for certiorari, petitioner ascribes to respondent NLRC grave abuse of discretion
in —
1. Ruling that the Labor Arbiter was without jurisdiction over the illegal dismissal case;
2. Not ruling that private respondent is estopped by laches from questioning the jurisdiction of the illegal
dismissal case;
3. Reversing the decision of the Labor Arbiter based on a technicality notwithstanding the merits of the
case.
Petitioner contents that Article 217(a)(2) and (c) relied upon by respondent NLRC in divesting
the labor arbiter of jurisdiction over the illegal dismissal case, should be read in conjunction with
Article 261 14 of the Labor Code. It is the view of petitioner that termination cases arising from
the interpretation or enforcement policies pertaining to violations of Offenses Subject to
Disciplinary Actions (OSDA), are under the jurisdiction of the voluntary arbitrator only if these

Disciplinary Actions (OSDA), are under the jurisdiction of the voluntary arbitrator only if these
are unresolved in the plant-level grievance machinery. Petitioner insists that her termination is
not an unresolved grievance as there has been no grievance meeting between the NUWHRAIN
union and the management. The reason for this, petitioner adds, is that it has been a company
practice that termination cases are not anymore referred to the grievance machinery but directly
to the labor arbiter.
In its comment, private respondent argues that the Labor Arbiter should have dismissed the
illegal dismissal case outright after finding that it is within the jurisdictional ambit of the
grievance procedure. Moreover, private respondent states that the issue of jurisdiction may be
raised at any time and at any stage of the proceedings even on appeal, and is not in estoppel by
laches as contended by the petitioner.
For its part, public respondent, through the Office of the Solicitor General, cited the ruling of this
Court in Sanyo Philippines Workers Union- PSSLU vs. Cañizares 15 in dismissing the case for
lack of jurisdiction of the Labor Arbiter.
The legal issue in this case is whether or not the Labor Arbiter has jurisdiction over the illegal
dismissal case.
The respondent Commission, in holding that the Labor Arbiter lacks jurisdiction to hear the
illegal dismissal case, cited as basis therefor Article 217 of the Labor Code, as amended by
Republic Act No. 6715. It said:
White it is conceded that under Article 217(a), Labor Arbiters shall have original and exclusive jurisdiction
over cases involving "termination disputes," the Supreme Court, in a fairy recent case ruled:
The procedure introduced in RA 6715 of referring certain grievances originally and exclusively to the
grievance machinery, and when not settled at this level, to a panel of voluntary arbitrators outlined in
CBAs does not only include grievances arising from the interpretation or implementation of the CBA but
applies as well to those arising from the implementation of company personnel policies. No other body
shall take cognizance of these cases. . . . (Sanyo vs. Cañizares, 211 SCRA 361,
372) 16
We Find that the respondent Commission has erroneously interpreted the aforequoted portion
of our ruling in the case of Sanyo, as divesting the Labor Arbiter of jurisdiction in a termination
dispute.
Art. 217 of the Labor Code gives us the clue as to the jurisdiction of the Labor Arbiter, to wit:
Art. 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 decided 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:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates
of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee
relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of
strikes and lockouts;
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other
claims, arising from employer-employee relations, including those of persons in domestic or household
service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether
accompanied with a claim for reinstatement.
b) The commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.
c) Cases arising from the interpretation or implementation of collective bargaining agreements and those
arising from the interpretation or enforcement of company personel 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.
As can be seen from the aforequoted Article, termination cases fall under the original and
exclusive jurisdiction of the Labor Arbiter. It should be noted, however, that in the opening there
appears the phrase: "Except as otherwise provided under this Code . . . ." It is paragraph (c) of
the same Article which respondent Commission has erroneously interpreted as giving the
voluntary arbitrator jurisdiction over the illegal dismissal case.
However, Article 217 (c) should be read in conjunction with Article 261 of the Labor Code which
grants to voluntary arbitrators 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

personel policies. Note the phrase "unresolved grievances." In the case at bar, the termination
of petitioner is not an unresolved grievance.
The stance of the Solicitor General in the Sanyo case is totally the reverse of its posture in the
case at bar. In Sanyo, the Solicitor General was of the view that a distinction should be made
between a case involving "interpretation or implementation of Collective Bargaining Agreement"
or interpretation or "enforcement" of company personel policies, on the one hand and a case
involving termination, on the other hand. It argued that the dismissal of the private respondents
does not involve an "interpretation or implementation" of a Collective Bargaining Agreement or
"interpretation or enforcement" of company personel policies but involves "termination." The
Solicitor General further said that where the dispute is just in the interpretation, implementation
or enforcement stage, it may be referred to the grievance machinery set up the Collective
Bargaining Agreement or by voluntary arbitration. Where there was already actual termination,
i.e., violation of rights, it is already cognizable by the Labor Arbiter. 17 We fully agree with the
theory of the Solicitor General in the Sanyo case, which is radically apposite to its position in
this case.
Moreover, the dismissal of petitioner does not fall within the phrase "grievance arising from the
interpretation or implementation of collective bargaining agreement and those arising from the
interpretation or enforcement of company personel policies," the jurisdiction of which pertains to
the grievance machinery or thereafter, to a voluntary arbitrator or panel of voluntary arbitrators.
It is to be stressed that under Article 260 of the Labor Code, which explains the function of the
grievance machinery and voluntary arbitrator. "(T)he parties to a Collective Bargaining
Agreement shall include therein provisions that will ensure the mutual observance of its terms
and conditions. They shall establish a machinery for the adjustment and resolution of
grievances arising from the interpretation or implementation of their Collective Bargaining
Agreement and those arising from the interpretation or enforcement of company personel
policies." Article 260 further provides that the parties to a CBA shall name or designate their
respective representative to the grievance machinery and if the grievance is unsettled in that
level, it shall automatically be refered to the voluntary arbitrators designated in advance by the
parties to a CBA of the union and the company. It can thus be deduced that only disputes
involving the union and the company shall be referred to the grievance machinery or voluntary
arbitrators. 18
In the case at bar, the union does not come into the picture, not having objected or voiced any
dissent to the dismissal of the herein petitioner. The reason for this, according to petitioner is
that "the practice in said Hotel in cases of termination is that the latter cases are not referred
anymore to the grievance committee;" and that "the terminated employee who wishes to
question the legality of his termination usually goes to the Labor Arbiter for arbitration, whether
the termination arose from the interpretation or enforcement of the company personnel policies
or otherwise." 19
As we ruled in Sanyo, "Since there has been an actual termination, the matter falls within the
jurisdiction of the labor Arbiter." The aforequoted doctrine is applicable foursquare in petitioner's
case. The dismissal of the petitioner does not call for the interpretation or enforcement of
company personnel policies but is a termination dispute which comes under the jurisdiction of
the Labor Arbiter.
It should be explained that "company personel policies" are guiding priciples stated in broad,
long-range terms that express the philosophy or beliefs of an organization's top authority
regarding personnel matters. They deal with matters affecting efficiency and well-being of
employees and include, among others, the procedure in the administration of wages, benefits,
promotions, transfer and other personnel movements which are usually not spelled out in the
collective agreement. The usual source of grievances, however, are the rules and regulations
governing disciplinary actions. 20
The case of Pantranco North Express, Inc. vs. NLRC 21 sheds further light on the issue of
jurisdiction where the Court cited the Sanyo case and quoted the decision of therein Labor
Arbiter Olairez in this manner:
In our honest opinion we have jurisdiction over the complaint on the following grounds:
First, this is a complaint of illegal dismissal of which original and exclusive jurisdiction under Article 217
has been conferred to the labor Arbiters. The interpretation of the CBA or enforcement of the company
policy is only corollary to the complaint of illegal dismissal. Otherwise, an employee who was on AWOL,
or who committed offenses contrary to the personnel policies(sic) can no longer file a case of illegal
discharge is premised on the interpretation or enforcement of the company policies(sic).
Second. Respondent voluntarily submitted tha case to the jurisdiction of this labor tribunal. It adduced
arguments to the legality of its act, whether such act may be retirement and/or dismissal, and prayed for

arguments to the legality of its act, whether such act may be retirement and/or dismissal, and prayed for
reliefs on the merits of the case. A litigant cannot pray for reliefs on the merits and at the same time
attacks(sic) the jurisdiction of the tribunal. A person cannot have one's cake and eat it too. . . . .
As to the second ground, petitioner correctly points out that respondent NLRC should have
ruled that private respondent is estopped by laches in questioning the jurisdiction of the Labor
Arbiter.
Clearly, estoppel lies. The issue of jurisdiction was mooted by herein private respondent's active
participation in the proceedings below. In Marquez vs. Secretary of Labor, 22 the Court said:
. . . . The active participation of the against whom the action was brought, coupled with his failure to
object to the jurisdiction of the court or quasi-judicial body where the action is pending, is tantamount to
an invocation of that jurisdiction and a willingness to abide the resolution of the case and will bar said
party from later on impugning the court or body's jurisdiction.
In the assailed Resolution, 23 respondent NLRC cited La Naval Drug Corporation vs. Court of
Appeals 24 in holding that private respondent is not in estopel. Thus,
The operation of the principle of estoppel on the question of jurisdiction seemingly depends upon whether
the lower court actually had jurisdiction or not. If it had no jurisdiction, but the case was tried and decided
upon the theory that it had jurisdiction, the parties are not barred, on appeal, from assailing such
jurisdiction, for the same "must exist as a matter of law, and may not be conferred by consent of the
parties or by estoppel" (5 C.J.S., 861-863). However, if the lower court had jurisdiction, and the case was
heard and decided upon a given theory, such, for instance, as that the court had no jurisdiction, the party
who induced it to adopt such theory will not be permitted, on appeal, to assume an inconsistent
position — that the lower court had jurisdiction. Here, the principle of estoppel applies. The rule that
jurisdiction is conferred by law, and does not depend upon the will of the parties, has no bearing thereon.
(Emphasis ours)
Again, the respondent NLRC has erroneously interpreted our ruling in the La Naval case. Under
the said ruling, estoppel lies in this case. Private respondent is stopped from questioning the
jurisdiction of the Labor Arbiter before the respondent NLRC having actively participated in the
proceedings before the former. At no time before or during the trial on the merits did private
respondent assail the jurisdiction of the Labor Arbiter. Private respondent took the cue only from
the preliminary statement in the decision of the Labor Arbiter, which was a mere obiter, and
raised the issue of jurisdiction before the Commission. It was then too late. Estoppel had set in.
Turning now to the merits of the case, We uphold the ruling of the Labor Arbiter that petitioner
was illegally dismissed.
The requisites of a valid dismissal are (1) the dismissal must be for any of the causes expressed
in the Article 282 of the Labor Code, 25 and (2) the employee must be given an opportunity to be
heard and to defend himself. 26 The substantive and procedural laws must be strictly complied
with before a worker can be dismissed from his employment because what is at stake is not
only the employee's position but his livelihood. 27
Petitioner's dismissal was grounded on culpade carelessness, negligence and failure to follow
specific instruction(s) or established procedure(s) under OSDA 1.11; and, having forged or
falsified official document(s) under OSDA 2.01.
Private respondent blames petitioner for failure to follow established procedure in the hotel on a
guest's request for long distance calls. Petitioner, however, explained that the usual or
established procedures are not followed by the operators and hotel employees when
circumstances warrant. For instance, the RLDC forms and the deposits are brought by the page
boy directly to the operators instead of the cashiers if the latter are busy and cannot attend to
the same. Furthermore, she avers that the telephone operators are not concious of the serial
numbers in the RLDCs and at times, the used RLDCs are recycled. Even the page boys do not
actually check the serial numbers of all RLDCs in one batch, except for the first and the last.
On the charge of taking of the money by petitioner, it is to be noted that the second P500.00
deposit made by the Japanese guest Ieda was later discovered to be inserted in the folder for
cancelled calls with deposit and official receipts. Thus, there exists no basis for personal
appropriation by the petitioner of the money involved. Another reason is the alleged tampering
of RLDC No. 862406. 28 While petitioner and her co-operator Loleng admitted that they indeed
altered the date appearing therein from February 15, 1990 to February 13, the same was
purposely made to reflect the true date of the transaction without any malice whatsoever on
their part.
As pointed out by Labor Arbiter Oswald b. Lorenzo, thus:
The specifics of the grounds relied by respondent hotel's dismissal of complainant are those stated in
Annex "F" of the latter's POSITION PAPER, which is the Notice of Dismissal, notably:
1. OSDA 2.01 — Forging, falsifying official documents(s)
2. OSDA 1.11 — Culpable negligence or failure to follow specific instruction(s) or established

2. OSDA 1.11 — Culpable negligence or failure to follow specific instruction(s) or established
procedure(s)
On this score, we are persuated by the complainant's arguments that under OSDA 1.11, infractions of this
sort is not without qualifications, which is, that the alleged culpable carelessness, negligence or failure to
follow instruction(s) or established procedure(s), RESULTING IN LOSS OR DAMAGE TO COMPANY
PROPERTY. From the facts obtaining in this case, there is no quantum of proof whatsoever, except the
general allegations in respondent's POSITION PAPER and other pleadings that loss or damage to
company property resulted from the charged infraction. To our mind, this is where labor tribunals should
come in and help correct interpretation of company policies which in the enforcement thereof wreaks
havoc to the constitutional guarantee of security of tenure. Apparently, the exercise of little flexibility by
complainant and co-employees which is predicated on good faith should not be taken against them and
more particularly against the complainant herein. In this case, to sustain the generalized charge of
respondent hotel under OSDA 1.11 would unduly be sanctioning the imposition of too harsh a penalty —
which is dismissal.
In the same tenor, the respondent's charge under OSDA 1.11 on the alleged falsification of private
document is also with a qualification, in that the alleged act of falsification must have been done "IN
SUCH A WAY AS TO MISLEAD THE USER(S) THEREOF." Again, based on the facts of the complained
act, there appeared no one to have been misled on the change of date from RLDC #862406 FROM 15
TO 13 February 1990.
As a matter of fact, we are in agreement with the jurisprudence cited by VIRGILIO M. PATAG, the 2nd
Asst. City Prosecutor of the City of Manila, who exculpated complainant MANEJA from the charges of
falsification of private documents and qualified theft under IS No. 90-11083 and marked Annex. "H" of
complainant's POSITION PAPER, when he ruled that an altercation which makes the document speak
the truth cannot be the foundation of a criminal action. As to the charge of qualified theft, we too are of the
finding, like the city prosecutor above-mentioned that there was no evidence on the part of MANEJA to
have unlawfully taken the P500.00 either from the hotel or from guest IEDA on 13 February 1990 and
moreover, we too, find no evidence that complainant MANEJA had intention to profit thereby nor had
misappropriated the P500.00 in question. 29
Given the factual circumstances of the case, we cannot deduce dishonesty from the act and
omission of petitioner. Our norms of social justice demand that we credit employees with the
presumption of good faith in the performance of their duties, 30 especially petitioner who has
served private respondent since 1985 up to 1990 without any tinge of dishonesty and was even
named "Model Employee" for the month of April, 1989. 31
Petitioner has been charged with a very serious offense — dishonesty. This can irreparably
wreck her life as an employee for no employer will take to its bosom a dishonest employee.
Dismissal is the supreme penalty that can be meted to an employee and its imposition cannot
be justified where the evidence is ambivalent. 32 It must, therefore, be based on a clear and not
on an ambiguous or ambivalent ground. Any ambiguity or ambivalence on the ground relied
upon by an employer in terminating the services of an employee denies the latter his full right to
contest its legality. Fairness cannot countenance such ambiguity or ambivalence. 33
An employer can terminate the services of an employee only for valid and just causes which
must be supported by clear and convincing evidence. The employer has the burden of proving
that the dismissal was indeed for a valid and just cause. 34 Failure to do so result in a finding
that the dismissal was
unjustified. 35
Finding that there was no just cause for dismissal of petitioner, we now determine if the
rudiments of due process have duly accorded to her.
Well-settled is the dictum that the twin requirements of notice and hearing constitute the
essential elements of due process in the dismissal of employees. It is a cardinal rule in our
jurisdiction that the employer must furnish the employee with two written notice before the
termination of employment can be effected: (a) the first apprises the employee of the particular
acts or omissions for which his dismissal is sought; and, (b) the second informs the employee of
the employer's decision to dismiss him. The requirement of a hearing, on the other hand, is
complied with as long as there was an opportunity to be heard, and not necessarily that an
actual hearing was conducted. 36
In the case at bar, petitioner and her co-operator Loleng were issued a memorandum on March
7, 1990. On March 11, 1990, they submitted their written explanation thereto. On March 20,
1990, a written report was made with a recommendation that the offences committed by them
were covered by OSDA 1.11 and 2.01. Thereafter, on March 23, 1990, petitioner was served
with a notice of dismissal for said violations effective April 1, 1990.
An examination of the record reveals that no hearing was ever conducted by private respondent
before petitioner was dismissed. While it may be true that petitioner submitted a written

explanation, no hearing was actually conducted before her employment was terminated. She
was not accorded the opportunity to fully defend herself.
Consultations or conferences may not be a substitute for the actual holding of a hearing. Every
opportunity and assistance must be accorded to the employee by the management to enable
hom to prepare adequately for his defense, including legal representation. 37 Considering that
petitioner denied having allegedly taken the second P500.00 deposit of the Japanese guest
which was eventually found; and, having made the alteration of the date on the second RLDC
merely to reflect the true date of the transaction, these circumstances should have at least
warranted a separate hearing to enable petitioner to fully ventilate her side. Absent such
hearing, petitioner's right to due process was clearly violated. 38
It bears stressing that a worker's employment is properly in the constitutional sense. He cannot
be deprived of his work without due process of law. Substantive due process mandates that an
employee can only be dismissed based on just or authorized causes. Procedural due process
requires further that he can only be dismissed after he has been given an opportunity to be
heard. The import of due process necessitates the compliance of these two aspects.
Accordingly, we hold that the labor arbiter did not err in awarding full backwages in view of this
finding that petitioner was dismissed without just cause and without due process.
We ruled in the case of Bustamante vs. NLRC 39 that the amount of backwages to be awarded
to an illegally dismissed employee must be computed from the time he was dismissed to the
time he is actually reinstated, without deducting the earnings he derived elsewhere pending the
resolution of the case.
Petitioner is likewise entitled to the thirteenth-month pay. Presidential Decree No.851, as
amended by Memorandum Order No. 28, provides that employees are entitled to the thirteenth-
month pay benefit regardless of their designation and irrespective of the method by which their
wages are paid. 40
The award of moral and exemplary damages to petitioner is also warranted where there is lack
of due process in effecting the dismissal.
Where the termination of the services of an employee is attended by fraud or bad faith on the
part of the employer, as when the latter knowingly made false allegations of a supposed valid
cause when none existed, moral and exemplary damages may be awarded in favor of the
former. 41
The anti-social and oppressive abuse of its right to investigate and dismiss its employees
constitute a violation of Article 1701 of the New Civil Code which prohibits acts of oppression by
either capital or labor against the other, and Article 21 on human relations. The grant of moral
damages to the employees by reason of such conduct on the part of the company is sanctioned
by Article 2219, No. 10 of the Civil Code, which allows recovery of such damages in actions
reffered to in Article 21. 42
The award of attorney's fees amounting to ten percent (10%) of the total award by the labor
arbiter is justified under Article 111 of the Labor Code.
WHEREFORE, premises considered, the petition is GRANTED and the assailed resolutions of
the respondent National Labor Relations Commission dated June 3, 1994 and October 20, 1995
are hereby REVERSED AND SET ASIDE. The decision dated May 29, 1992 of the Labor
Arbiter is therefore REINSTATED.
SO ORDERED.
Regalado, Puno and Martinez, JJ., concur.
Melo, J., is on leave.
Footnotes
1 Penned by Presiding Commissioner Bartolome S. Carale and concurred in by Commissioner Vicente
S.E. Veloso and Commissioner Alberto R.Quimpo (on leave). First Division.
2 Ibid
3 Annex "D" of Respondent's Memorandum; Rollo, p. 105.
4 Annex "E" of Complainant's Position Paper; Rollo, p. 59; Annex "E" of Respondent's Memorandum;
Rollo, p. 106.
5 Annex "F" of Respondent's Memorandum: Rollo, pp. 107-108.
6 Annex "F" of Complainant's Position Paper; Rollo, p. 60.
7 Entitled "Manila Midtown Hotel, Complainant, vs. Rowena Loleng y Sanares, et al., Respondents."
8 Annex "I" of Petition; Rollo, pp.133-144.
9 Rollo, p. 136.
10 Annex "J" of Petition; Rollo, pp. 145-155.
11 Annex "K" of Petition; Rollo, pp. 157-164.
12 See note 1; Annex "A" of Petition; Rollo, pp. 28-32.

11 Annex "K" of Petition; Rollo, pp. 157-164.
12 See note 1; Annex "A" of Petition; Rollo, pp. 28-32.
13 Annex "B" of Petition; Rollo, pp. 33-39.
14 Article. 261. Jurisdiction of Voluntary Arbitrators or 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 of the Collective Bargaining Agreement and
those arising from the interpretation or enforcement of company personnel policies referred to in the
preceding article.
15 211 SCRA 361 [1992].
16 Resolution of respondent commission dated June 3, 1994; Rollo, pp. 28-32.
17 Sanyo, supra.
18 Ibid.
19 Petition, Rollo, p. 15.
20 San Miguel Corp. vs. National Labor Relations, G.R. No. 108001, March 15, 1996, 255 SCRA 133,
140; citing C.A. Azucena, The Labor Code With Comments And Cases, Vol. II, 1993 ed., p. 272.
21 G.R. No. 95940, July 24, 1996, 259 SCRA 161, 167-168.
22 171 SCRA 337, 346; cited in Stolt-Nielsen Marine Services (phils.), Inc. vs. NLRC, G.R. No. 105396,
November 19, 1996, 264 SCRA 307, 319.
23 Annex "C" of Petition; Rollo, pp. 41-42.
24 236 SCRA 78.
25 Article 282 of the Labor Code provides:
Art. 282. Termination by employer. — An employer may terminate an employment for any of the following
cause:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or
representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized
representative;
(d) Commission of a crime or offence by the employee against the person of his employer or any
immediate member of his family or duly authorized representative, and
(e) Other causes analogous to the foregoing.
26 Midas Touch Food Corp. vs. NLRC, G.R. No. 111639, July 29, 1996, 259 SCRA 652, 657; citing
Mapalo vs. NLRC, 233 SCRA 266; Pizza Hut/Progressive Development Corp. vs. NLRC, G.R. No.
117059, January 29, 1996, 252 SCRA 531, 535 citing Mapalo vs. NLRC, supra.
27 Midas Touch Food Corp. vs. NLRC, supra., 657.
28 Annex "C" of Private Respondent's Position Paper, Rollo, p. 90.
29 Decision of Labor Arbiter; Rollo, pp. 140-141.
30 Pizza Hut/Progressive Development Corp. vs. NLRC, supra., 539.
31 Rollo, pp. 91-92.
32 Pizza Hut/Progressive Development Corp. vs. NLRC, supra., 540.
33 Pantranco North Express, Inc. vs. NLRC, G.R. No. 114333, January 24, 1996, 252 SCRA 237,
243-244.
34 Philippine Long Distance Telephone Company vs. NLRC, et al., G.R. No. 99030, July 31, 1997.
35 Uy vs. National Labor Relations Commission, G.R. No. 117983, September 6, 1996, 261 SCRA 505,
512; citing Labor Code, Article 277(b); Golden Donuts, Inc. vs. National Labor Ralations Commission,
230 SCRA 153 [1994]; Reyes & Lim Co., Inc. vs. National Labor Relations Commission, 201 SCRA 772,
775 [1991].
36 Pono vs. NLRC, et al., G.R. No. 118860, July 17, 1997.
37 Ibid.
38 Ibid.
39 G.R. No. 111651, November 28, 1996, cited in the case of Philippines Long Distance Telephone
Company vs. NLRC, et. al., G.R. No. 99030, July 13, 1997; Mabeza vs. NLRC, Hotel Supreme, et. al.,
G.R. No. 118506, April 18, 1997.
40 Jackson Building Condominium Corporation vs. National Labor Relations Commission, G.R. No.
111515, July 14, 1995, 246 SCRA 329, 333.
41 Lirag Textile Mills, Inc. vs. Court of Appeals, et. al., 63 SCRA 374, 385, April 14, 1975.
42 Philippine Refining Co., Inc. vs. Garcia, 18 SCRA 107, September 27, 1966.
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q=cache:lUtirY77W44J:www.lawphil.net/judjuris/juri1998/jun1998/gr_124013_1998.html+Maneja+vs.+Nlrc&cd=1
&hl=tl&ct=clnk&gl=ph>

san jose v nlrc 294 s 336 - 1998
12:38 PM
Original and exclusive jurisdiction of

Labor Arbiters for money claims limited
only to those arising from statutes and
contracts other than a CBA. VAs may
also exercise jurisdiction over Art. 217
disputes, as long as parties agree (Art.
262).
Supreme Court need not remand
case to VA, especially if case has
dragged on for 8 years.
G.R. No. 121227 August 17, 1998
VICENTE SAN JOSE, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and OCEAN TERMINAL SERVICES, INC.,
respondent.
PURISIMA, J.:
Before the Court is a Petition for Certiorari seeking to annul a Decision of the National Labor Relations
Commission dated April 20, 1995 in NLRC-NCR-CA-No. 00671-94 which reversed, on jurisdictional
ground, a Decision of the Labor Arbiter dated January 19, 1994 in NLRC-NCR Case No. 00-03-02101-93
a case for a money claim — underpayment of retirement benefit. Records do not show that petitioner
presented a Motion for Reconsideration of subject Decision of the National Labor Relations Commission,
which motion is, generally required before the filing of Petition for Certiorari.
While the rule prescribing the requisite motion for reconsideration is not absolute and recognizes some
exceptions, there is no showing that the case at bar constitutes an exception. Nevertheless, we gave due
course to the petition to enable the Court to reiterate and clarify the jurisdictional boundaries between
Labor Arbiters and Voluntary Arbitrator or Panel of Voluntary Arbitrators over money claims, and to render
substantial and speedy justice to subject aged stevedore retiree who first presented his claim for
retirement benefit in April 1991, or seven years ago.
Labor law practitioners and all lawyers, for that matter, should be fully conversant with the requirements
for the institution of certiorari proceedings under Rule 65 of the Revised Rules of Court. For instance, it is
necessary that a Motion for Reconsideration of the Decision of the National Labor Relations Commission
must first be resorted to. The ruling in Corazon Jamer v. National Labor Relations Commission, G.R. No.
112630, September 5, 1997, comes to the fore and should be well understood and observed. An ordinary
allegation — ". . . and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary
course of law" (Rule 65, Sec. 1, Revised Rules of Court) is not a foolproof substitute for a Motion for
Reconsideration, absence of which can be fatal to a Petition for Certiorari. Petitioner cannot and should
not rely on the liberality of the Court simply because he is a working man.
In the Jamer case, this court said:
. . . This premature action of petitioners constitutes a fatal infirmity as ruled in a long line of decisions, most recently is the case of Building
Care Corporation v. National Labor Relations Commission —
The filing of such motion is intended to afford public respondent an opportunity to correct any actual or fancied error attributed to it by way of
a re-examination of the legal and factual aspects of the case. Petitioner's inaction or negligence under the circumstances is tantamount to a
deprivation of the right and opportunity of the respondent commission to cleanse itself of an error unwittingly committed or to vindicate itself

deprivation of the right and opportunity of the respondent commission to cleanse itself of an error unwittingly committed or to vindicate itself
of an act unfairly imputed. . . .
Likewise, a motion for reconsideration is an adequate remedy; hence certiorari proceedings, as in this case, will not prosper.
As stated in the Decision of the Labor Arbiter in NLRC-NCR-Cas e No. 00-03-0201-93, dated January 19,
1994, the facts of this case are undisputed. The Labor Arbiter reported, thus:
Complainant, in his position paper (Record, pages 11 to 14) states that he was hired sometime in July 1980 as a stevedore continuously until
he was advised in April 1991 to retire from service considering that he already reached 65 years old (sic); that accordingly, he did apply for
retirement and was paid P3,156.39 for retirement pay . . . (Rollo, pp. 15, 26-27, 58-59).
Decision of the Labor Arbiter in NLRC-NCR-
Case No. 00-03-02101-93, January 9, 1994
(Rollo, pp. 15017, at pp. 16-17).
The Labor Arbiter decided the case solely on the merits of the complaint. Nowhere in the Decision is
made mention of or reference to the issue of jurisdiction of the Labor Arbiter (Rollo, pp. 15-17). But the
issue of jurisdiction is the bedrock of the Petition because, as earlier intimated, the Decision of the
National Labor Relations Commission, hereinbelow quoted, reversed the Labor Arbiter's Decision on the
issue of jurisdiction. Reads subject Decision of the Labor Arbiter:
Respondents, in their Reply to complainant's position paper, allege (Record, pages 18 to 21) that complainant's latest basic salary was
P120.34 per day; that he only worked on rotation basis and not seven days a week due to numerous stevedores who can not all be given
assignments at the same time; that all stevedores only for paid every time they were assigned or actually performed stevedoring; that the
computation used in arriving at the amount of P3,156.30 was the same computation applied to the other stevedores; that the use of divisor
303 is not applicable because complainant performed stevedoring job only on call, so while he was connected with the company for the past
11 years, he did not actually render 11 years of service; that the burden of proving that complainant's latest salary was P200.00 rests upon
him; that he already voluntarily signed a waiver of quitclaim; that if indeed respondent took advantage of his illiteracy into signing his
quitclaim, he would have immediately filed this complaint but nay, for it took him two (2) years to do so.
The issue therefore is whether or not complainant is entitled to the claimed differential of separation pay.
We find for the complainant. He is entitled to differential.
We cannot sustain a computation of length of service based on the ECC contribution records. Likewise, the allegation that complainant
rendered service for only five days a month for the past 11 years is statistically improbable, aside from the fact that the best evidence thereof
are complainant's daily time records which respondent are (sic) duty bound to keep and make available anytime in case of this.
The late filing has no bearing. The prescription period is three years. It is suffice (sic) that the filing falls within the period.
Whether or not complainant worked on rotation basis is a burden which lies upon the employer. The presumption is that the normal working
period is eight (8) hours a day and six (6) days a week, or 26 days a month, unless proven otherwise.
Also, the burden of proving the amount of salaries paid to employees rests upon the employer not on the employee. It can be easily proven
by payrolls, vouchers, etc. which the employers are likewise duty bound to keep and present. There being non, we have to sustain
complainant's assertion that his latest salary rate was P200 a day or P5,200 a month. Therefore, his retrenchment pay differential is
P25,443.70 broken down as follows:
P200 x 26 days = P5,200 x 11 years
2
= (P2,600 x 11 years) - P3,156.30
= P28,600 - P3,156.30
= P25,443.70
The Decision of the National Labor Relations
Commission in NLRC-NCR-CA No. 06701-94
April 20, 1995 (Rollo, pp. 18-21).
The National Labor Relations Commission reversed on jurisdictional ground the aforesaid Decision of the
Labor Arbiter; ruling, as follows:
. . . His claim for separation pay differential is based on the Collective Bargaining Agreement (CBA) between his union and the respondent
company, the pertinent portion of which reads:
. . . ANY UNION member shall be compulsory retired (sic) by the company upon reaching the age of sixty (60) years, unless otherwise
extended by the company for justifiable reason. He shall be paid his retirement pay equivalent to one-half (1/2) month salary for every year of
service, a fraction of at least six months being considered as one (1) whole year.
. . . The company agrees that in case of casual employees and/or workers who work on rotation basis the criterion for determining their
retirement pay shall be 303 rotation calls or work days as equivalent to one (1) year and shall be paid their retirement pay equivalent to one
half (1/2) month for every year of service.
xxx xxx xxx
Since the instant case arises from interpretation or implementation of a collective bargaining agreement, the Labor Arbiter should have
dismissed it for lack of jurisdiction in accordance with Article 217 (c) of the Labor Code, which reads: (Emphasis supplied)
Art. 217. Jurisdiction of Labor Arbiter and the Commission.
xxx xxx xxx
(c) Cases arising from the interpretation or implementation of collective bargaining agreement and those arising from the interpretation or
enforcement of company procedure/policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and
voluntary arbitrator as may be provided in said agreements.
Petitioner contends that:
I. THE PUBLIC RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION IN GIVING DUE COURSE TO THE APPEAL DESPITE THE
FACT 4 (SIC) THAT IT WAS FILED OUT OF TIME AND THERE IS NO SHOWING THAT A SURETY BOND WAS POSTED.
II. THE PUBLIC RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION IN SETTING ASIDE THE DECISION OF . . . DATED 19
JANUARY 1994 AND DISMISSING THE CASE ON THE GROUND OF LACK OF JURISDICTION WHEN THE ISSUE DOES NOT INVOLVE
ANY PROVISION OF THE COLLECTIVE BARGAINING AGREEMENT. (Rollo, pp. 7-8)
The Manifestation and Motion (In Lieu of Comment) sent in on December 6, 1995 by the Office of the
Solicitor General support the second issue, re: jurisdiction raised by the Petitioner (Rollo, pp. 26-33, at pp.
38-32).
Labor Arbiter Decision
Labor Arbiters should exert all efforts to cite statutory provisions and/or judicial decision to buttress their
dispositions. An Arbiter cannot rely on simplistic statements, generalizations, and assumptions. These are
not substitutes for reasoned judgment. Had the Labor Arbiter exerted more research efforts, support for
the Decision could have been found in pertinent provisions of the Labor Code, its implementing Rules,
and germane decisions of the Supreme Court. As this Court said in Juan Saballa, at al. v. NLRC, G.R.
No. 102472-84, August 22, 1996:
. . . This Court has previously held that judges and arbiters should draw up their decisions and resolutions with due care, and make certain
that they truly and accurately reflect their conclusions and their final dispositions. A decision should faithfully comply with Section 14, Article
VIII of the Constitution which provides that no decision shall be rendered by any court without expressing therein clearly and distinctly the

VIII of the Constitution which provides that no decision shall be rendered by any court without expressing therein clearly and distinctly the
facts of the case and the law on which it is based. If such decision had to be completely overturned or set aside, upon the modified decision,
such resolution or decision should likewise state the factual and legal foundation relied upon. The reason for this is obvious: aside from being
required by the Constitution, the court should be able to justify such a sudden change of course; it must be able to convincingly explain the
taking back of its solemn conclusions and pronouncements in the earlier decision. The same thing goes for the findings of fact made by the
NLRC, as it is a settled rule that such findings are entitled to great respect and even finality when supported by substantial evidence;
otherwise, they shall be struck down for being whimsical and capricious and arrived at with grave abuse of discretion. It is a requirement of
due process and fair play that the parties to a litigation be informed of how it was decided, with an explanation of the factual and legal
reasons that led to the conclusions of the court. A decision that does not clearly and distinctly state the facts and the law on which it is based
leaves the parties in the dark as to how it was reached and is especially prejudicial to the losing party, who is unable to pinpoint the possible
errors of the court for review by a higher tribunal. . . .
This is not an admonition but rather, advice and a critique to stress that both have obligations to the
Courts and students of the law. Decisions of the Labor Arbiters, the National Labor Relations
Commission, and the Supreme Court serve not only to adjudicate disputes, but also as an educational
tool to practitioners, executives, labor leaders and law students. They all have a keen interest in methods
of analysis and the reasoning processes employed in labor dispute adjudication and resolution. In fact,
decisions rise or fall on the basis of the analysis and reasoning processes of decision makers or
adjudicators.
On the issues raised by the Petitioner, we rule:
1. Timeliness of Appeal
And Filing of Appeal Bond
The Court rules that the appeal of the respondent corporation was interposed within the reglementary
period, in accordance with the Rules of the National Labor Relations Commission, and an appeal bond
was duly posted. We adopt the following Comment dated August 14, 1996, submitted by the National
Labor Relations Commission, to wit:
. . . While it is true that private respondent company received a copy of the decision dated January 19, 1994 of the Labor Arbiter . . . and filed
its appeal on February 14, 1994, it is undisputed that the tenth day within which to file an appeal fell on a Saturday, the last day to perfect an
appeal shall be the next working day.
Thus, the amendments to the New Rules of Procedure of the NLRC, Resolution No. 11-01-91 which took effect on January 14, 1992,
provides in part:
xxx xxx xxx
1. Rule VI, Sections 1 and 6 are hereby amended to read as follows:
Sec. 1. Period of Appeal — Decisions, awards or orders of the Labor Arbiter . . . shall be 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 of the Labor Arbiter . . . . . .
If the 10th day . . . falls on a Saturday, Sunday or a Holiday, the last day to perfect the decision shall be the next working day. (Emphasis
supplied)
Hence, it is crystal clear that the appeal was filed within the prescriptive period to perfect an appeal. Likewise, the petitioner's contention that
private respondent did not post the required surety bond, deserves scant consideration, for the simple reason that a surety bond was issued
by BF General Insurance Company, Inc., in the amount of P25,443.70 (Rollo, pp. 63-64).
2. Jurisdictional Issue
The jurisdiction of Labor Arbiters and Voluntary Arbitrator or Panel of Voluntary Arbitrators is clearly
defined and specifically delineated in the Labor Code. The pertinent provisions of the Labor Code, read:
A. Jurisdiction of Labor Arbiters
Art. 217. Jurisdiction of Labor Arbiter and the Commission. — (a) Except as otherwise provided under this Code the Labor Arbiter 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:
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other
terms and conditions of employment;
4. claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and,
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-
employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos
(P5,000) regardless of whether accompanied with a claim for reinstatement.
xxx xxx xxx
voluntary arbitrator so maybe provided in said agreement.
B. Jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators
Art. 261. Jurisdiction of Voluntary Arbitrators or 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 grossin 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 Voluntary Arbitration provided in the Collective Bargaining
Agreement.
Art. 262. Jurisdiction over other labor disputes. — The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties,
shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks.
The aforecited provisions of law cannot be read in isolation or separately. They must be read as a whole
and each Article of the Code reconciled one with the other. An analysis of the provisions of Articles 217,
261, and 262 indicates, that:
1. The jurisdiction of the Labor Arbiter and Voluntary Arbitrator or Panel of Voluntary Arbitrators over the
cases enumerated in Articles 217, 261 and 262, can possibly include money claims in one form or
another.

another.
2. The cases where the Labor Arbiters have original and exclusive jurisdiction are enumerated in Article
217, and that of the Voluntary Arbitrator or Panel of Voluntary Arbitrators in Article 261.
3. The original and exclusive jurisdiction of Labor Arbiters is qualified by an exception as indicated in the
introductory sentence of Article 217 (a), to wit:
Art. 217. Jurisdiction of Labor Arbiters . . . (a) Except as otherwise provided under this Code the Labor Arbiter shall have original and
exclusive jurisdiction to hear and decide . . . the following cases involving all workers. . . .
The phrase "Except as otherwise provided under this Code" refers to the following exceptions:
A. Art. 217. Jurisdiction of Labor Arbiters . . .
xxx xxx xxx
voluntary arbitrator as may be provided in said agreement.
B. Art. 262. Jurisdiction over other labor disputes. — The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the
parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks.
Parenthetically, the original and exclusive jurisdiction of the Labor Arbiter under Article 217 (c), for money
claims is limited only to those arising from statutes or contracts other than a Collective Bargaining
Agreement. The Voluntary Arbitrator or Panel of Voluntary Arbitrators will have original and exclusive
jurisdiction over money claims "arising from the interpretation or implementation of the Collective
Bargaining Agreement and, those arising from the interpretation or enforcement of company personnel
policies", under Article 261.
4. The jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators is provided for in Arts. 261 and
262 of the Labor Code as indicated above.
1. A close reading of Article 261 indicates that the original and exclusive jurisdiction of Voluntary
Arbitrator or Panel of Voluntary Arbitrators is limited only to:
. . . 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 . . . 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. . . . .
2. Voluntary Arbitrators or Panel of Voluntary Arbitrators, however, can exercise jurisdiction over any and
all disputes between an employer and a union and/or individual worker as provided for in Article 262.
Art. 262. Jurisdiction over other labor disputes. — The voluntary arbitrator or panel of voluntary arbitrators, upon agreement of the parties,
shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks.
It must be emphasized that the jurisdiction of the Voluntary Arbitrator or Panel of Voluntary Arbitrators
under Article 262 must be voluntarily conferred upon by both labor and management. The labor disputes
referred to in the same Article 262 can include all those disputes mentioned in Article 217 over which the
Labor Arbiter has original and exclusive jurisdiction.
As shown in the above contextual and wholistic analysis of Articles 217, 261, and 262 of the Labor Code,
the National Labor Relations Commission correctly ruled that the Labor Arbiter had no jurisdiction to hear
and decide petitioner's money-claim-underpayment of retirement benefits, as the controversy between the
parties involved an issue "arising from the interpretation or implementation" of a provision of the collective
bargaining agreement. The Voluntary Arbitrator or Panel of Voluntary Arbitrators has original and
exclusive jurisdiction over the controversy under Article 261 of the Labor Code, and not the Labor Arbiter.
3. Merits of the Case
The Court will not remand the case to the Voluntary Arbitrator or Panel of Voluntary Arbitrators for
hearing. This case has dragged on far too long — eight (8) years. Any further delay would be a denial of
speedy justice to an aged retired stevedore. There is further the possibility that any Decision by the
Voluntary Arbitrator or Panel of Voluntary Arbitrators will be appealed to the Court of Appeals, and finally
to this Court. Hence, the Court will rule on the merits of the case.
We adopt as our own the retirement benefit computation formula of the Labor Arbiter, and the reasons
therefor as stated in the decision abovequoted.
The simple statement of the Labor Arbiter that "we cannot sustain a computation of length of service
based on ECC contribution records", was not amply explained by the Labor Arbiter; however, there is
legal and factual basis for the same. It is unrealistic to expect a lowly stevedore to know what reports his
employer submits to the Employee's Compensation Commission under Book IV, Health, Safety and
Welfare Benefits, Title II, Employees Compensation and State Insurance Fund, of the Labor Code, simply
because the insurance fund is solely funded by the employer and the rate of employer's contribution
varies according to time and actuarial computations. (See Articles 183-184; Labor Code). The worker has
no ready access to this employer's record. In fact, it is farthest from his mind to inquire into the amount of
employer's contribution, much less whether the employer remits the contributions. The worker is at all
times entitled to benefits upon the occurrence of the defined contingency even when the employer fails to
remit the contributions. (See Article 196 (b), Labor Code).
All employers are likewise required to keep an employment record of all their employees, namely:
payrolls; and time records. (See Book III, Rule X, specifically Secs. 6, 7, 8, 1 and 12, Omnibus Rules —
Implementing the Labor Code).
The respondent-employer was afforded the opportunity to show proof of the petitioner's length of service
and pay records. In both instances, the respondent-employer failed. By its own folly, it must therefore
suffer the consequences of such failure. (South Motorists Enterprises v. Tosoc, 181 SCRA 386, [1990])
From the very beginning — by the provision of the retirement provision of the Collective Bargaining

Agreement, i.e., the length of service as requirement for retirement, and salary as a basis for benefit
computation — the employer was forewarned of the need for accurate record keeping. This is precisely
the basis of retirement, and the computation of benefits based on years of service and monthly wage.
To recapitulate; the Court hereby rules —
1. That the National Labor Relations Commission correctly ruled that the Labor Arbiter had no jurisdiction
over the case, because the case involved an issue "arising from the interpretation or implementation" of a
Collective Bargaining Agreement;
2. That the appeal to the National Labor Relations Commission was filed within the reglementary period
and that the appeal bond was filed; and
3. That we adopt the computation formula for the retirement benefits by the Labor Arbiter, and the basis
thereof, The respondent must therefore pay the petitioner the additional amount of Twenty-Five Thousand
Four Hundred Forty-Three and Seventy Centavos P25,443.70) Pesos.
In view of the long delay in the disposition of the case, this decision is immediately executory.
SO ORDERED.
Narvasa, C.J., Romero and Kapunan, JJ., concur.
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vivero v. ca 344 s 268 -2000
12:51 PM
Submission of “all disputes” to VA not

enough, termination disputes must be
specified. Also, grievance procedure
provisions must be mandatory.
Termination dispute not within ambit of
Policy Instruction No. 56, as it no longer
involves implementation or enforcement
of company personnel policies. Besides,
P.I. 56 was belatedly raised.
SECOND DIVISION
[G.R. No. 138938. October 24, 2000]
CELESTINO VIVIERO, petitioner, vs. COURT OF APPEALS, HAMMONIA MARINE SERVICES, and HANSEATIC
SHIPPING CO., LTD. respondents.
DE C I S I O N
BELLOSILLO, J.:
CELESTINO VIVERO, in this petition for review, seeks the reversal of the Decision of the Court of
Appeals of 26 May 1999 setting aside the Decision of the National Labor Relations Commission
of 28 May 1998 as well as its Resolution of 23 July 1998 denying his motion for its
reconsideration, and reinstating the decision of the Labor Arbiter of 21 January 1997.
Petitioner Vivero, a licensed seaman, is a member of the Associated Marine Officers and
Seamen's Union of the Philippines (AMOSUP). The Collective Bargaining Agreement entered
into by AMOSUP and private respondents provides, among others -
ARTICLE XII
GRIEVANCE PROCEDURE
xxx x
Sec. 3. A dispute or grievance arising in connection with the terms and provisions of this Agreement shall
be adjusted in accordance with the following procedure:
1. Any seaman who feels that he has been unjustly treated or even subjected to an unfair consideration
shall endeavor to have said grievance adjusted by the designated representative of the unlicensed
department abroad the vessel in the following manner:
A. Presentation of the complaint to his immediate superior.
B. Appeal to the head of the department in which the seaman involved shall be employed.
C. Appeal directly to the Master.
Sec. 4. If the grievance cannnot be resolved under the provision of Section 3, the decision of the Master
shall govern at sea x x x x in foreign ports and until the vessel arrives at a port where the Master shall
refer such dispute to either the COMPANY or the UNION in order to resolve such dispute. It is
understood, however, if the dispute could not be resolved then both parties shall avail of the grievance
procedure.
Sec. 5. In furtherance of the foregoing principle, there is hereby created a GRIEVANCE COMMITTEE to be
composed of two COMPANY REPRESENTATIVES to be designated by the COMPANY and two LABOR

composed of two COMPANY REPRESENTATIVES to be designated by the COMPANY and two LABOR
REPRESENTATIVES to be designated by the UNION.
Sec. 6. Any grievance, dispute or misunderstanding concerning any ruling, practice, wages or working
conditions in the COMPANY, or any breach of the Employment Contract, or any dispute arising from the
meaning or the application of the provision of this Agreement or a claim of violation thereof or any
complaint that any such crewmembers may have against the COMPANY, as well as complaint which the
COMPANY may have against such crewmembers shall be brought to the attention of the GRIEVANCE
COMMITTEE before either party takes any action, legal or otherwise.
Sec. 7. The COMMITTEE shall resolve any dispute within seven (7) days from and after the same is
submitted to it for resolution and if the same cannot be settled by the COMMITTEE or if the COMMITTEE
fails to act on the dispute within the 7-day period herein provided, the same shall be referred to a
VOLUNTARY ARBITRATION COMMITTEE.
An "impartial arbitrator" will be appointed by mutual choice and consent of the UNION and the
COMPANY who shall hear and decide the dispute or issue presented to him and his decision shall be
final and unappealable x x x x[1]
As found by the Labor Arbiter -
Complainant was hired by respondent as Chief Officer of the vessel "M.V. Sunny Prince" on 10 June 1994
under the terms and conditions, to wit:
Duration of Contract - - - - 10 months
Basic Monthly Salary - - - - US $1,100.00
Hours of Work - - - - 44 hrs./week
Overtime - - - - 495 lump O.T.
Vacation leave with pay - - - - US $220.00/mo.
On grounds of very poor performance and conduct, refusal to perform his job, refusal to report to the
Captain or the vessel’s Engineers or cooperate with other ship officers about the problem in cleaning the
cargo holds or of the shipping pump and his dismal relations with the Captain of the vessel, complainant
was repatriated on 15 July 1994.
On 01 August 1994, complainant filed a complaint for illegal dismissal at Associated Marine Officers’ and
Seaman’s Union of the Philippines (AMOSUP) of which complainant was a member. Pursuant to Article
XII of the Collective Bargaining Agreement, grievance proceedings were conducted; however, parties
failed to reach and settle the dispute amicably, thus, on 28 November 1994, complainant filed [a]
complaint with the Philippine Overseas Employment Administration (POEA).[2]
The law in force at the time petitioner filed his Complaint with the POEA was EO No. 247.[3]
While the case was pending before the POEA, private respondents filed a Motion to Dismiss on
the ground that the POEA had no jurisdiction over the case considering petitioner Vivero's
failure to refer it to a Voluntary Arbitration Committee in accordance with the CBA between the
parties. Upon the enactment of RA 8042, the Migrant Workers and Overseas Filipinos Act of
1995, the case was transferred to the Adjudication Branch of the National Labor Relations
Commission.
On 21 January 1997 Labor Arbiter Jovencio Ll. Mayor Jr., on the basis of the pleadings and
documents available on record, rendered a decision dismissing the Complaint for want of
jurisdiction.[4] According to the Labor Arbiter, since the CBA of the parties provided for the
referral to a Voluntary Arbitration Committee should the Grievance Committee fail to settle the
dispute, and considering the mandate of Art. 261 of the Labor Code on the original and
exclusive jurisdiction of Voluntary Arbitrators, the Labor Arbiter clearly had no jurisdiction over
the case.[5]
Petitioner (complainant before the Labor Arbiter) appealed the dismissal of his petition to the
NLRC. On 28 May 1998 the NLRC set aside the decision of the Labor Arbiter on the ground that
the record was clear that petitioner had exhausted his remedy by submitting his case to the
Grievance Committee of AMOSUP. Considering however that he could not obtain any
settlement he had to ventilate his case before the proper forum, i.e., the Philippine Overseas
Employment Administration.[6] The NLRC further held that the contested portion in the CBA
providing for the intercession of a Voluntary Arbitrator was not binding upon petitioner since

providing for the intercession of a Voluntary Arbitrator was not binding upon petitioner since
both petitioner and private respondents had to agree voluntarily to submit the case before a
Voluntary Arbitrator or Panel of Voluntary Arbitrators. This would entail expenses as the
Voluntary Arbitrator chosen by the parties had to be paid. Inasmuch however as petitioner
chose to file his Complaint originally with POEA, then the Labor Arbiter to whom the case was
transferred would have to take cognizance of the case.[7]
The NLRC then remanded the case to the Labor Arbiter for further proceedings. On 3 July 1998
respondents filed a Motion for Reconsideration which was denied by the NLRC on 23 July 1998.
Thus, private respondents raised the case to the Court of Appeals contending that the provision
in the CBA requiring a dispute which remained unresolved by the Grievance Committee to be
referred to a Voluntary Arbitration Committee, was mandatory in character in view of the CBA
between the parties. They stressed that "since it is a policy of the state to promote voluntary
arbitration as a mode of settling labor disputes, it is clear that the public respondent gravely
abused its discretion in taking cognizance of a case which was still within the mantle of the
Voluntary Arbitration Commitee’s jurisdiction."[8]
On the other hand, petitioner argued -
(A)s strongly suggested by its very title, referral of cases of this nature to the Voluntary Arbitration
Committee is voluntary in nature. Otherwise, the committee would not have been called Voluntary
Arbitration Committee but rather, a Compulsory Arbitration Committee. Moreover, if the referral of
cases of similar nature to the Voluntary Arbitration Committee would be deemed mandatory by virtue
of the provisions in the CBA, the [NLRC] would then be effectively deprived of its jurisdiction to try, hear
and decide termination disputes, as provided for under Article 217 of the Labor Code. Lastly,
[respondents] ought to be deemed to have waived their right to question the procedure followed by
[petitioner], considering that they have already filed their Position Paper before belatedly filing a Motion
to Dismiss x x x x [9]
But the Court of Appeals ruled in favor of private respondents. It held that the CBA "is the law
between the parties and compliance therewith is mandated by the express policy of the
law."[10] Hence, petitioner should have followed the provision in the CBA requiring the
submission of the dispute to the Voluntary Arbitration Committee once the Grievance
Committee failed to settle the controversy.[11] According to the Court of Appeals, the parties
did not have the choice to "volunteer" to refer the dispute to the Voluntary Arbitrator or a
Panel of Arbitrators when there was already an agreement requiring them to do so. "Voluntary
Arbitration" means that it is binding because of a prior agreement or contract, while
"Compulsory Arbitration" is when the law declares the dispute subject to arbitration, regardless
of the consent or desire of the parties.[12]
The Court of Appeals further held that the Labor Code itself enumerates the original and
exclusive jurisdiction of the Voluntary Arbitrator or Panel of Voluntary Arbitrators, and prohibits
the NLRC and the Regional Directors of the Department of Labor and Employment (DOLE) from
entertaining cases falling under the same.[13] Thus, the fact that private respondents filed their
Position Paper first before filing their Motion to Dismiss was immaterial and did not operate to
confer jurisdiction upon the Labor Arbiter, following the well-settled rule that jurisdiction is
determined by law and not by consent or agreement of the parties or by estoppel.[14]
Finally, the appellate court ruled that a case falling under the jurisdiction of the Labor Arbiter as
provided under Art. 217 of the Labor Code may be lodged instead with a Voluntary Arbitrator
because the law prefers, or gives primacy, to voluntary arbitration instead of compulsory
arbitration.[15] Consequently, the contention that the NLRC would be deprived of its jurisdiction
to try, hear and decide termination disputes under Art. 217 of the Labor Code, should the
instant dispute be referred to the Voluntary Arbitration Committee, is clearly bereft of merit.[16]
Besides, the Voluntary Arbitrator, whether acting solely or in a panel, enjoys in law the status of
a quasi-judicial agency independent of, and apart from, the NLRC since his decisions are not
appealable to the latter.[17]

appealable to the latter.[17]
Celestino Vivero, in his petition for review assailing the Decision of the Court of Appeals, alleges
that the appellate court committed grave abuse of discretion in holding that a Voluntary
Arbitrator or Panel of Voluntary Arbitrators, and not the Adjudication Branch of the NLRC, has
jurisdiction over his complaint for illegal dismissal. He claims that his complaint for illegal
dismissal was undeniably a termination dispute and did not, in any way, involve an
"interpretation or implementation of collective bargaining agreement" or "interpretation" or
"enforcement" of company personnel policies. Thus, it should fall within the original and
exclusive jurisdiction of the NLRC and its Labor Arbiter, and not with a Voluntary Arbitrator, in
accordance with Art. 217 of the Labor Code.
Private respondents, on the other hand, allege that the case is clearly one "involving the proper
interpretation and implementation of the Grievance Procedure found in the Collective
Bargaining Agreement (CBA) between the parties"[18] because of petitioner’s allegation in his
claim/assistance request form submitted to the Union, to wit:
NATURE OF COMPLAINT
3. Illegal Dismissal - Reason: (1) That in this case it was the master of M.V. SUNNY PRINCE Capt.
Andersen who created the trouble with physical injury and stating false allegation; (2) That there was no
proper procedure of grievance; (3) No proper notice of dismissal.
Is there a Notice of dismissal? _x_ Yes or ____ No
What date? 11 July 1994
Is there a Grievance Procedure observed? ____ Yes or _x_ No[19]
Private respondents further allege that the fact that petitioner sought the assistance of his
Union evidently shows that he himself was convinced that his Complaint was within the ambit
of the jurisdiction of the grievance machinery and subsequently by a Panel of Voluntary
Arbitrators as provided for in their CBA, and as explicitly mandated by Art. 261 of the Labor
Code.[20]
Thus, the issue is whether the NLRC is deprived of jurisdiction over illegal dismissal cases
whenever a CBA provides for grievance machinery and voluntary arbitration proceedings. Or,
phrased in another way, does the dismissal of an employee constitute a "grievance between
the parties," as defined under the provisions of the CBA, and consequently, within the exclusive
original jurisdiction of the Voluntary Arbitrators, thereby rendering the NLRC without
jurisdiction to decide the case?
On the original and exclusive jurisdiction of Labor Arbiters, Art. 217 of the Labor Code provides -
Art. 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: (1) Unfair labor practice cases; (2) Termination disputes; (3) If accompanied with a
claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work
and other terms and conditions of employment; (4) Claims for actual, moral, exemplary and other forms
of damages arising from the employer-employee relations; (5) Cases arising from any violation of Article
264 of this Code, including questions involving the legality of strikes and lockouts; and, (6) Except claims
for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims arising
from employer-employee relations, including those of persons in domestic or household service,
involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied
with a claim for reinstatement.
(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.
(c) Cases arising from the interpretation 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).
However, any or all of these cases may, by agreement of the parties, be submitted to a

agreements (emphasis supplied).
However, any or all of these cases may, by agreement of the parties, be submitted to a
Voluntary Arbitrator or Panel of Voluntary Arbitrators for adjudication. Articles 261 and 262 of
the Labor Code provide -
Art. 261. Jurisdiction of Voluntary Arbitrators or 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 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 Voluntary Arbitration provided in the Collective
Bargaining Agreement.
Art. 262. Jurisdiction Over Other Labor Disputes. - The Voluntary Arbitrator or panel of Voluntary
Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including
unfair labor practices and bargaining deadlocks (emphasis supplied).
Private respondents attempt to justify the conferment of jurisdiction over the case on the
Voluntary Arbitrator on the ground that the issue involves the proper interpretation and
implementation of the Grievance Procedure found in the CBA. They point out that when
petitioner sought the assistance of his Union to avail of the grievance machinery, he in effect
submitted himself to the procedure set forth in the CBA regarding submission of unresolved
grievances to a Voluntary Arbitrator.
The argument is untenable. The case is primarily a termination dispute. It is clear from the
claim/assistance request form submitted by petitioner to AMOSUP that he was challenging the
legality of his dismissal for lack of cause and lack of due process. The issue of whether there
was proper interpretation and implementation of the CBA provisions comes into play only
because the grievance procedure provided for in the CBA was not observed after he sought his
Union’s assistance in contesting his termination. Thus, the question to be resolved necessarily
springs from the primary issue of whether there was a valid termination; without this, then
there would be no reason to invoke the need to interpret and implement the CBA provisions
properly.
In San Miguel Corp. v. National Labor Relations Commission[21] this Court held that the phrase
"all other labor disputes" may include termination disputes provided that the agreement
between the Union and the Company states "in unequivocal language that [the parties]
conform to the submission of termination disputes and unfair labor practices to voluntary
arbitration."[22] Ergo, it is not sufficient to merely say that parties to the CBA agree on the
principle that "all disputes" should first be submitted to a Voluntary Arbitrator. There is a need
for an express stipulation in the CBA that illegal termination disputes should be resolved by a
Voluntary Arbitrator or Panel of Voluntary Arbitrators, since the same fall within a special class
of disputes that are generally within the exclusive original jurisdiction of Labor Arbiters by
express provision of law. Absent such express stipulation, the phrase "all disputes" should be
construed as limited to the areas of conflict traditionally within the jurisdiction of Voluntary
Arbitrators, i.e., disputes relating to contract-interpretation, contract-implementation, or
interpretation or enforcement of company personnel policies. Illegal termination disputes - not
falling within any of these categories - should then be considered as a special area of interest
governed by a specific provision of law.
In this case, however, while the parties did agree to make termination disputes the proper
subject of voluntary arbitration, such submission remains discretionary upon the parties. A

subject of voluntary arbitration, such submission remains discretionary upon the parties. A
perusal of the CBA provisions shows that Sec. 6, Art. XII (Grievance Procedure) of the CBA is the
general agreement of the parties to refer grievances, disputes or misunderstandings to a
grievance committee, and henceforth, to a voluntary arbitration committee. The requirement
of specificity is fulfilled by Art. XVII (Job Security) where the parties agreed -
Sec. 1. Promotion, demotion, suspension, dismissal or disciplinary action of the seaman shall be left to
the discretion of the Master, upon consultation with the Company and notification to the Union. This
notwithstanding, any and all disciplinary action taken on board the vessel shall be provided for in
Appendix “B” of this Agreement x x x x [23]
Sec. 4. x x x x Transfer, lay-off or discipline of seamen for incompetence, inefficiency, neglect of work,
bad behavior, perpetration of crime, drunkenness, insubordination, desertion, violation of x x x
regulations of any port touched by the Company’s vessel/s and other just and proper causes shall be at
Master’s discretion x x x in the high seas or foreign ports. The Master shall refer the case/dispute upon
reaching port and if not satisfactorily settled, the case/dispute may be referred to the grievance
machinery or procedure hereinafter provided (emphasis supplied).[24]
The use of the word "may" shows the intention of the parties to reserve the right to submit the
illegal termination dispute to the jurisdiction of the Labor Arbiter, rather than to a Voluntary
Arbitrator. Petitioner validly exercised his option to submit his case to a Labor Arbiter when he
filed his Complaint before the proper government agency.
Private respondents invoke Navarro III v. Damasco[25] wherein the Court held that "it is the
policy of the state to promote voluntary arbitration as a mode of settling disputes."[26] It should
be noted, however, that in Navarro III all the parties voluntarily submitted to the jurisdiction of
the Voluntary Arbitrator when they filed their respective position papers and submitted
documentary evidence before him. Furthermore, they manifested during the initial conference
that they were not questioning the authority of the Voluntary Arbitrator.[27] In the case at bar,
the dispute was never brought to a Voluntary Arbitrator for resolution; in fact, petitioner
precisely requested the Court to recognize the jurisdiction of the Labor Arbiter over the case.
The Court had held in San Miguel Corp. v. NLRC[28] that neither officials nor tribunals can
assume jurisdiction in the absence of an express legal conferment. In the same manner,
petitioner cannot arrogate into the powers of Voluntary Arbitrators the original and exclusive
jurisdiction of Labor Arbiters over unfair labor practices, termination disputes, and claims for
damages, in the absence of an express agreement between the parties in order for Art. 262 of
the Labor Code to apply in the case at bar. In other words, the Court of Appeals is correct in
holding that Voluntary Arbitration is mandatory in character if there is a specific agreement
between the parties to that effect. It must be stressed however that, in the case at bar, the use
of the word "may" shows the intention of the parties to reserve the right of recourse to Labor
Arbiters.
The CBA clarifies the proper procedure to be followed in situations where the parties expressly
stipulate to submit termination disputes to the jurisdiction of a Voluntary Arbitrator or Panel of
Voluntary Arbitrators. For when the parties have validly agreed on a procedure for resolving
grievances and to submit a dispute to voluntary arbitration then that procedure should be
strictly observed. Non-compliance therewith cannot be excused, as petitioner suggests, by the
fact that he is not well-versed with the "fine prints" of the CBA. It was his responsibility to find
out, through his Union, what the provisions of the CBA were and how they could affect his
rights. As provided in Art. 241, par. (p), of the Labor Code -
(p) It shall be the duty of any labor organization and its officers to inform its members on the provisions
of its constitution and by-laws, collective bargaining agreement, the prevailing labor relations system
and all their rights and obligations under existing labor laws.
In fact, any violation of the rights and conditions of union membership is a "ground for
cancellation of union registration or expulsion of officer from office, whichever is appropriate.
At least thirty percent (30%) of all the members of a union or any member or members

At least thirty percent (30%) of all the members of a union or any member or members
especially concerned may report such violation to the Bureau [of Labor Relations] x x x x"[29]
It may be observed that under Policy Instruction No. 56 of the Secretary of Labor, dated 6 April
1993, "Clarifying the Jurisdiction Between Voluntary Arbitrators and Labor Arbiters Over
Termination Cases and Providing Guidelines for the Referral of Said Cases Originally Filed with
the NLRC to the NCMB," termination cases arising in or resulting from the interpretation and
implementation of collective bargaining agreements and interpretation and enforcement of
company personnel policies which were initially processed at the various steps of the plant-
level Grievance Procedures under the parties' collective bargaining agreements fall within the
original and exclusive jurisdiction of the voluntary arbitrator pursuant to Art. 217 (c) and Art.
261 of the Labor Code; and, if filed before the Labor Arbiter, these cases shall be dismissed by
the Labor Arbiter for lack of jurisdiction and referred to the concerned NCMB Regional Branch
for appropriate action towards an expeditious selection by the parties of a Voluntary Arbitrator
or Panel of Arbitrators based on the procedures agreed upon in the CBA.
As earlier stated, 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 contemplated in Policy
Instruction No. 56. Consequently, Policy Instruction No. 56 does not apply in the case at bar. In
any case, private respondents never invoked the application of Policy Instruction No. 56 in their
Position Papers, neither did they raise the question in their Motion to Dismiss which they filed
nine (9) months after the filing of their Position Papers. At this late stage of the proceedings, it
would not serve the ends of justice if this case is referred back to a Voluntary Arbitrator
considering that both the AMOSUP and private respondents have submitted to the jurisdiction
of the Labor Arbiter by filing their respective Position Papers and ignoring the grievance
procedure set forth in their CBA.
After the grievance proceedings have failed to bring about a resolution, AMOSUP, as agent of
petitioner, should have informed him of his option to settle the case through voluntary
arbitration. Private respondents, on their part, should have timely invoked the provision of their
CBA requiring the referral of their unresolved disputes to a Voluntary Arbitrator once it became
apparent that the grievance machinery failed to resolve it prior to the filing of the case before
the proper tribunal. The private respondents should not have waited for nine (9) months from
the filing of their Position Paper with the POEA before it moved to dismiss the case purportedly
for lack of jurisdiction. As it is, private respondents are deemed to have waived their right to
question the procedure followed by petitioner, assuming that they have the right to do so.
Under their CBA, both Union and respondent companies are responsible for selecting an
impartial arbitrator or for convening an arbitration committee;[30] yet, it is apparent that
neither made a move towards this end. Consequently, petitioner should not be deprived of his
legitimate recourse because of the refusal of both Union and respondent companies to follow
the grievance procedure.
WHEREFORE, the Decision of the Court of Appeals is SET ASIDE and the case is remanded to the
Labor Arbiter to dispose of the case with dispatch until terminated considering the undue delay
already incurred.
SO ORDERED.
Mendoza, Quisumbing, Buena, and De Leon, Jr., JJ., concur.
[1] Rollo, pp. 34-35.

[2] Id., pp. 49-50.
[3] Sec. 3, par. (d), of EO No. 247,
the "Reorganization Act of the Philippine Overseas Employment
Administration" (24 July 1987) provides -
Sec. 3. Powers and Functions. - x x x x (d) Exercise original and exclusive jurisdiction to hear and decide

Administration" (24 July 1987) provides -
Sec. 3. Powers and Functions. - x x x x (d) Exercise original and exclusive jurisdiction to hear and decide
all claims arising out of an employee-employer relationship or by virtue of any law or contract involving
Filipino workers for overseas employment including the disciplinary cases; and all pre-employment cases
which are administrative in character involving or arising out of violation of requirement laws, rules and
regulations including money claims arising therefrom, or violation of the conditions for issuance of
license or authority to recruit workers x x x x
[4] Id., p. 53.
[5] Rollo, p. 66
[6] Id., p. 60.
[7] Id., p. 61.
[8] Rollo, p. 66.
[9] Rollo, p. 67.
[10] E. Razon, Inc. v. Secretary of Labor and Employment, G.R. No. 85867, 13 May 1993. 222 SCRA 1, 8.
[11] Rollo, p. 69.
[12] Id., p. 70, citing II Azucena, THE LABOR CODE WITH COMMENTS AND CASES 277 (1993).
[13] Id., p. 70.
[14] Tolentino v. Court of Appeals, G.R. No. 123445, 6 October 1997, 280 SCRA 226, 234.
[15] Labor Code, Art. 211, par. (a) provides that: “It is the policy of the State to 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.”
[16] Rollo, p. 70.
[17] Id., p. 70; see Luzon Development Bank v. Association of Luzon Development Bank Employees, G.R.
No. 120319, 6 October 1995, 249 SCRA 162, 168-69, citing Labor Code, Art. 262-A, in relation to Labor
Code, Art. 217 (b) and (c), as amended by RA 6715, Sec. 9.
[18] Id., p. 74.
[19] Id., p. 23.
[20] Id., p. 74.
[21] G.R. No. 108001, 15 March 1996, 255 SCRA 133.
[22] Id., p. 137.
[23] The aforesaid Appendix B provides for a Table of Offenses and Maximum Penalties, where the
offense of insubordination, which includes “any acts of disobedience to lawful orders of a superior
officer” is punished with the maximum penalty of dismissal; Rollo, p. 46.
[24] Rollo, pp. 36-37.
[25] G.R. No. 101875, 14 July 1995, 246 SCRA 260.
[26] Id., p. 264, citing Manguiat, MECHANISMS OF VOLUNTARY ARBITRATION IN LABOR DISPUTES, pp. 2-6
(1978)
[27] See Note 25, p. 264.
[28] See Note 20, pp. 143-44.
[29] Labor Code, Art. 241 (p).
[30] Rollo, p. 35.
Pasted from <http://sc.judiciary.gov.ph/jurisprudence/2000/oct2000/138938.htm>

sanyo v canizares 211 s 361 - 1992
12:52 PM
Union security clause enforcement

not within VA jurisdiction, as
union is not a party to
controversy.
Failure to establish a grievance
machinery not an excuse to avoid VA
jurisdiction. (Department Order No.
40-03 has a default grievance
procedure.)
PHILIPPINE JURISPRUDENCE - FULL TEXT
The Law phil Proj ect - Arellano Law Foundation
G.R. No. 101619 July 8, 1992
SANYO PHIL. WORKERS UNION-PSSLU ET AL. v s. POTENCIANO S. CANIZARES ET AL.
Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 101619 July 8, 1992

SANYO PHILIPPINES WORKERS UNION-PSSLU LOCAL CHAPTER NO. 109 AND/OR
ANTONIO DIAZ, PSSLU NATIONAL PRESIDENT, petitioners,
vs.
HON. POTENCIANO S. CANIZARES, in his capacity as Labor Arbiter, BERNARDO YAP,
RENATO BAYBON, SALVADOR SOLIBEL, ALLAN MISTERIO, EDGARDO TANGKAY,
LEONARDO DIONISIO, ARNEL SALVO, REYNALDO RICOHERMOSO, BENITO VALENCIA,
GERARDO LASALA AND ALEXANDER ATANASIO, respondents.
MEDIALDEA, J.:
This petition seeks to nullify: 1) the order of respondent Labor Arbiter Potenciano Cañizares
dated August 6, 1991 deferring the resolution of the motion to dismiss the complaint of private
respondents filed by petitioner Sanyo Philippines Workers Union-PSSLU Local Chapter No. 109
(PSSLU, for brevity) on the ground that the labor arbiter had no jurisdiction over said complaint
and 2) the order of the same respondent clarifying its previous order and ruling that it had
jurisdiction over the case.
The facts of the case are as follows:
PSSLU had an existing CBA with Sanyo Philippines Inc. (Sanyo, for short) effective July 1, 1989
to June 30, 1994. The same CBA contained a union security clause which provided:
Sec. 2. All members of the union covered by this agreement must retain their membership in good
standing in the union as condition of his/her continued employment with the company. The union shall
have the right to demand from the company the dismissal of the members of the union by reason of their
voluntary resignation from membership or willful refusal to pay the Union Dues or by reasons of their
having formed, organized, joined, affiliated, supported and/or aided directly or indirectly another labor

having formed, organized, joined, affiliated, supported and/or aided directly or indirectly another labor
organization, and the union thus hereby guarantees and holds the company free and harmless from any
liability whatsoever that may arise consequent to the implementation of the provision of this article. (pp.
5-6, Rollo)
In a letter dated February 7, 1990, PSSLU, through its national president, informed the
management of Sanyo that the following employees were notified that their membership with
PSSLU were cancelled for anti-union, activities, economic sabotage, threats, coercion and
intimidation, disloyalty and for joining another union: Benito Valencia, Bernardo Yap, Arnel
Salvo, Renato Baybon, Eduardo Porlaje, Salvador Solibel, Conrado Sarol, Angelito Manzano,
Allan Misterio, Reynaldo Ricohermoso, Mario Ensay and Froilan Plamenco. The same letter
informed Sanyo that the same employees refused to submit themselves to the union's
grievance investigation committee (p. 53, Rollo). It appears that many of these employees were
not members of PSSLU but of another union, KAMAO.
On February 14, 1990, some officers of KAMAO, which included Yap, Salvo, Baybon, Solibel,
Valencia, Misterio and Ricohermoso, executed a pledged of cooperation with PSSLU promising
cooperation with the latter union and among others, respecting, accepting and honoring the
CBA between Sanyo and specifically:
1. That we shall remain officers and members of KAMAO until we finally decide to rejoin Sanyo Phil.
Workers Union-PSSLU;
2. That henceforth, we support and cooperate with the duly elected union officers of Sanyo Phil. Workers
Union-PSSLU in any and all its activities and programs to insure industrial peace and harmony;
3. That we collectively accept, honor, and respect the Collective Bargaining Agreement entered into
between Sanyo Phil. Inc. and Sanyo Phil. Workers Union-PSSLU dated February 7, 1990;
4 That we collectively promise not to engage in any activities inside company premises contrary to law,
the CBA and existing policies;
5 That we are willing to pay our individual agency fee in accordance with the provision of the Labor Code,
as amended;
6 That we collectively promise not to violate this pledge of cooperation. (p. 55, Rollo)
On March 4, 1991, PSSLU through its national and local presidents, wrote another letter to
Sanyo recommending the dismissal of the following non-union workers: Bernardo Yap, Arnel
Salvo, Renato Baybon, Reynaldo Ricohermoso, Salvador Solibel, Benito Valencia, and Allan
Misterio, allegedly because: 1) they were engaged and were still engaging in anti-union
activities; 2) they willfully violated the pledge of cooperation with PSSLU which they signed and
executed on February 14, 1990; and 3) they threatened and were still threatening with bodily
harm and even death the officers of the union (pp. 37-38, Rollo).
Also recommended for dismissal were the following union members who allegedly joined,
supported and sympathized with a minority union, KAMAO: Gerardo Lasala, Legardo Tangkay,
Alexander Atanacio, and Leonardo Dionisio.
The last part of the said letter provided:
The dismissal of the above-named union members is without prejudice to receive (sic) their termination
pay if management decide (sic) to grant them benefits in accordance with law. The union hereby holds
the company free and harmless from any liability that may arise consequent to the implementation by the
company of our recommendations for the dismissal of the above-mentioned workers.
It is however suggested that the Grievance Machinery be convened pursuant to Section 3, Article XV of
the Collective Bargaining Agreement (CBA) before their actual dismissal from the company. (p. 38, Rollo)
Pursuant to the above letter of the union, the company sent a memorandum to the same
workers advising them that:
As per the attached letter from the local union President SPWU and the federation President, PSSLU,
requesting management to put the herein mentioned employees on preventive suspension, effective
immediately, preliminary to their subsequent dismissal, please be informed that the following employees
are under preventive suspension effective March 13, 1991 to wit:
1. Bernardo Yap
2. Renato Baybon
3. Salvador Solibel
4. Allan Misterio
5. Edgardo Tangkay
6. Leonardo Dionisio
7. Arnel Salvo
8. Reynaldo Ricohermoso
9. Benito Valencia
10. Gerardo Lasala
11. Alexander Atanacio
The above listed employees shall not be allowed within company premises without the permission of

11. Alexander Atanacio
The above listed employees shall not be allowed within company premises without the permission of
management.
As per request of the union's letter to management, should the listed employees fail to appeal the
decision of the union for dismissal, then effective March 23, 1991, said listed employees shall be
considered dismissed from the company. (p 39, Rollo)
The company received no information on whether or not said employees appealed to PSSLU.
Hence, it considered them dismissed as of March 23, 1991 (p. 40, Rollo).
On May 20, 1991, the dismissed employees filed a complaint (pp. 32-35, Rollo) with the NLRC
for illegal dismissal. Named respondent were PSSLU and Sanyo.
On June 20, 1991, PSSLU filed a motion to dismiss the complaint alleging that the Labor Arbiter
was without jurisdiction over the case, relying on Article 217 (c) of P.D. 442, as amended by
Section 9 of Republic Act No. 6715 which provides that cases arising from the interpretation or
implementation of the collective bargaining agreements shall be disposed of by the labor arbiter
by referring the same to the grievance machinery and voluntary arbitration.
The complainants opposed the motion to dismiss complaint on these grounds: 1) the series of
conferences before the National Conciliation and Mediation Board had been terminated; 2) the
NLRC Labor Arbiter had jurisdiction over the case which was a termination dispute pursuant to
Article 217 (2) of the Labor Code; and 3) there was nothing in the CBA which needs
interpretation or implementation (pp. 44-46, Rollo).
On August 7, 1991, the respondent Labor Arbiter issued the first questioned order. It held that:
xxx xxx xxx
While there are seemingly contradictory provisions in the aforecited article of the Labor Code, the better
interpretation will be to give effect to both, and termination dispute being clearly spelled as falling under
the jurisdiction of the Labor Arbiter, the same shall be respected. The jurisdiction of the grievance
machinery and voluntary arbitration shall cover other controversies.
However, the resolution of the instant issue shall be suspended until both parties have fully presented
their respective positions and the said issue shall be included in the final determination of the above-
captioned case.
WHEREFORE, the instant Motions to Dismiss are hereby held pending.
Consequently, the parties are hereby directed to submit their position papers and supporting documents
pursuant to Section 2, Rule VII of the Rules of the Commission on or before the hearing on the merit of
this case scheduled on August 29, 1991 at 11:00 a.m. (p. 23, Rollo)
On August 27, 1991, PSSLU filed another motion to resolve motion to dismiss complaint with a
prayer that the Labor Arbiter resolve the issue of jurisdiction.
On September 4, 1991, the respondent Labor Arbiter issued the second questioned order which
held that it was assuming jurisdiction over the complaint of private respondents, in effect,
holding that it had jurisdiction over the case.
On September 19, 1991, PSSLU filed this petition alleging that public respondent Labor Arbiter
cannot assume jurisdiction over the complaint of public respondents because it had no
jurisdiction over the dispute subject of said complaint. It is their submission that under Article
217 (c) of the Labor Code, in relation to Article 261 thereof, as well as Policy Instruction No. 6 of
the Secretary of Labor, respondent Arbiter has no jurisdiction and authority to take cognizance
of the complaint brought by private respondents which involves the implementation of the union
security clause of the CBA. The function of the Labor Arbiter under the same law and rule is to
refer this case to the grievance machinery and voluntary arbitration.
In its comment, private respondents argue that Article 217(a) 2 and 4 of the Labor Code is
explicit, to wit:
Art. 217. Jurisdiction of the 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 . . . the following cases involving all workers, . . . :
xxx xxx xxx
2) Termination disputes,
xxx xxx xxx
4) Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee
relations.
The private respondents also claimed that insofar as Salvo, Baybon, Ricohermoso, Solibel,
Valencia, Misterio and Lasala were concerned, they joined another union, KAMAO during the
freedom period which commenced on May 1, 1989 up to June 30, 1989 or before the effectivity
of the July 1, 1989 CBA. Hence, they are not covered by the provisions of the CBA between
Sanyo and PSSLU. Private respondents Tangkay, Atanacio and Dionisio admit that in
September 1989, they resigned from KAMAO and rejoined PSSLU (pp.
66(a)-68, Rollo).

66(a)-68, Rollo).
For its part, public respondent, through the Office of the Solicitor General, is of the view that a
distinction should be made between a case involving "interpretation or implementation of
collective bargaining agreement or "interpretation" or "enforcement" of company personnel
policies, on the one hand and a case involving termination, on the other hand. It argued that the
case at bar does not involve an "interpretation or implementation" of a collective bargaining
agreement or "interpretation or enforcement" of company policies but involves a "termination."
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 by voluntary arbitration. Where there
was already actual termination, i.e., violation of rights, it is already cognizable by the Labor
Arbiter.
Article 217 of the Labor Code defines the jurisdiction of the Labor Arbiter.
Art. 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:
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates
of pay, hours of work and other terms and conditions of employment;
relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of
strikes and lockouts;
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other
claims, arising from employer-employee relations, including those of persons in domestic or household
service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether
accompanied with a claim for reinstatement.
(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.
It is clear from the above article that termination cases fall under the jurisdiction of the Labor
Arbiter. It should be noted however that said article at the outset excepted from the said
provision cases otherwise provided for in other provisions of the same Code, thus the phrase
"Except as otherwise provided under this Code . . . ." Under paragraph (c) of the same article, it
is expressly provided that "cases arising from the interpretation or implementation of collective
bargaining agreements and those arising from the interpretation and 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.
It was provided in the CBA executed between PSSLU and Sanyo that a member's voluntary
resignation from membership, willful refusal to pay union dues and his/her forming, organizing,
joining, supporting, affiliating or aiding directly or indirectly another labor union shall be a cause
for it to demand his/her dismissal from the company. The demand for the dismissal and the
actual dismissal by the company on any of these grounds is an enforcement of the union
security clause in the CBA. This act is authorized by law provided that enforcement should not
be characterized by arbitrariness (Manila Mandarin Employee Union v. NLRC, G.R. No. 76989,
29 Sept. 1987, 154 SCRA 368) and always with due process (Tropical Hut Employees Union v.
Tropical Food Market, Inc., L-43495-99, Jan. 20, 1990).
The reference to a Grievance Machinery and Voluntary Arbitrators for the adjustment or
resolution of grievances arising from the interpretation or implementation of their CBA and those
arising from the interpretation or enforcement of company personnel policies is mandatory. The
law grants to voluntary arbitrators 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 (Art. 261, Labor Code).
In its order of September 4, 1991, respondent Labor Arbiter explained its decision to assume
jurisdiction over the complaint, thus:
The movants failed to show (1) the provisions of the CBA to be implemented, and (2) the grievance
machinery and voluntary arbitrator already formed and properly named. What self-respecting judge would

machinery and voluntary arbitrator already formed and properly named. What self-respecting judge would
refer a case from his responsibility to a shadow? To whom really and specifically shall the case be
indorsed or referred? In brief, they could have shown the (1) existence of the grievance machinery and
(2) its being effective.
Furthermore, the aforecited law merely directs the "referral" cases. It does not expressly confer
jurisdiction on the grievance machinery or voluntary arbitration panel, created or to be created. Article 260
of the Labor Code describes the formation of the grievance and voluntary arbitration. All this of course
shall be on voluntary basis. Is there another meaning of voluntary arbitration? (The herein complainant
have strongly opposed the motion to dismiss. Would they go willingly to the grievance machinery and
voluntary arbitration which are installed by their opponents if directed to do so?) (p. 26, Rollo)
The failure of the parties to the CBA to establish the grievance machinery and its unavailability
is not an excuse for the Labor Arbiter to assume jurisdiction over disputes arising from the
implementation and enforcement of a provision in the CBA. In the existing CBA between PSSLU
and Sanyo, the procedure and mechanics of its establishment had been clearly laid out as
follows:
ARTICLE XV — GRIEVANCE MACHINERY
Sec. 1. Whenever any controversy should arise between the company and the union as to the
interpretation or application of the provision of this agreement, or whenever any difference shall exist
between said parties relative to the terms and conditions of employment, an earnest effort shall be made
to settle such controversy in substantially the following manner:
First step. (Thru Grievance) The dispute shall initially be resolved by conference between the
management to be represented by the Management's authorized representatives on the one hand, and
the Union to be represented by a committee composed of the local union president and one of the local
union officer appointed by the local union president, on the other hand within three days from date of
concurrence of grievance action. In the absence of the local union president, he (shall) appoint another
local union officer to take over in his behalf. Where a controversy personally affects an employee, he shall
not be allowed to be a member of the committee represented by the union.
Second step. (Thru Arbitrator mutually chosen) Should such dispute remain unsettled after twenty (20)
days from the first conference or after such period as the parties may agree upon in specified cases, it
shall be referred to an arbitrator chosen by the consent of the company and the union. In the event of
failure to agree on the choice of voluntary arbitrator, the National Conciliation and Mediation Board,
Department of Labor and Employment shall be requested to choose an Arbitrator in accordance with
voluntary arbitration procedures.
Sec. 2. The voluntary Arbitrator shall have thirty (30) days to decide the issue presented to him and his
decision shall be final, binding and executory upon the parties. He shall have no authority to add or
subtract from and alter any provision of this agreement. The expenses of voluntary arbitration including
the fee of the arbitrator shall be shared equally by the company and the union. In the event the arbitrator
chosen either by the mutual agreement of the company and the union by (the) way of voluntary arbitration
or by the National Conciliation and Mediation Board (NCMB) failed to assume his position, died, become
disabled or any other manner failed to function and or reach a decision, the company and the union shall
by mutual agreement choose another arbitrator; in the event of failure to agree on the choice of a new
voluntary arbitrator, the matter shall again be referred back to the NCMB who shall be requested again to
choose a new arbitrator as above provided. Any grievance not elevated or processed as above provided
within the stipulated period shall be deemed settled and terminated.
Sec. 3. It is hereby agreed that decisions of the union relative to their members, for implementation by the
COMPANY, should be resolved for review thru the Grievance Machinery; and management be invited to
participate in the Grievance procedure to be undertaken by the union relative to (the) case of the union
against members. (pp. 134-135, Rollo)
All that needs to be done to set the machinery into motion is to call for the convening thereof. If
the parties to the CBA had not designated their representatives yet, they should be ordered to
do so.
The procedure introduced in RA 6715 of referring certain grievances originally and exclusively
to the grievance machinery and when not settled at this level, to a panel of voluntary arbitrators
outlined in CBA's does not only include grievances arising from the interpretation or
implementation of the CBA but applies as well to those arising from the implementation of
company personnel policies. No other body shall take cognizance of these cases. The last
paragraph of Article 261 enjoins other bodies from assuming jurisdiction thereof:
The commission, its Regional Offices and the Regional Directors of the Department of Labor and
jurisdiction of the Voluntary Arbitrator or panel of voluntary arbitrators and shall immediately dispose and
refer the same to the grievance machinery or voluntary arbitration provided in the Collective Bargaining
Agreement.
In the instant case, however, We hold that the Labor Arbiter and not the Grievance Machinery
provided for in the CBA has the jurisdiction to hear and decide the complaints of the private

provided for in the CBA has the jurisdiction to hear and decide the complaints of the private
respondents. While it appears that the dismissal of the private respondents was made upon the
recommendation of PSSLU pursuant to the union security clause provided in the CBA, We are
of the opinion that these facts do not come within the phrase "grievances arising from the
interpretation or implementation of (their) Collective Bargaining Agreement and those arising
from the interpretation or enforcement of company personnel policies," the jurisdiction of which
pertains to the Grievance Machinery or thereafter, to a voluntary arbitrator or panel of voluntary
arbitrators. Article 260 of the Labor Code on grievance machinery and voluntary arbitrator states
that "(t)he parties to a Collective Bargaining Agreement shall include therein provisions that will
ensure the mutual observance of its terms and conditions. They shall establish a machinery for
the adjustment and resolution of grievances arising from the interpretation or implementation of
their Collective Bargaining Agreement and those arising from the interpretation or enforcement
of company personnel policies." It is further provided in said article that the parties to a CBA
shall name or designate their respective representatives to the grievance machinery and if the
grievance is not settled in that level, it shall automatically be referred to voluntary arbitrators (or
panel of voluntary arbitrators) designated in advance by the parties. It need not be mentioned
that the parties to a CBA are the union and the company. Hence, only disputes involving the
union and the company shall be referred to the grievance machinery or voluntary arbitrators.
In the instant case, both the union and the company are united or have come to an agreement
regarding the dismissal of private respondents. No grievance between them exists which could
be brought to a grievance machinery. The problem or dispute in the present case is between the
union and the company on the one hand and some union and non-union members who were
dismissed, on the other hand. The dispute has to be settled before an impartial body. The
grievance machinery with members designated by the union and the company cannot be
expected to be impartial against the dismissed employees. Due process demands that the
dismissed workers grievances be ventilated before an impartial body. Since there has already
been an actual termination, the matter falls within the jurisdiction of the Labor Arbiter.
ACCORDINGLY, the petition is DISMISSED. Public respondent Labor Arbiter is directed to
resolve the complaints of private respondents immediately.
SO ORDERED.
Cruz, Griño-Aquino and Bellosillo, JJ., concur.
The Lawphil Project - Arellano Law Foundation
Pasted from <http://lawphil.net/judjuris/juri1992/jul1992/gr_101619_1992.html>

ludo v saornido 395 s 451 - 2003
12:56 PM
VA has plenary jurisdiction and

authority to interpret the agreement to
arbitrate and determine the scope of
his/her authority (eg. amount of
performance bonus, payment of
regularization benefits).
G.R. No. 140960 January 20, 2003
LUDO & LUYM CORPORATION vs. FERDINAND SAORNIDO, ET AL.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 140960 January 20, 2003
LUDO & LUYM CORPORATION, petitioner,
vs.
FERDINAND SAORNIDO as voluntary arbitrator and LUDO EMPLOYEES UNION (LEU) representing 214
of its officers and members, respondents.
QUISUMBING, J.:
This petition for review on certiorari seeks to annul and set aside the decision1 of the Court of Appeals
promulgated on July 6, 1999 and its Order denying petitioner’s motion for reconsideration in CA-G.R. SP
No. 44341.
The relevant facts as substantially recited by the Court of Appeals in its decision are as follows:
Petitioner LUDO & LUYM CORPORATION (LUDO for brevity) is a domestic corporation engaged in the
manufacture of coconut oil, corn starch, glucose and related products. It operates a manufacturing plant
located at Tupas Street, Cebu City and a wharf where raw materials and finished products are shipped
out.
In the course of its business operations, LUDO engaged the arrastre services of Cresencio Lu Arrastre
Services (CLAS) for the loading and unloading of its finished products at the wharf. Accordingly, several
arrastre workers were deployed by CLAS to perform the services needed by LUDO.
These arrastre workers were subsequently hired, on different dates, as regular rank-and-file employees
of LUDO every time the latter needed additional manpower services. Said employees thereafter joined
respondent union, the LUDO Employees Union (LEU), which acted as the exclusive bargaining agent of
the rank-and-file employees.
On April 13, 1992, respondent union entered into a collective bargaining agreement with LUDO which
provides certain benefits to the employees, the amount of which vary according to the length of service
rendered by the availing employee.
Thereafter, the union requested LUDO to include in its members’ period of service the time during
which they rendered arrastre services to LUDO through the CLAS so that they could get higher benefits.
LUDO failed to act on the request. Thus, the matter was submitted for voluntary arbitration.

LUDO failed to act on the request. Thus, the matter was submitted for voluntary arbitration.
The parties accordingly executed a submission agreement raising the sole issue of the date of
regularization of the workers for resolution by the Voluntary Arbitrator.
In its decision dated April 18, 1997, the Voluntary Arbitrator ruled that: (1) the respondent employees
were engaged in activities necessary and desirable to the business of petitioner, and (2) CLAS is a labor-
only contractor of petitioner.2 It disposed of the case thus:
WHEREFORE, in view of the foregoing, this Voluntary Arbitrator finds the claims of the complainants
meritorious and so hold that:
a. the 214 complainants, as listed in the Annex A, shall be considered regular employees of the
respondents six (6) months from the first day of service at CLAS;
b. the said complainants, being entitled to the CBA benefits during the regular employment, are
awarded a) sick leave, b) vacation leave & c) annual wage and salary increases during such period in the
amount of FIVE MILLION SEVEN HUNDRED SEVEN THOUSAND TWO HUNDRED SIXTY ONE PESOS AND
SIXTY ONE CENTAVOS (P5,707,261.61) as computed in "Annex A";
c. the respondents shall pay attorney’s fees of ten (10) percent of the total award;
d. an interest of twelve (12) percent per annum or one (1) percent per month shall be imposed to the
award from the date of promulgation until fully paid if only to speed up the payment of these long over
due CBA benefits deprived of the complaining workers.
Accordingly, all separation and/or retirement benefits shall be construed from the date of regularization
aforementioned subject only to the appropriate government laws and other social legislation.
SO ORDERED.3
In due time, LUDO filed a motion for reconsideration, which was denied. On appeal, the Court of
Appeals affirmed in toto the decision of the Voluntary Arbitrator, thus:
WHEREFORE, finding no reversible error committed by respondent voluntary arbitrator, the instant
petition is hereby DISMISSED.
SO ORDERED.4
Hence this petition. Before us, petitioner raises the following issues:
I
WHETHER OR NOT BENEFITS CONSISTING OF SALARY INCREASES, VACATION LEAVE AND SICK LEAVE
BENEFITS FOR THE YEARS 1977 TO 1987 ARE ALREADY BARRED BY PRESCRIPTION WHEN PRIVATE
RESPONDENTS FILED THEIR CASE IN JANUARY 1995;
II
WHETHER OR NOT A VOLUNTARY ARBITRATOR CAN AWARD BENEFITS NOT CLAIMED IN THE
SUBMISSION AGREEMENT.5
Petitioner contends that the appellate court gravely erred when it upheld the award of benefits which
were beyond the terms of submission agreement. Petitioner asserts that the arbitrator must confine its
adjudication to those issues submitted by the parties for arbitration, which in this case is the sole issue
of the date of regularization of the workers. Hence, the award of benefits by the arbitrator was done in
excess of jurisdiction.6
Respondents, for their part, aver that the three-year prescriptive period is reckoned only from the time
the obligor declares his refusal to comply with his obligation in clear and unequivocal terms. In this case,
respondents maintain that LUDO merely promised to review the company records in response to
respondents’ demand for adjustment in the date of their regularization without making a categorical
statement of refusal.7 On the matter of the benefits, respondents argue that the arbitrator is
empowered to award the assailed benefits because notwithstanding the sole issue of the date of
regularization, standard companion issues on reliefs and remedies are deemed incorporated. Otherwise,
the whole arbitration process would be rendered purely academic and the law creating it inutile.8
The jurisdiction of Voluntary Arbitrator or Panel of Voluntary Arbitrators and Labor Arbiters is clearly
defined and specifically delineated in the Labor Code. The pertinent provisions of the Labor Code, read:
Art. 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:
1. Unfair labor practice cases:

1. Unfair labor practice cases:
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wage,
rates of pay, hours of work and other terms and conditions of employment;
relations;
xxx
Art. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. — The Voluntary
Art. 262. Jurisdiction over other labor disputes. — The Voluntary Arbitrator or panel of Voluntary
unfair labor practices and bargaining deadlocks."
In construing the above provisions, we held in San Jose vs. NLRC, 9 that the jurisdiction of the Labor
Arbiter and the Voluntary Arbitrator or Panel of Voluntary Arbitrators over the cases enumerated in the
Labor Code, Articles 217, 261 and 262, can possibly include money claims in one form or another.10
Comparatively, in Reformist Union of R.B. Liner, Inc. vs. NLRC,11 compulsory arbitration has been defined
both as "the process of settlement of labor disputes by a government agency which has the authority to
investigate and to make an award which is binding on all the parties, and as a mode of arbitration where
the parties are compelled to accept the resolution of their dispute through arbitration by a third party
(emphasis supplied)."12 While a voluntary arbitrator is not part of the governmental unit or labor
department’s personnel, said arbitrator renders arbitration services provided for under labor laws.
Generally, the arbitrator is expected to decide only those questions expressly delineated by the
submission agreement. Nevertheless, the arbitrator can assume that he has the necessary power to
make a final settlement since arbitration is the final resort for the adjudication of disputes.13 The
succinct reasoning enunciated by the CA in support of its holding, that the Voluntary Arbitrator in a
labor controversy has jurisdiction to render the questioned arbitral awards, deserves our concurrence,
thus:
In general, the arbitrator is expected to decide those questions expressly stated and limited in the
submission agreement. However, since arbitration is the final resort for the adjudication of disputes, the
arbitrator can assume that he has the power to make a final settlement. Thus, assuming that the
submission empowers the arbitrator to decide whether an employee was discharged for just cause, the
arbitrator in this instance can reasonable assume that his powers extended beyond giving a yes-or-no
answer and included the power to reinstate him with or without back pay.
In one case, the Supreme Court stressed that "xxx the Voluntary Arbitrator had plenary jurisdiction and
authority to interpret the agreement to arbitrate and to determine the scope of his own authority
subject only, in a proper case, to the certiorari jurisdiction of this Court. The Arbitrator, as already
indicated, viewed his authority as embracing not merely the determination of the abstract question of
whether or not a performance bonus was to be granted but also, in the affirmative case, the amount
thereof.
By the same token, the issue of regularization should be viewed as two-tiered issue. While the
submission agreement mentioned only the determination of the date or regularization, law and
jurisprudence give the voluntary arbitrator enough leeway of authority as well as adequate prerogative
to accomplish the reason for which the law on voluntary arbitration was created –speedy labor justice.

to accomplish the reason for which the law on voluntary arbitration was created – speedy labor justice.
It bears stressing that the underlying reason why this case arose is to settle, once and for all, the
ultimate question of whether respondent employees are entitled to higher benefits. To require them to
file another action for payment of such benefits would certainly undermine labor proceedings and
contravene the constitutional mandate providing full protection to labor.14
As regards petitioner’s contention that the money claim in this case is barred by prescription, we hold
that this contention is without merit. So is petitioner’s stance that the benefits claimed by the
respondents, i.e., sick leave, vacation leave and 13th-month pay, had already prescribed, considering
the three-year period for the institution of monetary claims.15 Such determination is a question of fact
which must be ascertained based on the evidence, both oral and documentary, presented by the parties
before the Voluntary Arbitrator. In this case, the Voluntary Arbitrator found that prescription has not as
yet set in to bar the respondents’ claims for the monetary benefits awarded to them. Basic is the rule
that findings of fact of administrative and quasi-judicial bodies, which have acquired expertise because
their jurisdiction is confined to specific matters, are generally accorded not only great respect but even
finality.16 Here, the Voluntary Arbitrator received the evidence of the parties first-hand. No compelling
reason has been shown for us to diverge from the findings of the Voluntary Arbitrator, especially since
the appellate court affirmed his findings, that it took some time for respondent employees to ventilate
their claims because of the repeated assurances made by the petitioner that it would review the
company records and determine therefrom the validity of the claims, without expressing a categorical
denial of their claims. As elucidated by the Voluntary Arbitrator:
The respondents had raised prescription as defense. The controlling law, as ruled by the High Court, is:
"The cause of action accrues until the party obligated refuses xxx to comply with his duty. Being warded
off by promises, the workers not having decided to assert [their] right[s], [their] causes of action had not
accrued…" (Citation omitted.)
Since the parties had continued their negotiations even after the matter was raised before the
Grievance Procedure and the voluntary arbitration, the respondents had not refused to comply with
their duty. They just wanted the complainants to present some proofs. The complainant’s cause of
action had not therefore accrued yet. Besides, in the earlier voluntary arbitration case aforementioned
involving exactly the same issue and employees similarly situated as the complainants’, the same
defense was raised and dismissed by Honorable Thelma Jordan, Voluntary Arbitrator.
In fact, the respondents’ promised to correct their length of service and grant them the back CBA
benefits if the complainants can prove they are entitled rendered the former in estoppel, barring them
from raising the defense of laches or prescription. To hold otherwise amounts to rewarding the
respondents for their duplicitous representation and abet them in a dishonest scheme against their
workers.17
Indeed, as the Court of Appeals concluded, under the equitable principle of estoppel, it will be the
height of injustice if we will brush aside the employees’ claims on a mere technicality, especially when it
is petitioner’s own action that prevented them from interposing the claims within the prescribed period.
WHEREFORE, the petition is denied. The appealed decision of the Court of Appeals in CA-G.R. SP No.
44341 and the resolution denying petitioner’s motion for reconsideration, are AFFIRMED. Costs against
petitioner.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Austria-Martinez and Callejo, Sr., JJ., concur.
Footnotes
1 Rollo, pp. 29-34. Penned by Associate Justice Angelina Sandoval Gutierrez, former Associate Justice of
the CA.
2 Id. at 60-61.
3 Id. at 63.
4 Id. at 33.
5 Id. at 10-11.
6 Id. at 16.
7 Id. at 97-98.
8 Id. at 99-101.
9 294 SCRA 336 (1998).
10 Supra note 9 at 348.

10 Supra note 9 at 348.
11
266 SCRA 713 (1997).
12 Supra note 11, at 723.
13
Rollo, pp. 31-32 citing C.A. Azucena, The Labor Code, With Comments and Cases, 1993 Ed., p. 283 and
Sime Darby Pilipinas, Inc. vs. Magsalin, G.R. No. 90426, 180 SCRA 177, 183 (1989).
14
Ibid.
15
Labor Code, ART. 291. Money claims. – All money claims arising from employer-employee relation
accruing during the effectivity of this Code shall be filed within three (3) years from the time that cause
of action accrues; otherwise they shall be forever barred.
xxx
16 Conti vs. NLRC, G.R. No. 119253, 271 SCRA 114, 122 (1997).
17
Rollo, pp. 61-62.
Pasted from <http://www.lawphil.net/judjuris/juri2003/jan2003/gr_140960_2003.html>

apalisok v radio philippines 403 s 238 - 2003
12:56 PM
Even if employee initially waives

grievance procedure, change of
heart in favor of VA still proper.
G.R. No. 138094 May 29, 2003
MARILOU GUANZON APALISOK vs. RPN RADIO STATION DYKC, ET AL.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 138094 May 29, 2003
MARILOU GUANZON APALISOK, petitioner,
vs.
RADIO PHILIPPINES NETWORK RADIO STATION DYKC and STATION MANAGER GEORGE SUAZO,
respondents.
CARPIO MORALES, J.:
Before this Court is a petition for review on certiorari under Rule 45 assailing the Court of Appeals
Decision1 of October 30, 1998 and Resolution 2 of February 26, 1999.
On May 15, 1995, Marilou Gaunzon Apalisok (petitioner), then Production Chief of Radio Philippines
Network (RPN) Station DYKC, received a Memorandum3 from Branches Operations Manager Gilito Datoc
asking her to submit a written explanation why no disciplinary action should be taken against her for
performance of acts hostile to RPN, and arrogant, disrespectful and defiant behavior towards her
superior Station Manager George Suazo.
Complying, petitioner submitted on May 16, 1995 her Answer4 to the memorandum.
On May 31, 1995, petitioner received another memorandum from the Administrative Manager of RPN,
informing her of the termination of her services effective the close of regular office hours of June 15,
1995.
By letter of June 5, 1995, petitioner informed RPN, by letter of June 5, 1995, of her decision to waive her
right to resolve her case through the grievance machinery of RPN as provided for in the Collective
Bargaining Agreement (CBA) and to lodge her case before the proper government forum. She thereafter
filed a complaint against RPN DYKC and Suazo (respondents) for illegal dismissal before the National
Labor Relations Commission, Regional Arbitration Branch of Region 7 which referred it to the National
Conciliation and Mediation Board.
By Submission Agreement5 dated June 20, 1995 signed by their respective counsels, petitioner and
respondents agreed to submit for voluntary arbitration the issue of whether petitioner's dismissal was
valid and to abide by the decision of the voluntary arbitrator.
In her position paper6 submitted before the voluntary arbitrator, petitioner prayed that her dismissal be
declared invalid and that she be awarded separation pay, backwages and other benefits granted to her
by the Labor Code since reinstatement is no longer feasible due to strained relations. She also prayed
that she be awarded P2,000,000.00 for moral damages and P500,000.00 for exemplary damages.
Respondents on the other hand prayed for the dismissal of the complaint, arguing that the voluntary
arbitrator had no jurisdiction over the case and, assuming that he had, the complaint is dismissible for

arbitrator had no jurisdiction over the case and, assuming that he had, the complaint is dismissible for
lack of merit as petitioner was not illegally dismissed.7
On October 18, 1995, the voluntary arbitrator rendered an Award8 in favor of petitioner, the dispositive
portion of which reads:
WHEREFORE, above premises considered, this Voluntary Arbitrator rules that the dismissal of
complainant was invalid.
However, considering the impracticality of reinstatement because of proven strained relation between
the parties, respondents, instead shall pay complainant the amount of FOUR HUNDRED ELEVEN
THOUSAND ONE HUNDRED TWENTY SIX PESOS & SEVENTY-SIX CENTAVOS (P411,126.76) itemized as
follows:
In summary, the total award is hereunder itemized:
1. SEPARATION PAY (P14,600.00 divide by 30 days multiplied by 15 days per year of P138,700.9
service x 19 years) ......................................... 5
2. BACKWAGES (P14,600 X 6 months) ............................. P
88,817.00
3. MORAL AND EXEMPLARY DAMAGES ........................... P100,000.0
0
4. SERVICE INCENTIVE LEAVES (P14,600 divide by 30 days = P486.67 x 5 days = P2,433.35 x P
19 years ....... 46,233.65
5. ATTORNEY'S FEES (10%) ........................... P
37,375.16
All other claims are hereby denied.
SO ORDERED. (Emphasis supplied)
Respondents' motion for reconsideration9 of the Award having been denied by the voluntary arbitrator
by Order of November 21, 1995, they filed a petition for certiorari before this Court, docketed as G.R.
No. 122841.
By Resolution10 of December 13, 1995, the Third Division of this Court referred G.R. No. 122841 to the
Court of Appeals, following the case of Luzon Development Bank v. Association of Luzon Development
Bank Employees, et al.11 holding that decisions or awards of a voluntary arbitrator or panel of arbitrators
in labor cases are reviewable by the Court of Appeals.
The Court of Appeals, finding that the option of petitioner not to subject the dispute to the grievance
machinery provided for in the CBA was tantamount to relinquishing her right to avail of the aid of a
voluntary arbitrator in settling the dispute which "likewise converted an unresolved grievance into a
resolved one," held that the voluntary arbitrator did not have jurisdiction over petitioner's complaint
and accordingly nullified and set aside, by Decision of October 30, 1998, the voluntary arbitration award.
Petitioner's Motion for Reconsideration12 of the Court of Appeals Decision having been denied by
Resolution13 of February 26, 1999, the present petition was filed which raises the following issues:
1. Whether or not the Voluntary Arbitrator had jurisdiction over petitioner's complaint, and
2. Whether or not respondents are guilty of estoppel.14
Petitioner, citing Article 262 of the Labor Code of the Philippines, as amended which reads:
ARTICLE 262. JURISDICTION OVER OTHER LABOR DISPUTES. The Voluntary Arbitrator or panel of
Voluntary Arbitrators, upon agreement of the parties, shall hear and decide all other labor disputes
including unfair labor practices and bargaining deadlocks. (Emphasis and italics supplied),
contends that her option not to subject the dispute to the grievance machinery of RPN did not amount
to her relinquishing of her right to avail of voluntary arbitration as a mode of settling it for she and
respondents in fact agreed to have the dispute settled by a voluntary arbitrator when they freely
executed the above-said Submission Agreement. She thus concludes that the voluntary arbitrator has
jurisdiction over the controversy.15
Petitioner contends in any event that even assuming that the voluntary arbitrator had no jurisdiction
over the case, it would not be in keeping with settled jurisprudence to allow a losing party to question
the authority of the voluntary arbitrator after it had freely submitted itself to its authority.16
The petition is impressed with merit.

the authority of the voluntary arbitrator after it had freely submitted itself to its authority.16
The petition is impressed with merit.
The above quoted Article 262 of the Labor Code provides that upon agreement of the parties, the
voluntary arbitrator can hear and decide all other labor disputes.
Contrary to the finding of the Court of Appeals, voluntary arbitration as a mode of settling the dispute
was not forced upon respondents. Both parties indeed agreed to submit the issue of validity of the
dismissal of petitioner to the jurisdiction of the voluntary arbitrator by the Submission Agreement duly
signed by their respective counsels.
As the voluntary arbitrator had jurisdiction over the parties' controversy, discussion of the second issue
is no longer necessary.
WHEREFORE, the Court of Appeals Decision of October 30, 1998 is hereby SET ASIDE and the voluntary
arbitration Award of October 18, 1995 is hereby REINSTATED.
SO ORDERED.
Puno and Panganiban, JJ ., concur.
Sandoval-Gutierrez and Corona, JJ ., on leave.
Footnotes
1 Rollo at 169-180.
2 Id. at 190.
3 Id. at 73.
4
Id. at 74-77.
5 Id. at 24.
6 Id. at 103-117.
7 Id. at 81-98.
8
Id. at 25-31.
9 Id. at 151-152.
10
Id. at 153.
11
G.R. No. 120319, October 6, 1995.
12
Id. at 181-187.
13 Id. at 190.
14
Id. at 13.
15 Id. at 14.
16 Id. at 15.
Pasted from <http://www.lawphil.net/judjuris/juri2003/may2003/gr_138094_2003.html>

atlas farms v nlrc 392 s 128 - 2002
12:57 PM
Union failure to object to

employee’s termination or
retirement does not place dispute
within VA jurisdiction.
Where NLRC dismisses case and refers
matter to company grievance procedure,
failure of company to activate grievance
mechanism entitles employee to re-seek
recourse with the NLRC.
G.R. No. 142244 November 18, 2002
ATLAS FARMS, INC.vs. NATIONAL LABOR RELATIONS COMMISSION, ET AL.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 142244 November 18, 2002
ATLAS FARMS, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION,
JAIME O. DELA PEÑA and MARCIAL I. ABION, respondents.
DE C I S I O N
QUISUMBING, J.:
Petitioner seeks the reversal of the decision1 dated January 10, 2000 of the Court of Appeals in CA-G.R.
SP No. 52780, dismissing its petition for certiorari against the NLRC, as well as the resolution2 dated
February 24, 2000, denying its motion for reconsideration.
The antecedent facts of the case, as found by the Court of Appeals,3 are as follows:
Private respondent Jaime O. dela Peña was employed as a veterinary aide by petitioner in December
1975. He was among several employees terminated in July 1989. On July 8, 1989, he was re-hired by
petitioner and given the additional job of feedmill operator. He was instructed to train selected workers
to operate the feedmill.
On March 13, 1993,4 Peña 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. Peña refused, however, to receive the formal notice. He never bothered to explain, either

regulations. Peña refused, however, to receive the formal notice. He never bothered to explain, either
verbally or in writing, according to petitioner. Thus, 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.
From the start of his employment on July 8, 1989, until his termination on March 20, 1993, Peña had
worked for seven days a week, including holidays, without overtime, holiday, rest day pay and service
incentive leave. At the time of his dismissal from employment, he was receiving P180 pesos daily wage,
or an average monthly salary of P5,402.
Co-respondent Marcial I. Abion5 was a carpenter/mason and a maintenance man whose employment by
petitioner commenced on October 8, 1990. Allegedly, he 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, according to petitioner. Consequently,
the company terminated his services on October 27, 1992. He acknowledged receipt of a written notice
of dismissal, with his separation pay.
Like Peña, Abion worked seven days a week, including holidays, without holiday pay, rest day pay,
service incentive leave pay and night shift differential pay. When terminated on October 27, 1992, Abion
was receiving a monthly salary of P4,500.
Peña and Abion filed separate complaints for illegal dismissal that were later consolidated. Both claimed
that their termination from 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.
On November 9, 1993, 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 refiled 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 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. This being the
case, according to petitioner, jurisdiction over the case belonged to the grievance machinery and
thereafter the voluntary arbitrator, as provided in the CBA.
In a decision dated January 30, 1996, 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. He stated that Article 217 (c) of the Labor Code 6 was inapplicable to the case.
Further, the labor arbiter found that although both complainants did not substantiate their claims of
illegal dismissal, there was proof that private respondents voluntarily accepted their separation pay and
petitioner’s financial assistance.
Thus, private respondents brought the case 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 review
on certiorari under Rule 65, seeking reinstatement of the labor arbiter’s decision. The appellate court
denied the petition and affirmed the NLRC resolution with some modifications, thus:
WHEREFORE, the petition is DENIED. The resolution in NLRC CA No. 010520-96 is AFFIRMED with the
following modifications:
1) The private respondents can not be reinstated, due to their acceptance of the separation pay offered
by the petitioner;
2) The private respondents are entitled to their full back wages; and,
3) The amount of the separation pay received by private respondents from petitioner shall not be
deducted from their full back wages.
Costs against petitioner.
SO ORDERED.7
Petitioner forthwith filed its motion for reconsideration, which was denied in a resolution dated
February 24, 2000, which reads:
Acting on the Motion for Reconsideration filed by petitioner[s] which drew an opposition from private
respondents, the Court resolved to DENY the aforesaid motion for reconsideration, as the issues raised
therein have been passed upon by the Court in its questioned decision and no substantial arguments

therein have been passed upon by the Court in its questioned decision and no substantial arguments
were presented to warrant its reversal, let alone modification.
SO ORDERED.8
In this petition now before us, petitioner alleges that the appellate court erred in:
I. … DENYING THE PETITION FOR CERTIORARI AND IN EFFECT AFFIRMING THE RULINGS OF THE
PUBLIC RESPONDENT NLRC THAT THE PRIVATE RESPONDENTS WERE ILLEGALLY DISMISSED;
II. … RULING THAT THE PRIVATE RESPONDENTS ARE ENTITLED TO SEPARATION PAY AND FULL
BACKWAGES;
III. … RULING THAT PETITIONER IS LIABLE FOR COSTS OF SUIT. 9
Petitioner contends that the dismissal of private respondents was for a just and valid cause, pursuant to
the provisions of the company’s rules and regulations. It also alleges lack of jurisdiction on the part of
the labor arbiter, claiming that the cases should have been resolved through the grievance machinery,
and eventually referred to voluntary arbitration, as prescribed in the CBA.
For their part, private respondents contend that they were illegally dismissed from employment because
management discovered that they intended to form another union, and because they were vocal in
asserting their rights. In any case, according to private respondents, the petition involves factual issues
that cannot be properly raised in a petition for review on certiorari under Rule 45 of the Revised Rules of
Court.10
In fine, there are three issues to be resolved: 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; and 3) whether petitioner is liable for costs of the suit.
The first issue primarily involves questions of fact, which can serve as basis for the conclusion that
private respondents were legally and validly dismissed. The burden of proving that the dismissal of
private respondents was legal and valid falls upon petitioner. The NLRC found that petitioner failed to
substantiate its claim that both private respondents committed certain acts that violated company rules
and regulations,11 hence we find no factual basis to say that private respondents’ dismissal was in order.
We see no compelling reason to deviate from the NLRC ruling that their dismissal was illegal, absent a
showing that it reached its conclusion arbitrarily.12 Moreover, factual findings of agencies exercising
quasi-judicial functions are accorded not only respect but even finality, aside from the consideration
here that this Court is not a trier of facts. 13
Anent the second issue, Article 217 of the Labor Code provides that labor arbiters have original and
exclusive jurisdiction over termination disputes. A possible exception is provided 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
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
purposes of this article, gross violations of Collective Bargaining Agreement shall mean flagrant and or
and refer the same to the grievance Machinery or Arbitration provided in the Collective Bargaining
Agreement.
But as held in Vivero vs. CA,14 "petitioner cannot arrogate into the powers of Voluntary Arbitrators the
original and exclusive jurisdiction of Labor Arbiters over unfair labor practices, termination disputes, and
claims for damages, in the absence of an express agreement between the parties in order for Article 262
of the Labor Code [Jurisdiction over other labor disputes] to apply in the case at bar."
Moreover, per Justice Bellosillo:
It may be observed that under Policy Instruction No. 56 of the Secretary of Labor, dated 6 April 1993,
"Clarifying the Jurisdiction Between Voluntary Arbitrators and Labor Arbiters Over Termination Cases
and Providing Guidelines for the Referral of Said Cases Originally Filed with the NLRC to the NCMB,"
termination cases arising in or resulting from the interpretation and implementation of collective

termination cases arising in or resulting from the interpretation and implementation of collective
bargaining agreements and interpretation and enforcement of company personnel policies which were
initially processed at the various steps of the plant-level Grievance Procedures under the parties’
collective bargaining agreements fall within the original and exclusive jurisdiction of the voluntary
arbitrator pursuant to Art. 217 (c) and Art. 261 of the Labor Code; and, if filed before the Labor Arbiter,
these cases shall be dismissed by the Labor Arbiter for lack of jurisdiction and referred to the concerned
NCMB Regional Branch for appropriate action towards and expeditious selection by the parties of a
Voluntary Arbitrator or Panel of Arbitrators based on the procedures agreed upon in the CBA.
As earlier stated, 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 contemplated in Policy Instruction No. 56. Consequently,
Policy Instruction No. 56 does not apply in the case at bar.15 x x x
Records show, however, that private respondents sought without success to avail of the grievance
procedure in their CBA.16 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.17 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. Under these
circumstances private respondents had to find another avenue for redress. We agree with the NLRC 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 complaints for illegal dismissal and directed the parties to avail of
the grievance procedure under Article VII of the existing CBA. They could not now 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. The NLRC had aptly concluded in part that private respondents had
already exhausted the remedies under the grievance procedure.18 It erred only in finding that their
cause of action was ripe for arbitration.
In the case of Maneja vs. NLRC,19 we held that the dismissal case does not fall within the phrase
"grievances arising from the interpretation or implementation of the collective bargaining agreement
and those arising from the interpretation or enforcement of company personnel policies." In Maneja,
the hotel employee was dismissed without hearing. We ruled that her dismissal was unjustified, and her
right to due process was violated, absent the twin requirements of notice and hearing. We also held that
the labor arbiter had original and exclusive jurisdiction over the termination case, and that it was error
to give the voluntary arbitrator jurisdiction over the illegal dismissal case.
In Vivero vs. CA,20 private respondents attempted to justify the jurisdiction of the voluntary arbitrator
over a termination dispute alleging that the issue involved the interpretation and implementation of the
grievance procedure in the CBA. There, we held that since what was challenged was the legality of the
employee’s dismissal for lack of cause and lack of due process, the case was primarily a termination
dispute. The issue of whether there was proper interpretation and implementation of the CBA
provisions came into play only because the grievance procedure in the CBA was not observed, after he
sought his union’s assistance. Since the real issue then was whether there was a valid termination, there
was no reason to invoke the need to interpret nor question an implementation of any CBA provision.
One significant fact in the present petition also needs stressing. Pursuant to Article 26021 of the Labor
Code, the parties to a CBA shall name or designate their respective representatives to the grievance
machinery and if the grievance is unsettled in that level, it shall automatically be referred to the
voluntary arbitrators designated in advance by the parties to a CBA. Consequently only disputes
involving the union and the company shall be referred to the grievance machinery or voluntary
arbitrators. In these termination cases of private respondents, the union had no participation, it having
failed to object to the dismissal of the employees concerned by the petitioner. It is obvious that
arbitration without the union’s active participation on behalf of the dismissed employees would be
pointless, or even prejudicial to their cause.
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

requiring them to show cause why no disciplinary action should be taken against them. Without proof of
notice, private respondents who were subsequently dismissed without hearing were also deprived 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 employee’s rights, it is already cognizable by the labor arbiter.23
In sum, we conclude that 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.
However, we find that a modification of the monetary awards is in order. As a consequence of their
illegal dismissal, private respondents are entitled to reinstatement to their former positions. But since
reinstatement is no longer feasible because petitioner had already closed its shop, separation pay in lieu
of reinstatement shall be awarded.24 A terminated employee’s receipt of his separation pay and other
monetary benefits does not preclude reinstatement or full benefits under the law, should reinstatement
be no longer possible.25 As held in Cariño vs. ACCFA:26
Acceptance of those benefits would not amount to estoppel. The reason is plain. Employer and
employee, obviously, do not stand on the same footing. The employer drove the employee to the wall.
The latter must have to get hold of the money. Because out of job, he had to face the harsh necessities
of life. He thus found himself in no position to resist money proffered. His, then, is a case of adherence,
not of choice. One thing sure, however, is that petitioners did not relent their claim. They pressed it.
They are deemed not to have waived their rights. Renuntiato non praesumitur.
Conformably, private respondents are entitled to separation pay equivalent to one month’s salary for
every year of service, in lieu of reinstatement.27 As regards the award of damages, in order not to
further delay the disposition of this case, we find it necessary to expressly set forth the extent of the
backwages as awarded by the appellate court. Pursuant to R.A. 6715, as amended, private respondents
shall be entitled to full backwages computed from the time of their illegal dismissal up to the date of
promulgation of this decision without qualification, considering that reinstatement is no longer
practicable under the circumstances.28
Having found private respondents’ dismissal to be illegal, and the labor arbiter and the NLRC duly vested
with jurisdiction to hear and decide their cases, we agree with the appellate court that petitioner should
pay the costs of suit.
WHEREFORE, the petition is DENIED for lack of merit. The decision of the Court of Appeals in CA-G.R. SP
No. 52780 is AFFIRMED with the MODIFICATION that petitioner is ordered to pay private respondents
(a) separation pay, in lieu of their reinstatement, equivalent to one month’s salary for every year of
service, (b) full backwages from the date of their dismissal up to the date of the promulgation of this
decision, together with (c) the costs of suit.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, and Callejo, Sr., JJ., concur.
Austria-Martinez, J., on leave.
Footnotes
1 Rollo, pp. 32-45.
2 Id. at 47.
3 Id. at 33-35.
4 Erroneously stated as March 13, 1995 in NLRC Resolution and CA Decision.
5 Referred also as Marcial L. Abion in NLRC Resolution and CA Decision.
6 ART. 217. Jurisdiction of Labor Arbiters and the Commission.–
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.
7 Rollo, pp. 44-45.
8 Id. at 47.

8 Id. at 47.
9
Id. at 13.
10 Id. at 9-10.
11
CA Rollo, pp. 101-103.
12
See Sanyo Travel Corporation vs. NLRC, 280 SCRA 129, 139 (1997).
13
Bataan Shipyard and Engineering Corporation vs. NLRC, 269 SCRA 199, 209-210 (1997); Aurora Land
Projects Corporation vs. NLRC, 266 SCRA 48, 58-59 (1997).
14
344 SCRA 268, 281 (2000). Stress supplied.
15 Id. at 282.
16 CA Rollo, pp. 61-62.
17 Id. at 14.
18 Id at 23.
19
290 SCRA 603, 616 (1998).
20 344 SCRA 268 (2000).
21
ART. 260. Grievance Machinery and Voluntary Arbitration.—The parties to a Collective Bargaining
Agreement shall include therein provisions that will ensure the mutual observance of its terms and
conditions. They shall establish a machinery for the adjustment and resolution of grievances arising from
the interpretation or implementation of their Collective Bargaining Agreement and those arising from
the interpretation or enforcement of company personnel policies. See also Maneja vs. NLRC, supra.
All grievances submitted to the grievance machinery which are not settled within seven (7) calendar
days from the date of its submission shall automatically be referred to voluntary arbitration prescribed
in the Collective Bargaining Agreement.
For this purpose, parties to a Collective Bargaining Agreement shall name and designate in advance a
Voluntary Arbitrator or panel of Voluntary Arbitrators, or include in the agreement a procedure for the
selection of such Voluntary Arbitrator or panel of Voluntary Arbitrators, preferably from the listing of
qualified Voluntary Arbitrators duly accredited by the Board. In case the parties fail to select a Voluntary
Arbitrator or panel of Voluntary Arbitrators, the Board shall designate the Voluntary Arbitrators, as may
be necessary, pursuant to the selection procedure agreed upon in the Collective Bargaining Agreement,
which shall act with the same force and effect as if the Arbitrator or panel of Arbitrators has been
selected by the parties as prescribed.
22 Magcalas vs. NLRC, 269 SCRA 453, 470 (1997); Pepsi-Cola Distributors of the Philippines, Inc. vs. NLRC,
272 SCRA 267, 274-275 (1997).

23
Maneja vs. NLRC, 290 SCRA 603, 616 (1998), citing Sanyo Philippines Workers Union-PSSLU vs.
Cañizares, 211 SCRA 361, 368 (1992).
24 Aurora Land Projects Corp. vs. NLRC, 266 SCRA 48, 66 (1997); De la Cruz vs. NLRC, 268 SCRA 458, 471
(1997); Hinatuan Mining Corporation vs. NLRC, 268 SCRA 622, 626 (1997).
25 See Lopez Sugar Corporation vs. Federation of Free Workers, 189 SCRA 179, 192 (1990), citing AFP
Mutual Benefit Association, Inc. vs. AFP-MBAI-EU, 97 SCRA 715 (1980).

26 18 SCRA 183, 190 (1966).
27
Iriga Telephone Co., Inc. vs. NLRC, 286 SCRA 600, 609 (1998); Kathy-O Enterprises vs. NLRC, 286 SCRA
729, 740 (1998).
28 Mabeza vs. NLRC, 271 SCRA 670, 687 (1997), citing Bustamante vs. NLRC, 265 SCRA 61 (1996).
Pasted from <http://www.lawphil.net/judjuris/juri2002/nov2002/gr_142244_2002.html>

mindanao v minsteel workers org 424 s 614 - 2004
12:57 PM

G.R. No. 130693 March 4, 2004
MINDANAO STEEL CORPORATION vs. MINSTEEL FREE WORKERS ORGANIZATION (MINFREWO-NFL)

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 130693 March 4, 2004
MINDANAO STEEL CORPORATION, petitioner,
vs.
MINSTEEL FREE WORKERS ORGANIZATION (MINFREWO-NFL) CAGAYAN DE ORO, respondent.
DE C I S I O N
SANDOVAL-GUTIERREZ, J.:
At bar is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as
amended, assailing the Decision1 dated May 30, 1997 and Resolution2 dated August 22, 1997 rendered
by the Court of Appeals in CA-G.R. SP No. 40919, entitled "Mindanao Steel Corporation vs. Atty. Marieto
Gallego and Minsteel Free Workers Organization MINFREWO-NFL, Cagayan de Oro City."
The undisputed facts of this case are as follows:
On June 29, 1990, Mindanao Steel Corporation (herein petitioner) and Minsteel Free Workers
Organization MINFREWO-NFL Cagayan de Oro City (herein respondent) executed a collective bargaining
agreement (CBA) providing for an increase of P20.00 in the workers’ daily wage.
Prompted by the December 5, 1990 fuel price increase, the Regional Tripartite Wages and Productivity
Board (RTWPB) of Region X, Northern Mindanao, Cagayan de Oro City, issued Interim Wage Order No.
RX-023. This Interim Wage Order granted to all workers4 an emergency cost of living allowance (ECOLA)5
for three (3) months or from January 7, 1991 to April 6, 1991.
Petitioner refused to implement the Interim Wage Order, prompting respondent to file with the
National Mediation and Conciliation Board (NCMB) a complaint for payment of ECOLA against the
former. Then the parties, in a Submission Agreement dated April 8, 1991, agreed to submit the case for
voluntary arbitration.
After the parties had submitted their position papers and other pleadings, the Voluntary Arbitrator
rendered a Decision dated January 8, 1992 ordering petitioner to pay respondent’s members and other
workers their ECOLA. Petitioner then filed a motion for reconsideration but was denied in an Order
dated January 28, 1992.
Thereafter, petitioner filed with the Court of Appeals a petition for certiorari with prayer for issuance of
a temporary restraining order and/or writ of preliminary injunction.
On May 30, 1997, the Appellate Court promulgated its Decision affirming the Voluntary Arbitrator’s
Decision dated January 8, 1992 and Order dated January 28, 1992. The Court of Appeals ratiocinated as
follows:
"In the case at bench, Interim Wage Order No. RX-02 was issued specifically to grant employees a
temporary allowance pending the approval of the wage increase being petitioned by them due to the
fuel price hike on December 5, 1990.
"The grant of the P20.00 wage increase under the CBA did not have the purpose of granting such
temporary allowance due to the contingency stated in the subject wage order, but was actually
intended as wage increase to be effective January 1, 1991. Thus, as stated by the Supreme Court, it
should be termed as ‘wage increase’, pure and simple, and not part of the emergency allowance.
"Not to be overlooked is the provision under the CBA which was executed between the parties herein,

should be termed as ‘wage increase’, pure and simple, and not part of the emergency allowance.
"Not to be overlooked is the provision under the CBA which was executed between the parties herein,
Section 3, Article VII of which provides that:
‘It is hereby agreed that these salary increases shall be exclusive of any wage that may be provided by
law as a result of economic change.’ (p. 55, rollo)
"There indeed is nothing contrary to law, customs, public order or public policy in a stipulation
subordinating, as does the aforesaid provision in the collective bargaining agreement, contractual wage
increases to those imposed or prescribed by law. They were therefore perfectly free to agree thereon,
and having thus agreed, are bound by such stipulation as constituting the law between them." (Filipinas
Golf and Country Club, Inc. vs. NLRC, 176 SCRA 625)
"The increase provided by the subject wage order, moreover, was not intended to be purely a wage
increase, that may be credited to any wage increase granted by employers because of or in anticipation
of the fuel price hike, but for emergency purposes for only three months.
"The petitioner should, therefore, not be entitled to the creditable benefit provided by the
implementing rules and regulations of interim wage order no. RX-02.
"This Court thus finds no grave abuse of discretion amounting to lack of excess of jurisdiction on the part
of the respondent voluntary arbitrator in issuing the questioned decision.
"WHEREFORE, THE INSTANT PETITION IS HEREBY DISMISSED FOR LACK OF MERIT.
"SO ORDERED."
On August 22, 1997, the Court of Appeals issued a Resolution denying petitioner’s motion for
reconsideration.
Hence, this petition for review on certiorari.
Petitioner contends that it is exempt from paying the ECOLA because pursuant to the CBA, it already
granted a wage increase of P20.00 a day or P523.20 a month effective January 1, 1991. Likewise,
petitioner claims it is entitled to creditable benefits on the basis of Section 7 of Interim Wage Order No.
RX-02 which provides:
"(W)age increases, rice allowance (in kind or cash), and other allowances granted by employers to their
workers because of, or in anticipation of the fuel price hikes on December 05, 1990 and exclusive of
compliance with Wage Order Nos. RX-01 and RX-01-A are creditable, provided that if the amount is less
than that prescribed in this Interim Wage Order, the employer shall give the difference."
Along the same line, petitioner maintains that under Section 5 of the Implementing Rules and
Regulations of Wage Order No. RX-02, its grant of wage increase to its workers pursuant to the CBA is
considered compliance with the Order, thus:
"Section 5. Creditable Benefits - Any wage increases or adjustments granted between November 22,
1990 and January 06, 1991 shall be considered as compliance with the Order provided that if the
amount is less than that prescribed, the employer shall pay the difference.
"In addition, any of the following shall be considered as compliance:
"a. All forms of wage increases granted unilaterally or under collective bargaining agreement excluding
company anniversary increases and those resulting from regularization, promotion and merit increases.
"b. All kinds of allowances in cash or in kind for whatever purpose, such as transportation, meal
allowance, rice subsidy and others.
"c. All forms of economic assistance such as productivity bonus, housing, bus services for the family and
other similar activities."
Petitioner’s contentions lack merit.
To begin with, any doubt or ambiguity in the contract between management and the union members
should be resolved in the light of Article 1702 of the Civil Code which provides: "(I)n case of doubt, all
labor legislation and all labor contracts shall be construed in favor of the safety and decent living for the
laborer."6
The basic issue for our resolution is whether or not petitioner is exempt from paying the ECOLA in light
of the CBA entered into by the parties.
Pertinent is Section 3, Article VII of the CBA which provides:
"It is hereby agreed that these salary increases shall be exclusive of any wage increase that may be
provided by law as a result of any economic change."
The above provision is clear that the salary increases, such as the P20.00 provided under the CBA, shall
not include any wage increase that may be provided by law as a result of any economic change. Hence,
aside from the P20.00 CBA wage increase, respondent’s members are also entitled to the ECOLA under

aside from the P20.00 CBA wage increase, respondent’s members are also entitled to the ECOLA under
the Interim Wage Order.
The CBA provision under Section 3, Article VII needs no interpretation. Contracts which are not
ambiguous are to be interpreted according to their literal meaning and not beyond their obvious
intendment. 7
In Mactan Workers Union vs. Aboitiz,8 we held that "the terms and conditions of a collective bargaining
contract constitute the law between the parties. Those who are entitled to its benefits can invoke its
provisions. In the event that an obligation therein imposed is not fulfilled, the aggrieved party has the
right to go to court for redress."
Finally, the P20.00 daily wage increase granted by petitioner to its employees under the CBA can not be
considered as creditable benefit or compliance with the Interim Wage Order because such was
intended as a CBA or negotiated wage increase and not "because of, or in anticipation of the fuel price
hikes on December 5, 1990 x x x."
Thus, the Court of Appeals did not commit any error when it rendered the assailed Decision and
Resolution, the same being consistent with law and jurisprudence.
WHEREFORE, the petition is DENIED. The assailed Decision dated May 30, 1997 and Resolution dated
August 22, 1997 rendered by the Court of Appeals in CA-G.R. SP No. 40919 are AFFIRMED. Costs against
petitioner.
SO ORDERED.
Vitug, (Chairman), Corona, and Carpio-Morales, JJ., concur.
Footnotes
1 Annex "F" of the Petition for Review on Certiorari, Rollo at 48-54.
2
Annex "H", id. at 64.
3 Annex "A", id. at 21-24.
4
Except (1) workers who are members of the family of the employer but dependent upon the latter for
support; (2) household or domestic helpers; and (3) persons in the personal service of another.
5
Section 2 of Interim Wage Order No. RX-02. That the amount of such Emergency Cost of Living
Allowance shall be not less than the following:
Category for Establishment Amount of ECOLA
1. With not more than 20 employees P200 / month
2. With 21 but not more than 150 employees P300 / month
3. With 151 but not more than 300 employees P400 / month
4. With more than 300 employees P500 / month
6 Plastic Town Center Corporation vs. NLRC, G.R. No. 81176, April 19, 1989, 172 SCRA 580, 587.
7 See Ibid. at 585, citing Herrera vs. Petrophil Corp., 146 SCRA 385 (1986).
8 G.R. No. L-30241, June 30, 1972, 45 SCRA 577, 581, citing Shell Oil Workers Union vs. Shell Company of
the Philippines, 39 SCRA 276 (1971).

Pasted from <http://www.lawphil.net/judjuris/juri2004/mar2004/gr_130693_2004.html>

union of nestle workers v nestle 391 s 204 -200
12:57 PM

G.R. No. 148303 October 17, 2002
UNION OF NESTLE WORKERS CAGAYAN DE ORO FACTORY vs. NESTLE PHILPPINES, INC.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 148303 October 17, 2002
UNION OF NESTLE WORKERS CAGAYAN DE ORO FACTORY (UNWCF for brevity),
represented by its President YURI P. BERTULFO and officers, namely,
DEXTER E. AGUSTIN, DANTE S. SEÑAREZ, EDDIE P. OGNIR, JEFFREY C. RELLIQUETE,
ENRIQUITO B. BUAGAS, EDWIN P. SALVAÑA, RAMIL B. MONSANTO, JERRY A. TABILIRAN, ARNOLD A.
TADLAS,
REYQUE A. FACTURA, NAPOLEON S. GALERINA, JR., TOLENTINO T. MICABALO and EDDIE O.
MACASOCOL, petitioners,
vs.
NESTLE PHILPPINES, INC.,
represented by its President JUAN B. SANTOS, RUDY P. TRILLANES, Factory Manager, Cagayan de Oro
City Branch
and FRANCIS L. LACSON, Cagayan de Oro City Human Resources Manager, respondents.
DE C I S I O N
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari 1 challenging the Decision of the Court of Appeals dated
December 28, 2000 and its Resolution dated April 19, 2001 in CA GR-SP No. 56656, "Union of Nestle
Workers Cagayan de Oro Factory, et al. vs. Nestle Philippines, Inc. et al."
On August 1, 1999, Nestle Philippines, Inc. (Nestle) adopted Policy No. HRM 1.8, otherwise known as the
"Drug Abuse Policy." Pursuant to this policy, the management shall conduct simultaneous drug tests on
all employees from different factories and plants. Thus, on August 17, 1999, drug testing commenced at
the Lipa City factory, then followed by the other factories and plants.
However, there was resistance to the policy in the Nestle Cagayan de Oro factory. Out of 496
employees, only 141 or 28.43% submitted themselves to drug testing. On August 20, 1999, the Union of
Nestle Workers Cagayan de Oro Factory and its officers, petitioners, wrote Nestle challenging the
implementation of the policy and branding it as a mere subterfuge to defeat the employees’
constitutional rights. Nestle claimed that the policy is in keeping with the government’s thrust to
eradicate the proliferation of drug abuse, explaining that the company has the right: (a) to ensure that
its employees are of sound physical and mental health and (b) to terminate the services of an employee
who refuses to undergo the drug test.
On August 23, 1999, petitioners filed with the Regional Trial Court (RTC), Branch 40, Cagayan de Oro
City, a complaint for injunction with prayer for the issuance of a temporary restraining order against
Nestle, Rudy P. Trillanes, Factory Manager of the Cagayan de Oro City Branch, and Francis L. Lacson,
Cagayan de Oro City Human Resources Manager (respondents herein), docketed as Civil Case No.
99-471.
On August 24, 1999, the RTC issued a temporary restraining order enjoining respondents from
proceeding with the drug test. Forthwith, they filed a motion to dismiss the complaint on the ground
that the RTC has no jurisdiction over the case as it involves a labor dispute or enforcement of a company
personnel policy cognizable by the Voluntary Arbitrator or Panel of Voluntary Arbitrators. Petitioners

filed their opposition, contending that the RTC has jurisdiction since the complaint raises purely
constitutional and legal issues.
On September 8, 1999, the RTC dismissed the complaint for lack of jurisdiction, thus:
"This Court originally is of the honest belief that the issue involved in the instant case is more
constitutional than labor. It was convinced that the dispute involves violation of employees’
constitutional rights to self-incrimination, due process and security of tenure. Hence, the issuance of the
Temporary Restraining Order.
"However, based on the pleadings and pronouncements of the parties, a close scrutiny of the issues
would actually reveal that the main issue boils down to a labor dispute. The company implemented a
new drug abuse policy whereby all its employees should undergo a drug test under pain of penalty for
refusal. The employees who are the union members questioned the implementation alleging that: ‘can
they be compelled to undergo the drug test even against their will, which violates their right against self-
incrimination?’ At this point, the issue seems constitutional. But if we go further and ask the reason for
their refusal to undergo the drug test, the answer is – because the policy was formulated and
implemented without proper consultation with the union members. So that, the issue here boils down
to a labor dispute between an employer and employees.
xxx x xx x xx
"Clearly, in the case at bar, the constitutional issue is closely related or intertwined with the labor issue,
so much so that this Court is inclined to believe that it has no jurisdiction but the NLRC."2
Petitioners filed a motion for reconsideration but was denied, prompting them to file with this Court a
petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, as amended. They alleged that
in dismissing their complaint for lack of jurisdiction, the RTC gravely abused its discretion.
On November 24, 1999, this Court referred the petition to the Court of Appeals for consideration and
adjudication on the merits or any other action as it may deem appropriate.
On December 28, 2000, the Appellate Court rendered its Decision3 dismissing the petition, thus:
"Settled is the rule that the remedy against a final order is an appeal, and not a petition for certiorari
under Rule 65 of the 1997 Rules of Civil Procedure. The party aggrieved does not have the option to
substitute the special civil action of certiorari under Rule 65 for the remedy of appeal. The existence and
availability of the right of appeal are antithetical to the availment of the special civil action of certiorari.
And while the special civil action of certiorari may be resorted to even if the remedy of appeal is
available, it must be shown that the appeal is inadequate, slow, insufficient and will not promptly relieve
a party from the injurious effects of the order complained of, or where the appeal is ineffective.
"Inasmuch as only questions of law are raised by petitioners in assailing the Order of respondent Judge
dismissing their complaint for injunction, the proper remedy, therefore, is appeal to the Supreme Court
by petition for review on certiorari in accordance with Rule 45 of the 1997 Rules of Civil Procedure.
Other than the bare, stereotyped allegation in the petition that there is ‘no appeal, nor any plain,
speedy, and adequate remedy in the ordinary course of law available to the petitioner herein whose
right has been violated,’ petitioners have not justified their resort to Rule 65 of the 1997 Rules of Civil
Procedure.
xxx x xx x xx
"It is noteworthy that petitioners have not disputed the allegations in paragraph 28 of private
respondents’ Comment on the petition that drug testing of the entire workforce of Nestle Cagayan de
Oro factory, including herein petitioners, submitted themselves to the drug test required by
management and was confirmed free from illegal drug abuse. In view thereof, the instant petition,
which prays for an injunction of the drug test of the Nestle Cagayan de Oro factory workers, had become
moot and academic. The remedy of injunction could no longer be entertained because the act sought to
be prevented had been consummated."
Petitioners sought reconsideration but to no avail. Hence this petition for review on certiorari.
Petitioners raise the following issues for our resolution:
I. Whether the Regional Trial Court has jurisdiction over petitioners’ suit for injunction; and
II. Whether petitioners’ resort to certiorari under Rule 65 is in order.
On the first issue, we hold that petitioners’ insistence that the RTC has jurisdiction over their complaint
since it raises constitutional and legal issues is sorely misplaced. The fact that the complaint was
denominated as one for injunction does not necessarily mean that the RTC has jurisdiction. Well-settled
is the rule that jurisdiction is determined by the allegations in the complaint.4

is the rule that jurisdiction is determined by the allegations in the complaint.4
The pertinent allegations of petitioners’ amended complaint read:
"x x x x x x x x x
5. Plaintiffs are aggrieved employees of the Nestle Philippines, Inc. who are subjected to the new policy
of the management for compulsory Drug Test, without their consent and approval;
xxx x xx x xx
8. That the said policy was implemented last August 1, 1999, and the Union was only informed last
August 20, 1999, during a meeting held on that day, that all employees who are assigned at the CDO
Factory will be compulsorily compelled to undergo drug test, whether they like it or not, without even
informing the Union on this new policy adopted by the Management and no guidelines was set
pertaining to this drug test policy.
9. That there was no consultation made by the management or even consultation from the employees
of this particular policy, as the nature of the policy is punitive in character, as refusal to submit yourself
to drug test would mean suspension from work for four (4) to seven (7) days, for the first refusal to
undergo drug test and dismissal for second refusal to undergo drug test, hence, they were not afforded
due process x x x;
xxx x xx x xx
12. That it is not the question of whether or not the person will undergo the drug test but it is the
manner how the drug test policy is being implemented by the management which is arbitrary in
character.
xxx x xx x xx
16. That the exercise of management prerogative to implement the said drug test, even against the will
of the employees, is not absolute but subject to the limitation imposed by law x x x;"5
It is indubitable from the foregoing allegations that petitioners are not per se questioning "whether or
not the person will undergo the drug test" or the constitutionality or legality of the Drug Abuse Policy.
They are assailing the manner by which respondents are implementing the policy. According to them, it
is "arbitrary in character" because: (1) the employees were not consulted prior to its implementation;
(2) the policy is punitive inasmuch as an employee who refuses to abide with the policy may be
dismissed from the service; and (3) such implementation is subject to limitations provided by law which
were disregarded by the management.
Is the complaint, on the basis of its allegations, cognizable by the RTC?
Respondent Nestle’s Drug Abuse Policy states that "(i)llegal drugs and use of regulated drugs beyond the
medically prescribed limits are prohibited in the workplace. Illegal drug use puts at risk the integrity of
Nestle operations and the safety of our products. It is detrimental to the health, safety and work-
performance of employees and is harmful to the welfare of families and the surrounding community."6
This pronouncement is a guiding principle adopted by Nestle to safeguard its employees’ welfare and
ensure their efficiency and well-being. To our minds, this is a company personnel policy. In San Miguel
Corp. vs. NLRC,7 this Court held:
"Company personnel policies are guiding principles stated in broad, long-range terms that express the
philosophy or beliefs of an organization’s top authority regarding personnel matters. They deal with
matter affecting efficiency and well-being of employees and include, among others, the procedure in the
administration of wages, benefits, promotions, transfer and other personnel movements which are
usually not spelled out in the collective agreement."
Considering that the Drug Abuse Policy is a company personnel policy, it is the Voluntary Arbitrators or
Panel of Voluntary Arbitrators, not the RTC, which exercises jurisdiction over this case. Article 261 of the
Labor Code, as amended, pertinently provides:
Art. 261. Jurisdiction of Voluntary Arbitrators or Panel of Voluntary Arbitrators. – The Voluntary
policies x x x." (Emphasis supplied)
With respect to the second issue raised by petitioners, what they should have interposed is an appeal to
the Court of Appeals, not a petition for certiorari which they initially filed with this Court, since the
assailed RTC order is final.8 Certiorari is not a substitute for an appeal.9 For certiorari to prosper, it is not
enough that the trial court committed grave abuse of discretion amounting to lack or excess of

enough that the trial court committed grave abuse of discretion amounting to lack or excess of
jurisdiction, as alleged by petitioners. The requirement that there is no appeal, nor any plain, speedy
and adequate remedy in the ordinary course of law must likewise be satisfied.10 We must stress that the
remedy of appeal was then available to petitioners, but they did not resort to it. And while this Court in
exceptional instances allowed a party’s availment of certiorari instead of appeal, we find that no such
exception exists here.
WHEREFORE, the instant petition for review on certiorari is DENIED. The Decision of the Court of
Appeals dated December 28, 2000 and its Resolution dated April 19, 2001 in CA GR-SP No. 56656 are
affirmed.
SO ORDERED.
Puno, (Chairman), Panganiban, Corona, and Carpio Morales, JJ., concur.
Footnotes
1
Under Rule 45 of the 1997 Rules of Civil Procedure, as amended.
2 Rollo, p. 86.
3
In CA GR-SP No. 56656, penned by Associate Justice Marina L. Buzon, and concurred in by Associate
Justices Eubolo G. Verzola and Edgardo P. Cruz.
4 Herrera, et al. vs. Bollos, et al., G.R. No. 138258, January 18, 2002; Sta. Clara Homeowners’ Association
vs. Gaston, G.R. No. 141961, January 23, 2002; Ceroferr Realty Corp. vs. Court of Appeals, G.R. No.
135939, February 5, 2002.
5 Comment, pp. 7-8; Rollo, pp. 119-120.
6 Annex "1," Comment; Rollo, p. 151.
7 255 SCRA 133 (1996); Maneja vs. NLRC, 290 SCRA 603 (1998).
8
GSIS vs. Olisa, 304 SCRA 421 (1999); Sps. Hontiveros vs. RTC, Branch 25, Quezon City, 309 SCRA 340
(1999); DBP vs. Court of Appeals, 357 SCRA 626 (2001).
9
Almuete vs. Andres, G.R. No. 122276, November 20, 2001; San Miguel Corporation vs. Court of
Appeals, G.R. No. 146775, January 30, 2002; Del Mar vs. Court of Appeals, G.R. No. 139008, March 13,
2002.
10 Republic vs. Court of Appeals, 322 SCRA 81 (2000); Lagera vs. NLRC, 329 SCRA 436 (2000); Heirs of
Pedro Atega vs. Garilao, 357 SCRA 203 (2001).

Pasted from <http://www.lawphil.net/judjuris/juri2002/oct2002/gr_148303_2002.html>

san miguel foods v san miguel corp employees union -ptwgo gr no
168569 - october 5 2007
12:57 PM
G.R. No. 168569 October 5, 2007
SAN MIGUEL FOODS, INC. vs. SAN MIGUEL CORPORATION EMPLOYEES UNION-PTWGO

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 168569 October 5, 2007
SAN MIGUEL FOODS, INC., petitioner,
vs.
SAN MIGUEL CORPORATION EMPLOYEES UNION-PTWGO, respondent.
DECIS ION
CARPIO MORALES, J.:
The present petition for review on certiorari raises the issue of whether respondent’s complaint is one
for unfair labor practice (ULP) over which a Labor Arbiter has jurisdiction.
At the time material to the case, respondent, San Miguel Corporation Employees Union – PTWGO (the
Union), was the sole bargaining agent of all the monthly paid employees of petitioner San Miguel Foods,
Incorporated (SMFI). On November 9, 1992, some employees of SMFI’s Finance Department, through
the Union represented by Edgar Moraleda, brought a grievance against Finance Manager Gideon
Montesa (Montesa), for "discrimination, favoritism, unfair labor practices, not flexible [sic], harassment,
promoting divisiveness and sectarianism, etc.,"1 before SMFI Plant Operations Manager George Nava in
accordance with Step 1 of the grievance machinery adopted in the Collective Bargaining Agreement
(CBA) forged by SMFI and the Union.
The Union sought the "1. review, evaluat[ion] & upgrad[ing of] all Finance staff and 2. promot[ion of]
G.Q. Montesa to other SMC affiliate[s] & subsidiaries."2
At the grievance meeting held on January 14, 1993, SMFI informed the Union that it planned to address
the grievance through a "work management review" which would be completed by March 1993, hence,
it asked the finance personnel to give it their attention and cooperation.
The "work management review" was not completed by March 1993, however, prompting the Union to,
on March 26, 1993, elevate the grievance to Step 2.3
Almost nine months after the grievance meeting was held or on October 6, 1993, SMFI rendered a
"Decision on Step 1 Grievance" stating that it was still in the process of completing the "work
management review,"4 hence, the Union’s requests could not be granted.
The Union thereupon filed a complaint on October 20, 1993 before the National Labor Relations
Commission (NLRC), Arbitration Branch, against SMFI,5 its President Amadeo P. Veloso, and its Finance
Manager Montesa for "unfair labor practice, [and] unjust discrimination in matters of promotion . . . "6 It
prayed that SMFI et al. be ordered to promote the therein named employees "with the corresponding
pay increases or adjustment including payment of salary differentials plus attorney’s fees*,+ and to cease
and desist from committing the same unjust discrimination in matters of promotion."7
Instead of filing a position paper as required by the Labor Arbiter, SMFI et al. filed a motion to dismiss,8
contending that the issues raised in the complaint were grievance issues and, therefore, "should be
resolved in the grievance machinery provided in [the] collective bargaining agreements [sic] of the
parties or in the mandated provision of voluntary arbitration which is also provided in the CBA."9 The
Union opposed the motion to dismiss.
In its Position Paper, the Union specified acts of ULP of SMFI et al. under Article 248, paragraphs (e) and

In its Position Paper, the Union specified acts of ULP of SMFI et al. under Article 248, paragraphs (e) and
(i) of the Labor Code 10 which Article reads:
Art. 248. Unfair labor practices of employers. – It shall be unlawful for an employer to commit any of the
following unfair labor practices:
xxx x
(e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment in
order to encourage or discourage membership in any labor organization. x x x
xxx x
(i) To violate a collective bargaining agreement.
xxx x
By Order of February 18, 1994, the Labor Arbiter granted SMFI et al.’s motion to dismiss and ordered the
remand of the case to the grievance machinery for completion of the proceedings.11 The Union
appealed the said order to the NLRC by "Motion for Reconsideration/Appeal"12 which its Second Division
granted and accordingly ordered the Labor Arbiter to continue the proceedings on the Union’s
complaint.13 SMFI et al. filed a Motion for Reconsideration of the NLRC order but it was denied, hence,
they filed a petition for certiorari with this Court. After the parties and the Solicitor General had filed
their respective pleadings, this Court, by Resolution of January 25, 1999, referred the case to the Court
of Appeals pursuant to St. Martin Funeral Homes v. NLRC.14
By Decision of July 31, 2002,15 the Court of Appeals denied SMFI et al.’s petition for certiorari, it holding
that the Labor Arbiter has jurisdiction over the complaint of the Union, they having violated the seniority
rule under the CBA by appointing and promoting certain employees which amounted to a ULP.16
Before this Court, SMFI lodged the present petition for review on certiorari, faulting the appellate court
in
A.
. . . FINDING THAT THE LABOR ARBITER HAS JURISDICTION OVER THE COMPLAINT OF RESPONDENT
UNION
B.
. . . FINDING THAT SMFI’S ALLEGED VIOLATION OF THE CBA CONSTITUTES UNFAIR LABOR PRACTICE.
The jurisdiction of Labor Arbiters, enumerated in Article 217 of the Labor Code, includes complaints for
ULP.
SMFI argues that the allegations in the Union’s complaint filed before the Labor Arbiter do not establish
a cause of action for ULP, the Union having merely contended that SMFI was guilty thereof without
specifying the ultimate facts upon which it was based. It cites Section 1 of Rule 8 of the Rules of Court as
applying suppletorily to the proceedings before the Labor Arbiter, which Section reads:
Section 1. In general. – Every pleading shall contain in a methodical and logical form, a plain concise and
direct statement of the ultimate facts on which the party pleading relies for his claim . . .
Alleging that the Union failed to comply with this Rule, SMFI concludes that the Labor Arbiter has no
jurisdiction over its complaint.
A perusal of the complaint shows that, indeed, the particular acts of ULP alleged to have been
committed by SMFI were not specified; neither were the ultimate facts in support thereof. In its Position
Paper, however, the Union detailed the particular acts of ULP attributed to SMFI and the ultimate facts
in support thereof.
Section 7, Rule V of the New Rules of Procedure of the NLRC provides:
Nature of Proceedings. – The proceedings before the Labor Arbiter shall be non-litigious in nature.
Subject to the requirements of due process, the technicalities of law and procedure and the rules
obtaining in the courts of law shall not strictly apply thereto. The Labor Arbiter may avail himself of all
reasonable means to ascertain the facts of the controversy speedily, including ocular inspection and
examination of well-informed persons. (Emphasis and underscoring supplied)
Section 1 of Rule 8 of the Rules of Court should thus not be strictly applied to a case filed before a Labor
Arbiter. In determining jurisdiction over a case, allegations made in the complaint, as well as those in the
position paper, may thus be considered.
As stated above, the Union, in its Position Paper, mentioned the particular acts of ULP and the ultimate
facts in support thereof. Thus it alleged:
This is a complaint for unfair labor practices pursuant to Article 248 (e) and (i) of the Labor Code, as
amended, which reads:

amended, which reads:
following unfair labor practices:
xxx x
(e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment
in order to encourage or discourage membership in any labor organization.
xxx x
(i) to violate a collective bargaining agreement.
and which was committed by herein respondents as follows:
1. large scale and wanton unjust discrimination in matters of promotion, particularly upon the
following members of complainant: Ellen Ventura, Julie Geronimo, Ronnie Cruz, Rita Calasin, Romy de
Peralta, Malou Alano, And E. M. Moraleda, all assigned with the Finance Department or respondent
SMFI.
2. gross and blatant violations by respondent SMFI of Section 5, Article III (Job Security) and Section 4,
Article VIII (Grievance Machinery) of the current collective bargaining agreement (CBA) between
complainant and respondent SMFI, which provisions of said CBA are hereunder quoted for easy
reference. (Emphasis and underscoring supplied)
On the questioned promotions, the Union did not allege that they were done to encourage or
discourage membership in a labor organization. In fact, those promoted were members of the
complaining Union. The promotions do not thus amount to ULP under Article 248(e) of the Labor Code.
As for the alleged ULP committed under Article 248(i), for violation of a CBA, this Article is qualified by
Article 261 of the Labor Code, the pertinent portion of which latter Article reads:
x x x 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 Collective Bargaining Agreement
shall mean flagrant and/or malicious refusal to comply with the economic provisions of such
agreement. (Emphasis and underscoring supplied)
Silva v. NLRC instructs that for a
ULP case to be cognizable by the Labor Arbiter, and the NLRC to exercise its appellate jurisdiction, the
allegations in the complaint should show prima facie the concurrence of two things, namely: (1) gross
violation of the CBA; AND (2) the violation pertains to the economic provisions of the CBA.17 (Emphasis
and underscoring supplied)
As reflected in the above-quoted allegations of the Union in its Position Paper, the Union charges SMFI
to have violated the grievance machinery provision in the CBA. The grievance machinery provision in the
CBA is not an economic provision, however, hence, the second requirement for a Labor Arbiter to
exercise jurisdiction of a ULP is not present.
The Union likewise charges SMFI, however, to have violated the Job Security provision in the CBA,
specifically the seniority rule, in that SMFI "appointed less senior employees to positions at its Finance
Department, consequently intentionally by-passing more senior employees who are deserving of said
appointment."
Article 4 of the Labor Code provides that "All doubts in the implementation and interpretation of the
provisions of this Code, including implementing rules and regulations, shall be resolved in favor of
labor." Since the seniority rule in the promotion of employees has a bearing on salary and benefits, it
may, following a liberal construction of Article 261 of the Labor Code, be considered an "economic
provision" of the CBA.
As above-stated, the Union charges SMFI to have promoted less senior employees, thus bypassing
others who were more senior and equally or more qualified. It may not be seriously disputed that this
charge is a gross or flagrant violation of the seniority rule under the CBA, a ULP over which the Labor
Arbiter has jurisdiction.
SMFI, at all events, questions why the Court of Appeals came out with a finding that it (SMFI)
disregarded the seniority rule under the CBA when its petition before said court merely raised a
question of jurisdiction. The Court of Appeals having affirmed the NLRC decision finding that the Labor
Arbiter has jurisdiction over the Union’s complaint and thus remanding it to the Labor Arbiter for
continuation of proceedings thereon, the appellate court’s said finding may be taken to have been made
only for the purpose of determining jurisdiction.
WHEREFORE, the Petition is DENIED.

WHEREFORE, the Petition is DENIED.
SO ORDERED.
Quisumbing, Carpio, Tinga, Velasco, Jr., JJ., concur.
Footnotes
1
Records, p. 33.
2
Ibid.
3
Id. at 35-39.
4
Id. at 65-66.
5 NLRC-NCR No. 00-10-06543-93; id. at 2-4.
6 Id. at 3.
7 Ibid.
8 Id. at 20-29.
9
Id. at 26-27.
10 Id. at 46-54.
11
Id. at 81-82.
12 Id. at 87-89.
13 CA rollo, pp. 32-35.
14 G.R. No. 130866, September 16, 1998, 295 SCRA 494. [T]he Court En Banc declared that all appeals
from the NLRC to the Supreme Court [petition for certiorari under Rule 65 of the 1997 Rules of Civil
Procedure] should henceforth be initially filed in the Court of Appeals as the appropriate forum for the
relief desired in strict observance of the doctrine on the hierarchy of courts.
15 Penned by Justice Roberto A. Barrios, and concurred in by Justices Bienvenido L. Reyes and Edgardo F.
Sundiam, CA rollo, pp. 259-267.

16 Rollo, pp. 47-50.
17
G.R. No. 110226, June 19, 1997, 274 SCRA 159, 173.

landtex v ca 529 s 631 - 2007
1:01 PM
SECOND DIVISION
LANDTEX INDUSTRIES and G.R. No.

WILLIAM GO, 150278
Petitioners,
Present:
QUISUMBING,
J.,
- versus - Chairperson,
CARPIO,
CARPIO
MORALES,
TINGA, and
COURT OF APPEALS, VELASCO, JR.,
SALVADOR M. AYSON, and JJ.
LANDTEX INDUSTRIES WORKERS UNION – FEDERATION OF
FREE WORKERS (FFW),
Respondents.
Promulgated:
August 9, 2007
x- - - - - - - - - - -- - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - -- - - - - - x
DEC I S IO N
CARPIO, J.:
The Case
This is a petition for review on certiorari[1] of the Decision[2] dated 13

February 2001 and of the Resolution[3] dated 16 October 2001 of the Court of
Appeals (appellate court) in CA-G.R. SP No. 50060. The Decision ordered
petitioners Landtex Industries (Landtex) and William Go to award respondent

Salvador M. Ayson (Ayson) separation pay in lieu of reinstatement, backwages,
13th month pay, service incentive leave pay, and attorney’s fees.
The Facts
Landtex, a sole proprietorship owned by Alex Go and managed by William

Go, is a business enterprise engaged in the manufacture of garments. Ayson
worked in Landtex as a knitting operator from 19 May 1979 to 6 July 1996. Ayson
was an officer[4] of Landtex Industries Workers Union – Federation of Free
Workers (union) which had an existing collective bargaining agreement (CBA) with
Landtex.
Ayson received a letter[5] from Landtex dated 16 March 1996 which stated
that Ayson committed acts contrary to company policies on 2 and 7 March
1996. The letter required Ayson to explain in writing within 24 hours from receipt
why no disciplinary action should be taken against him for spreading damaging
rumors about the personal life of an unspecified person, and for having an
altercation with one of the company’s owners when he was asked to submit an ID
picture.
Ayson replied in writing[6] that he could not defend himself from the charge
of spreading damaging rumors because Landtex’s letter failed to state what
rumors he was supposed to have spread. Ayson further explained that he merely
replied in a loud voice to the company owner’s request because he was carrying
textiles. Ayson then apologized for his actions.
Landtex sent Ayson another letter dated 2 April 1996 informing him of its
receipt of his explanation. Landtex informed Ayson that the omission of the
details about the damaging rumors was intentional because other employees
might be able to read the letter. Furthermore, Landtex decided to conduct an
investigation on 26 April 1996 in view of Ayson’s denials.
The first meeting between Ayson and Landtex’s counsel took place on 26
April 1996. The minutes of the 26 April 1996 meeting state that Ayson was
informed that there were witnesses who could testify that he spread rumors
about the personal life of William Go and his family. Ayson denied that he spread
rumors and requested for another meeting so that he could hear the alleged
witnesses and defend himself. Ayson further requested that the next
investigation be held at Landtex’s Mauban office because he and the union
officers accompanying him suffer salary deductions for their attendance of
investigations during office hours.[7] Another meeting was scheduled for 5 May

1996, but Ayson was unable to attend it and went home early because he
allegedly needed to look after his child.
The second meeting between Ayson and Landtex’s counsel took place on 5
June 1996. The minutes of the 5 June 1996 meeting state that Ayson and a union
officer accompanying him appeared but refused to sign the attendance sheet or
to participate. Landtex’s counsel, Atty. Generosa Jacinto, made a note in the
minutes which reads, “Pls. advise mgt. They can take any action they want.”[8]
In a letter dated 19 June 1996, Landtex terminated Ayson’s services

effective 30 June 1996 because of Ayson’s lack of cooperation during the
investigations. Despite this notice, Ayson still reported for work until 6 July 1996.
In a letter dated 8 July 1996, the union president requested Landtex for a
formal dialogue regarding Ayson’s case. Landtex reaffirmed its decision to
terminate Ayson in meetings with the union held on 10 and 16 July 1996. Landtex
and the union agreed to refer the matter to a third party in accordance with the
provisions of law and of the CBA. Landtex expected Ayson to refer the issue to
the National Conciliation and Mediation Board (NCMB) for the selection of a
voluntary arbitrator. Ayson and the union, however, filed a complaint before the
labor arbiter.[9]
The labor arbiter conducted mandatory conferences for amicable

settlement with the participation of all parties. The parties agreed to the idea of
payment of separation pay in lieu of reinstatement but differed as to the
amount. Ayson wanted to receive one month basic salary for every year of
service while Landtex wanted to pay only one-half month basic salary for every
year of service from date of hiring to termination of employment.[10] The parties
were not able to settle; hence, the labor arbiter ordered them to submit their
position papers.
In his position paper, Ayson asked whether his dismissal from employment
has any just cause. Ayson also asked whether Landtex complied with procedural
due process when it terminated his employment.
On the other hand, Landtex and William Go revealed in their position paper
that Ayson was seen having a drinking session with other Landtex employees near
the company premises. A Landtex security guard, who was a part of the drinking
session but whose identity was not revealed, stated that Ayson maliciously
narrated spiteful stories about the personal life of William Go. Landtex also
questioned the jurisdiction of the labor arbiter over Ayson’s case. Landtex

insisted that the labor arbiter should dismiss Ayson’s case and refer it to the
NCMB for the selection of a voluntary arbitrator.
The Ruling of the Labor Arbiter
On 30 September 1997, the labor arbiter promulgated his decision[11]

which ruled in favor of Ayson. The labor arbiter declared that despite the union’s
manifestation of its desire to refer Ayson’s case to “a third party in accordance
with provisions of law and CBA,”[12] this manifestation did not affect Landtex’s
termination of Ayson’s employment. Ayson’s termination thus properly falls
under the jurisdiction of the labor arbiter. Moreover, the labor arbiter did not
find any evidence supporting Landtex’s allegations that Ayson spread malicious
rumors about William Go or shouted at William Go’s wife. The pertinent
portions of the labor arbiter’s decision read:
Dismissal of a worker is no trifling matter; more so, of herein [Ayson] who had been employed
with [Landtex] for seventeen years, more or less. The dismissal must be for a just cause, let alone with
due process, and must be based on substantial evidence. Mere allegations will not suffice.
WHEREFORE, premises considered, judgment is hereby rendered ordering [Landtex Industries and
William Go] to reinstate [Ayson] to his former position without loss of seniority rights with full
backwages from the date his salary has been withheld until the actual date of reinstatement.
*Landtex Industries and William Go+ are further ordered to pay ten (10%) percent of *Ayson’s+
total monetary award as attorney’s fees.
Backwages
6/30/96 – 8/31/97 = 14.0 mos.
P165.00 x 30 x 14.00 mos. = P 69,300.00
th
13 Month Pay = 5,775.00
SILP
5.833 days x P165.00 = 962.50
P 76,037.50
Attorney’s Fees = 7,603.75
TOTAL P 83,641.25
All other claims of [Ayson] are dismissed for lack of merit.
SO ORDERED.[13]
Landtex and William Go appealed the labor arbiter’s decision to the National
Labor Relations Commission (NLRC). Landtex and William Go posted a bond in
the amount of the total award in the labor arbiter’s decision to perfect their
appeal and to enjoin the execution of the decision. Landtex and William Go
insisted that the labor arbiter had no jurisdiction over the parties and over the
subject matter in the present case.
The Ruling of the NLRC
On 20 July 1998, the NLRC promulgated its decision[14] which agreed with
Landtex and William Go’s argument that Ayson’s case falls within the original and

exclusive jurisdiction of the voluntary arbitrators, as provided in Article 261 of the
Labor Code. Landtex merely imposed a disciplinary measure when it terminated
Ayson’s employment. Furthermore, the NLRC ruled that Ayson waived his right to
have his case heard before any other forum when he did not undergo the
grievance process mandated by his union’s CBA with Landtex. The NLRC declared
that the disciplinary action meted out by Landtex to Ayson and the waiver of
Ayson’s right to have his case heard were matters which require the
interpretation of the CBA, and thus were within the original and exclusive
jurisdiction of the voluntary arbitrators. The dispositive portion of the NLRC’s
decision reads:
WHEREFORE, the decision appealed from is hereby SET ASIDE on the ground of lack of jurisdiction
over the subject matter. The instant case is hereby referred to Voluntary Arbitration in accordance with
the Collective Bargaining Agreement.
SO ORDERED.[15]
The NLRC dismissed Ayson and the union’s motion for reconsideration on 11
September 1998. Ayson and the union then filed a petition for certiorari before
the appellate court.
The Ruling of the Appellate Court
In a decision promulgated on 13 February 2001, the appellate court

sustained the jurisdiction of the labor arbiter and modified the award in favor of
Ayson. The appellate court further stated that the records are “bereft of any
showing that a grievance mediation had been undertaken so as to thresh out any
disciplinary measure against *Ayson+.”[16] The appellate court took Landtex and
William Go to task because they took “the avenue of least resistance” and
discussed the possibility of an amicable settlement instead of filing a motion to
dismiss before the labor arbiter. Moreover, the appellate court found that Ayson
was illegally dismissed because his termination was characterized by “bad faith,
*and+ wanton and reckless exercise of management prerogative.”[17] Landtex’s
allegations against Ayson failed to show that Ayson’s dismissal was for a just
cause. The appellate court awarded Ayson full backwages, separation pay
(equivalent to one month’s pay for every year of service, a fraction of at least six
months being considered as one whole year) in lieu of reinstatement, 13th month
pay, service incentive leave pay, and attorney’s fees. The dispositive portion of
the decision of the appellate court reads:
WHEREFORE, premises considered, the petition is GRANTED— and the decision (promulgated on
July 20, 1998) and the resolution (promulgated on September 11, 1998) of the public respondent
(National Labor Relations Commission) in NLRC NCR Case No. 00-07-04492-92 is hereby REVERSED and
SET ASIDE. The decision of the labor arbiter, which was rendered on September 30, 1997 is hereby
REINSTATED—subject, however, to the MODIFICATION that separation pay shall be awarded to [Ayson]

in lieu of reinstatement. No pronouncement as to costs.
SO ORDERED.[18]
Landtex and William Go filed a motion for reconsideration of the appellate

court’s decision. Ayson and the union also contested the appellate court’s award
of separation pay in lieu of reinstatement. The appellate court dismissed both
motions in a resolution promulgated on 16 October 2001.
Landtex and William Go then filed a petition for review before this Court on
11 December 2001. Ayson and the union also filed a petition for review, docketed
as G.R. No. 150392, but this petition was withdrawn as Ayson no longer desired
to question the resolution of the appellate court.[19] Emilia P. Ayson, respondent
Ayson’s wife, later made a manifestation that she would like to represent Ayson
in the present case since her husband died on 28 August 2002. She attached
Ayson’s death certificate and their marriage certificate to prove her allegations.
When Landtex and William Go filed their memorandum in the present case,
they stated that Landtex started to suffer serious business reverses in the first
quarter of 2001. Landtex’s cutting and knitting departments temporarily closed in
December 2002, and Landtex permanently ceased its operations in February
2003. Landtex and William Go attached Landtex’s notice of closure to the union
dated 9 January 2003, Landtex’s balance sheets for the years 2000 to 2002,
Landtex’s profit and loss statements for the years 2000 to 2002, notice of extra-
judicial sale of the property of spouses Alex and Nancy Go, demand letters
addressed to Alex Go, and unpaid utility bills in the name of Alex Go to prove their
allegations.
The Issues
Landtex and William Go raise the following issues before this Court:
Whether the NLRC correctly ruled that jurisdiction over the subject matter of the instant
case pertains exclusively to the voluntary arbitrator considering that
The existing CBA provides that “a grievance is one that arises from the interpretation or
implementation of this agreement, including disciplinary action imposed on any covered
employee”; and
The parties have undergone the grievance machinery of the collective bargaining
agreement.
Whether the instant case concerns enforcement and implementation of company personnel
policy and that the issue therein was timely raised.
Whether there is a valid ground for termination of the employment of [Ayson].
Whether [Ayson] is entitled to backwages and separation pay.

Whether [the appellate court] committed grave and patent abuse of discretion and errors of
law in setting aside the decision of the NLRC.[20]
The Ruling of the Court
The petition has no merit.
The Labor Arbiter’s Jurisdiction
Landtex and William Go insist that the matter subject of the present petition
is covered by the CBA’s provision on voluntary arbitration and thus is excluded
from the labor arbiter’s jurisdiction. They allege that Ayson’s termination merely
enforced Landtex’s personnel policy against misconduct. They further claim that
the union’s request for a formal dialogue signified the initiation of the grievance
procedure outlined in the CBA. Landtex and William Go even assert that because
of Ayson’s failure to submit his claim before the NCMB, he is barred from seeking
relief from a forum other than that provided in the CBA.
Section 1 of Article XV, Grievance Procedure, of the union’s CBA with

Landtex reads:
Grievance Machinery. — For purposes of this Agreement, a grievance is one that arises from the
interpretation or implementation of this Agreement, including disciplinary action imposed on any
covered employee. Any grievance, dispute, or complaint which a covered employee or UNION may have
against the COMPANY: (a) relative to the meaning, interpretation and application of the terms of this
agreement; or (b) arising out of the employment relationship, shall be submitted to the grievance
machinery in accordance with the following procedure:
Step I The employee shall present his grievance, dispute, or complaint in writing to the COMPANY’s
Section Head/In Charge and to the UNION’s authorized representative, and thereupon the
said Section Head and UNION representative shall endeavor to work out a settlement within
four (4) working days from presentation.
Step II If, under Step I, no settlement is reached within four (4) working days from presentation, the
grievance shall be taken up by the UNION representative with the General Manager.
Step III If, under Step II, no settlement is reached within four (4) working days, the grievance shall be
referred by the parties to the Management-Employee Committee.
Step IV If under Step III, no settlement is reached within eight (8) working days, the grievance shall be
referred by both parties to the National Conciliation and Mediation Board (NCMB) for
submission to voluntary arbitration in accordance with NCMB’s rules within ten (10) days
from the date of the last meeting of the Management-Employee Committee.
Where the grievance or complaint involves the UNION directly, Steps I and II of the foregoing procedure
shall be dispensed with and only Steps III and IV shall be followed.[21]
Articles 217, 261, and 262 of the Labor Code tackle the jurisdiction of labor
arbiters and voluntary arbitration as follows:

Art. 217. Jurisdiction of the 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
3. If accompanied with a claim for reinstatement, those cases that workers may file involving
wages, rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-
employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving the
legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits,
all other claims arising from employer-employee relations, including those of persons in domestic
or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless
of whether accompanied with a claim for reinstatement.
(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor
Arbiters.
(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.
Art. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. - The Voluntary
ART. 262. Jurisdiction over other labor disputes. - The Voluntary Arbitrator or panel of Voluntary
unfair labor practices and bargaining deadlocks.
The labor arbiter, the appellate court, and the NLRC differed in their rulings
on the matter of jurisdiction. The labor arbiter and the appellate court agreed
with Ayson and the union’s position. The labor arbiter assumed jurisdiction and
emphasized that when the union met with Landtex on 8 July 1996, Ayson was no
longer an employee because Landtex terminated him effective 30 June 1996. The
manifestation of the union’s desire to “refer the matter to a third party in
accordance with law and the CBA” does not deviate from the fact that Ayson was

already dismissed. On the other hand, the NLRC sustained Landtex and William
Go’s position. The NLRC asserted that the determination of whether Ayson’s
dismissal constitutes a “disciplinary action” within the scope of the CBA calls for
an interpretation of the CBA. When the union called for a meeting with Landtex,
the union effectively initiated the grievance procedure. Thus, Ayson’s case should
have been subjected to voluntary arbitration.
We agree with Ayson and the union and affirm the rulings of the labor
arbiter and the appellate court.
Article 261 of the Labor Code provides that 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. On the other hand, a reading of Article 217 in conjunction
with Article 262 shows that termination disputes fall under the jurisdiction of the
labor arbiter unless the union and the company agree that termination disputes
should be submitted to voluntary arbitration. Such agreement should be clear
and unequivocal. Existing law is an intrinsic part of a valid contract without need
for the parties to expressly refer to it. Thus, the original and exclusive jurisdiction
of the labor arbiter over unfair labor practices, termination disputes, and claims
for damages cannot be arrogated into the powers of voluntary arbitrators in the
absence of an express agreement between the union and the company.[22]
In the present case, the CBA between Landtex and the union does not
clearly state that termination disputes, as opposed to mere disciplinary actions,
are covered by the CBA. The CBA defined a grievance as “one that arises from the
interpretation or implementation of this Agreement, including disciplinary action
imposed on any covered employee.” The CBA did not explicitly state that
termination disputes should be submitted to the grievance machinery.
In ruling that the present case should have been submitted to voluntary
arbitration, the NLRC relied on the union’s act of meeting with Landtex. The
union’s letter to Landtex, dated 8 July 1996, reads:
We received your letter dated 19 June 1996 re: TERMINATION LETTER of MR. SALVADOR AYSON who
happened to be *a+ union officer of LANDTEX INDUSTRIES EMPLOYEE’S UNION.
In connection to [sic] this, we would like to request for a formal dialogue regarding the above matter at
a [sic] soonest possible time.
We are hoping that the management is with us in resolving this termination of our officer.
May we have a continuous harmonious relationship.
Thank you.[23]
The CBA’s provisions on grievance directly involving the union state that the

grievance shall be referred by the parties to the Management-Employee
Committee. The Management-Employee Committee shall be composed of three
representatives each from the union and Landtex. According to the minutes of
the meeting prepared by Landtex’s counsel, when the union met with Landtex on
10 July 1996, there were seven union members and two Landtex representatives
in attendance. The minutes of the meeting read:
The mgt.’s position is that it will no longer reconsider the termination of Mr. Ayson. The union on
the other hand opened discussion of other possibilities in lieu of reinstatement.
The union requested for time to study possibilities. The mgt. will do likewise.
Reset 16 July 96[,] 5 pm at factory.[24]
The next meeting proceeded with the same number of representatives from both
parties. The minutes of the meeting state that there was “*n+o settlement. Union
will refer matter to third party in accordance with provision of law and CBA.”[25]
We find nothing in the records which shows that the meetings between the
union and Landtex already constitute the grievance machinery as mandated by
the CBA. The meetings happened only after the effectivity of Ayson’s
termination. The meetings did not comply with the requisite number of
participants. The CBA mandated that there should be three representatives each
from the union and Landtex but there were seven union members and two
Landtex representatives who attended the meetings. More importantly, there
was nothing in the minutes that shows that the attendees constituted a
Management-Employee Committee.
Finally, the appellate court is correct in stating that if Landtex really believed
that the labor arbiter did not have jurisdiction over the present case, then
Landtex should have filed a motion to dismiss in accordance with Section 15, Rule
V of The New Rules of Procedure of the NLRC.[26] Instead of filing a motion to
dismiss, Landtex participated in the proceedings before the labor arbiter. Had
Landtex immediately filed a motion to dismiss, the labor arbiter would have
determined the issue outright before proceeding with hearing the case. In the
present case, Landtex raised the issue of jurisdiction only after the labor arbiter
required the parties to submit their position papers.
Validity of Ayson’s Dismissal
The requisites for a valid dismissal are (1) the dismissal must be for any of
the causes expressed in Article 282 of the Labor Code, and (2) the opportunity to

be heard and to defend oneself.[27] Landtex and William Go assert that Ayson’s
termination was for a just cause as defined in Article 282[28] of the Labor Code;
hence, the two-notice rule[29] should be followed.
The contents of Landtex’s first memorandum to Ayson, signed by Landtex’s

counsel, read:
Ipinagbigay-alam sa amin ng pamahalaang Landtex Industries and [sic] tungkol sa nangyaring insidente
nuong ika-2 at 7 Marso 1996.
Ayon sa isang saksi, ikaw ay nagkakalat ng mga balitang nakakasira sa aming personal na buhay. Bukod
pa dito nuong ika-7 ng Marso ng ikaw ay hingan ng iyong ID pictures bilang isa sa mga regulasyon ng
kompanya, ikaw ay sumungaw sa harap pa mismo ng nagmamay-ari ng kompanya na naging dahilan
upang magkasagutan kayo.
Iyong nalalaman na ang ganitong gawain ay taliwas sa umiiral na patakaran ng kompanya. Bunga nito[,]
ikaw ay hinihingan ng nakasulat na paliwanag 24 oras mula sa pagkakatanggap ng liham na ito. Ang
hindi mo pagsunod ay nangangahulugan na maaari ng gumawa ng susunod na aksyong pang-disiplina
and [sic] kompanya laban sa iyo.[30]
Ayson’s handwritten response reads:

Ayon sa salaysay ng inyong saksi ako ay nagkakalat ng balitang nakakasira sa inyong personal na
buhay.
Ipagpaumanhin po ninyo ang hindi ko pagtugon sa inyong sulat na nakasaad na ako ay nagkakalat
ng balitang nakakasira ng inyong personal na buhay sa dahilan na wala naman pong nakasaad sa sulat
kung anong balita na ipinagkakalat ko na nakakasira sa personal na buhay ninyo.
Noon po ika-7 ng Marso ako po ay hiningan ng ID picture bilang isa sa mga regulasyon ng
kompanya at nakasaad po sa sulat na ako po ay “sumungaw” o “sumigaw” sa harap mismo ng may-ari
ng kompanya. Hindi po ako sumigaw[,] ako po ay sumagot lamang sa tanong nila. Kung ang pagkasagot
ko man ay medyo napakalakas ito po ay sa dahilan na nang mga oras na iyon ay may buhat-buhat akong
tela na aming inaakyat. Kung ito po ay minamasama ninyo, ay ihinihingi ko na lamang ng
paumanhin.[31]
Landtex then summoned Ayson on 26 April 1996 to a meeting to investigate

the 2 and 7 March 1996 incidents. The minutes of the 26 April 1996 meeting
read:
Mr. Ayson was apprised of the incident that happened on March 2 & 7 wherein it was alleged
that he is spreading some rumors involving [the] personal life of Mr. Go and his family. He was informed
that there were witnesses who can testify on this.
Mr. Ayson however requested that another investigaton be conducted wherein the alleged
witnesses be presented since he cannot answer whether what was reported was true or not. He further
denies allegations that he is spreading said rumors.
Mr. Ayson together with union officers requested that investigation be conducted instead at
Mauban, Quezon City since they are being deducted everytime they attend investigations like this
during office hours.
Mr. Ayson & union to be notified when another investigation [will] be scheduled.[32]
The next meeting was held on 5 June 1996. The minutes of the meeting
read:
Mr. Ferdinand Samson, union Sgt. at Arms [and] Mr. Salvador Ayson appeared but refused to sign
attendance or participate in [the] investigation. Accord. to them, they will consult FFW.[33]

Landtex informed Ayson of its decision to terminate his services in a letter

dated 19 June 1996. The letter, signed by Landtex’s counsel, reads:
Ito ay hinggil sa insidenteng nangyari na kinasangkutan mo noong ika-2 at 7 ng Marso 1996. Hindi lingid
sa iyong kaalaman na ikaw ay binigyan ng pamunuan ng Landtex ng lahat ng pagkakataon upang marinig
ang iyong panig at maipagtanggol ang iyong sarili sa paraang naaayon sa batas ngunit, ikaw ay hindi
nakiisa o nakipagtulungan.
Sa katunayan, noong nakaraang 16 Marso 1996 ikaw [ay] pinadalhan ng memo kung saan nakasaad ang
nasabing insidente at kasama ang paghingi ng iyong nakasulat na paliwanag. Noong nakaraang 02 Abril
1996 isang sulat ang pinadala sa iyo kung saan ikaw ay inatasang dumalo sa isang pagsisiyasat. Sa
nasabing imbestigasyon, iminungkahi mo at ng iyong mga kasama (mga opisyales ng unyon) na
magsagawa ulit ng isa pang imbestigasyon at nais ninyong ito ay isagawa sa inyong pagawaan. Kaya’t ito
ay muling inskedyul noon 06 Mayo 1996 ngunit ikaw ay tumawag ng araw din yaon at sinabing kailangan
mong umuwi ng maaga dahil walang magbabantay sa iyong anak.
Muli na naman nagtakda ng isa pang pagsisiyasat noong ika-05 Hunyo 1996 ngunit, sa nasabing
imbestigasyon ikaw ay tumangging maimbestigahan at tumanggi ring pumirma sa attendance. Ilang
pagkakataon na iyong pinalampas kung saan sana ay naipadinig mo ang iyong panig at naipagtanggol mo
ang iyong sarili.
Kaugnay nito, ikinalulungkot na ipinababatid sa iyo ng pamunuan na batay sa akusasyon sa iyo, sa

pagpatunay ng testigo laban sa iyo ikaw ay tinatanggal sa trabaho. Ang iyong paglilingkod sa Landtex
Industries ay hanggang sa ika-30 ng Hunyo 1996 na lamang.[34]
Landtex and William Go, in their appeal before the NLRC, stated that
paragraphs (a) and (d) of Article 282[35] were applicable to Ayson. They added
that the employer, exercising management prerogative, has the right to protect
its interest by imposing the appropriate penalties on erring employees. However,
upon reading the records of the case, we cannot deduce any proof of Landtex and
William Go’s accusations against Ayson. Moreover, the NLRC did not make any
pronouncement as to whether Ayson was dismissed for a just cause. The
appellate court and the labor arbiter were one in ruling that there was no just
cause in Ayson’s dismissal. We quote the labor arbiter’s factual findings with
approval:
We have painstakingly read the records of this case and, sadly, this Office finds no shred of
evidence to show that indeed *Ayson+ had been spreading “news and gossips” or that he ever shouted
at Mr. Go and engaged Mr. Go in a heated argument.
No affidavit of either the security guard who claimed to be one of the drinking group who heard
the alleged malicious news or gossips or that of Mr. and Mrs. Go who had been the subject of *Ayson’s+
alleged shouting has been presented if only to substantiate *Landtex and William Go’s+ self-serving
claims.[36]
Procedural due process in the dismissal of employees requires notice and

hearing. The employer must furnish the employee two written notices before
termination may be effected. The first notice apprises the employee of the
particular acts or omissions for which his dismissal is sought, while the second
notice informs the employee of the employer’s decision to dismiss him.[37] In

the present case, Landtex more than complied with the two-notice rule.
The requirement of a hearing, on the other hand, is complied with as long as

there was an opportunity to be heard, and not necessarily that an actual hearing
was conducted.[38] In the present case, Landtex scheduled three meetings
before terminating Ayson. However, Landtex failed to understand the law’s
purpose in requiring the opportunity to be heard. Landtex scheduled meetings
with Ayson but these meetings were not free from arbitrariness. Ayson could not
adequately defend himself from Landtex’s and William Go’s accusations. No
witness was ever presented against Ayson, hence Ayson could not test the
veracity of their claims.
Unsubstantiated suspicions, accusations, and conclusions of the employer

are not sufficient to justify an employee’s dismissal. The employer must prove by
substantial evidence the facts and incidents upon which the accusations are
made.[39] In Philippine Associated Smelting and Refining Corporation (PASAR) v.
NLRC,[40] we ruled that the mere conduct of an investigation and the statements
of the company’s security guard are not enough to establish the validity of the
charge of wrongdoing against the dismissed employees. It is not enough for an
employer who wishes to dismiss an employee to charge him with
wrongdoing. The validity of the charge must be established in a manner
consistent with due process. A suspicion or belief no matter how sincerely felt
cannot substitute for factual findings carefully established through an orderly
procedure.
Landtex and William Go failed to observe due process in terminating
Ayson. They likewise failed to establish that Ayson’s termination was for a just
cause. Thus, we rule that Landtex and William Go illegally dismissed Ayson.
WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 13

February 2001 and the Resolution dated 16 October 2001 of the Court of Appeals
in CA-G.R. SP No. 50060. Emilia P. Ayson, in representation of Salvador M. Ayson,
is entitled to receive the amounts due Salvador M. Ayson.
Costs against the petitioners.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice

WE CONCUR:
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
CONCHITA CARPIO MORALES DANTE O. TINGA

Associate Justice Associate Justice
PRESBITERO J. VELASCO, JR.

Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.

Associate Justice
Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairperson’s Attestation, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
[1] Under Rule 45 of the 1997 Rules of Civil Procedure.

[2] Rollo, pp. 58-75. Penned by Associate Justice Ramon Mabutas, Jr. with Associate Justices
Roberto A. Barrios and Edgardo P. Cruz, concurring.
[3] Id. at 76. Penned by Associate Justice Ramon Mabutas, Jr. with Associate Justices
[4] Id. at 125.
[5] Id. at 118.
[6] Id. at 119.
[7] Id. at 121-122.
[8] Id. at 123.
[9] Labor Arbiter Emerson C. Tumanon heard the parties in this case.
[10] Rollo, p. 102.
[11] Id. at 136-142.
[12] Id. at 127.
[13] Id. at 141-142.
[14] Id. at 165-179. Penned by Commissioner Ireneo B. Bernardo, with Presiding
Commissioner Lourdes C. Javier and Commissioner Tito F. Genilo, concurring.
[15] Id. at 176-177.
[16] Id. at 70.
[17] Id. at 71.
[18] Id. at 74. The case is also referred to as NLRC NCR Case No. 00-07-04492-96 in
various portions of the records.
[19] Id. at 736-741.
[20] Id. at 30-31.
[21] Id. at 812-813
[22] See San Miguel Corp. v. NLRC, 325 Phil. 401 (1996).
[23] Records, p. 55.

[24] Rollo, p. 126.
[25] Id. at 127.
[26] Motion to Dismiss. — On or before the date set for the conference the respondent may file

[25] Id. at 127.
a motion to dismiss. Any motion to dismiss on the ground of lack of jurisdiction, improper venue
or that the cause of action is barred by prior judgment or by prescription shall be
immediately resolved by the Labor Arbiter by a written order. An order denying the motion to
dismiss or suspending its resolution until the final determination of the case is not appealable.
[27] Maneja v. NLRC, 353 Phil. 45, 61-62 (1998).
[28] Art. 282. Termination by employer. — An employer may terminate an employment for any of
the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer
or representative in connection with his work;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representative; and
[29] The pertinent portion of Section 2(d), Rule 1, Book VI of the Implementing Rules of the
Labor Code reads as follows:
(d) In all cases of termination of employment, the following standards of due process shall be
substantially observed:
For termination of employment based on just causes as defined in Article 282 of the Labor Code:
(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 the 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.
[30] Rollo, p. 118.
[31] Id. at 119.
[32] Id. at 121-122.
[33] Id. at 123.
[34] Id. at 124.
[35] Supra note 28.
[36] Rollo, pp. 140-141.
[37] See Pono v. National Labor Relations Commission, G.R. No. 118860, 17 July 1997, 275 SCRA 611.
[38] See Pamantasan ng Lungsod ng Maynila v. Civil Service Commission, 311 Phil. 573 (1995).
[39] See Mendoza v. NLRC, 369 Phil. 1113 (1999).
[40] G.R. Nos. 82866-67, 29 June 1989, 174 SCRA 550.
Pasted from <http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/150278.htm>
SECOND DIVISION
LANDTEX INDUSTRIES and G.R. No.

WILLIAM GO, 150278
Petitioners,
Present:
QUISUMBING,
J.,
- versus - Chairperson,
CARPIO,

CARPIO,
CARPIO
MORALES,
TINGA, and
COURT OF APPEALS, VELASCO, JR.,
SALVADOR M. AYSON, and JJ.
LANDTEX INDUSTRIES WORKERS UNION – FEDERATION OF
FREE WORKERS (FFW),
Respondents.
Promulgated:
August 9, 2007
x- - - - - - - - - - -- - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - -- - - - - - x
DEC I S IO N
CARPIO, J.:
The Case
This is a petition for review on certiorari[1] of the Decision[2] dated 13

February 2001 and of the Resolution[3] dated 16 October 2001 of the Court of
Appeals (appellate court) in CA-G.R. SP No. 50060. The Decision ordered
Salvador M. Ayson (Ayson) separation pay in lieu of reinstatement, backwages,
13th month pay, service incentive leave pay, and attorney’s fees.
The Facts
Landtex, a sole proprietorship owned by Alex Go and managed by William

Go, is a business enterprise engaged in the manufacture of garments. Ayson
worked in Landtex as a knitting operator from 19 May 1979 to 6 July 1996. Ayson
was an officer[4] of Landtex Industries Workers Union – Federation of Free
Workers (union) which had an existing collective bargaining agreement (CBA) with
Landtex.
Ayson received a letter[5] from Landtex dated 16 March 1996 which stated
that Ayson committed acts contrary to company policies on 2 and 7 March

1996. The letter required Ayson to explain in writing within 24 hours from receipt
why no disciplinary action should be taken against him for spreading damaging
rumors about the personal life of an unspecified person, and for having an
altercation with one of the company’s owners when he was asked to submit an ID
picture.
Ayson replied in writing[6] that he could not defend himself from the charge
of spreading damaging rumors because Landtex’s letter failed to state what
rumors he was supposed to have spread. Ayson further explained that he merely
replied in a loud voice to the company owner’s request because he was carrying
textiles. Ayson then apologized for his actions.
Landtex sent Ayson another letter dated 2 April 1996 informing him of its
receipt of his explanation. Landtex informed Ayson that the omission of the
details about the damaging rumors was intentional because other employees
might be able to read the letter. Furthermore, Landtex decided to conduct an
investigation on 26 April 1996 in view of Ayson’s denials.
The first meeting between Ayson and Landtex’s counsel took place on 26
April 1996. The minutes of the 26 April 1996 meeting state that Ayson was
informed that there were witnesses who could testify that he spread rumors
about the personal life of William Go and his family. Ayson denied that he spread
rumors and requested for another meeting so that he could hear the alleged
witnesses and defend himself. Ayson further requested that the next
investigation be held at Landtex’s Mauban office because he and the union
officers accompanying him suffer salary deductions for their attendance of
1996, but Ayson was unable to attend it and went home early because he
allegedly needed to look after his child.
The second meeting between Ayson and Landtex’s counsel took place on 5
June 1996. The minutes of the 5 June 1996 meeting state that Ayson and a union
officer accompanying him appeared but refused to sign the attendance sheet or
to participate. Landtex’s counsel, Atty. Generosa Jacinto, made a note in the
minutes which reads, “Pls. advise mgt. They can take any action they want.”[8]
In a letter dated 19 June 1996, Landtex terminated Ayson’s services

effective 30 June 1996 because of Ayson’s lack of cooperation during the
investigations. Despite this notice, Ayson still reported for work until 6 July 1996.
In a letter dated 8 July 1996, the union president requested Landtex for a
formal dialogue regarding Ayson’s case. Landtex reaffirmed its decision to

terminate Ayson in meetings with the union held on 10 and 16 July 1996. Landtex
and the union agreed to refer the matter to a third party in accordance with the
provisions of law and of the CBA. Landtex expected Ayson to refer the issue to
the National Conciliation and Mediation Board (NCMB) for the selection of a
voluntary arbitrator. Ayson and the union, however, filed a complaint before the
labor arbiter.[9]
The labor arbiter conducted mandatory conferences for amicable

settlement with the participation of all parties. The parties agreed to the idea of
payment of separation pay in lieu of reinstatement but differed as to the
amount. Ayson wanted to receive one month basic salary for every year of
service while Landtex wanted to pay only one-half month basic salary for every
year of service from date of hiring to termination of employment.[10] The parties
were not able to settle; hence, the labor arbiter ordered them to submit their
position papers.
In his position paper, Ayson asked whether his dismissal from employment
has any just cause. Ayson also asked whether Landtex complied with procedural
due process when it terminated his employment.
On the other hand, Landtex and William Go revealed in their position paper
that Ayson was seen having a drinking session with other Landtex employees near
the company premises. A Landtex security guard, who was a part of the drinking
session but whose identity was not revealed, stated that Ayson maliciously
narrated spiteful stories about the personal life of William Go. Landtex also
questioned the jurisdiction of the labor arbiter over Ayson’s case. Landtex
insisted that the labor arbiter should dismiss Ayson’s case and refer it to the
NCMB for the selection of a voluntary arbitrator.
The Ruling of the Labor Arbiter
On 30 September 1997, the labor arbiter promulgated his decision[11]

which ruled in favor of Ayson. The labor arbiter declared that despite the union’s
manifestation of its desire to refer Ayson’s case to “a third party in accordance
with provisions of law and CBA,”[12] this manifestation did not affect Landtex’s
termination of Ayson’s employment. Ayson’s termination thus properly falls
under the jurisdiction of the labor arbiter. Moreover, the labor arbiter did not
find any evidence supporting Landtex’s allegations that Ayson spread malicious
rumors about William Go or shouted at William Go’s wife. The pertinent
portions of the labor arbiter’s decision read:
Dismissal of a worker is no trifling matter; more so, of herein [Ayson] who had been employed

with [Landtex] for seventeen years, more or less. The dismissal must be for a just cause, let alone with
due process, and must be based on substantial evidence. Mere allegations will not suffice.
WHEREFORE, premises considered, judgment is hereby rendered ordering [Landtex Industries and
William Go] to reinstate [Ayson] to his former position without loss of seniority rights with full
backwages from the date his salary has been withheld until the actual date of reinstatement.
*Landtex Industries and William Go+ are further ordered to pay ten (10%) percent of *Ayson’s+
total monetary award as attorney’s fees.
Backwages
6/30/96 – 8/31/97 = 14.0 mos.
P165.00 x 30 x 14.00 mos. = P 69,300.00
13th Month Pay = 5,775.00
SILP
5.833 days x P165.00 = 962.50
P 76,037.50
Attorney’s Fees = 7,603.75
TOTAL P 83,641.25
All other claims of [Ayson] are dismissed for lack of merit.
SO ORDERED.[13]
Landtex and William Go appealed the labor arbiter’s decision to the National
Labor Relations Commission (NLRC). Landtex and William Go posted a bond in
the amount of the total award in the labor arbiter’s decision to perfect their
appeal and to enjoin the execution of the decision. Landtex and William Go
insisted that the labor arbiter had no jurisdiction over the parties and over the
subject matter in the present case.
The Ruling of the NLRC
On 20 July 1998, the NLRC promulgated its decision[14] which agreed with
Landtex and William Go’s argument that Ayson’s case falls within the original and
exclusive jurisdiction of the voluntary arbitrators, as provided in Article 261 of the
Labor Code. Landtex merely imposed a disciplinary measure when it terminated
Ayson’s employment. Furthermore, the NLRC ruled that Ayson waived his right to
have his case heard before any other forum when he did not undergo the
grievance process mandated by his union’s CBA with Landtex. The NLRC declared
that the disciplinary action meted out by Landtex to Ayson and the waiver of
Ayson’s right to have his case heard were matters which require the
interpretation of the CBA, and thus were within the original and exclusive
jurisdiction of the voluntary arbitrators. The dispositive portion of the NLRC’s
decision reads:
WHEREFORE, the decision appealed from is hereby SET ASIDE on the ground of lack of jurisdiction
over the subject matter. The instant case is hereby referred to Voluntary Arbitration in accordance with
the Collective Bargaining Agreement.
SO ORDERED.[15]
The NLRC dismissed Ayson and the union’s motion for reconsideration on 11
the appellate court.
The Ruling of the Appellate Court
In a decision promulgated on 13 February 2001, the appellate court

sustained the jurisdiction of the labor arbiter and modified the award in favor of
Ayson. The appellate court further stated that the records are “bereft of any
showing that a grievance mediation had been undertaken so as to thresh out any
disciplinary measure against *Ayson+.”[16] The appellate court took Landtex and
William Go to task because they took “the avenue of least resistance” and
discussed the possibility of an amicable settlement instead of filing a motion to
dismiss before the labor arbiter. Moreover, the appellate court found that Ayson
was illegally dismissed because his termination was characterized by “bad faith,
*and+ wanton and reckless exercise of management prerogative.”[17] Landtex’s
allegations against Ayson failed to show that Ayson’s dismissal was for a just
cause. The appellate court awarded Ayson full backwages, separation pay
(equivalent to one month’s pay for every year of service, a fraction of at least six
months being considered as one whole year) in lieu of reinstatement, 13th month
pay, service incentive leave pay, and attorney’s fees. The dispositive portion of
the decision of the appellate court reads:
WHEREFORE, premises considered, the petition is GRANTED— and the decision (promulgated on
July 20, 1998) and the resolution (promulgated on September 11, 1998) of the public respondent
(National Labor Relations Commission) in NLRC NCR Case No. 00-07-04492-92 is hereby REVERSED and
SET ASIDE. The decision of the labor arbiter, which was rendered on September 30, 1997 is hereby
REINSTATED—subject, however, to the MODIFICATION that separation pay shall be awarded to [Ayson]
in lieu of reinstatement. No pronouncement as to costs.
SO ORDERED.[18]
Landtex and William Go filed a motion for reconsideration of the appellate

court’s decision. Ayson and the union also contested the appellate court’s award
of separation pay in lieu of reinstatement. The appellate court dismissed both
motions in a resolution promulgated on 16 October 2001.
Landtex and William Go then filed a petition for review before this Court on
11 December 2001. Ayson and the union also filed a petition for review, docketed
as G.R. No. 150392, but this petition was withdrawn as Ayson no longer desired
to question the resolution of the appellate court.[19] Emilia P. Ayson, respondent
Ayson’s wife, later made a manifestation that she would like to represent Ayson
in the present case since her husband died on 28 August 2002. She attached
Ayson’s death certificate and their marriage certificate to prove her allegations.
When Landtex and William Go filed their memorandum in the present case,
quarter of 2001. Landtex’s cutting and knitting departments temporarily closed in
December 2002, and Landtex permanently ceased its operations in February
2003. Landtex and William Go attached Landtex’s notice of closure to the union
dated 9 January 2003, Landtex’s balance sheets for the years 2000 to 2002,
Landtex’s profit and loss statements for the years 2000 to 2002, notice of extra-
judicial sale of the property of spouses Alex and Nancy Go, demand letters
addressed to Alex Go, and unpaid utility bills in the name of Alex Go to prove their
allegations.
The Issues
Landtex and William Go raise the following issues before this Court:
Whether the NLRC correctly ruled that jurisdiction over the subject matter of the instant
case pertains exclusively to the voluntary arbitrator considering that
The existing CBA provides that “a grievance is one that arises from the interpretation or
implementation of this agreement, including disciplinary action imposed on any covered
employee”; and
The parties have undergone the grievance machinery of the collective bargaining
agreement.
Whether the instant case concerns enforcement and implementation of company personnel
policy and that the issue therein was timely raised.
Whether there is a valid ground for termination of the employment of [Ayson].
Whether [Ayson] is entitled to backwages and separation pay.
Whether [the appellate court] committed grave and patent abuse of discretion and errors of
law in setting aside the decision of the NLRC.[20]
The Ruling of the Court
The petition has no merit.
The Labor Arbiter’s Jurisdiction
Landtex and William Go insist that the matter subject of the present petition
is covered by the CBA’s provision on voluntary arbitration and thus is excluded
from the labor arbiter’s jurisdiction. They allege that Ayson’s termination merely
enforced Landtex’s personnel policy against misconduct. They further claim that
the union’s request for a formal dialogue signified the initiation of the grievance
procedure outlined in the CBA. Landtex and William Go even assert that because
relief from a forum other than that provided in the CBA.
Section 1 of Article XV, Grievance Procedure, of the union’s CBA with

Landtex reads:
Grievance Machinery. — For purposes of this Agreement, a grievance is one that arises from the
interpretation or implementation of this Agreement, including disciplinary action imposed on any
covered employee. Any grievance, dispute, or complaint which a covered employee or UNION may have
against the COMPANY: (a) relative to the meaning, interpretation and application of the terms of this
agreement; or (b) arising out of the employment relationship, shall be submitted to the grievance
machinery in accordance with the following procedure:
Step I The employee shall present his grievance, dispute, or complaint in writing to the COMPANY’s
Section Head/In Charge and to the UNION’s authorized representative, and thereupon the
said Section Head and UNION representative shall endeavor to work out a settlement within
four (4) working days from presentation.
Step II If, under Step I, no settlement is reached within four (4) working days from presentation, the
grievance shall be taken up by the UNION representative with the General Manager.
Step III If, under Step II, no settlement is reached within four (4) working days, the grievance shall be
referred by the parties to the Management-Employee Committee.
Step IV If under Step III, no settlement is reached within eight (8) working days, the grievance shall be
referred by both parties to the National Conciliation and Mediation Board (NCMB) for
submission to voluntary arbitration in accordance with NCMB’s rules within ten (10) days
from the date of the last meeting of the Management-Employee Committee.
Where the grievance or complaint involves the UNION directly, Steps I and II of the foregoing procedure
shall be dispensed with and only Steps III and IV shall be followed.[21]
Articles 217, 261, and 262 of the Labor Code tackle the jurisdiction of labor
Art. 217. Jurisdiction of the 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
3. If accompanied with a claim for reinstatement, those cases that workers may file involving
wages, rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-
employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving the
legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits,
all other claims arising from employer-employee relations, including those of persons in domestic
or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless
of whether accompanied with a claim for reinstatement.
(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor
Arbiters.

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.
Art. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. - The Voluntary
ART. 262. Jurisdiction over other labor disputes. - The Voluntary Arbitrator or panel of Voluntary
The labor arbiter, the appellate court, and the NLRC differed in their rulings
on the matter of jurisdiction. The labor arbiter and the appellate court agreed
with Ayson and the union’s position. The labor arbiter assumed jurisdiction and
emphasized that when the union met with Landtex on 8 July 1996, Ayson was no
longer an employee because Landtex terminated him effective 30 June 1996. The
manifestation of the union’s desire to “refer the matter to a third party in
accordance with law and the CBA” does not deviate from the fact that Ayson was
already dismissed. On the other hand, the NLRC sustained Landtex and William
Go’s position. The NLRC asserted that the determination of whether Ayson’s
dismissal constitutes a “disciplinary action” within the scope of the CBA calls for
an interpretation of the CBA. When the union called for a meeting with Landtex,
the union effectively initiated the grievance procedure. Thus, Ayson’s case should
have been subjected to voluntary arbitration.
We agree with Ayson and the union and affirm the rulings of the labor
arbiter and the appellate court.
Article 261 of the Labor Code provides that 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. On the other hand, a reading of Article 217 in conjunction
with Article 262 shows that termination disputes fall under the jurisdiction of the
labor arbiter unless the union and the company agree that termination disputes
and unequivocal. Existing law is an intrinsic part of a valid contract without need
for the parties to expressly refer to it. Thus, the original and exclusive jurisdiction
of the labor arbiter over unfair labor practices, termination disputes, and claims
for damages cannot be arrogated into the powers of voluntary arbitrators in the
absence of an express agreement between the union and the company.[22]
In the present case, the CBA between Landtex and the union does not
clearly state that termination disputes, as opposed to mere disciplinary actions,
are covered by the CBA. The CBA defined a grievance as “one that arises from the
interpretation or implementation of this Agreement, including disciplinary action
imposed on any covered employee.” The CBA did not explicitly state that
termination disputes should be submitted to the grievance machinery.
In ruling that the present case should have been submitted to voluntary
arbitration, the NLRC relied on the union’s act of meeting with Landtex. The
union’s letter to Landtex, dated 8 July 1996, reads:
We received your letter dated 19 June 1996 re: TERMINATION LETTER of MR. SALVADOR AYSON who
happened to be *a+ union officer of LANDTEX INDUSTRIES EMPLOYEE’S UNION.
In connection to [sic] this, we would like to request for a formal dialogue regarding the above matter at
a [sic] soonest possible time.
We are hoping that the management is with us in resolving this termination of our officer.
May we have a continuous harmonious relationship.
Thank you.[23]
grievance shall be referred by the parties to the Management-Employee
Committee. The Management-Employee Committee shall be composed of three
representatives each from the union and Landtex. According to the minutes of
the meeting prepared by Landtex’s counsel, when the union met with Landtex on
10 July 1996, there were seven union members and two Landtex representatives
in attendance. The minutes of the meeting read:
The mgt.’s position is that it will no longer reconsider the termination of Mr. Ayson. The union on
the other hand opened discussion of other possibilities in lieu of reinstatement.
The union requested for time to study possibilities. The mgt. will do likewise.
Reset 16 July 96[,] 5 pm at factory.[24]
The next meeting proceeded with the same number of representatives from both
parties. The minutes of the meeting state that there was “*n+o settlement. Union
will refer matter to third party in accordance with provision of law and CBA.”[25]
We find nothing in the records which shows that the meetings between the
union and Landtex already constitute the grievance machinery as mandated by
the CBA. The meetings happened only after the effectivity of Ayson’s
participants. The CBA mandated that there should be three representatives each
from the union and Landtex but there were seven union members and two
Landtex representatives who attended the meetings. More importantly, there
was nothing in the minutes that shows that the attendees constituted a
Management-Employee Committee.
Finally, the appellate court is correct in stating that if Landtex really believed
that the labor arbiter did not have jurisdiction over the present case, then
Landtex should have filed a motion to dismiss in accordance with Section 15, Rule
V of The New Rules of Procedure of the NLRC.[26] Instead of filing a motion to
dismiss, Landtex participated in the proceedings before the labor arbiter. Had
Landtex immediately filed a motion to dismiss, the labor arbiter would have
determined the issue outright before proceeding with hearing the case. In the
present case, Landtex raised the issue of jurisdiction only after the labor arbiter
required the parties to submit their position papers.
Validity of Ayson’s Dismissal
The requisites for a valid dismissal are (1) the dismissal must be for any of
the causes expressed in Article 282 of the Labor Code, and (2) the opportunity to
be heard and to defend oneself.[27] Landtex and William Go assert that Ayson’s
termination was for a just cause as defined in Article 282[28] of the Labor Code;
hence, the two-notice rule[29] should be followed.
The contents of Landtex’s first memorandum to Ayson, signed by Landtex’s

counsel, read:
Ipinagbigay-alam sa amin ng pamahalaang Landtex Industries and [sic] tungkol sa nangyaring insidente
nuong ika-2 at 7 Marso 1996.
Ayon sa isang saksi, ikaw ay nagkakalat ng mga balitang nakakasira sa aming personal na buhay. Bukod
pa dito nuong ika-7 ng Marso ng ikaw ay hingan ng iyong ID pictures bilang isa sa mga regulasyon ng
kompanya, ikaw ay sumungaw sa harap pa mismo ng nagmamay-ari ng kompanya na naging dahilan
upang magkasagutan kayo.
Iyong nalalaman na ang ganitong gawain ay taliwas sa umiiral na patakaran ng kompanya. Bunga nito[,]
ikaw ay hinihingan ng nakasulat na paliwanag 24 oras mula sa pagkakatanggap ng liham na ito. Ang
hindi mo pagsunod ay nangangahulugan na maaari ng gumawa ng susunod na aksyong pang-disiplina
and [sic] kompanya laban sa iyo.[30]
Ayson’s handwritten response reads:

Ayon sa salaysay ng inyong saksi ako ay nagkakalat ng balitang nakakasira sa inyong personal na
buhay.

buhay.
ng balitang nakakasira ng inyong personal na buhay sa dahilan na wala naman pong nakasaad sa sulat
kung anong balita na ipinagkakalat ko na nakakasira sa personal na buhay ninyo.
Noon po ika-7 ng Marso ako po ay hiningan ng ID picture bilang isa sa mga regulasyon ng
kompanya at nakasaad po sa sulat na ako po ay “sumungaw” o “sumigaw” sa harap mismo ng may-ari
ng kompanya. Hindi po ako sumigaw[,] ako po ay sumagot lamang sa tanong nila. Kung ang pagkasagot
ko man ay medyo napakalakas ito po ay sa dahilan na nang mga oras na iyon ay may buhat-buhat akong
tela na aming inaakyat. Kung ito po ay minamasama ninyo, ay ihinihingi ko na lamang ng
paumanhin.[31]
Landtex then summoned Ayson on 26 April 1996 to a meeting to investigate

the 2 and 7 March 1996 incidents. The minutes of the 26 April 1996 meeting
read:
Mr. Ayson was apprised of the incident that happened on March 2 & 7 wherein it was alleged
that he is spreading some rumors involving [the] personal life of Mr. Go and his family. He was informed
that there were witnesses who can testify on this.
Mr. Ayson however requested that another investigaton be conducted wherein the alleged
witnesses be presented since he cannot answer whether what was reported was true or not. He further
denies allegations that he is spreading said rumors.
Mr. Ayson together with union officers requested that investigation be conducted instead at
Mauban, Quezon City since they are being deducted everytime they attend investigations like this
during office hours.
Mr. Ayson & union to be notified when another investigation [will] be scheduled.[32]
The next meeting was held on 5 June 1996. The minutes of the meeting
read:
Mr. Ferdinand Samson, union Sgt. at Arms [and] Mr. Salvador Ayson appeared but refused to sign
Landtex informed Ayson of its decision to terminate his services in a letter

dated 19 June 1996. The letter, signed by Landtex’s counsel, reads:
Ito ay hinggil sa insidenteng nangyari na kinasangkutan mo noong ika-2 at 7 ng Marso 1996. Hindi lingid
sa iyong kaalaman na ikaw ay binigyan ng pamunuan ng Landtex ng lahat ng pagkakataon upang marinig
ang iyong panig at maipagtanggol ang iyong sarili sa paraang naaayon sa batas ngunit, ikaw ay hindi
nakiisa o nakipagtulungan.
Sa katunayan, noong nakaraang 16 Marso 1996 ikaw [ay] pinadalhan ng memo kung saan nakasaad ang
nasabing insidente at kasama ang paghingi ng iyong nakasulat na paliwanag. Noong nakaraang 02 Abril
1996 isang sulat ang pinadala sa iyo kung saan ikaw ay inatasang dumalo sa isang pagsisiyasat. Sa
nasabing imbestigasyon, iminungkahi mo at ng iyong mga kasama (mga opisyales ng unyon) na
magsagawa ulit ng isa pang imbestigasyon at nais ninyong ito ay isagawa sa inyong pagawaan. Kaya’t ito
ay muling inskedyul noon 06 Mayo 1996 ngunit ikaw ay tumawag ng araw din yaon at sinabing kailangan
mong umuwi ng maaga dahil walang magbabantay sa iyong anak.
Muli na naman nagtakda ng isa pang pagsisiyasat noong ika-05 Hunyo 1996 ngunit, sa nasabing
imbestigasyon ikaw ay tumangging maimbestigahan at tumanggi ring pumirma sa attendance. Ilang
pagkakataon na iyong pinalampas kung saan sana ay naipadinig mo ang iyong panig at naipagtanggol mo
ang iyong sarili.
Kaugnay nito, ikinalulungkot na ipinababatid sa iyo ng pamunuan na batay sa akusasyon sa iyo, sa


Industries ay hanggang sa ika-30 ng Hunyo 1996 na lamang.[34]
Landtex and William Go, in their appeal before the NLRC, stated that
paragraphs (a) and (d) of Article 282[35] were applicable to Ayson. They added
that the employer, exercising management prerogative, has the right to protect
its interest by imposing the appropriate penalties on erring employees. However,
upon reading the records of the case, we cannot deduce any proof of Landtex and
William Go’s accusations against Ayson. Moreover, the NLRC did not make any
pronouncement as to whether Ayson was dismissed for a just cause. The
appellate court and the labor arbiter were one in ruling that there was no just
cause in Ayson’s dismissal. We quote the labor arbiter’s factual findings with
approval:
We have painstakingly read the records of this case and, sadly, this Office finds no shred of
evidence to show that indeed *Ayson+ had been spreading “news and gossips” or that he ever shouted
at Mr. Go and engaged Mr. Go in a heated argument.
No affidavit of either the security guard who claimed to be one of the drinking group who heard
the alleged malicious news or gossips or that of Mr. and Mrs. Go who had been the subject of *Ayson’s+
alleged shouting has been presented if only to substantiate *Landtex and William Go’s+ self-serving
claims.[36]
Procedural due process in the dismissal of employees requires notice and

hearing. The employer must furnish the employee two written notices before
termination may be effected. The first notice apprises the employee of the
particular acts or omissions for which his dismissal is sought, while the second
the present case, Landtex more than complied with the two-notice rule.
The requirement of a hearing, on the other hand, is complied with as long as

there was an opportunity to be heard, and not necessarily that an actual hearing
was conducted.[38] In the present case, Landtex scheduled three meetings
before terminating Ayson. However, Landtex failed to understand the law’s
purpose in requiring the opportunity to be heard. Landtex scheduled meetings
with Ayson but these meetings were not free from arbitrariness. Ayson could not
adequately defend himself from Landtex’s and William Go’s accusations. No
witness was ever presented against Ayson, hence Ayson could not test the
veracity of their claims.
Unsubstantiated suspicions, accusations, and conclusions of the employer

are not sufficient to justify an employee’s dismissal. The employer must prove by
substantial evidence the facts and incidents upon which the accusations are
made.[39] In Philippine Associated Smelting and Refining Corporation (PASAR) v.
NLRC,[40] we ruled that the mere conduct of an investigation and the statements

of the company’s security guard are not enough to establish the validity of the
charge of wrongdoing against the dismissed employees. It is not enough for an
employer who wishes to dismiss an employee to charge him with
wrongdoing. The validity of the charge must be established in a manner
consistent with due process. A suspicion or belief no matter how sincerely felt
cannot substitute for factual findings carefully established through an orderly
procedure.
Landtex and William Go failed to observe due process in terminating
Ayson. They likewise failed to establish that Ayson’s termination was for a just
cause. Thus, we rule that Landtex and William Go illegally dismissed Ayson.
WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 13

February 2001 and the Resolution dated 16 October 2001 of the Court of Appeals
in CA-G.R. SP No. 50060. Emilia P. Ayson, in representation of Salvador M. Ayson,
is entitled to receive the amounts due Salvador M. Ayson.
Costs against the petitioners.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice
WE CONCUR:
Associate Justice
Chairperson


Associate Justice
ATTESTATION
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
Associate Justice
Chairperson
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairperson’s Attestation, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice

[2] Rollo, pp. 58-75. Penned by Associate Justice Ramon Mabutas, Jr. with Associate Justices
[3] Id. at 76. Penned by Associate Justice Ramon Mabutas, Jr. with Associate Justices
[4] Id. at 125.
[5] Id. at 118.
[6] Id. at 119.
[7] Id. at 121-122.
[8] Id. at 123.
[9] Labor Arbiter Emerson C. Tumanon heard the parties in this case.
[10] Rollo, p. 102.
[11] Id. at 136-142.
[12] Id. at 127.
[13] Id. at 141-142.
[14] Id. at 165-179. Penned by Commissioner Ireneo B. Bernardo, with Presiding
Commissioner Lourdes C. Javier and Commissioner Tito F. Genilo, concurring.
[15] Id. at 176-177.
[16] Id. at 70.
[17] Id. at 71.
[18] Id. at 74. The case is also referred to as NLRC NCR Case No. 00-07-04492-96 in
various portions of the records.
[19] Id. at 736-741.
[20] Id. at 30-31.
[21] Id. at 812-813
[22] See San Miguel Corp. v. NLRC, 325 Phil. 401 (1996).
[23] Records, p. 55.

[24] Rollo, p. 126.
[25] Id. at 127.
a motion to dismiss. Any motion to dismiss on the ground of lack of jurisdiction, improper venue
or that the cause of action is barred by prior judgment or by prescription shall be
immediately resolved by the Labor Arbiter by a written order. An order denying the motion to
dismiss or suspending its resolution until the final determination of the case is not appealable.
[27] Maneja v. NLRC, 353 Phil. 45, 61-62 (1998).
[28] Art. 282. Termination by employer. — An employer may terminate an employment for any of
the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer
or representative in connection with his work;
(c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly
authorized representative;
(d) Commission of a crime or offense by the employee against the person of his employer or any
immediate member of his family or his duly authorized representative; and
[29] The pertinent portion of Section 2(d), Rule 1, Book VI of the Implementing Rules of the
Labor Code reads as follows:
(d) In all cases of termination of employment, the following standards of due process shall be
substantially observed:
For termination of employment based on just causes as defined in Article 282 of the Labor Code:
(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 the 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.
[30] Rollo, p. 118.
[31] Id. at 119.
[32] Id. at 121-122.
[33] Id. at 123.
[34] Id. at 124.
[35] Supra note 28.
[36] Rollo, pp. 140-141.
[37] See Pono v. National Labor Relations Commission, G.R. No. 118860, 17 July 1997, 275 SCRA 611.
[38] See Pamantasan ng Lungsod ng Maynila v. Civil Service Commission, 311 Phil. 573 (1995).
[39] See Mendoza v. NLRC, 369 Phil. 1113 (1999).
[40] G.R. Nos. 82866-67, 29 June 1989, 174 SCRA 550.
Pasted from <http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/150278.htm>

olvido v ca gr no 141166-67 oct 15 2007
1:01 PM
SECOND DIVISION
RONILO OLVIDO, CRISTINA DULGUIME, SOFRONIA HERNANDEZ, WILMA SUICO, G.R.

ARSENIA MAYORES, ERLINDA HIDALGO, MARIETTA MONDERO, MA. THERESA Nos.
MACASINAG, ELMIRA PAMARANGLAS, CRISTINA SAMBITAN, ELIZABETH MANALON, 141166-67
GLORIA VIZCARRA, LAARNI APULI, CASTIELA MENDOZA and MERIAM OLVIDO,
Petitioners, Present
:
Quisu
mbing, J.,
Chairperson,
Carpio,
Carpio
Morales,
Tinga,
and
VELASC
O, JR., JJ.
- versus -
COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, SICALTEK

MANUFACTURING, INC./ CHARLIE ADARNE, SICALTEK EMPLOYEES UNION-ADFLO/
DINA VILLAGRACIA and ANTONIO C. CEDILLA,
Respondents.
Promul
gated:
October
15, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
QUISUMBING, J.:
Subject of the present petition for review on certiorari is the Decision [1] dated May 19, 1999, as
well as the Resolution[2] dated December 9, 1999, of the Court of Appeals in CA-G.R. SP Nos.
52108 and 52109. The appellate court affirmed the Resolution dated July 31, 1996 of the National

52108 and 52109. The appellate court affirmed the Resolution dated July 31, 1996 of the National
Labor Relations Commission (NLRC) in NCR CA No. 008784-95, which had reversed the Decision
dated February 6, 1995 of the Labor Arbiter in NLRC NCR No. 00-03-02163-93.
These are the facts:
Petitioners Ronilo Olvido, Cristina Dulguime, Sofronia Hernandez, Wilma Suico, Arsenia Mayores,
Erlinda Hidalgo, Marietta Mondero, Ma. Theresa Macasinag, Elmira Pamaranglas, Cristina
Sambitan, Elizabeth Manalon, Gloria Vizcarra, Laarni Apuli, Castiela Mendoza and Meriam Olvido
were regular employees of respondent Sicaltek Manufacturing, Inc.
Petitioners R. Olvido, Suico, and Macasinag were also the President, Vice-President, and Sergeant-
at-Arms, respectively, of respondent Sicaltek Employees Union-ADFLO[3] (SEU-ADFLO) while the
other petitioners were the founding or original members thereof.
On August 24, 1992, R. Olvido, Suico, and Macasinag, with the assistance of respondent Antonio C.
Cedilla, President of their Federation, ADFLO, filed a complaint for illegal lay-off, illegal deductions,
non-payment of overtime pay, premium pay for holiday, service incentive leave pay, 13 th month
pay, and night shift differential pay.
In the meantime, SEU-ADFLO filed a petition for certification election on August 28, 1992. During
the certification proceedings, ADFLO and Sicaltek agreed that SEU-ADFLO will withdraw the labor
case in exchange for the company’s voluntary recognition of SEU-ADFLO as the sole bargaining
agent of its employees. On September 10, 1992, the Med-Arbiter issued an order certifying SEU-
ADFLO as the sole bargaining agent of Sicaltek’s rank-and-file employees.
ADFLO then prepared a motion to dismiss the labor case, but petitioners refused to sign it. Thus,
ADFLO barred R. Olvido and Suico from attending and participating in the initial negotiations of
the new Collective Bargaining Agreement (CBA). This prompted petitioners to disaffiliate from
SEU-ADFLO on September 17, 1992. They formed another union, the Sicaltek Workers Union
(SWU), and filed a petition for certification election on October 5, 1992. The petition was,
however, dismissed due to the earlier certification order by the Med-Arbiter. SWU appealed to
the Secretary of Labor and Employment, but the appeal was also denied.
On October 10, 1992, Sicaltek and SEU-ADFLO concluded their new CBA made effective on
October 1, 1992.
SEU-ADFLO, through its new President, respondent Dina Villagracia, forthwith demanded that
Sicaltek dismiss petitioners as provided in the Modified Union Shop Provision in the CBA, [4] due
to falsification and disloyalty. On March 3, 1993, Sicaltek required petitioners to explain in writing
why they should not be dismissed. Petitioners countered that the demand for their dismissal was
pure harassment since the certification issue between the two unions was still pending at the time
with the Secretary of Labor and Employment while the falsification charge had no basis.
On March 22, 1993, Sicaltek dismissed petitioners. Petitioners then filed a complaint for unfair
labor practice, illegal dismissal, damages, and attorney’s fees.

labor practice, illegal dismissal, damages, and attorney’s fees.
The Labor Arbiter dismissed the complaint for lack of merit. On appeal, the NLRC reversed the
decision of the Labor Arbiter. It ordered petitioners’ reinstatement to their former positions but
without backwages.
Petitioners and respondents filed separate petitions, docketed as G.R. Nos. 129104 and 128798,
respectively, with this Court. After the petitions were consolidated, this Court referred the case to
the Court of Appeals in accordance with St. Martin Funeral Home v. NLRC.[5]
In CA-G.R. SP No. 52108, Sicaltek contended that the NLRC committed grave abuse of discretion when it
ruled that (1) petitioners’ dismissal was unjustified; (2) petitioners cannot be validly charged with
disloyalty to SEU-ADFLO because they were not members thereof; and (3) petitioners are entitled to
reinstatement. Sicaltek argued that since petitioners were former officers and members of SEU-ADFLO,
the certified exclusive bargaining agent of the rank-and-file employees, they are covered by the
Modified Union Shop provision in the CBA. In CA-G.R. SP No. 52109, petitioners assailed the denial of
the payment of backwages.
On May 19, 1999, the appellate court dismissed the consolidated petitions:
WHEREFORE, the petitions in these cases are hereby DENIED DUE COURSE and
accordingly DISMISSED, for lack of merit.
SO ORDERED.[6]
The appellate court ruled that petitioners were not covered by the Modified Union Shop provision in the
CBA. The provision requires all new employees to become union members after sometime, but does
not require present employees to join the union. The appellate court noted that when the CBA was
signed on October 10, 1992, petitioners were already regular employees and were already members of
SWU as of September 17, 1992. Thus, they could not be obliged to become members of SEU-ADFLO
after the signing of the CBA under pain of being dismissed from employment.
Nevertheless, the appellate court ruled that the dismissal was not attended by bad faith. The
appellate court held that contrary to petitioners’ contentions, there was nothing sinister about the
company’s act of settling amicably the labor case with ADFLO. Sicaltek also had a right to inform the
Med-Arbiter that there was already a certified collective bargaining agent in the company. Further,
there was no evidence that Sicaltek and SEU-ADFLO rushed the execution of the CBA to prevent SWU
from being certified as the new collective bargaining agent. The appellate court further held that
Sicaltek cannot be faulted for complying with the demand of SEU-ADFLO to dismiss petitioners since it
was only protecting itself. In any event, according to the appellate court, Sicaltek sent petitioners show-
cause letters before actually terminating their employment.
Petitioners now come to this Court via the present petition. They argue that the Court of Appeals
erred:
IN RULING THAT PETITIONERS ARE NOT ENTITLED TO THEIR BACKWAGES DESPITE [THE]
CLEAR FINDING THAT PETITIONERS WERE ILLEGALLY DISMISSED BY THE COMPANY[.] [7]

Thus, the sole issue for our resolution is: Are petitioners entitled to backwages?
Notably, Sicaltek did not assail the finding of the Court of Appeals that petitioners were not
covered by the Modified Union Shop provision in the CBA. The appellate court found that
petitioners were already members of SWU when the CBA was signed on October 10, 1992. Thus,
they could not be obliged to become members of SEU-ADFLO after the CBA was signed, and their
dismissal by reason of disloyalty or disaffiliation was illegal. Such being the case, the ruling of the
appellate court in this regard should now be considered final.
Nevertheless, petitioners contend that their dismissal was effected by Sicaltek in bad faith, thus,
entitling them not only to reinstatement but also the payment of backwages. Sicaltek counters
that it merely complied in good faith with its covenant in the CBA.
It has been the jurisprudential rule for quite sometime that the employer is not considered guilty
of unfair labor practice if it merely complied in good faith with the request of the certified union
for the dismissal of employees expelled from the union pursuant to the union security clause in
the CBA.[8] Hence, the company may not be ordered to grant either backwages or financial
assistance in the form of separation pay as a form of penalty. [9]
However, we have recently ruled that this doctrine is inconsistent with Article 279 [10] of the
Labor Code, as amended by Republic Act No. 6715. [11] It is now provided in the Labor Code that
an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss
of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement. Thus, where reinstatement is
adjudged, the award of backwages and other benefits continues beyond the date of the Labor
Arbiter’s decision ordering reinstatement and extends up to the time said order of reinstatement
is actually carried out. [12]
WHEREFORE, the petition is GRANTED. The Decision dated May 19, 1999 and the Resolution
dated December 9, 1999 of the Court of Appeals in CA-G.R. SP Nos. 52108 and 52109, which
affirmed the Resolution dated July 31, 1996 of the National Labor Relations Commission in NCR CA
No. 008784-95, are MODIFIED accordingly. Petitioners are hereby awarded full backwages and
other allowances, without qualifications and diminutions, computed from the time they were
illegally dismissed up to the time they are actually reinstated. Let this case be remanded to the
Labor Arbiter for proper computation of the full backwages due petitioners, in accordance with
Article 279 of the Labor Code, as expeditiously as possible.
SO ORDERED.
Associate Justice

WE CONCUR:
ANTONIO T. CARPIO
Associate Justice


Associate Justice
ATTE STATION
I attest that the conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
Associate Justice
Chairperson
CER T IF I C A TI O N
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, I
certify that the conclusions in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
[1] Rollo, pp. 39-46. Penned by Associate Justice Hector L. Hofileña, with Associate Justices Bernardo
P. Abesamis and Presbitero J. Velasco, Jr. (now a member of this Court) concurring.
[2] Id. at 38.
[3] Alliance of Democratic and Free Labor Organization.

[3] Alliance of Democratic and Free Labor Organization.
[4] Section 1. Modified UNION shop. All union members as of the signing date of this Agreement shall
maintain their membership in good standing during its term or extension as a condition of continued
employment. Those present employees covered by the agreed bargaining unit but not yet members,
although eligible for membership, may join the UNION at any time, while those who shall become
regular employment during the effectivity of the Agreement shall join the UNION within fifteen (15)
days from the date of regular employment also a condition of continued employment.
Section 2. Termination upon UNION demand. The company shall, upon the written demand of
the UNION supported by a duly approved Resolution of its Executive Board, suspend or dismiss from the
company or Union member in the Bargaining Unit, provided the said demand is based on any of the
following grounds:
a) Upon written finding by the UNION Executive Board of a deliberate failure of refusal by a
covered employee to join the UNION as provided for herein to above.
d) Organizing or joining another labor group during the lifetime of this Agreement and
participating in activities derogatory to the UNION decision.
e) Upon written finding by the UNION, copy furnished the COMPANY, of any violation of the
UNION’s Constitution and by Laws, Code of Discipline, and other Rules and Regulations of the UNION,
provided however, that the UNION shall furnish, the COMPANY, within five (5) days after signing of this
Constitution and By-Laws, Code of Discipline and other Rules and Regulation and such other
amendments made from time to time.
f) Non-payment of duly authorized and legitimate UNION dues, fines, fees and other
assessment. (Rollo, pp. 42-43.)
[5] G.R. No. 130866, September 16, 1998, 295 SCRA 494.
[6] Rollo, p. 45.
[7] Id. at 22.
[8] Soriano v. Atienza, G.R. No. 68619, March 16, 1989, 171 SCRA 284, 289-290; National Labor Union
v. Zip Venetian Blind, Nos. L-15827 and L-15828, May 31, 1961, 2 SCRA 509, 514-515.
[9] Soriano v. Atienza, id.
[10] ART. 279. Security of Tenure. - In cases of regular employment, the employer shall not terminate
the services of an employee except for a just cause or when authorized by this Title. An employee who
is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the time
of his actual reinstatement.
[11] An Act to Extend Protection to Labor, Strengthen the Constitutional Rights of Workers to Self-Organization,
Collective Bargaining and Peaceful Concerted Activities, Foster Industrial Peace and Harmony, Promote the
Preferential Use of Voluntary Modes of Settling Labor Disputes, and Reorganize the National Labor Relations
Commission, Amending for these Purposes Certain Provisions of Presidential Decree No. 442, as Amended,
Otherwise Known as the Labor Code of the Philippines, Appropriating Funds Therefor, and for Other Purposes.
Effective March 21, 1989.
[12] Del Monte Philippines, Inc. v. Saldivar, G.R. No. 158620, October 11, 2006, 504 SCRA 192, 211.
Pasted from <http://sc.judiciary.gov.ph/jurisprudence/2007/october2007/141166-67.htm>

del monte v saldivar 504 phil 192 2006
1:01 PM
G.R. No. 158620 October 11, 2006
DEL MONTE PHILIPPINES, INC., ET AL. vs. MARIANO SALDIVAR, ET AL.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 158620 October 11, 2006
DEL MONTE PHILIPPINES, INC. and WARFREDO C. BALANDRA, petitioners,
vs.
MARIANO SALDIVAR, NENA TIMBAL, VIRGINIO VICERA, ALFREDO AMONCIO and NAZARIO S. COLASTE,
respondents.
DECIS ION
TINGA, J.:
The main issue for resolution herein is whether there was sufficient cause for the dismissal of a rank-
and-file employee effectuated through the enforcement of a closed-shop provision in the Collective
Bargaining Agreement (CBA) between the employer and the union.
The operative facts are uncomplicated.
The Associated Labor Union (ALU) is the exclusive bargaining agent of plantation workers of petitioner
Del Monte Philippines, Inc. (Del Monte) in Bukidnon. Respondent Nena Timbal (Timbal), as a rank-and-
file employee of Del Monte plantation in Bukidnon, is also a member of ALU. Del Monte and ALU
entered into a Collective Bargaining Agreement (CBA) with an effective term of five (5) years from 1
September 1988 to 31 August 1993.1
Timbal, along with four other employees (collectively, co-employees), were charged by ALU for
disloyalty to the union, particularly for encouraging defections to a rival union, the National Federation
of Labor (NFL). The charge was contained in a Complaint dated 25 March 1993, which specifically
alleged, in relation to Timbal: "That on July 13, 1991 and the period prior or after thereto, said Nena
Timbal personally recruited other bonafide members of the ALU to attend NFL seminars and has actually
attended these seminars together with the other ALU members."2 The matter was referred to a body
within the ALU organization, ominously named "Disloyalty Board."
The charge against Timbal was supported by an affidavit executed on 23 March 1993 by Gemma Artajo
(Artajo), also an employee of Del Monte. Artajo alleged that she was personally informed by Timbal on
13 July 1991 that a seminar was to be conducted by the NFL on the following day. When Artajo
demurred from attending, Timbal assured her that she would be given honorarium in the amount of
P500.00 if she were to attend the NFL meeting and bring new recruits. Artajo admitted having attended
the NFL meeting together with her own recruits, including Paz Piquero (Piquero). Artajo stated that after
the meeting she was given P500.00 by Timbal.3
Timbal filed an Answer before the Disloyalty Board, denying the allegations in the complaint and the
averments in Artajo's Affidavit. She further alleged that her husband, Modesto Timbal, had filed a
complaint against Artajo for collection of a sum of money on 17 March 1993, or just six (6) days before
Artajo executed her affidavit. She noted that the allegations against her were purportedly committed
nearly two (2) years earlier, and that Artajo's act was motivated by hate and revenge owing to the filing
of the aforementioned civil action.4
Nevertheless, the ALU Disloyalty Board concluded that Timbal was guilty of acts or conduct inimical to
the interests of ALU, through a Resolution dated 7 May 1993.5 It found that the acts imputed to Timbal
were partisan activities, prohibited since the "freedom period" had not yet commenced as of that time.

Thus, the Disloyalty Board recommended the expulsion of Timbal from membership in ALU, and likewise
her dismissal from Del Monte in accordance with the Union Security Clause in the existing CBA between
ALU and Del Monte. The Disloyalty Board also reached the same conclusions as to the co-employees,
expressed in separate resolutions also recommending their expulsion from ALU.6
On 21 May 1993, the Regional Vice President of ALU adopted the recommendations of the Disloyalty
Board and expelled Timbal 7 and her co-employees from ALU.8 The ALU National President affirmed the
expulsion.9 On 17 June 1993, Del Monte terminated Timbal and her co-employees effective 19 June
1993, noting that the termination was "upon demand of [ALU] pursuant to Sections 4 and 5 of Article III
of the current Collective Bargaining Agreement."10
Timbal and her co-employees filed separate complaints against Del Monte and/or its Personnel Manager
Warfredo C. Balandra and ALU with the Regional Arbitration Branch (RAB) of the National Labor
Relations Commission (NLRC) for illegal dismissal, unfair labor practice and damages.11 The complaints
were consolidated and heard before Labor Arbiter Irving Pedilla. The Labor Arbiter affirmed that all five
(5) were illegally dismissed and ordered Del Monte to reinstate complainants, including Timbal, to their
former positions and to pay their full backwages and other allowances, though the other claims and
charges were dismissed for want of basis.12
Only Del Monte interposed an appeal with the NLRC.13 The NLRC reversed the Labor Arbiter and ruled
that all the complainants were validly dismissed.14 On review, the Court of Appeals ruled that only
Timbal was illegally dismissed.15 At the same time, the appellate court found that Del Monte had failed
to observe procedural due process in dismissing the co-employees, and thus ordered the company to
pay P30,000.00 to each of the co-employees as penalties. The co-employees sought to file a Petition for
Review16 with this Court assailing the ruling of the Court of Appeals affirming their dismissal, but the
petition was denied because it was not timely filed.17
On the other hand, Del Monte, through the instant petition, assails the Court of Appeals decision insofar
as it ruled that Timbal was illegally dismissed. Notably, Del Monte does not assail in this petition the
award of P30,000.00 to each of the co-employees, and the ruling of the Court of Appeals in that regard
should now be considered final.
The reason offered by the Court of Appeals in exculpating Timbal revolves around the problematic
relationship between her and Artajo, the complaining witness against her. As explained by the appellate
court:
However, the NLRC should have considered in a different light the situation of petitioner Nena Timbal.
Timbal asserted before the NLRC, and reiterates in this petition, that the statements of Gemma Artajo,
ALU's sole witness against her, should not be given weight because Artajo had an ax[e] to grind at the
time when she made the adverse statements against her. Respondents never disputed the claim of
Timbal that in the two (2) collection suits initiated by Timbal and her husband, Artajo testified for the
defendant in the first case and she was even the defendant in the second case which was won by
Timbal. We find it hard to believe that Timbal would so willingly render herself vulnerable to expulsion
from the Union by revealing to an estranged colleague her desire to shift loyalty. The strained
relationship between Timbal and Artajo renders doubtful the charge against the former that she
attempted to recruit Artajo to join a rival union. Inasmuch as the respondents failed to justify the
termination of Timbal's employment, We hold that her reinstatement to her former position in
accordance with the September 27, 1996 decision of the Labor Arbiter is appropriate.18
The Labor Arbiter, in his favorable ruling to the dismissed employees, had noted that "complainant
Timbal['s] x x x accuser has an axe to grind against her for an unpaid debt so that her testimony cannot
be given credit."19 The NLRC, in reversing the Labor Arbiter, did not see it fit to mention the
circumstances of the apparent feud between Timbal and Artajo, except in the course of narrating
Timbal's allegations.
However, in the present petition, Del Monte utilizes a new line of argument in justifying Timbal's
dismissal. While it does not refute the contemporaneous ill-will between Timbal and Artajo, it
nonetheless alleges that there was a second witness, Paz Piquero, who testified against Timbal before
the Disloyalty Board.20 Piquero had allegedly corroborated Artajo's allegations and positively identified
Timbal as among those present during the seminar of the NFL conducted on 14 July 1992 and as having
given her transportation money after the seminar was finished. Del Monte asserts that Piquero was a
disinterested witness against Timbal.21
Del Monte also submits two (2) other grounds for review. It argues that the decision of the Labor

Del Monte also submits two (2) other grounds for review. It argues that the decision of the Labor
Arbiter, which awarded Timbal full backwages and other allowances, was inconsistent with
jurisprudence which held that an employer who acted in good faith in dismissing employees on the basis
of a closed-shop provision is not liable to pay full backwages.22 Finally, Del Monte asserts that it had,
from the incipience of these proceedings consistently prayed that in the event that it were found with
finality that the dismissal of Timbal and the others is illegal, ALU should be made liable to Del Monte
pursuant to the CBA. The Court of Appeals is faulted for failing to rule upon such claim.
For her part, Timbal observes that Piquero's name was mentioned for the first time in Del Monte's
Motion for Partial Reconsideration of the decision of the Court of Appeals.23 She claims that both
Piquero and Artajo were not in good terms with her after she had won a civil suit for the collection of a
sum of money against their immediate superior, one Virgie Condeza.24
The legality of Timbal's dismissal is obviously the key issue in this case. We are particularly called upon
to determine whether at this late stage, the Court may still give credence to the purported testimony of
Piquero and justify Timbal's dismissal based on such testimony.
It bears elaboration that Timbal's dismissal is not predicated on any of the just or authorized causes for
dismissal under Book Six, Title I of the Labor Code,25 but on the union security clause in the CBA
between Del Monte and ALU. Stipulations in the CBA authorizing the dismissal of employees are of
equal import as the statutory provisions on dismissal under the Labor Code, since "[a] CBA is the law
between the company and the union and compliance therewith is mandated by the express policy to
give protection to labor."26 The CBA, which covers all regular hourly paid employees at the pineapple
plantation in Bukidnon,27 stipulates that all present and subsequent employees shall be required to
become a member of ALU as a condition of continued employment. Sections 4 and 5, Article II of the
CBA further state:
ARTICLE II
Section 4. Loss of membership in the UNION shall not be a ground for dismissal by the Company except
where loss of membership is due to:
1. Voluntary resignation from [ALU] earlier than the expiry date of this [CBA];
2. Non-payment of duly approved and ratified union dues and fees; and
3. Disloyalty to [ALU] in accordance with its Constitution and By-Laws as duly registered with the
Department of Labor and Employment.
Section 5. Upon request of [ALU], [Del Monte] shall dismiss from its service in accordance with law, any
member of the bargaining unit who loses his membership in [ALU] pursuant to the provisions of the
preceding section. [ALU] assumes full responsibility for any such termination and hereby agrees to hold
[Del Monte] free from any liability by judgment of a competent authority for claims arising out of
dismissals made upon demand of [ALU], and [the] latter shall reimburse the former of such sums as it
shall have paid therefor. Such reimbursement shall be deducted from union dues and agency fees until
duly paid.28
The CBA obviously adopts a closed-shop policy which mandates, as a condition of employment,
membership in the exclusive bargaining agent. A "closed-shop" 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.29 A CBA provision for a closed-shop is a valid form of
union security and it is not a restriction on the right or freedom of association guaranteed by the
Constitution.30
Timbal's expulsion from ALU was premised on the ground of disloyalty to the union, which under Section
4(3), Article II of the CBA, also stands as a ground for her dismissal from Del Monte. Indeed, Section 5,
Article II of the CBA enjoins Del Monte to dismiss from employment those employees expelled from ALU
for disloyalty, albeit with the qualification "in accordance with law."
Article 279 of the Labor Code ordains that "in cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized by [Title I, Book Six of
the Labor Code]." Admittedly, the enforcement of a closed-shop or union security provision in the CBA
as a ground for termination finds no extension within any of the provisions under Title I, Book Six of the
Labor Code. Yet jurisprudence has consistently recognized, thus: "It is State policy to promote unionism

to enable workers to negotiate with management on an even playing field and with more
persuasiveness than if they were to individually and separately bargain with the employer. For this
reason, the law has allowed stipulations for 'union shop' and 'closed shop' as means of encouraging
workers to join and support the union of their choice in the protection of their rights and interests vis-a-
vis the employer."31
It might be suggested that since Timbal was expelled from ALU on the ground of disloyalty, Del Monte
had no choice but to implement the CBA provisions and cause her dismissal. Similarly, it might be
posited that any tribunal reviewing such dismissal is precluded from looking beyond the provisions of
the CBA in ascertaining whether such dismissal was valid. Yet deciding the problem from such a closed
perspective would virtually guarantee unmitigated discretion on the part of the union in terminating the
employment status of an individual employee. What the Constitution does recognize is that all workers,
whether union members or not, are "entitled to security of tenure."32 The guarantee of security of
tenure itself is implemented through legislation, which lays down the proper standards in determining
whether such right was violated.33
Agabon v. NLRC34 did qualify that constitutional due process or security of tenure did not shield from
dismissal an employee found guilty of a just cause for termination even if the employer failed to render
the statutory notice and hearing requirement. At the same time, it should be understood that in the
matter of determining whether cause exists for termination, whether under Book Six, Title I of the Labor
Code or under a valid CBA, substantive due process must be observed as a means of ensuring that
security of tenure is not infringed.
Agabon observed that due process under the Labor Code comprised of two aspects: "substantive, i.e.,
the valid and authorized causes of employment termination under the Labor Code; and procedural, i.e.,
the manner of dismissal."35 No serious dispute arose in Agabon over the observance of substantive due
process in that case, or with the conclusion that the petitioners therein were guilty of abandonment of
work, one of the just causes for dismissal under the Labor Code. The controversy in Agabon centered on
whether the failure to observe procedural due process, through the non-observance of the two-notice
rule, should lead to the invalidation of the dismissals. The Court ruled, over the dissents of some
Justices, that the failure by the employer to observe procedural due process did not invalidate the
dismissals for just cause of the petitioners therein. However, Agabon did not do away with the
requirement of substantive due process, which is essentially the existence of just cause provided by law
for a valid dismissal. Thus, Agabon cannot be invoked to validate a dismissal wherein substantive due
process, or the proper determination of just cause, was not observed.
Even if the dismissal of an employee is conditioned not on the grounds for termination under the Labor
Code, but pursuant to the provisions of a CBA, it still is necessary to observe substantive due process in
order to validate the dismissal. As applied to the Labor Code, adherence to substantive due process is a
requisite for a valid determination that just or authorized causes existed to justify the dismissal.36 As
applied to the dismissals grounded on violations of the CBA, observance of substantial due process is
indispensable in establishing the presence of the cause or causes for dismissal as provided for in the
CBA.
Substantive due process, as it applies to all forms of dismissals, encompasses the proper presentation
and appreciation of evidence to establish that cause under law exists for the dismissal of an employee.
This holds true even if the dismissal is predicated on particular causes for dismissal established not by
the Labor Code, but by the CBA. Further, in order that any CBA-mandated dismissal may receive the
warrant of the courts and labor tribunals, the causes for dismissal as provided for in the CBA must satisfy
to the evidentiary threshold of the NLRC and the courts.
It is necessary to emphasize these principles since the immutable truth under our constitutional and
labor laws is that no employee can be dismissed without cause. Agabon may have tempered the
procedural due process requirements if just cause for dismissal existed, but in no way did it eliminate
the existence of a legally prescribed cause as a requisite for any dismissal. The fact that a CBA may
provide for additional grounds for dismissal other than those established under the Labor Code does not
detract from the necessity to duly establish the existence of such grounds before the dismissal may be
validated. And even if the employer or, in this case, the collective bargaining agent, is satisfied that
cause has been established to warrant the dismissal, such satisfaction will be of no consequence if, upon
legal challenge, they are unable to establish before the NLRC or the courts the presence of such causes.
In the matter at bar, the Labor Arbiter—the proximate trier of facts—and the Court of Appeals both duly

In the matter at bar, the Labor Arbiter—the proximate trier of facts—and the Court of Appeals both duly
appreciated that the testimony of Artajo against Timbal could not be given credence, especially in
proving Timbal's disloyalty to ALU. This is due to the prior animosity between the two engendered by
the pending civil complaint filed by Timbal's husband against Artajo. Considering that the civil complaint
was filed just six (6) days prior to the execution of Artajo's affidavit against Timbal, it would be plainly
injudicious to presume that Artajo possessed an unbiased state of mind as she executed that affidavit.
Such circumstance was considered by the Labor Arbiter, and especially the Court of Appeals, as they
rendered a favorable ruling to Timbal. The NLRC may have decided against Artajo, but in doing so, it
failed to provide any basis as to why Artajo's testimony should be believed, instead of disbelieved. No
credible disputation was offered by the NLRC to the claim that Artajo was biased against Timbal; hence,
we should adjudge the findings of the Labor Arbiter and the Court of Appeals as more cogent on that
point.
Before this Court, Del Monte does not even present any serious argument that Artajo's testimony
against Timbal was free from prejudice. Instead, it posits that Piquero's alleged testimony against Timbal
before the Disloyalty Board should be given credence, and that taken with Artajo's testimony, should
sufficiently establish the ground of disloyalty for which Timbal should be dismissed.
The Court sees the danger to jurisprudence and the rights of workers in acceding to Del Monte's
position. The dismissal for cause of employees must be justified by substantial evidence, as appreciated
by an impartial trier of facts. None of the trier of facts below—the Labor Arbiter, the NLRC and the Court
of Appeals—saw fit to accord credence to Piquero's testimony, even assuming that such testimony was
properly contained in the record. Even the NLRC decision, which was adverse to Timbal, made no
reference at all to Piquero's alleged testimony.
Del Monte is able to point to only one instance wherein Piquero's name and testimony appears on the
record. It appears that among the several attachments to the position paper submitted by the ALU
before the NLRC-RAB was a copy of the raw stenographic notes transcribed, apparently on 17 April
1993, during a hearing before the Disloyalty Board. The transcription is not wholly legible, but there
appears to be references therein to the name "Paz Piquero," and her apparent testimony before the
Disloyalty Board. We are unable to reproduce with accuracy, based on the handwritten stenographic
notes, the contents of this seeming testimony of Piquero, although Del Monte claims before this Court
that Piquero had corroborated Artajo's claims during such testimony, "positively identified [Timbal's]
presence in the NFL seminar on 14 July 1992," and "confirmed that Timbal gave Artajo P500.00 for
recruiting participants in the NFL seminar."37
There are evident problems on our part, at this late stage, in appreciating these raw stenographic notes
adverting to the purported testimony of Piquero, especially as a means of definitively concluding that
Timbal was guilty of disloyalty. Certainly, these notes cannot be appreciated as entries in the official
record, which are presumed prima facie evidence of the facts therein stated,38 as such records can only
be made by a public officer of the Philippines or by a person in the performance of a duty specially
enjoined by law. These transcripts were not taken during a hearing conducted by any public office in the
Philippines, but they were committed in the course of an internal disciplinary mechanism devised by a
privately organized labor union. Unless the authenticity of these notes is duly proven before, and
appreciated by the triers of fact, we cannot accord them any presumptive or conclusive value.
Moreover, despite the fact that the apparent record of Piquero's testimony was appended to ALU's
position paper, the position paper itself does not make any reference to such testimony, or even to
Piquero's name for that matter. The position paper observes that "[t]his testimony of [Artajo] was
directly corroborated by her actual attendance on July 14, 1992 at the agreed [venue]," but no mention
is made that such testimony was also "directly corroborated" by Piquero. Then again, it was only Artajo,
and not Piquero, who executed an affidavit recounting the allegations against Timbal.
Indeed, we are inclined to agree with Timbal's observation in her Comment on the present petition that
from the time the complaint was filed with the NLRC-RAB, Piquero's name and testimony were invoked
for the first time only in Del Monte's motion for reconsideration before the Court of Appeals. Other than
the handwritten reference made in the raw stenographic notes attached to ALU's position paper before
the NLRC-RAB, Piquero's name or testimony was not mentioned either by ALU or Del Monte before any
of the pleadings filed before the NLRC-RAB, the NLRC, and even with those submitted to the Court of
Appeals prior to that court's decision.
In order for the Court to be able to appreciate Piquero's testimony as basis for finding Timbal guilty of

In order for the Court to be able to appreciate Piquero's testimony as basis for finding Timbal guilty of
disloyalty, it is necessary that the fact of such testimony must have been duly established before the
NLRC-RAB, the NLRC, or at the very least, even before the Court of Appeals. It is only after the fact of
such testimony has been established that the triers of fact can come to any conclusion as to the veracity
of the allegations in the testimony.
It should be mentioned that the Disloyalty Board, in its Resolution finding Timbal guilty of disloyalty, did
mention that Artajo's testimony "was corroborated by Paz Piquero who positively identified and
testified that Nena Timbal was engaged in recruitment of ALU members at [Del Monte] to attend NFL
seminars."39
The Disloyalty Board may have appreciated Piquero's testimony in its own finding that Timbal was guilty,
yet the said board cannot be considered as a wholly neutral or dispassionate tribunal since it was
constituted by the very organization that stood as the offended party in the disloyalty charge. Without
impugning the integrity of ALU and the mechanisms it has employed for the internal discipline of its
members, we nonetheless hold that in order that the dismissal of an employee may be validated by this
Court, it is necessary that the grounds for dismissal are justified by substantial evidence as duly
appreciated by an impartial trier of facts.40 The existence of Piquero's testimony was appreciated only
by the Disloyalty Board, but not by any of the impartial tribunals which heard Timbal's case. The
appreciation of such testimony by the Disloyalty Board without any similar affirmation or concurrence
by the NLRC-RAB, the NLRC, or the Court of Appeals, cannot satisfy the substantive due process
requirement as a means of upholding Timbal's dismissal.
All told, we see no error on the part of the Court of Appeals when it held that Timbal was illegally
dismissed.
We now turn to the second issue raised, whether the Labor Arbiter correctly awarded full backwages to
Timbal.
Del Monte cites a jurisprudential rule that an employer who acted in good faith in dismissing employees
on the basis of a closed- shop provision may not be penalized even if the dismissal were illegal. Such a
doctrine is admittedly supported by the early case of National Labor Union v. Zip Venetian Blind41 and
the later decision in 1989 of Soriano v. Atienza,42 wherein the Court affirmed the disallowance of
backwages or "financial assistance" in dismissals under the aforementioned circumstance.
However, the Court now recognizes that this doctrine is inconsistent with Article 279 of the Labor Code,
as amended by Republic Act No. 6715, which took effect just five (5) days after Soriano was
promulgated. It is now provided in the Labor Code that "[a]n employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed
from the time his compensation was withheld from him up to the time of his actual reinstatement."
Thus, where reinstatement is adjudged, the award of backwages and other benefits continues beyond
the date of the labor arbiter's decision ordering reinstatement and extends up to the time said order of
reinstatement is actually carried out.43
Rep. Act No. 6715 effectively mitigated previous jurisprudence which had limited the extent to which
illegally dismissed employees could claim for backwages. We explained in Ferrer v. NLRC:44
With the passage of Republic Act No. 6715 which took effect on March 21, 1989, Article 279 of the Labor
Code was amended to read as follows:
Security of Tenure. — In cases of regular employment, the employer shall not terminate the services of
an employee except for a just cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority rights and other
privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the time of his
actual reinstatement.
and as implemented by Section 3, Rule 8 of the 1990 New Rules of Procedure of the National Labor
Relations Commission, it would seem that the Mercury Drug Rule (Mercury Drug Co., Inc. vs. Court of
Industrial Relations, 56 SCRA 694 [1974]) which limited the award of back wages of illegally dismissed
workers to three (3) years "without deduction or qualification" to obviate the need for further
proceedings in the course of execution, is no longer applicable.
A legally dismissed employee may now be paid his back wages, allowances, and other benefits for the
entire period he was out of work subject to the rule enunciated before the Mercury Drug Rule, which is

entire period he was out of work subject to the rule enunciated before the Mercury Drug Rule, which is
that the employer may, however, deduct any amount which the employee may have earned during the
period of his illegal termination (East Asiatic Company, Ltd. vs. Court of Industrial Relations, 40 SCRA 521
[1971]). Computation of full back wages and presentation of proof as to income earned elsewhere by
the illegally dismissed employee after his termination and before actual reinstatement should be
ventilated in the execution proceedings before the Labor Arbiter concordant with Section 3, Rule 8 of
the 1990 New Rules of Procedure of the National Labor Relations Commission.
Inasmuch as we have ascertained in the text of this discourse that the OFC whimsically dismissed
petitioners without proper hearing and has thus opened OFC to a charge of unfair labor practice, it
ineluctably follows that petitioners can receive their back wages computed from the moment their
compensation was withheld after their dismissal in 1989 up to the date of actual reinstatement. In such
a scenario, the award of back wages can extend beyond the 3-year period fixed by the Mercury Drug
Rule depending, of course, on when the employer will reinstate the employees.
It may appear that Article 279 of the Labor Code, as amended by Republic Act No. 6715, has made the
employer bear a heavier burden than that pronounced in the Mercury Drug Rule, but perhaps Republic
Act No. 6715 was enacted precisely for the employer to realize that the employee must be immediately
restored to his former position, and to impress the idea that immediate reinstatement is tantamount to
a cost-saving measure in terms of overhead expense plus incremental productivity to the company
which lies in the hands of the employer.45
The Labor Arbiter's ruling, which entitled Timbal to claim full backwages and other allowances, "without
qualifications and diminutions, computed from the time [she was] illegally dismisse[d] up to the time
[she] will be actually reinstated," conforms to Article 279 of the Labor Code. Hence, the Court of Appeals
was correct in affirming the Labor Arbiter insofar as Timbal was concerned.
Finally, we address the claim that the Court of Appeals erred when it did not rule on Del Monte's claim
for reimbursement against ALU. We do observe that Section 5 of the CBA stipulated that "[ALU] assumes
full responsibility of any such termination [of any member of the bargaining unit who loses his
membership in ALU] and hereby agrees to hold [Del Monte] free from any liability by judgment of a
competent authority for claims arising out of dismissals made upon demand of [ALU], and latter shall
reimburse the former of such sums as it shall have paid therefore."46
This stipulation does present a cause of action in Del Monte's favor should it be held financially liable for
the dismissal of an employee by reason of expulsion from ALU. Nothing in this decision should preclude
the operation of this provision in the CBA. At the same time, we are unable to agree with Del Monte
that the Court of Appeals, or this Court, can implement this provision of the CBA and accordingly directly
condemn ALU to answer for the financial remuneration due Timbal.
Before the Labor Arbiter, Del Monte had presented its cross-claim against ALU for reimbursement
should it be made liable for illegal dismissal or unfair labor practice, pursuant to the CBA. The Labor
Arbiter had actually passed upon this claim for reimbursement, stating that "[as] for the cross-claims of
respondent DMPI and Tabusuares against the respondent ALU-TUCP, this Branch cannot validly
entertain the same in the absence of employer-employee relationship between the former and the
latter."47 We have examined Article 217 of the Labor Code,48 which sets forth the original jurisdiction of
the Labor Arbiters. Article 217(c) states:
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.]
In contrast, Article 261 of the Labor Code indubitably vests on the Voluntary Arbitrator or panel of
Voluntary Arbitrators the "original and exclusive jurisdiction to hear and decide all unresolved
grievances arising from the interpretation or implementation of the Collective Bargaining Agreement."49
Among those areas of conflict traditionally within the jurisdiction of Voluntary Arbitrators are contract-
interpretation and contract-implementation,50 the questions precisely involved in Del Monte's claim
seeking enforcement of the CBA provision mandating restitution by ALU should the company be held
financially liable for dismissals pursuant to the union security clause.
In reconciling the grants of jurisdiction vested under Articles 261 and 217 of the Labor Code, the Court
has pronounced that "the original and exclusive jurisdiction of the Labor Arbiter under Article 217(c) for
money claims is limited only to those arising from statutes or contracts other than a Collective

money claims is limited only to those arising from statutes or contracts other than a Collective
Bargaining Agreement. The Voluntary Arbitrator or Panel of Voluntary Arbitrators will have original and
exclusive jurisdiction over money claims 'arising from the interpretation or implementation of the
Collective Bargaining Agreement and, those arising from the interpretation or enforcement of company
personnel policies', under Article 261."51
Our conclusion that the Labor Arbiter in the instant case could not properly pass judgment on the cross-
claim is further strengthened by the fact that Del Monte and ALU expressly recognized the jurisdiction of
Voluntary Arbitrators in the CBA. Section 2, Article XXXI of the CBA provides:
Section 2. In the event a dispute arises concerning the application of, or interpretation of this
Agreement which cannot be settled pursuant to the [grievance procedure set forth in the] preceding
Section, the dispute shall be submitted to an arbitrator agreed to by [Del Monte] and [ALU].
Should the parties fail to agree on the arbitrator, the same shall be drawn by lottery from a list of
arbitrators furnished by the Bureau of Labor Relations of the Department of Labor and Employment.
xxx x
Thus, as the law indubitably precludes the Labor Arbiter from enforcing money claims arising from the
implementation of the CBA, the CBA herein complementarily recognizes that it is the Voluntary
Arbitrators which have jurisdiction to hear the claim. The Labor Arbiter correctly refused to exercise
jurisdiction over Del Monte's cross-claim, and the Court of Appeals would have no basis had it acted
differently. At the same time, even as we affirm the award of backwages against Del Monte, our ruling
should not operate to prejudice in any way whatever causes of action Del Monte may have against ALU,
in accordance with the CBA.
WHEREFORE, the instant petition is DENIED. The assailed Decision of the Court of Appeals dated 26
August 2002 is AFFIRMED. Costs against petitioner.
SO ORDERED.
Quisumbing, J., Chairperson, Carpio, Carpio Morales, and Velasco, Jr., JJ., concur.
Footnotes
1
Rollo, p. 137.
2 Id. at 163.
3
Id. at 173.
4 Id. at 167-168.
5 Id. at 203-206.
6 Id. at 207-215, 252-255, 257-260.
7 See rollo, p. 216.
8 Id. at 217-218, 256, 261.
9 Id. at 140-141, 266-267, 271-272.
10 See id. at 142-144. See also id. at 73.
11
Rollo, p. 73. "The complaints of Mariano Saldivar and Nazario Colaste were respectively docketed as
RAB 10-07-00433-93 and RAB 10-09-00473-93 while those of Nena Timbal, Virginio Vicera and Alfredo
Amoncio were docketed as RAB 10-07-00442-93."
12 Id. at 364.
13 Id. at 369-382.
14 Id. at 403-423. Decision authored by Acting Presiding Commissioner Oscar N. Abella, concurred in by
Commissioner Leon G. Gonzaga, Jr.

15 In a Decision dated 26 August 2002, penned by then Court of Appeals Associate Justice (now Supreme
Court Associate Justice) Cancio C. Garcia, concurred in by Associate Justices Marina L. Buzon and Eliezer
R. de los Reyes. See rollo, pp. 12-23.
16 Docketed as G.R. No. 158394.
17 In a Resolution dated 1 September 2003. See rollo (G.R. No. 158394), pp. 674-676-401.
18 Rollo, p. 21.
19Id. at 358.
20 See rollo, p. 51.
21 Id. at 52.
22 Particularly citing Confederated Sons of Labor v. Anakan Lumber Co., et al., 107 Phil. 915 (1960);
National Labor Union v. Zip Venetian Blind, 112 Phil. 407 (1961) and Soriano v. Atienza, G.R. No. 68619,
16 March 1989, 171 SCRA 284. See rollo, pp. 55-58.

16 March 1989, 171 SCRA 284. See rollo, pp. 55-58.
23
Rollo, p. 683.
24 Id.
25
See Labor Code, Arts. 282-284.
26
Ferrer v. NLRC, G.R. No. 100898, 5 July 1993, 224 SCRA 410, 418.
27
See rollo, p. 97.
28 Id. at 99-100.
29
Rothenberg on Labor Relations, p. 48; cited in Confederated Sons of Labor v. Anakan Lumber Co., et al.,
107 Phil. 915, 918 (1960).
30 Ferrer v. NLRC, supra note 26 at 418, citing Lirag Textile Mills, Inc. v. Blanco, 109 SCRA 87 (1981).
31 Rivera v. Hon. Espiritu, 425 Phil. 169, 184 (2002), citing Liberty Flour Mills Employees v. Liberty Flour
Mills, Inc., G.R. Nos. 58768-70, 180 SCRA 668, 679-680 (1989).
32
See Constitution, Art. XIII, Sec. 3.
33 See Agabon v. NLRC, G.R. No. 158693, 17 November 2004, 442 SCRA 573, 689-690, J. Tinga, Separate
Opinion citing Phil. Aeolus Automotive United Corp. v. NLRC, 387 Phil. 250 (2000); Gonzales v. National
Labor Relations Commission, 372 Phil. 39 (1999); Jardine Davies v. National Labor Relations Commission,
370 Phil 310 (1999); Pearl S. Buck Foundation v. National Labor Relations Commission, G.R. No. 80728,
February 21, 1990, 182 SCRA 446; Bagong Bayan Corporation, Realty Investors & Developers v. National
Labor Relations Commission, G.R. No. 61272, September 29, 1989, 178 SCRA 107; Labajo v. Alejandro, et
al., No. L-80383, September 26, 1988, 165 SCRA 747; D.M. Consunji, Inc. v. Pucan, et al., No. L-71413,
March 21, 1988, 159 SCRA 107; Santos v. National Labor Relations Commission, L-76271, September 21,
1987, 154 SCRA 166; People's Bank & Trust Co. v. People's Bank & Trust Co. Employees Union, 161 Phil
15 (1976); Philippine Movie Pictures Association v. Premiere Productions, 92 Phil. 843 (1953).
34
Id.
35
Agabon v. NLRC, supra note 33 at 612.
36
"Substantive due process mandates that an employee can only be dismissed based on just or
authorized causes." Maneja v. NLRC, 353 Phil. 45, 66 (1998).
37 Rollo, p. 51.
38
See Rules of Civil Procedure, Rule 130, Sec. 44.
39 Rollo, p. 204.
40 There is no dispute that the requirement of an impartial tribunal is integral to substantive and
administrative due process. "On the imperative of ensuring due process in administrative proceedings,
Ang Tibay laid down the guidelines for administrative tribunals to observe. However, what Ang Tibay
failed to explicitly state was, prescinding from the general principles governing due process, the
requirement of an impartial tribunal which, needless to say, dictates that one called upon to resolve a
dispute may not sit as judge and jury simultaneously, neither may he review his decision on appeal."
GSIS v. Court of Appeals, 357 Phil. 511, 533 (1998).
41 Supra note 22.
42 Id.
43 See Pheschem Industrial Corp. v. Moldez, G.R. No. 161158, 9 May 2005 citing Rasonable v. NLRC, 253
SCRA 815 (1996).

44 Supra note 26 at 423. Incidentally, a case wherein the employees ordered reinstated were dismissed
after having been expelled from their union.

45
Supra note 26 at 423-424.
46 Rollo, p. 100.
47 Id. at 363.
48 Which reads in full: "Art. 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:
(1) Unfair labor practice cases;
(2) Termination disputes;
(3) If accompanied with a claim of reinstatement, those cases that workers may file involving wages,

(4) Claims for actual, moral, exemplary and other forms of damages arising from the employer-
employee relation;
(5) Cases arising from any violation of Article 264 of this Code, including questions involving the legality
of strikes and lockouts; and
(6) Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all
other claims arising from employer-employee relations, including those persons in domestic or
household service, involving an amount exceeding five thousand pesos (P5,000.00), regardless of
whether or not accompanied with a claim for reinstatement.
(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 by
the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be
provided in said agreements."
49
See Labor Code, Art. 261. See also Sanyo Phil. Workers Union v. Canizares, G.R. No. 101619, 8 July
1992.
50 See Vivero v. Court of Appeals, 398 Phil. 158, 170 (2000).
51 San Jose v. NLRC, 355 Phil. 759, 772 (1998).

imperial textile v sampang 219 s 651 - 1993
1:01 PM
No motions for reconsideration of

VA decisions are allowed.
G.R. No. 94960 March 8, 1993
IMPERIAL TEXTILE MILLS, INC., petitioner,
vs.
HON. VLADIMIR P.L. SAMPANG and IMPERIAL TEXTILE MILLS-MONTHLY EMPLOYEES
ASSOCIATION (ITM-MEA), respondents.
Batino, Angala, Salud & Fabia Law Offices for petitioner.
Carlo A. Domingo for private respondent.
CRUZ, J.:
On March 20, 1987, petitioner Imperial Textile Mills, Inc. (the Company, for brevity) and
respondent Imperial Textile Mills-Monthly Employees Association (the Union, for brevity)
entered into a collective bargaining agreement providing across-the-board salary increases and
other benefits retroactive to November 1, 1986.
On August 21, 1987, they executed another agreement on the job classification and wage
standardization plan. This was also to take effect retroactively on November 1, 1986.
A dispute subsequently arose in the interpretation of the two agreements. The parties then
submitted it to arbitration and designated public respondent Vladimir P.L. Sampang as the
Voluntary Arbitrator. The understanding was that his decision would be final, executory and
inappealable. 1
The Company maintained that the wage of a particular employee subject of possible adjustment
on base pay should be the pay with the first year CBA increase already integrated therein.
The Union argued that the CBA increases should not be included in adjusting the wages to the
base pay level, as it was separate and distinct from the increases resulting from the job
classification and standardization scheme.
On July 12, 1988, the Voluntary Arbitrator rendered a decision upholding the formula used by
the Company.
The Union filed a motion for reconsideration which was opposed by the Company.
On December 14, 1988, after a conference with the parties, the Voluntary Arbitrator rendered
another decision, this time in favor of the Union.
On January 20, 1989, the Company appealed to the NLRC. The appeal was dismissed for lack
of jurisdiction. The reason was that the original rule allowing appeal if the Voluntary Arbitrator's
award was more than P100,000.00 had already been repealed by BP 130. Moreover, under
Article 262-A of the Labor Code, as amended, awards or decisions of voluntary arbitrators
become final and executory after calendar 10 days from notice thereof to the parties.
The Company then came to this Court in this petition for certiorari under Rule 65 of the Rules of
Court.
The Court has deliberated on the arguments of the parties in light of the established facts and
the applicable law and finds for the Company.
The Union erred in filing a motion for reconsideration of the decision dated July 12, 1988. So did
the respondent Voluntary Arbitrator in entertaining the motion and vacating his first decision.
When the parties submitted their grievance to arbitration, they expressly agreed that the
decision of the Voluntary Arbitrator would be final, executory and inappealable. In fact, even
without this stipulation, the first decision had already become so by virtue of Article 263 of the
Labor Code making voluntary arbitration awards or decisions final and executory.
The philosophy underlying this rule was explained by Judge Freedman in the case of La Vale
Plaza, Inc., v. R.S. Noonan, Inc., 2 thus:
It is an equally fundamental common law principle that once an arbitrator has made and published a final
award, his authority is exhausted and be is functus officio and can do nothing more in regard to the
subject matter of the arbitration. The policy which lies behind this is an unwillingness to permit one who

subject matter of the arbitration. The policy which lies behind this is an unwillingness to permit one who
not a is judicial officer and who acts informally and sporadically, to re-examine a final decision which he
has already rendered, because of the potential evil of outside communication and unilateral influence
which might affect a new conclusion. The continuity of judicial office and the tradition which surround
judicial conduct is lacking in the isolated activity of an arbitrator, although even here the vast increase in
the arbitration of labor disputes has created the office of the specialized provisional arbitrator.
(Washington-Baltimore N.G., Loc. 35 v. Washington Post Co., 442 F. 2d 1234 (1971], pp. 1238-1239)
In the case of The Consolidated Bank & Trust Corporation (SOLIDBANK) v. Bureau of Labor
Relations, et al., 3 this Court held that the Voluntary Arbitrator lost jurisdiction over the case
submitted to him the moment be rendered his decision. Therefore, he could no longer entertain
a motion for reconsideration of the decision for its reversal or modification. Thus:
By modifying the original award, respondent arbitrator exceeded his authority as such, a fact he was well
aware of, as shown by his previous Resolution of Inhibition wherein he refused to act on the Union's
motion for reconsideration of the award or decision. Thus, respondent arbitrator emphatically ruled:
It would be well to remind the Parties in this case that the arbitration law or jurisprudence on the matter is
explicit in its stand against revocation and amendment of the submission agreement and the arbitration
award once such has been made. The rationale behind this is that:
An award should be regarded as the judgment of a court of last resort, so that all reasonable
presumptions should be ascertained in its favor and none to overthrow it. Otherwise, arbitration
proceedings, instead of being a quick and easy mode of obtaining justice, would be merely an
unnecessary step in the course of litigation, causing delay and expenses, but not finally settling anything.
Notwithstanding the natural reluctance of the courts to interfere with matters determined by the
arbitrators. they will do so in proper cases where the law ordains them. (Arbitration, Manguiat, citing U.S.
v. Gleason, 175 US 588)
The power and authority of the Voluntary Arbitrator to act in the case commences from his appointment
and acceptance to act as such under the submission agreement of the Parties and terminates upon his
rendition of his decision or award which is accorded the benefits of the doctrine of res judicata as in
judgments of our regular courts of law. Since the power and authority of the arbitrator to render a valid
award, order or resolution rest upon the continuing mutual consent of the parties, and there is none
shown here, the Voluntary Arbitrator has no choice but to decline to rule on the pleadings submitted by
the parties. (Emphasis supplied)
It is true that the present rule makes the voluntary arbitration award final and executory after ten
calendar days from receipt of the copy of the award or decision by the parties. 4 Presumably, the
decision may still be reconsidered by the Voluntary Arbitrator on the basis of a motion for
reconsideration duly filed during that period. Such a provision, being procedural, may be applied
retroactively to pending actions as we have held in a number of cases. 5 However, it cannot be
applied to a case in which the decision had become final before the new provision took effect,
as in the case at bar. 6 R.A. 6715, which introduced amended Article 262-A of the Labor Code,
became effective on March 21, 1989. The first decision of the Voluntary Arbitrator was rendered
on July 12, 1988, when the law in force was Article 263 of the Labor Code, which provided that:
Voluntary arbitration awards or decisions shall be final, inappealable, and executory.
The above-quoted provision did not expressly fix the time when the Voluntary Arbitrator's
decision or award would become final. We have held, however, that it would assume the
attribute of finality upon its issuance, subject only to judicial review in appropriate cases. 7
The public respondent exceeded his authority when he acted on the Union's motion for
reconsideration and reversed his original decision. Corollarily his second decision dated
December 14, 1988, having been rendered in violation of law, must be considered null and void
and of no force and effect whatsoever. 8
WHEREFORE, the decision of the Voluntary Arbitrator dated December 14, 1988, is SET
ASIDE for lack of jurisdiction and his decision dated July 12, 1988, is REINSTATED.
SO ORDERED.
Griño-Aquino, Bellosillo and Quiason, JJ., concur.
# Footnotes
1 Original Records, p. 1.
2 Fernandez, Labor Arbitration, 1975 ed., p. 380.
3 G.R. No. 64926, October 15, 1984.
4 Article 262-A, Labor Code, as amended by R.A. 6715.
5 Enrile v. CFI, 36 Phil. 574; Hosana v. Diomano and Diomano, 56 Phil. 741; Laguio v. Gamet, 171 SCRA
392).
6 People v. Sumilang, 77 Phil. 764.
7 Consolidated Bank & Trust Corp. (SOLIDBANK) v. Bureau of Labor Relations, supra.
8 Ibid.; Cayena v. NLRC, 194 SCRA 134; Egypt Air Local Employees Association NTUIA-Transphil Tupas

7 Consolidated Bank & Trust Corp. (SOLIDBANK) v. Bureau of Labor Relations, supra.
8 Ibid.; Cayena v. NLRC, 194 SCRA 134; Egypt Air Local Employees Association NTUIA-Transphil Tupas
v. NLRC, et al., G.R. No. 98933.

smc v nlrc 255 s 133 -1996
1:01 PM
Company personnel policies: guiding

principles stated in broad, long-range
terms that express the philosophy or
beliefs of an organization’s top authority
regarding personnel matters. The usual
source of grievances are rules and
regulations governing disciplinary
actions.
Discharges based on redundancy
can hardly be considered a
company personnel policy.
CBA agreement to arbitrate must be
plain and unambiguous – must
expressly state that termination disputes
and unfair labor practice cases under
voluntary arbitration.
In the same manner, job security
provisions invoking grievance
procedure must be strictly construed
(e.g. union reconsideration
requirement).
G.R. No. 108001 March 15, 1996
SAN MIGUEL CORPORATION, ANGEL G. ROA and MELINDA MACARAIG, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Second Division), LABOR ARBITER
EDUARDO J. CARPIO, ILAW AT BUKLOD NG MANGGAGAWA (IBM), ET AL., respondents.
HERMOSISIMA, JR., J.:p

HERMOSISIMA, JR., J.:p
In the herein petition for certiorari under Rule 65, petitioners question the jurisdiction of the
Labor Arbiter to hear a complaint for unfair labor practice, illegal dismissal, and damages,
notwithstanding the provision for grievance and arbitration in the Collective Bargaining
Agreement.
Let us unfurl the facts.
Private respondents, employed by petitioner San Miguel Corporation (SMC) as mechanics,
machinists, and carpenters, were and still are, bona fide officers and members of private
respondent Ilaw at Buklod ng Manggagawa.
On or about July 31, 1990, private respondents were served a Memorandum from petitioner
Angel G. Roa, Vice-President and Manager of SMC's Business Logistics Division (BLD), to the
effect that they had to be separated from the service effective October 31, 1990 on the ground
of "redundancy or excess personnel." Respondent union, in behalf of private respondents,
opposed the intended dismissal and asked for a dialogue with management.
Accordingly, a series of dialogues were held between petitioners and private respondents. Even
before the conclusion of said dialogues, the aforesaid petitioner Angel Roa issued another
Memorandum on October 1, 1990 informing private respondents that they would be dismissed
from work effective as of the close of business hours on November 2, 1990. Private
respondents were in fact purged on the date aforesaid.
Thus, on February 25, 1991, private respondents filed a complaint against petitioners for Illegal
Dismissal and Unfair Labor Practices, with a prayer for damages and attorney's fees, with the
Arbitration Branch of respondent National Labor Relations Commission. The complaint 1 was
assigned to Labor Arbiter Eduardo F. Carpio for hearing and proper disposition.
On April 15, 1991, petitioners filed a motion to dismiss the complaint, alleging that respondent
Labor Arbiter had no jurisdiction over the subject matter of the complaint, and that respondent
Labor Arbiter must defer consideration of the unfair labor practice complaint until after the
parties have gone through the grievance procedure provided for in the existing Collective
Bargaining Agreement (CBA). Respondent Labor Arbiter denied this motion in a Resolution,
dated September 23, 1991.
The petitioners appealed the denial to respondent Commission on November 8, 1991.
Unimpressed by the grounds therefor, respondent Commission dismissed the appeal in its
assailed Resolution, dated August 11, 1992. Petitioners promptly filed a Motion for
Reconsideration which, however, was denied through the likewise assailed Resolution, dated
October 29, 1992.
Hence, the instant petition for certiorari alleging the following grounds was filed by the
petitioners:
I
RESPONDENT LABOR ARBITER CANNOT EXERCISE JURISDICTION OVER THE ALLEGED
ILLEGAL TERMINATION AND ALLEGED ULP CASES WITHOUT PRIOR RESORT TO GRIEVANCE
AND ARBITRATION PROVIDED UNDER THE CBA.
II
THE STRONG STATE POLICY ON 'THE PROMOTION OF VOLUNTARY MODES OF SETTLEMENT
OF LABOR DISPUTES CRAFTED IN THE CONSTITUTION AND THE LABOR CODE DICTATES THE
SUBMISSION OF THE CBA DISPUTE TO GRIEVANCE AND ARBITRATION. 2
Petitioners posit the basic principle that a collective bargaining agreement is a contract between
management and labor that must bind and be enforced in the first instance as between the
parties thereto. In this case, the CBA between the petitioners and respondent union provides,
under Section 1, Article V entitled ARBITRATION, that "wages, hours of work, conditions of
employment and/or employer-employee relations shall be settled by arbitration." Petitioners'
thesis is that the dispute as to the termination of the union members and the unfair labor
practice should first be settled by arbitration, and not directly by the labor arbiter, following the
above provision of the CBA, which ought to be treated as the law between the parties thereto.
The argument is unmeritorious. The law in point is Article 217 (a) of the Labor Code. It is
elementary that this law is deemed written into the CBA. In fact, the law speaks in plain and
unambiguous terms that termination disputes, together with unfair labor practices, are matters
falling under the original and exclusive jurisdiction of the Labor Arbiter, to wit:
Art. 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 . . . the following cases involving all workers, whether

(2) Termination disputes;
xxx xxx xxx
The sole exception to the above rule can be found under Article 262 of the same Code, which
provides:
Art. 262. Jurisdiction over other labor disputes — The voluntary arbitrator or panel of voluntary arbitrators,
upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor
practices and bargaining dead locks. (As added by RA 6715).
We subjected the records of this case, particularly the CA to meticulous scrutiny and we find no
agreement between SMC and the respondent union that would state in unequivocal language
that petitioners and the respondent union conform to the submission of termination disputes and
unfair labor practices to voluntary arbitration. Section 1, Article V of the CBA, cited by the herein
petitioners, certainly does not provide so. Hence, consistent with the general rule under Article
217 (a) of the Labor Code, the Labor Arbiter properly has jurisdiction over the complaint filed by
the respondent union on February 25, 1991 for illegal dismissal and unfair labor practice.
Petitioners point however to Section 2, Article III of the CBA, under the heading Job Security, to
show that the dispute is a proper subject of the grievance procedure, viz:
. . . The UNION, however, shall have the right to seek reconsideration of any discharge, lay-off or
disciplinary action, and such requests for reconsideration shall be considered a dispute or grievance to be
dealt with in accordance with the procedure outlined in Article IV hereof [on Grievance Machinery] . . . 3
(Emphasis ours)
Petitioners allege that respondent union requested management for a "reconsideration and
review" of the company's decision to terminate the employment of the union members. By this
act, petitioners argue, respondent union recognized that the questioned dismissal is a grievable
dispute by virtue of Section 2, Article III of the CBA. This allegation was strongly denied by the
respondent union. In a Memorandum filed for the public respondent NLRC, the Solicitor General
supported the position of the respondent union that it did not seek reconsideration from the
SMC management in regard to the dismissal of the employees.
Petitioners fail miserably to prove that, indeed, the respondent union requested for a
reconsideration or review of the management decision to dismiss the private respondents. A
punctilious examination of the records indubitably reveals that at no time did the respondent
union exercise its right to seek reconsideration of the company's move to terminate the
employment of the union members, which request for reconsideration would have triggered the
application of Section 2, Article III of the CBA, thus resulting in the treatment of the dispute as a
grievance to be dealt with in accordance with the Grievance Machinery laid down in Article IV of
the CBA. Stated differently, the filing of a request for reconsideration by the respondent union,
which is the condition sine qua non to categorize the termination dispute and the ULP complaint
as a grievable dispute, was decidedly absent in the case at bench. Hence, the respondent union
acted well within their rights in filing their complaint for illegal dismissal and ULP directly with the
Labor Arbiter under Article 217 (a) of the Labor Code.
Second. Petitioners insist that involved in the controversy is the interpretation and
implementation of the CBA which is grievable and arbitrable by law under Article 217 (c) of the
Labor Code, viz:
Art. 217 (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. (As amended by RA 6715).
Petitioners theorize that since respondents questioned the discharges, the main question for
resolution is whether SMC had the management right or prerogative to effect the discharges on
the ground of redundancy, and this necessarily calls for the interpretation or implementation of
Article III (Job Security) in relation to Article IV (Grievance Machinery) of the CBA. 4
Petitioner's theory does not hold water. There is no connection whatsoever between SMC's
management prerogative to effect the discharges and the interpretation or implementation of
Articles III and IV of the CBA. The only relevant provision under Article III that may need
interpretation or implementation is Section 2 which was cited herein. However, as patiently
pointed out by this court, said provision does not come into play considering that the union
never exercised its right to seek reconsideration of the discharges effected by the company. It
would have been different had the union sought reconsideration. Such recourse under Section 2
would have been treated as a grievance under Article IV (Grievance Machinery) of the CBA,
thus calling for the possible interpretation or implementation of the entire provision on Grievance
Machinery as agreed upon by the parties. This was not the case however. The union brought

Machinery as agreed upon by the parties. This was not the case however. The union brought
the termination dispute directly to the Labor Arbiter rendering Articles III and IV of the CBA
inapplicable for the resolution of this case.
The discharges, petitioners also contend, call for the interpretation or enforcement of company
personnel policies, particularly SMC's personnel policies on lay-offs arising from redundancy,
and so, they may be considered grievable and arbitrable by virtue of Article 217 (c). Not
necessarily so. Company personnel policies are guiding principles stated in broad, long-range
terms that express the philosophy or beliefs of an organization's top authority regarding
personnel matters. They deal with matters affecting efficiency and well being of employees and
include, among others, the procedure in the administration of wages, benefits, promotions,
transfer and other personnel movements which are usually not spelled out in the collective
agreement. The usual source of grievances, however, is the rules and regulations governing
disciplinary actions. 5 Judging therefrom, the questioned discharges due to alleged redundancy
can hardly be considered company personnel policies and therefore need not directly be subject
to the grievance machinery nor to voluntary arbitration.
Third. Petitioners would like to persuade us that respondents' ULP claims are merely conclusory
and cannot serve to vest jurisdiction to the Labor Arbiters. Petitioners argue with passion: "How
was the employee discharges' (sic) right to self-organization restrained by their termination?
Respondent did not show. There is no allegation of the existence of anti-union animus or of the
ultimate facts showing how the discharges affected the rights to self-organization of individual
respondents." 6 In short, petitioners maintain that respondents complaint does not allege a
genuine case for ULP.
The Court is not convinced.
The complaint alleges that:
5. Individual complainants are bona fide officers and members of complainant Ilaw at Buklod ng
Manggagawa (IBM). They are active and militant in the affairs and activities of the union.
xxx xxx xxx
23. The dismissal or lock-out from work of the individual complainants clearly constitutes an act of unfair
labor practices in the light of the fact that the work being performed by the individual complainants are
being contracted out by the respondent company, and, therefore, deprives individual complainants of their
right to work and it constitutes a criminal violation of existing laws.
xxx xxx xxx
25. The acts of the respondent company in economically coercing employees to accept payment of
separation and/or retirement benefits, pending final resolution of the labor disputes between the parties
constitute acts of unfair labor practice in the light of the fact that there is undue interference, restraint, and
coercion of employees in the exercise of their right to self-organization and collective bargaining. 7
Short of pre-empting the proceedings before the Labor Arbiter, the above complaint, makes out
a genuine case for ULP.
In Manila Pencil Co. v. CIR, 8 this Court had occasion to observe that even where business
conditions justified a lay-off of employees, unfair labor practices were committed in the form of
discriminatory dismissal where only unionists were permanently dismissed. This was despite the
valid excuse given by the Manila Pencil Company that the dismissal of the employees was due
to the reduction of the company's dollar allocations for importation and that both union members
and non-union members were laid-off. The Court, thru Justice Makalintal, rebuffed the petitioner
Company and said:
. . . The explanation, however, does not by any means account for the permanent dismissal of five of the
unionists, where it does not appear that non-unionists were similarly dismissed.
xxx xxx xxx
And the discrimination shown by the Company strongly is confirmed by the fact that during the period
from October 1958 to August 17, 1959 it hired from fifteen to twenty new employees and ten apprentices.
It says these employees were for its new lead factory, but is (sic) not shown that the five who had been
permanently dismissed were not suitable for work in that new factory.
A similar ruling was made by this Court in People's Bank and Trust Co. v. People's Bank and
Trust Co. Employees Union 9 involving the lay-off by a bank of sixty-five (65) employees who
were active union members allegedly by reason of retrenchment. The Court likewise found the
employer in that case to have committed ULP in effecting the discharges.
This Court was more emphatic however in Bataan Shipyard and Engineering Co., Inc. v. NLRC,
et al.: 10
Under the circumstances obtaining in this case, We are inclined to believe that the company had indeed
been discriminatory in selecting the employees who were to be retrenched. All of the retrenched
employees are officers and members of the NAFLU. The record of the case is bereft of any satisfactory
explanation from the Company regarding this situation. As such, the action taken by the firm becomes

explanation from the Company regarding this situation. As such, the action taken by the firm becomes
highly suspect. It leads Us to conclude that the firm had been discriminating against membership in the
NAFLU, an act which amounts to interference in the employees' exercise of their right of self-organization.
Under Art. 249 (now Art. 248) of the Labor Code of the Philippines, such interference is considered an act
of unfair labor practice on the part of the Company . . . (Emphasis ours).
It matters not that the cause of termination in the above cited cases was retrenchment while that
in the instant case was redundancy. The important fact is that in all of these cases, including the
one at bar, all of the dismissed employees were officers and members of their respective
unions, and their employers failed to give a satisfactory explanation as to why this group of
employees was singled out.
It may be the case that employees other than union members may have been terminated also
by petitioner SMC on account of its redundancy program. If that is true, the discharges may
really be for a bona fide authorized cause under Article 283 11 of the Labor Code. On the other
hand, it is also possible that such may only be a clever scheme of the petitioner company to
camouflage its real intention of discriminating against union members particularly the private
respondents. In any case, these matters will be best ventilated in a hearing before the Labor
Arbiter.
It is for the above reason that we cannot hold the petitioners guilty of the ULP charge. This will
be the task of the Labor Arbiter. We however find that based on the circumstances surrounding
this case and settled jurisprudence on the subject, the complaint filed by the private
respondents on February 25, 1991 alleges facts sufficient to constitute a bona fide case of ULP,
and therefore properly cognizable by the Labor Arbiter under Article 217 (a) of the Labor Code.
This is consistent with the rule that jurisdiction over the subject matter is determined by the
allegations of the complaint. 12
Finally, petitioners try to impress on this Court the strong State policy on the promotion of
voluntary modes of settlement of labor disputes crafted in the Constitution and the Labor Code
which dictate the submission of the CBA dispute to grievance and arbitration. 13
In this regard, the response of the Solicitor General is apt:
Petitioners deserve commendation for divulging and bringing to public respondents' attention the noble
legislative intent behind the law mandating the inclusion of grievance and voluntary arbitration provisions
in the CBA. However, in the absence of an express legal conferment thereof, jurisdiction cannot be
appropriated by an official or tribunal (sic) no matter how well-intentioned it is, even in the pursuit of the
dearest substantial right (Concurring Opinion of Justice Barredo, Estanislao v. Honrado, 114 SCRA 748,
29 June 1982). 14
In the same manner, petitioners cannot arrogate into the powers of voluntary arbitrators the original and
exclusive jurisdiction of Labor Arbiters over unfair labor practices, termination disputes, and claims for
damages, in the absence of an express agreement between the parties in order for Article 262 15 of the
Labor Law to apply in the case at bar. 16
WHEREFORE, the instant petition is DISMISSED for lack of merit and the resolutions of the
National Labor Relations Commission dated August 11, 1992 and October 29, 1992 are hereby
AFFIRMED.
SO ORDERED.
Bellosillo, Vitug and Kapunan, JJ., concur.
Padilla, J., took no part.
Footnotes
1 Docketed as NLRC-NCR-Case No. 00-02-01210-91.
2 Petition, p. 15; Rollo, p. 237.
3 Rollo, p. 41.
4 Rollo, p. 242.
5 C.A. Azucena, The Labor Code With Comments and Cases, Volume II, 1993 ed., p. 272.
7 Rollo, pp. 82, 86.
8 14 SCRA 955 [1965].
9 69 SCRA 10 [1976].
10 161 SCRA 271 [1988].
11 Art. 283. Closure of establishment and reduction of personnel. — The employer may also terminate
the employment of any employee due to the installation of labor-saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation of the establishment or
undertaking . . .
12 Regalado, Florenz D., Remedial Law Compendium, Volume One, Fifth Revised Edition. p. 8. citing
Edward J. Nell & Co. v. Cubacub, L-20843, 23 June 1965; Time, Inc. v. Reyes, L-28882, 31 May 1971;
Ganadin v. Ramos, L-23547, 11 September 1980.

14 Memorandum of Public Respondents, p. 13; p. 271.
15 Art. 262, Jurisdiction over other labor disputes. — The voluntary arbitrator or panel or voluntary
arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including
16 Rollo, p. 272.

continental marble v nlrc 161 s 151 1998
1:02 PM
Findings of VA must be supported

by substantial evidence
G.R. No. L-43825 May 9, 1988
CONTINENTAL MARBLE CORP. and FELIPE DAVID, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC); ARBITRATOR JOSE T. COLLADO
and RODITO NASAYAO, respondents.
Benito P. Fabie for petitioners.
Narciso C. Parayno, Jr. for respondents.
PADILLA, J.:
In this petition for mandamus, prohibition and certiorari with preliminary injunction, petitioners
seek to annul and set aside the decision rendered by the respondent Arbitrator Jose T. Collado,
dated 29 December 1975, in NLRC Case No. LR-6151, entitled: "Rodito Nasayao, complainant,
versus Continental Marble Corp. and Felipe David, respondents," and the resolution issued by
the respondent Commission, dated 7 May 1976, which dismissed herein petitioners' appeal
from said decision.
In his complaint before the NLRC, herein private respondent Rodito Nasayao claimed that
sometime in May 1974, he was appointed plant manager of the petitioner corporation, with an
alleged compensation of P3,000.00, a month, or 25% of the monthly net income of the
company, whichever is greater, and when the company failed to pay his salary for the months of
May, June, and July 1974, Rodito Nasayao filed a complaint with the National Labor Relations
Commission, Branch IV, for the recovery of said unpaid varies. The case was docketed therein
as NLRC Case No. LR-6151.
Answering, the herein petitioners denied that Rodito Nasayao was employed in the company as
plant manager with a fixed monthly salary of P3,000.00. They claimed that the undertaking
agreed upon by the parties was a joint venture, a sort of partnership, wherein Rodito Nasayao
was to keep the machinery in good working condition and, in return, he would get the contracts
from end-users for the installation of marble products, in which the company would not interfere.
In addition, private respondent Nasayao was to receive an amount equivalent to 25% of the net
profits that the petitioner corporation would realize, should there be any. Petitioners alleged that
since there had been no profits during said period, private respondent was not entitled to any
amount.
The case was submitted for voluntary arbitration and the parties selected the herein respondent
Jose T. Collado as voluntary arbitrator. In the course of the proceedings, however, the herein
petitioners challenged the arbitrator's capacity to try and decide the case fairly and judiciously
and asked him to desist from further hearing the case. But, the respondent arbitrator refused. In
due time, or on 29 December 1975, he rendered judgment in favor of the complainant, ordering
the herein petitioners to pay Rodito Nasayao the amount of P9,000.00, within 10 days from
notice. 1
Upon receipt of the decision, the herein petitioners appealed to the National Labor Relations
Commission on grounds that the labor arbiter gravely abused his discretion in persisting to hear
and decide the case notwithstanding petitioners' request for him to desist therefrom: and that
the appealed decision is not supported by evidence. 2
On 18 March 1976, Rodito Nasayao filed a motion to dismiss the appeal on the ground that the
decision of the voluntary arbitrator is final, unappealable, and immediately executory; 3 and, on
23 March 1976, he filed a motion for the issuance of a writ of execution. 4
Acting on the motions, the respondent Commission, in a resolution dated 7 May 1976,
dismissed the appeal on the ground that the decision appealed from is final, unappealable and
immediately executory, and ordered the herein petitioners to comply with the decision of the
voluntary arbitrator within 10 days from receipt of the resolution. 5

voluntary arbitrator within 10 days from receipt of the resolution. 5
The petitioners are before the Court in the present recourse. As prayed for, the Court issued a
temporary restraining order, restraining herein respondents from enforcing and/or carrying out
the questioned decision and resolution. 6
The issue for resolution is whether or not the private respondent Rodito Nasayao was employed
as plant manager of petitioner Continental Marble Corporation with a monthly salary of
P3,000.00 or 25% of its monthly income, whichever is greater, as claimed by said respondent,
or entitled to receive only an amount equivalent to 25% of net profits, if any, that the company
would realize, as contended by the petitioners.
The respondent arbitrator found that the agreement between the parties was for the petitioner
company to pay the private respondent, Rodito Nasayao, a monthly salary of P3,000.00, and,
consequently, ordered the company to pay Rodito Nasayao the amount of P9,000.00 covering a
period of three (3) months, that is, May, June and July 1974.
The respondent Rodito Nasayao now contends that the judgment or award of the voluntary
arbitrator is final, unappealable and immediately executory, and may not be reviewed by the
Court. His contention is based upon the provisions of Art. 262 of the Labor Code, as amended.
The petitioners, upon the other hand, maintain that "where there is patent and manifest abuse of
discretion, the rule on unappealability of awards of a voluntary arbitrator becomes flexible and it
is the inherent power of the Courts to maintain the people's faith in the administration of justice."
The question of the finality and unappealability of a decision and/or award of a voluntary
arbitrator had been laid to rest in Oceanic Bic Division (FFW) vs. Romero, 7 and reiterated in
Mantrade FMMC Division Employees and Workers Union vs. Bacungan. 8 The Court therein
ruled that it can review the decisions of voluntary arbitrators, thus-
We agree with the petitioner that the decisions of voluntary arbitrators must be given the highest respect
and as a general rule must be accorded a certain measure of finality. This is especially true where the
arbitrator chosen by the parties enjoys the first rate credentials of Professor Flerida Ruth Pineda Romero,
Director of the U.P. Law Center and an academician of unquestioned expertise in the field of Labor Law.
It is not correct, however, that this respect precludes the exercise of judicial review over their decisions.
Article 262 of the Labor Code making voluntary arbitration awards final, inappealable, and executory
except where the money claims exceed P l 00,000.00 or 40% of paid-up capital of the employer or where
there is abuse of discretion or gross incompetence refers to appeals to the National Labor Relations
Commission and not to judicial review.
Inspite of statutory provisions making 'final' the decisions of certain administrative agencies, we have
taken cognizance of petitions questioning these decisions where want of jurisdiction, grave abuse of
discretion, violation of due process, denial of substantial justice, or erroneous interpretation of the law
were brought to our attention. There is no provision for appeal in the statute creating the Sandiganbayan
but this has not precluded us from examining decisions of this special court brought to us in proper
petitions. ...
The Court further said:
A voluntary arbitrator by the nature of her fucntions acts in quasi-judicial capacity. There is no reason why
herdecisions involving interpretation of law should be beyond this Court's review. Administrative officials
are presumed to act in accordance with law and yet we do hesitate to pass upon their work where a
question of law is involved or where a showing of abuse of authority or discretion in their official acts is
properly raised in petitions for certiorari.
The foregoing pronouncements find support in Section 29 of Republic Act No. 876, otherwise
known as the Arbitration Law, which provides:
Sec. 29. Appeals — An appeal may be taken from an order made in a proceeding under this Act, or from
a judgment entered upon an award through certiorari proceedings, but such appeals shall be limited to
questions of law. The proceedings upon such an appeal, including the judgment thereon shall be
governed by the Rules of Court in so far as they are applicable.
The private respondent, Rodito Nasayao, in his Answer to the petition, 9 also claims that the
case is premature for non-exhaustion of administrative remedies. He contends that the decision
of the respondent Commission should have been first appealed by petitioners to the Secretary
of Labor, and, if they are not satisfied with his decision, to appeal to the President of the
Philippines, before resort is made to the Court.
The contention is without merit. The doctrine of exhaustion of administrative remedies cannot be
invoked in this case, as contended. In the recent case of John Clement Consultants, Inc. versus
National Labor Relations Commission, 10 the Court said:
As is well known, no law provides for an appeal from decisions of the National Labor Relations
Commission; hence, there can be no review and reversal on appeal by higher authority of its factual or
legal conclusions. When, however, it decides a case without or in excess of its jurisdiction, or with grave
abuse of discretion, the party thereby adversely affected may obtain a review and nullification of that

decision by this Court through the extraordinary writ of certiorari. Since, in this case, it appears that the
Commission has indeed acted without jurisdiction and with grave abuse of discretion in taking cognizance
of a belated appeal sought to be taken from a decision of Labor Arbiter and thereafter reversing it, the writ
of certiorari will issue to undo those acts, and do justice to the aggrieved party.
We also find no merit in the contention of Rodito Nasayao that only questions of law, and not
findings of fact of a voluntary arbitrator may be reviewed by the Court, since the findings of fact
of the voluntary arbitrator are conclusive upon the Court.
While the Court has accorded great respect for, and finality to, findings of fact of a voluntary
arbitrator 11 and administrative agencies which have acquired expertise in their respective fields,
like the Labor Department and the National Labor Relations Commission, 12 their findings of fact
and the conclusions drawn therefrom have to be supported by substantial evidence. ln that
instant case, the finding of the voluntary arbitrator that Rodito Nasayao was an employee of the
petitioner corporation is not supported by the evidence or by the law.
On the other hand, we find the version of the petitioners to be more plausible and in accord with
human nature and the ordinary course of things. As pointed out by the petitioners, it was illogical
for them to hire the private respondent Rodito Nasayao as plant manager with a monthly salary
of P3,000.00, an amount which they could ill-afford to pay, considering that the business was
losing, at the time he was hired, and that they were about to close shop in a few months' time.
Besides, there is nothing in the record which would support the claim of Rodito Nasayao that he
was an employee of the petitioner corporation. He was not included in the company payroll, nor
in the list of company employees furnished the Social Security System.
Most of all, the element of control is lacking. In Brotherhood Labor Unity Movement in the
Philippines vs. Zamora, 13 the Court enumerated the factors in determining whether or not an
employer-employee relationship exists, to wit:
In determining the existence of an employer-employee relationship, the elements that are generally
considered are the following: (a) the selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect to
the means and methods by which the work is to be accomplished. It is the so-called "control test" that is
the most important element (Investment Planning Corp. of the Phils. vs. The Social Security System, 21
SCRA 924; Mafinco Trading Corp. v. Ople, supra, and Rosario Brothers, Inc. v. Ople, 131 SCRA
72).<äre||anº•1àw>
In the instant case, it appears that the petitioners had no control over the conduct of Rodito
Nasayao in the performance of his work. He decided for himself on what was to be done and
worked at his own pleasure. He was not subject to definite hours or conditions of work and, in
turn, was compensated according to the results of his own effort. He had a free hand in running
the company and its business, so much so, that the petitioner Felipe David did not know, until
very much later, that Rodito Nasayao had collected old accounts receivables, not covered by
their agreement, which he converted to his own personal use. It was only after Rodito Nasayao
had abandoned the plant following discovery of his wrong- doings, that Felipe David assumed
management of the plant.
Absent the power to control the employee with respect to the means and methods by which his
work was to be accomplished, there was no employer-employee relationship between the
parties. Hence, there is no basis for an award of unpaid salaries or wages to Rodito Nasayao.
WHEREFORE, the decision rendered by the respondent Jose T. Collado in NLRC Case No.
LR-6151, entitled: "Rodito Nasayao, complainant, versus Continental Marble Corp. and Felipe
David, respondents," on 29 December 1975, and the resolution issued by the respondent
National Labor Relations Commission in said case on 7 May 1976, are REVERSED and SET
ASIDE and another one entered DISMISSING private respondent's complaints. The temporary
restraning order heretofore isued by the Court is made permanent. Without costs.
SO ORDERED.
Yap, C.J, Melencio-Herrera, Paras and Sarmiento, JJ, concur.
Footnotes
1 Rollo, p. 15.
2 Id., p. 23.
3 Id., p. 43.
4 Id., p. 47,
5 Id., p. 51,
6 Id., p. 55.
7 G.R. No. L-43890, July 16,1984,130 SCRA 392.
8 G.R. No. L-48437, Sept. 30,1986,144 SCRA 510.
9 Rollo, pp. 69, 76.
10 G.R. No. 72096, January 29,1988.
11 Oceanic Bic Division (FFW) vs. Romero, supra.

11 Oceanic Bic Division (FFW) vs. Romero, supra.
12 Franklin Baker Company of the Philippines vs. Trajano G.R. No 75039, Jan. 28, 1988, and cases cited.
13 G.R. No. L-48645, Jan. 7, 1987, 147 SCRA 49, 54, See also: Bautista vs. Inciong, G.R. No. 52824, March 16, 1988.
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Eternit employees and workers union v. De veyra

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