1) Alcantara vs. CA GR No.155109 Sept.

29, 2010

SECOND DIVISION

C. ALCANTARA & SONS, INC., G.R. No. 155109

Petitioner,
Present:
CARPIO, J., Chairperson,
- versus - NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.
COURT OF APPEALS, LABOR ARBITER
ANTONIO M. VILLANUEVA, LABOR ARBITER
ARTURO L. GAMOLO, SHERIFF OF NLRC RAB-
XI-DAVAO CITY, NAGKAHIUSANG MAMUMUO
SA ALSONS-SPFL (NAMAAL-
SPFL), FELIXBERTO IRAG, JOSHUA BARREDO,
ERNESTO CUARIO, EDGAR MONDAY,
EDILBERTO DEMETRIA, HERMINIO ROBILLO,
ROMULO LUNGAY, MATROIL DELOS SANTOS,
BONERME MATURAN, RAUL CANTIGA,
EDUARDO CAMPUSO, RUDY ANADON,
GILBERTO GABRONINO, BONIFACIO
SALVADOR, CIRILO MINO, ROBERTO
ABONADO, WARLITO MONTE, PEDRO
ESQUIERDO, ALFREDO TROPICO, DANILO
MEJOS, HECTOR ESTUITA, BARTOLOME
CASTILLANES, EDUARDO CAPUYAN,
SATURNINO CAGAS, ALEJANDRO HARDER,
EDUARDO LARENA, JAIME MONTEDERAMOS,
ERMELANDO BASADRE, REYNALDO
LIMPAJAN, ELPIDIO LIBRANZA, TEDDY
SUELO, JOSE AMOYLIN, TRANQUILINO
ORALLO, CARLOS BALDOS, MANOLITO
SABELLANO, CARMELITO TOBIAS,
PRIMITIVO GARCIA, JUANITO ALDEPOLLA,
LUDIVICO ABAD, WENCISLAO INGHUG,
RICARDO ALTO, EPIFANIO JARABAY,
FELICIANO AMPER, ALEXANDER JUDILLA,
ROBERTO ANDRADE, ALFREDO LESULA,
JULIO ANINO, BENITO MAGPUSAO, PEDRO
AQUINO, EDDIE MANSANADES, ROMEO
ARANETA, ARGUILLAO MANTICA,
CONSTANCIO ARNAIZ, ERNESTO HOTOY,
JUSTINO ASCANO, RICARDO MATURAN,
EDILBERTO YAMBAO, ANTONIO MELARGO,
JESUS BERITAN, ARSENIO MELICOR,
DIOSDADO BONGABONG, LAURO
MONTENEGRO, CARLITO BURILLO, LEO
MORA, PABLO BUTIL, ARMANDO GUCILA,
JEREMIAH CAGARA, MARIO NAMOC,
CARLITO CAL, GERWINO NATIVIDAD,
ROLANDO CAPUYAN, EDGARDO ORDIZ,
LEONARDO CASURRA, PATROCINIO ORTEGA,
FILEMON CESAR, MARIO PATAN, ROMEO
COMPRADO, JESUS PATOC, RAMON
CONSTANTINO, ALBERTO PIELAGO, SAMUEL
DELA LLANA, NICASIO PLAZA, ROSALDO
DAGONDON, TITO GUADES, BONIFACIO
DINAGUDOS, PROCOPIO RAMOS, JOSE
EBORAN, ROSENDO SAJOL, FRANCISCO
EMPUERTO, PATRICIO SALOMON, NESTOR
ENDAYA, MARIO SALVALEON, ERNESTO
ESTILO, BONIFACIO SIGUE, VICENTE
FABROA, JAIME SUCUAHI, CELSO HUISO,
ALEX TAUTO-AN, SATURNINO YAGON,
CLAUDIO TIROL, SULPECIO GAGNI, JOSE
TOLERO, FERVIE GALVEZ, ALFREDO
TORALBA and EDUARDO GENELSA,
Respondents.

x ------------------------------------------------ x

NAGKAHIUSANG MAMUMUO SA G.R. No. 155135

ALSONS-SPFL (NAMAAL-SPFL), FELIXBERTO
IRAG, JOSHUA BARREDO, ERNESTO CUARIO,
EDGAR MONDAY, EDILBERTO DEMETRIA,
HERMINIO ROBILLO, ROMULO LUNGAY,
MATROIL DELOS SANTOS, BONERME
MATURAN, RAUL CANTIGA, EDUARDO
CAMPUSO, RUDY ANADON, GILBERTO
GABRONINO, BONIFACIO SALVADOR, CIRILO
MINO, ROBERTO ABONADO, WARLITO
MONTE, PEDRO ESQUIERDO, ALFREDO
TROPICO, DANILO MEJOS, HECTOR ESTUITA,
BARTOLOME CASTILLANES, EDUARDO
CAPUYAN, SATURNINO CAGAS, ALEJANDRO
HARDER, EDUARDO LARENA, JAIME
MONTEDERAMOS, ERMELANDO BASADRE,
REYNALDO LIMPAJAN, ELPIDIO LIBRANZA,
TEDDY SUELO, JOSE AMOYLIN,
TRANQUILINO ORALLO, CARLOS BALDOS,
MANOLITO SABELLANO, CARMELITO
TOBIAS, PRIMITIVO GARCIA, JUANITO
ALDEPOLLA, LUDIVICO ABAD, WENCISLAO
INGHUG, RICARDO ALTO, EPIFANIO
JARABAY, FELICIANO AMPER, ALEXANDER
JUDILLA, ROBERTO ANDRADE, ALFREDO
LESULA, JULIO ANINO, BENITO MAGPUSAO,
PEDRO AQUINO, EDDIE MANSANADES,
ROMEO ARANETA, ARGUILLAO MANTICA,
CONSTANCIO ARNAIZ, ERNESTO HOTOY,
JUSTINO ASCANO, RICARDO MATURAN,
EDILBERTO YAMBAO, ANTONIO MELARGO,
JESUS BERITAN, ARSENIO MELICOR,
DIOSDADO BONGABONG, LAURO
MONTENEGRO, CARLITO BURILLO, LEO
MORA, PABLO BUTIL, ARMANDO GUCILA,
JEREMIAH CAGARA, MARIO NAMOC,
CARLITO CAL, GERWINO NATIVIDAD,
ROLANDO CAPUYAN, JUANITO NISNISAN,
AURELIO CARIN, PRIMO OPLIMO, ANGELITO
CASTANEDA, EDGARDO ORDIZ, LEONARDO
CASURRA, PATROCINIO ORTEGA, FILEMON
CESAR, MARIO PATAN, ROMEO COMPRADO,
JESUS PATOC, RAMON CONSTANTINO,
MANUEL PIAPE, ROY CONSTANTINO,
ALBERTO PIELAGO, SAMUEL DELA LLANA,
NICASIO PLAZA, ROSALDO DAGONDON, TITO
GUADES, BONIFACIO DINAGUDOS, PROCOPIO
RAMOS, JOSE EBORAN, ROSENDO SAJOL,
FRANCISCO EMPUERTO, PATRICIO
SALOMON, NESTOR ENDAYA, MARIO
SALVALEON, ERNESTO ESTILO, BONIFACIO
SIGUE, VICENTE FABROA, JAIME SUCUAHI,
CELSO HUISO, ALEX TAUTO-AN, SATURNINO
YAGON, CLAUDIO TIROL, SULPECIO GAGNI,
JOSE TOLERO, FERVIE GALVEZ, ALFREDO
TORALBA and EDUARDO GENELSA,
Petitioners,

- versus -

C. ALCANTARA & SONS, INC., EDITHA I.

ALCANTARA, ATTY. NELIA A. CLAUDIO,
CORNELIO E. CAGUIAT, JESUS S. DELA CRUZ,
ROLANDO Z. ANDRES and JOSE MA. MANUEL
YRASUEGUI,
Respondents.

x ------------------------------------------------ x

NAGKAHIUSANG MAMUMUO SA G.R. No. 179220

ALSONS-SPFL (NAMAAL-SPFL),
and its members whose names are
listed below,
Petitioners,

- versus -
Promulgated:
C. ALCANTARA & SONS, INC.,
Respondent. September 29, 2010

x ----------------------------------------------------------------------------------------------- x

DECISION
ABAD, J.:

This case is about a) the consequences of an illegally staged strike upon the
employment status of the union officers and its ordinary members and b) the right
of reinstated union members to go back to work pending the companys appeal
from the order reinstating them.
 The Facts and the Case

C. Alcantara & Sons, Inc., (the Company) is a domestic corporation engaged

in the manufacture and processing of plywood. Nagkahiusang Mamumuo sa
Alsons-SPFL (the Union) is the exclusive bargaining agent of the Companys rank
and file employees. The other parties to these cases are the Union officers[1] and
their striking members.[2]

The Company and the Union entered into a Collective Bargaining

Agreement (CBA) that bound them to hold no strike and no lockout in the course
of its life. At some point the parties began negotiating the economic provisions of
their CBA but this ended in a deadlock, prompting the Union to file a notice of
strike. After efforts at conciliation by the Department of Labor and Employment
(DOLE) failed, the Union conducted a strike vote that resulted in an overwhelming
majority of its members favoring it. The Union reported the strike vote to the
DOLE and, after the observance of the mandatory cooling-off period, went on
strike.

During the strike, the Company filed a petition for the issuance of a writ of
preliminary injunction with prayer for the issuance of a temporary restraining order
(TRO) Ex Parte[3] with the National Labor Relations Commission (NLRC) to
enjoin the strikers from intimidating, threatening, molesting, and impeding by
barricade the entry of non-striking employees at the Companys premises. The
NLRC first issued a 20-day TRO and, after hearing, a writ of preliminary
injunction, enjoining the Union and its officers and members from performing the
acts complained of. But several attempts to implement the writ failed. Only the
intervention of law enforcement units made such implementation possible.
Meantime, the Union filed a petition[4] with the Court of Appeals (CA),
questioning the preliminary injunction order. On February 8, 1999 the latter court
dismissed the petition. The Union did not appeal from such dismissal.

The Company, on the other hand, filed a petition with the Regional
Arbitration Board to declare the Unions strike illegal,[5] citing its violation of the
no strike, no lockout, provision of their CBA. Subsequently, the Company
amended its petition to implead the named Union members who allegedly
committed prohibited acts during the strike. For their part, the Union, its officers,
and its affected members filed against the Company a counterclaim for unfair labor
practices, illegal dismissal, and damages. The Union also assailed as invalid the
service of summons on the individual Union members included in the amended
petition.

On June 29, 1999 the Labor Arbiter rendered a decision,[6] declaring

the Unions strike illegal for violating the CBAs no strike, no lockout, provision. As
a consequence, the Labor Arbiter held that the Union officers should be deemed to
have forfeited their employment with the Company and that they should pay actual
damages of P3,825,000.00 plus 10% interest and attorneys fees. With respect to the
striking Union members, finding no proof that they actually committed illegal acts
during the strike, the Labor Arbiter ordered their reinstatement without
backwages. The Labor Arbiter denied the Unions counterclaim for lack of merit.

On June 29, 1999 the terminated Union members promptly filed a motion
for their immediate reinstatement but the Labor Arbiter did not act on the same. At
any rate, the Company did not reinstate them. Both parties appealed[7] the Labor
Arbiters decision to the NLRC. The Company impugned the Labor Arbiters
decision insofar as it ordered the reinstatement of the terminated Union
members. The Union, on the other hand, questioned the declaration of illegality of
the strike as well as the dismissal of its officers and the order for them to pay
damages.

On November 8, 1999 the NLRC rendered a decision,[8] affirming that of the

Labor Arbiter insofar as the latter declared the strike illegal, ordered the Union
officers terminated, and directed them to pay damages to the Company. The NLRC
ruled, however, that the Union members involved, who were identified in the
proceedings held in the case, should also be terminated for having committed
prohibited and illegal acts.

The Union filed a petition for certiorari[9] with the CA, questioning the
NLRC decision. Finding merit in the petition, the CA rendered a decision on
March 20, 2002,[10] annulling the NLRC decision and reinstating that of the Labor
Arbiter. The Company and the Union with its officers and members filed separate
petitions for review of the CA decision in G.R. 155109 and 155135, respectively.
 During the pendency of these cases, the affected Union members filed with
the Labor Arbiter a motion for reinstatement pending appeal by the parties and the
computation of their backwages based on the CA decision. After hearing, the
Labor Arbiter issued a resolution dated November 21, 2002,[11] holding that due to
the delay in the resolution of the dispute and the impracticability of reinstatement
owing to the fact that the relations between the terminated Union members and the
Company had been severely strained by the prolonged litigation, payment of
separation pay to such Union members was in order. The Labor Arbiter thus
approved the computation and payment of their separation pay and denied all their
other claims.

Both parties appealed the Labor Arbiters resolution[12] to the

NLRC. Initially, in its resolution dated April 30, 2003,[13] the NLRC declared the
Labor Arbiters resolution of November 21, 2002 void for lack of factual and legal
basis but ordered the Company to pay the affected employees accrued wages and
13th month pay considering the Companys refusal to reinstate them pending
appeal. On motion for reconsideration by both parties, however, the NLRC issued
a resolution on August 29, 2003,[14] modifying its earlier resolution by deleting the
grant of accrued wages and 13th month pay to the subject employees, thus denying
their motion for computation.

Upon the Unions petition for certiorari[15] with the CA, questioning the
NLRCs denial of the terminated Union members claim for separation pay, accrued
wages, and other benefits, the CA rendered a decision on February 24,
2005,[16] dismissing the petition. The CA ruled that the reinstatement pending
appeal provided under Article 223 of the Labor Code contemplated illegal
dismissal or termination cases and not cases under Article 263. Thus, the CA ruled
that the resolution ordering the reinstatement of the terminated Union members and
the payment of their wages and other benefits had no basis. Aggrieved,
the Union sought intervention by this Court.

The Issues Presented

The issues presented in these cases are:

 1. Whether or not the NLRC properly acquired jurisdiction over the persons
of the individual Union members impleaded in the case;

2. Whether or not the Union staged an illegal strike;

3. Assuming the strike to be illegal, whether or not the impleaded Union

members committed illegal acts during the strike, justifying their termination from
employment;

4. Whether or not the terminated Union members are entitled to the payment
of backwages on account of the Companys refusal to reinstate them, pending
appeal by the parties, from the Labor Arbiters decision of June 29, 1999; and

5. Whether or not the terminated Union members are entitled to accrued

backwages and separation pay.

The Rulings of the Court

One. The NLRC acquires jurisdiction over parties in cases before it either by
summons served on them or by their voluntary appearance before its Labor
Arbiter. Here, while the Union insists that summons were not properly served on
the impleaded Union members with respect to the Companys amended petition that
sought to declare the strike illegal, the records show that they were so served. The
Return of Service of Summons[17] indicated that 74 out of the 81[18] impleaded
Union members were served with summons. But they refused either to accept the
summons or to acknowledge receipt of the same. Such refusal cannot of course
frustrate the NLRCs acquisition of jurisdiction over them. Besides, the affected
Union members voluntarily entered their appearance in the case when they sought
affirmative relief in the course of the proceedings like an award of damages in their
favor.

Two. A strike may be regarded as invalid although the labor union has
complied with the strict requirements for staging one as provided in Article 263 of
the Labor Code when the same is held contrary to an existing agreement, such as a
no strike clause or conclusive arbitration clause.[19] Here, the CBA between the
parties contained a no strike, no lockout provision that enjoined both the Union and
the Company from resorting to the use of economic weapons available to them
under the law and to instead take recourse to voluntary arbitration in settling their
disputes.

No law or public policy prohibits the Union and the Company from mutually
waiving the strike and lockout maces available to them to give way to voluntary
arbitration. Indeed, no less than the 1987 Constitution recognizes in Section 3,
Article XIII, preferential use of voluntary means to settle disputes. Thus

The State shall promote the principle of shared responsibility between

workers and employers and the preferential use of voluntary modes in
settling disputes, including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.

The Court finds no compelling reason to depart from the findings of the
Labor Arbiter, the NLRC, and the CA regarding the illegality of the strike. Social
justice is not one-sided. It cannot be used as a badge for not complying with a
lawful agreement.

Three. Since the Unions strike has been declared illegal, the Union officers
can, in accordance with law be terminated from employment for their actions. This
includes the shop stewards. They cannot be shielded from the coverage of Article
264 of the Labor Code since the Union appointed them as such and placed them in
positions of leadership and power over the men in their respective work units.

As regards the rank and file Union members, Article 264 of the Labor Code
provides that termination from employment is not warranted by the mere fact that a
union member has taken part in an illegal strike. It must be shown that such a
union member, clearly identified, performed an illegal act or acts during the
strike.[20]

Here, although the Labor Arbiter found no proof that the dismissed rank and
file Union members committed illegal acts, the NLRC found following the
injunction hearing in NLRC IC M-000126-98 that the Union members concerned
committed such acts, for which they had in fact been criminally charged before
various courts and the prosecutors office in Davao City. Since the CA held that the
existence of criminal complaints against the Union members did not warrant their
dismissal, it becomes necessary for the Court to go into the records to settle the
issue.

The striking Union members allegedly committed the following prohibited

acts:

a. They threatened, coerced, and intimidated non-striking

employees, officers, suppliers and customers;

b. They obstructed the free ingress to and egress from the

company premises; and

c. They resisted and defied the implementation of the writ of

preliminary injunction issued against the strikers.

Cornelio Caguiat, Ruben Tungapalan, and Eufracio Rabusa depicted the

above prohibited acts in their affidavits and testimonies. The Sheriff of the NLRC
said in his Report[21] that, in the course of his implementation of the writ of
injunction, he observed that the striking employees blocked the exit lane of the
Alson drive with their tent. Tungapalan, a non-striking employee, identified the
Union members who threatened and coerced him. Indeed, he filed criminal actions
against them.Lastly, the photos taken of the strike show the strikers, properly
identified, committing the acts complained of. These constitute substantial
evidence in support of the termination of the subject Union members.

The mere fact that the criminal complaints against the terminated Union
members were subsequently dismissed for one reason or another does not
extinguish their liability under the Labor Code. Nor does such dismissal bar the
admission of the affidavits, documents, and photos presented to establish their
identity and guilt during the hearing of the petition to declare the strike illegal. The
technical grounds that the Union interposed for denying admission of the photos
are also not binding on the NLRC.[22]

Four. The terminated Union members contend that, since the Company
refused to reinstate them after the Labor Arbiter rendered a decision in their favor,
the Company should be ordered to pay them their wages during the pendency of
the appeals from the Labor Arbiters decision.

It will be recalled that after the Labor Arbiter rendered his decision on June
29, 1999, which decision ordered the reinstatement of the terminated Union
members, the latter promptly filed a motion for their reinstatement pending
appeal. But the Labor Arbiter did not for some reason act on the motion. As it
happened, after about four months or on November 8, 1999, the NLRC reversed
the Labor Arbiters reinstatement order. It cannot be said, therefore, that the
Company had resisted a standing order of reinstatement directed at it at this point.

Of course, on March 20, 2002 the CA restored the Labor Arbiters

reinstatement order. And this prompted the affected Union members to again file
with the Labor Arbiter a motion for their reinstatement pending appeal. But, acting
on the motion, the Labor Arbiter resolved at this point that reinstatement was no
longer practicable because of the severely strained relation between the company
and the terminated Union members. In place of reinstatement, the Labor Arbiter
ordered the Company to pay them their separation pays.

Both parties appealed the Labor Arbiters above ruling[23] to the NLRC. But,
as it turned out the NLRC did not also favor reinstatement. It instead ordered the
Company to pay the terminated Union members their accrued wages and
13th month pay considering its refusal to reinstate them pending appeal. On motion
for reconsideration, however, the NLRC reconsidered and deleted altogether the
grant of accrued wages and 13th month pay. The Union appealed the NLRC ruling
to the CA on behalf of its terminated members but the CA denied their appeal.

The CA denied reinstatement for the reason that the reinstatement pending
appeal provided under Article 223 of the Labor Code contemplated illegal
dismissal or termination cases and not cases under Article 264. But this perceived
distinction does not find support in the provisions of the Labor Code.

The grounds for termination under Article 264 are based on prohibited acts
that employees could commit during a strike. On the other hand, the grounds for
termination under Articles 282 to 284 are based on the employees conduct in
connection with his assigned work. Still, Article 217, which defines the powers of
Labor Arbiters, vests in the latter jurisdiction over all termination cases, whatever
be the grounds given for the termination of employment. Consequently, Article
223, which provides that the decision of the Labor Arbiter reinstating a dismissed
employee shall immediately be executory pending appeal, cannot but apply to all
terminations irrespective of the grounds on which they are based.

Here, although the Labor Arbiter failed to act on the terminated Union
members motion for reinstatement pending appeal, the Company had the duty
under Article 223 to immediately reinstate the affected employees even if it
intended to appeal from the decision ordaining such reinstatement. The Companys
failure to do so makes it liable for accrued backwages until the eventual reversal of
the order of reinstatement by the NLRC on November 8, 1999,[24] a period of four
months and nine days.

Five. While it is true that generally the grant of separation pay is not
available to employees who are validly dismissed, there are, in furtherance of the
laws policy of compassionate justice, certain circumstances that warrant the grant
of some relief in favor of the terminated Union members based on equity.

Bitter labor disputes, especially strikes, always generate a throng of odium

and abhorrence that sometimes result in unpleasant, although unwanted,
consequences.[25] Considering this, the striking employees breach of certain
restrictions imposed on their concerted actions at their employers doorsteps cannot
be regarded as so inherently wicked that the employer can totally disregard their
long years of service prior to such breach.[26] The records also fail to disclose any
past infractions committed by the dismissed Union members. Taking these
circumstances in consideration, the Court regards the award of financial assistance
to these Union members in the form of one-half month salary for every year of
service to the company up to the date of their termination as equitable and
reasonable.

WHEREFORE, the Court DENIES the petition of the Nagkahiusang

Mamumuo sa Alsons-SPFL and its officers and members in G.R. 155135 for lack
of merit, and REVERSES and SETS ASIDE the decision of the Court of Appeals
in CA-G.R. SP 59604 dated March 20, 2002. The Court, on the other
hand, GRANTSthe petition of C. Alcantara & Sons, Inc. in G.R. 155109
and REINSTATES the decision of the National Labor Relations Commission in
NLRC CA M-004996-99 dated November 8, 1999.

Further, the Court PARTIALLY GRANTS the petition of the

Nagkahiusang Mamumuo sa Alsons-SPFL and their dismissed members in G.R.
179220 and ORDERS C. Alcantara & Sons, Inc. to pay the terminated Union
members backwages for four (4) months and nine (9) days and separation pays
equivalent to one-half month salary for every year of service to the company up to
the date of their termination, with interest of 12% per annum from the time this
decision becomes final and executory until such backwages and separation pays
are paid. The Court DENIES all other claims.

SO ORDERED.

ROBERTO A. ABAD
Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice

ANTONIO EDUARDO B. NACHURA DIOSDADO M. PERALTA

Associate Justice Associate Justice

JOSE CATRAL MENDOZA

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 Courts Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairpersons 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 Courts Division.

RENATO C. CORONA
Chief Justice
[1]
The officers of the Union are the following: Felixberto Irag, Joshua Barredo, Edilberto Demetria, Romulo
Lungay, Bonerme Maturan, Eduardo Campuso, Gilberto Gabronino, Cirilo Mino, Roberto Abonado, Fructoso
Cabahog, Alfredo Tropico, Hector Estuita, Eduardo Capuyan, Alejandro Harder, Jaime Montederamos, Reynaldo
Limpajan, Ernesto Cuario, Edgar Monday, Herminio Robillo, Matroil delos Santos, Raul Cantiga, Rudy Anadon,
Bonifacio Salvador, Florente Seno, Warlito Monte, Pedro Esquierdo, Danilo Mejos, Bartolome Castillanes,
Saturnino Cagas, Eduardo Larena, Ermelando Basadre, Elpidio Libranza.Teddy Suelo, Tranquilino Orallo, Manolito
Sabellano, Primitivo Garcia, Jose Amoylin, Carlos Baldos, Carmelito Tobias and Juanito Aldepolla.
[2]
These are Ludivicio Abad, Ricardo Alto, Feliciano Amper, Roberto Andrade, Julio Anino, Pedro Aquino, Romeo
Araneta, Constancio Arnaiz, Justino Ascano, Ernesto Baino, Jesus Beritan, Diosdado Bongabong, Carilito Cal,
Rolando Capuyan, Aurelio Carin, Angelito Castaeda, Leonaro Casurra, Filemon Cesar, Romeo Comprado, Ramon
Constantino, Roy Constantino, Samuel dela Llana, Rosaldo Dagondon, Bonifacio Dinagudos, Jose Eboran,
Francisco Empuerto, Nestor Endaya, Ernesto Estilo, Vicente Fabroa, Ramon Fernando, Samson Fulgueras, Sulpecio
Gagni, Fervie Galvez, Eduardo Genelsa, Tito Guades, Armando Gucila, Ernesto Hotoy, Wencislao Inghug, Epifanio
Jarabay, Alexander Judilla, Alfredo Lesula, Benito Magpusao, Eddie Mansanades, Arguilao Mantica, Silverio
Maranian, Ricardo Maturan, Antonio Melargo, Arsenio Melicor, Lauro Montenegro, Leo Mora, Ronaldo Naboya,
Mario Namoc, Gerwino Natividad, Juanito Nisnisan, Primo Oplimo, Edgardo Ordiz, Patrocino Ortega, Mario Patan,
Jesus Patoc, Manuel Piape, Alberto Pielago, Nicasio Plaza, Fausto Quibod, Procopio Ramos, Rosendo Sajol,
Patricio Solomon, Mario Salvaleon, Bonifacio Sigue, Jaime Sucuahi, Alex Tauto-an, Claudio Tirol, Jose Tolero,
Alfredo Toralba, Eusebio Tumulak, Hermes Villacarlos, Saturnino Yagon and Edilberto Yambao.
[3]
Docketed as NLRC IC M-000126-98.
[4]
Docketed as CA-G.R. SP 50371.
[5]
Docketed as NLRC RAB-11-08-01064-98.
[6]
NLRC records, Vol. 1, pp. 845-869.
[7]
Docketed as NLRC CA M-004996-99.
[8]
NLRC records, Vol. 3, pp. 575-591.
[9]
Docketed as CA-G.R. SP 59604.
[10]
CA rollo, Vol. 2, pp. 1090-1097.
[11]
NLRC records, Vol. 6, pp. 164-170.
[12]
Docketed as NLRC CA M-007314-2002.
[13]
Id. at 612-620.
[14]
Id. at 1177-1184.
[15]
Docketed as CA-G.R. SP 80507.
[16]
Rollo (G.R. 155109), pp. 787-800.
[17]
NLRC records, Vol. 1, pp. 57-58, 123-127.
[18]
Respondents Ricardo Alto, Ramon Constantino, Rosaldo Dagondon, Vicente Fabroa, Jose Tolero, Mario Namoc
and Rolando Naboya were not served with summons due to incomplete address.
[19]
I Teller 314-317 cited in Azucena, C. Everyones Labor Code, 2007 edition, p. 291.
[20]
Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations Commission, G.R. Nos.
158786, 158789 & 158798-99, October 19, 2007, 537 SCRA 171, 212.
[21]
NLRC records, Vol. 1, pp. 110-111.
[22]
LABOR CODE, Article 221.
[23]
Docketed as NLRC CA M-007314-2002.
[24]
See Garcia v. Philippine Airlines, Inc., G.R. No. 164856, January 20, 2009, 576 SCRA 479, 489.
[25]
Kimberly Clark (Phils.) v. Facundo, G.R. No. 144885. July 12, 2006.
[26]
Rollo (G.R. 155109), p. 1011. Some of them were hired as early as 1972.

2) Samahan vs. NLRC GR No. 113856 Sept. 7, 1998

THIRD DIVISION
 [G.R. No. 113856. September 7, 1998]

SAMAHANG MANGGAGAWA SA TOP FORM MANUFACTURING

UNITED WORKERS OF THE PHILIPPINES (SMTFM-UWP), its
officers and members, petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION, HON. JOSE G. DE VERA and TOP
FORM MANUFACTURING PHIL., INC., respondents.

DECISION
ROMERO, J.:

The issue in this petition for certiorari is whether or not an employer committed an unfair
labor practice by bargaining in bad faith and discriminating against its employees. The charge
arose from the employers refusal to grant across-the-board increases to its employees in
implementing Wage Orders Nos. 01 and 02 of the Regional Tripartite Wages and Productivity
Board of the National Capital Region (RTWPB-NCR). Such refusal was aggravated by the fact
that prior to the issuance of said wage orders, the employer allegedly promised at the collective
bargaining conferences to implement any government-mandated wage increases on an across-
the-board basis.
Petitioner Samahang Manggagawa sa Top Form Manufacturing United Workers of the
Philippines (SMTFM) was the certified collective bargaining representative of all regular rank
and file employees of private respondent Top Form Manufacturing Philippines, Inc. At the
collective bargaining negotiation held at the Milky Way Restaurant in Makati, Metro Manila on
February 27, 1990, the parties agreed to discuss unresolved economic issues. According to the
minutes of the meeting, Article VII of the collective bargaining agreement was discussed. The
following appear in said Minutes:

ARTICLE VII. Wages

Section 1. Defer

Section 2. Status quo

Section 3. Union proposed that any future wage increase given by the government
should be implemented by the company across-the-board or non-conditional.

Management requested the union to retain this provision since their sincerity was already proven
when the P25.00 wage increase was granted across-the-board. The union acknowledges
managements sincerity but they are worried that in case there is a new set of management, they
can just show their CBA. The union decided to defer this provision.[1]
 In their joint affidavit dated January 30, 1992,[2] union members Salve L. Barnes, Eulisa
Mendoza, Lourdes Barbero and Concesa Ibaez affirmed that at the subsequent collective
bargaining negotiations, the union insisted on the incorporation in the collective bargaining
agreement (CBA) of the union proposal on automatic across-the-board wage increase. They
added that:

11. On the strength of the representation of the negotiating panel of the company and
the above undertaking/promise made by its negotiating panel, our union agreed to
drop said proposal relying on the undertakings made by the officials of the company
who negotiated with us, namely, Mr. William Reynolds, Mr. Samuel Wong and Mrs.
Remedios Felizardo. Also, in the past years, the company has granted to us
government mandated wage increases on across-the-board basis.

On October 15, 1990, the RTWPB-NCR issued Wage Order No. 01 granting an increase of
P17.00 per day in the salary of workers. This was followed by Wage Order No. 02 dated
December 20, 1990 providing for a P12.00 daily increase in salary.
As expected, the union requested the implementation of said wage orders. However, they
demanded that the increase be on an across-the-board basis. Private respondent refused to accede
to that demand. Instead, it implemented a scheme of increases purportedly to avoid wage
distortion. Thus, private respondent granted the P17.00 increase under Wage Order No. 01 to
workers/employees receiving salary of P125.00 per day and below. The P12.00 increase
mandated by Wage Order No. 02 was granted to those receiving the salary of P140.00 per day
and below.For employees receiving salary higher than P125.00 or P140.00 per day, private
respondent granted an escalated increase ranging from P6.99 to P14.30 and from P6.00 to
P10.00, respectively.[3]
On October 24, 1991, the union, through its legal counsel, wrote private respondent a letter
demanding that it should fulfill its pledge of sincerity to the union by granting an across-the-
board wage increases (sic) to all employees under the wage orders. The union reiterated that it
had agreed to retain the old provision of CBA on the strength of private respondents promise and
assurance of an across-the-board salary increase should the government mandate salary
increases.[4] Several conferences between the parties notwithstanding, private respondent
adamantly maintained its position on the salary increases it had granted that were purportedly
designed to avoid wage distortion.
Consequently, the union filed a complaint with the NCR NLRC alleging that private
respondents act of reneging on its undertaking/promise clearly constitutes an act of unfair labor
practice through bargaining in bad faith. It charged private respondent with acts of unfair labor
practices or violation of Article 247 of the Labor Code, as amended, specifically bargaining in
bad faith, and prayed that it be awarded actual, moral and exemplary damages. [5] In its position
paper, the union added that it was charging private respondent with violation of Article 100 of
the Labor Code.[6]
Private respondent, on the other hand, contended that in implementing Wage Orders Nos. 01
and 02, it had avoided the existence of a wage distortion that would arise from such
implementation. It emphasized that only after a reasonable length of time from the
implementation of the wage orders that the union surprisingly raised the question that the
company should have implemented said wage orders on an across-the-board basis. It asserted
that there was no agreement to the effect that future wage increases mandated by the government
should be implemented on an across-the-board basis. Otherwise, that agreement would have been
incorporated and expressly stipulated in the CBA. It quoted the provision of the CBA that
reflects the parties intention to fully set forth therein all their agreements that had been arrived at
after negotiations that gave the parties unlimited right and opportunity to make demands and
proposals with respect to any subject or matter not removed by law from the area of collective
bargaining. The same CBA provided that during its effectivity, the parties each voluntarily and
unqualifiedly waives the right, and each agrees that the other shall not be obligated, to bargain
collectively, with respect to any subject or matter not specifically referred to or covered by this
Agreement, even though such subject or matter may not have been within the knowledge or
contemplation of either or both of the parties at the time they negotiated or signed this
Agreement.[7]
On March 11, 1992, Labor Arbiter Jose G. de Vera rendered a decision dismissing the
complaint for lack of merit.[8] He considered two main issues in the case: (a) whether or not
respondents are guilty of unfair labor practice, and (b) whether or not the respondents are liable
to implement Wage Orders Nos. 01 and 02 on an across-the-board basis. Finding no basis to rule
in the affirmative on both issues, he explained as follows:

The charge of bargaining in bad faith that the complainant union attributes to the
respondents is bereft of any certitude inasmuch as based on the complainant unions
own admission, the latter vacillated on its own proposal to adopt an across-the-board
stand or future wage increases. In fact, the union acknowledges the managements
sincerity when the latter allegedly implemented Republic Act 6727 on an across-the-
board basis. That such union proposal was not adopted in the existing CBA was due to
the fact that it was the union itself which decided for its deferment. It is, therefore,
misleading to claim that the management undertook/promised to implement future
wage increases on an across-the-board basis when as the evidence shows it was the
union who asked for the deferment of its own proposal to that effect.

The alleged discrimination in the implementation of the subject wage orders does not
inspire belief at all where the wage orders themselves do not allow the grant of wage
increases on an across-the-board basis. That there were employees who were granted
the full extent of the increase authorized and some others who received less and still
others who did not receive any increase at all, would not ripen into what the
complainants termed as discrimination. That the implementation of the subject wage
orders resulted into an uneven implementation of wage increases is justified under the
law to prevent any wage distortion. What the respondents did under the circumstances
in order to deter an eventual wage distortion without any arbitral proceedings is
certainly commendable.

The alleged violation of Article 100 of the Labor Code, as amended, as well as Article
XVII, Section 7 of the existing CBA as herein earlier quoted is likewise found by this
Branch to have no basis in fact and in law. No benefits or privileges previously
enjoyed by the employees were withdrawn as a result of the implementation of the
subject orders. Likewise, the alleged company practice of implementing wage
increases declared by the government on an across-the-board basis has not been duly
established by the complainants evidence. The complainants asserted that the
company implemented Republic Act No. 6727 which granted a wage increase of
P25.00 effective July 1, 1989 on an across-the-board basis. Granting that the same is
true, such isolated single act that respondents adopted would definitely not ripen into a
company practice. It has been said that `a sparrow or two returning to Capistrano does
not a summer make.

Finally, on the second issue of whether or not the employees of the respondents are
entitled to an across-the-board wage increase pursuant to Wage Orders Nos. 01 and
02, in the face of the above discussion as well as our finding that the respondents
correctly applied the law on wage increases, this Branch rules in the negative.

Likewise, for want of factual basis and under the circumstances where our findings
above are adverse to the complainants, their prayer for moral and exemplary damages
and attorneys fees may not be granted.

Not satisfied, petitioner appealed to the NLRC that, in turn, promulgated the assailed
Resolution of April 29, 1993[9] dismissing the appeal for lack of merit. Still dissatisfied,
petitioner sought reconsideration which, however, was denied by the NLRC in the Resolution
dated January 17, 1994. Hence, the instant petition for certiorari contending that:
-A-

THE PUBLIC RESPONDENTS GROSSLY ERRED IN NOT

DECLARING THE PRIVATE RESPONDENTS GUILTY OF ACTS
OF UNFAIR LABOR PRACTICES WHEN, OBVIOUSLY, THE
LATTER HAS BARGAINED IN BAD FAITH WITH THE UNION
AND HAS VIOLATED THE CBA WHICH IT EXECUTED WITH
THE HEREIN PETITIONER UNION.
-B-

THE PUBLIC RESPONDENTS SERIOUSLY ERRED IN NOT

DECLARING THE PRIVATE RESPONDENTS GUILTY OF ACTS
OF DISCRIMINATION IN THE IMPLEMENTATION OF NCR
WAGE ORDER NOS. 01 AND 02.
-C-
 THE PUBLIC RESPONDENTS SERIOUSLY ERRED IN NOT
FINDING THE PRIVATE RESPONDENTS GUILTY OF HAVING
VIOLATED SECTION 4, ARTICLE XVII OF THE EXISTING CBA.
-D-

THE PUBLIC RESPONDENTS GRAVELY ERRED IN NOT

DECLARING THE PRIVATE RESPONDENTS GUILTY OF
HAVING VIOLATED ARTICLE 100 OF THE LABOR CODE OF
THE PHILIPPINES, AS AMENDED.
-E-

ASSUMING, WITHOUT ADMITTING THAT THE PUBLIC

RESPONDENTS HAVE CORRECTLY RULED THAT THE
PRIVATE RESPONDENTS ARE GUILTY OF ACTS OF UNFAIR
LABOR PRACTICES, THEY COMMITTED SERIOUS ERROR IN
NOT FINDING THAT THERE IS A SIGNIFICANT DISTORTION IN
THE WAGE STRUCTURE OF THE RESPONDENT COMPANY.
-F-

THE PUBLIC RESPONDENTS ERRED IN NOT AWARDING TO

THE PETITIONERS HEREIN ACTUAL, MORAL, AND
EXEMPLARY DAMAGES AND ATTORNEYS FEES.

As the Court sees it, the pivotal issues in this petition can be reduced into two, to wit: (a)
whether or not private respondent committed an unfair labor practice in its refusal to grant
across-the-board wage increases in implementing Wage Orders Nos. 01 and 02, and (b) whether
or not there was a significant wage distortion of the wage structure in private respondent as a
result of the manner by which said wage orders were implemented.
With respect to the first issue, petitioner union anchors its arguments on the alleged
commitment of private respondent to grant an automatic across-the-board wage increase in the
event that a statutory or legislated wage increase is promulgated. It cites as basis therefor, the
aforequoted portion of the Minutes of the collective bargaining negotiation on February 27, 1990
regarding wages, arguing additionally that said Minutes forms part of the entire agreement
between the parties.
The basic premise of this argument is definitely untenable. To start with, if there was indeed
a promise or undertaking on the part of private respondent to obligate itself to grant an automatic
across-the-board wage increase, petitioner union should have requested or demanded that such
promise or undertaking be incorporated in the CBA. After all, petitioner union has the means
under the law to compel private respondent to incorporate this specific economic proposal in the
CBA. It could have invoked Article 252 of the Labor Code defining duty to bargain, thus, the
duty includes executing a contract incorporating such agreements if requested by either
party. Petitioner unions assertion that it had insisted on the incorporation of the same proposal
may have a factual basis considering the allegations in the aforementioned joint affidavit of its
members. However, Article 252 also states that the duty to bargain does not compel any party to
agree to a proposal or make any concession. Thus, petitioner union may not validly claim that the
proposal embodied in the Minutes of the negotiation forms part of the CBA that it finally entered
into with private respondent.
The CBA is the law between the contracting parties[10] the collective bargaining
representative and the employer-company. Compliance with a CBA is mandated by the
expressed policy to give protection to labor.[11] In the same vein, CBA provisions should be
construed liberally rather than narrowly and technically, and the courts must place a practical and
realistic construction upon it, giving due consideration to the context in which it is negotiated
and purpose which it is intended to serve."[12] This is founded on the dictum that a CBA is not an
ordinary contract but one impressed with public interest.[13] It goes without saying, however, that
only provisions embodied in the CBA should be so interpreted and complied with. Where a
proposal raised by a contracting party does not find print in the CBA,[14] it is not a part thereof
and the proponent has no claim whatsoever to its implementation.
Hence, petitioner unions contention that the Minutes of the collective bargaining negotiation
meeting forms part of the entire agreement is pointless. The Minutes reflects the proceedings and
discussions undertaken in the process of bargaining for worker benefits in the same way that the
minutes of court proceedings show what transpired therein.[15] At the negotiations, it is but
natural for both management and labor to adopt positions or make demands and offer proposals
and counter-proposals. However, nothing is considered final until the parties have reached an
agreement. In fact, one of managements usual negotiation strategies is to x x x agree tentatively
as you go along with the understanding that nothing is binding until the entire agreement is
reached.[16] If indeed private respondent promised to continue with the practice of granting
across-the-board salary increases ordered by the government, such promise could only be
demandable in law if incorporated in the CBA.
Moreover, by making such promise, private respondent may not be considered in bad faith
or at the very least, resorting to the scheme of feigning to undertake the negotiation proceedings
through empty promises. As earlier stated, petitioner union had, under the law, the right and the
opportunity to insist on the foreseeable fulfillment of the private respondents promise by
demanding its incorporation in the CBA. Because the proposal was never embodied in the CBA,
the promise has remained just that, a promise, the implementation of which cannot be validly
demanded under the law.
Petitioners reliance on this Courts pronouncements[17] in Kiok Loy v. NLRC[18] is, therefore,
misplaced. In that case, the employer refused to bargain with the collective bargaining
representative, ignoring all notices for negotiations and requests for counter proposals that the
union had to resort to conciliation proceedings. In that case, the Court opined that (a) Companys
refusal to make counter-proposal, if considered in relation to the entire bargaining process, may
indicate bad faith and this is specially true where the Unions request for a counter-proposal is
left unanswered. Considering the facts of that case, the Court concluded that the company was
unwilling to negotiate and reach an agreement with the Union.[19]
In the case at bench, however, petitioner union does not deny that discussion on its proposal
that all government-mandated salary increases should be on an across-the-board basis was
deferred, purportedly because it relied upon the undertaking of the negotiating panel of private
respondent.[20] Neither does petitioner union deny the fact that there is no provision of the 1990
CBA containing a stipulation that the company will grant across-the-board to its employees the
mandated wage increase. They simply assert that private respondent committed acts of unfair
labor practices by virtue of its contractual commitment made during the collective bargaining
process.[21] The mere fact, however, that the proposal in question was not included in the CBA
indicates that no contractual commitment thereon was ever made by private respondent as no
agreement had been arrived at by the parties. Thus:

Obviously the purpose of collective bargaining is the reaching of an agreement resulting in a

contract binding on the parties; but the failure to reach an agreement after negotiations continued
for a reasonable period does not establish a lack of good faith. The statutes invite and
contemplate a collective bargaining contract, but they do not compel one. The duty to bargain
does not include the obligation to reach an agreement. x x x.[22]

With the execution of the CBA, bad faith bargaining can no longer be imputed upon any of
the parties thereto. All provisions in the CBA are supposed to have been jointly and voluntarily
incorporated therein by the parties. This is not a case where private respondent exhibited an
indifferent attitude towards collective bargaining because the negotiations were not the unilateral
activity of petitioner union. The CBA is proof enough that private respondent exerted reasonable
effort at good faith bargaining.[23]
Indeed, the adamant insistence on a bargaining position to the point where the negotiations
reach an impasse does not establish bad faith. Neither can bad faith be inferred from a partys
insistence on the inclusion of a particular substantive provision unless it concerns trivial matters
or is obviously intolerable.[24]

The question as to what are mandatory and what are merely permissive subjects of collective
bargaining is of significance on the right of a party to insist on his position to the point of
stalemate. A party may refuse to enter into a collective bargaining contract unless it includes a
desired provision as to a matter which is a mandatory subject of collective bargaining; but a
refusal to contract unless the agreement covers a matter which is not a mandatory subject is in
substance a refusal to bargain about matters which are mandatory subjects of collective
bargaining; and it is no answer to the charge of refusal to bargain in good faith that the insistence
on the disputed clause was not the sole cause of the failure to agree or that agreement was not
reached with respect to other disputed clauses."[25]

On account of the importance of the economic issue proposed by petitioner union, it could
have refused to bargain and to enter into a CBA with private respondent. On the other hand,
private respondents firm stand against the proposal did not mean that it was bargaining in bad
faith. It had the right to insist on (its) position to the point of stalemate. On the part of petitioner
union, the importance of its proposal dawned on it only after the wage orders were
issued after the CBA had been entered into. Indeed, from the facts of this case, the charge of bad
faith bargaining on the part of private respondent was nothing but a belated reaction to the
implementation of the wage orders that private respondent made in accordance with law. In other
words, petitioner union harbored the notion that its members and the other employees could have
had a better deal in terms of wage increases had it relentlessly pursued the incorporation in the
CBA of its proposal. The inevitable conclusion is that private respondent did not commit the
unfair labor practices of bargaining in bad faith and discriminating against its employees for
implementing the wage orders pursuant to law.
The Court likewise finds unmeritorious petitioner unions contention that by its failure to
grant across-the-board wage increases, private respondent violated the provisions of Section 5,
Article VII of the existing CBA[26] as well as Article 100 of the Labor Code. The CBA provision
states:

Section 5. The COMPANY agrees to comply with all the applicable provisions of the
Labor Code of the Philippines, as amended, and all other laws, decrees, orders,
instructions, jurisprudence, rules and regulations affecting labor.

Article 100 of the Labor Code on prohibition against elimination or diminution of benefits
provides that (n)othing in this Book shall be construed to eliminate or in any way diminish
supplements, or other employee benefits being enjoyed at the time of promulgation of this Code.
We agree with the Labor Arbiter and the NLRC that no benefits or privileges previously
enjoyed by petitioner union and the other employees were withdrawn as a result of the manner
by which private respondent implemented the wage orders. Granted that private respondent had
granted an across-the-board increase pursuant to Republic Act No. 6727, that single instance
may not be considered an established company practice. Petitioner unions argument in this
regard is actually tied up with its claim that the implementation of Wage Orders Nos. 01 and 02
by private respondent resulted in wage distortion.
The issue of whether or not a wage distortion exists is a question of fact[27] that is within the
jurisdiction of the quasi-judicial tribunals below. Factual findings of administrative agencies are
accorded respect and even finality in this Court if they are supported by substantial
evidence.[28] Thus, in Metropolitan Bank and Trust Company, Inc. v. NLRC, the Court said:

The issue of whether or not a wage distortion exists as a consequence of the grant of a wage
increase to certain employees, we agree, is, by and large, a question of fact the determination of
which is the statutory function of the NLRC. Judicial review of labor cases, we may add, does
not go beyond the evaluation of the sufficiency of the evidence upon which the labor officials
findings rest. As such, the factual findings of the NLRC are generally accorded not only respect
but also finality provided that its decisions are supported by substantial evidence and devoid of
any taint of unfairness or arbitrariness. When, however, the members of the same labor tribunal
are not in accord on those aspects of a case, as in this case, this Court is well cautioned not to be
as so conscious in passing upon the sufficiency of the evidence, let alone the conclusions derived
therefrom.[29]

Unlike in above-cited case where the Decision of the NLRC was not unanimous, the NLRC
Decision in this case which was penned by the dissenter in that case, Presiding Commissioner
Edna Bonto-Perez, unanimously ruled that no wage distortions marred private respondents
implementation of the wage orders. The NLRC said:
On the issue of wage distortion, we are satisfied that there was a meaningful implementation of
Wage Orders Nos. 01 and 02. This debunks the claim that there was wage distortion as could be
shown by the itemized wages implementation quoted above. It should be noted that this
itemization has not been successfully traversed by the appellants. x x x.[30]

The NLRC then quoted the labor arbiters ruling on wage distortion.
We find no reason to depart from the conclusions of both the labor arbiter and the NLRC. It
is apropos to note, moreover, that petitioners contention on the issue of wage distortion and the
resulting allegation of discrimination against the private respondents employees are anchored on
its dubious position that private respondents promise to grant an across-the-board increase in
government-mandated salary benefits reflected in the Minutes of the negotiation is an
enforceable part of the CBA.
In the resolution of labor cases, this Court has always been guided by the State policy
enshrined in the Constitution that the rights of workers and the promotion of their welfare shall
be protected.[31] The Court is likewise guided by the goal of attaining industrial peace by the
proper application of the law. It cannot favor one party, be it labor or management, in arriving at
a just solution to a controversy if the party has no valid support to its claims. It is not within this
Courts power to rule beyond the ambit of the law.
WHEREFORE, the instant petition for certiorari is hereby DISMISSED and the
questioned Resolutions of the NLRC AFFIRMED. No costs.
SO ORDERED.
Narvasa, C.J., (Chairman), Kapunan and Purisima, JJ., concur.

[1]
Annex D to Petition; Rollo, pp. 71-74.
[2]
Annex K to Petition; Rollo, pp. 139-143.
[3]
NLRC Resolution of April 29, 1993, p. 2; Rollo, p. 61.
[4]
Annex E to Petition; Rollo, pp. 80-81.
[5]
Annex F to Petition; Rollo, pp. 75-78.
[6]
Rollo, p. 93.
[7]
Ibid., p. 95.
[8]
Ibid., p. 53.
[9]
Penned by Presiding Commissioner Edna Bonto-Perez and concurred in by Commissioners Domingo H. Zapanta
and Rogelio I. Rayala.
[10]
Marcopper Mining Corporation v. NLRC, 325 Phil. 618, 632 (1996).
[11]
Meycauayan College v. Drilon, G.R. No. 81144, May 7, 1990, 185 SCRA 50, 56 citing Art. 3 of the Labor Code.
[12]
Marcopper Mining Corporation v. NLRC, supra, at p. 634.
[13]
Art. 1700 of the Civil Code provides: The relations between capital and labor are not merely contractual. They
are so impressed with public interest that labor contracts must yield to the common good. Therefore, such contracts
are subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages,
working conditions, hours of labor and similar subjects.
[14]
Art. 252 of the Labor Code provides that the duty to bargain collectively means the performance of a mutual
obligation to meet and convene promptly and expeditiously in good faith for the purpose of negotiating an
agreement with respect to wages, hours of work an all other terms and conditions of employment including
proposals for adjusting any grievances or questions arising under such agreement and executing a
contract incorporating such agreements if requested by either party but such duty does not compel any party to agree
to a proposal or to make any concession. Notably, however, the first paragraph of Sec. 13 of Rep. Act No. 875, the
Industrial Peace Act, provides the execution of a written contract incorporating the collective bargaining agreement
as part of the parties duty to bargain collectively.
[15]
While the minutes kept by the judge are not the memorial of the judgment, and are not records required by law to
be kept, they constitute legal evidence of what was adjudged, and as such may serve as the foundation for the
correction of errors of the clerk in the performance of his duty. The minutes are only evidence of what was done (27
WORDS AND PHRASES 425 citing State ex rel. Sheridan Pub. Co. v. Goodrich, 140 S.W. 629, 630, 159 Mo.App.
422, citing Kreisel v. Snavely, 115 S.W. 1060, 135 Mo. App. 158).
[16]
William G. Caphs and Robert A. Graney, The Technique of Labor-Management Negotiations, University of
Illinois Law Forum, Summer 1955, p. 293 cited in C.A. AZUCENA, THE LABOR CODE WITH COMMENTS
AND CASES, Vol. II, 1993 ed., p. 228.
[17]
Petitioners Memorandum, pp. 18-20.
[18]
G.R. No. 54334, January 22, 1986, 141 SCRA 179.
[19]
Ibid., at pp. 185 & 186.
[20]
Petitioners Memorandum, pp. 14-15.
[21]
Ibid., p. 17.
[22]
51 C.J.S. 910.
[23]
Divine Word University of Tacloban v. Secretary of Labor and Employment, G.R. No. 91915, September 11,
1992, 213 SCRA 759, 773.
[24]
Ibid., at p. 910.
[25]
Ibid., at p. 912-913.
[26]
Petitioners Memorandum, p. 35.
[27]
Manila Mandarin Employees Union v. NLRC, G.R. No. 108556, November 19, 1996, 264 SCRA 320, 336 citing
Associate Labor Unions-TUCP v. NLRC, G.R. No. 109328, August 16, 1994, 235 SCRA 395; Metropolitan Bank
and Trust Co. Employees Union-ALU-TUCP v. NLRC, G.R. No. 102636, September 10, 1993, 226 SCRA 268;
Cardona v. NLRC, G.R. No. 89007, March 11, 1991, 195 SCRA 92.
[28]
Philippine Savings Bank v. NLRC, 330 Phil. 106 (1996).
[29]
Supra, at p. 275.
[30]
Rollo, p. 66.
[31]
Sec. 18, Art. II, 1987 Constitution.
 3) General vs. CA GR No. 146728 Feb.11, 2004 (murag naa na ni gahapon)

SECOND DIVISION

[G.R. No. 146728. February 11, 2004]

GENERAL MILLING CORPORATION, petitioner, vs. HON. COURT OF

APPEALS, GENERAL MILLING CORPORATION INDEPENDENT
LABOR UNION (GMC-ILU), and RITO MANGUBAT, respondents.

DECISION
QUISUMBING, J.:

Before us is a petition for certiorari assailing the decision[1] dated July 19, 2000, of
the Court of Appeals in CA-G.R. SP No. 50383, which earlier reversed the
decision[2]dated January 30, 1998 of the National Labor Relations Commission (NLRC)
in NLRC Case No. V-0112-94.
The antecedent facts are as follows:
In its two plants located at Cebu City and Lapu-Lapu City, petitioner General Milling
Corporation (GMC) employed 190 workers. They were all members of private
respondent General Milling Corporation Independent Labor Union (union, for brevity), a
duly certified bargaining agent.
On April 28, 1989, GMC and the union concluded a collective bargaining agreement
(CBA) which included the issue of representation effective for a term of three years.The
CBA was effective for three years retroactive to December 1, 1988. Hence, it would
expire on November 30, 1991.
On November 29, 1991, a day before the expiration of the CBA, the union sent
GMC a proposed CBA, with a request that a counter-proposal be submitted within ten
(10) days.
As early as October 1991, however, GMC had received collective and individual
letters from workers who stated that they had withdrawn from their union membership,
on grounds of religious affiliation and personal differences. Believing that the union no
longer had standing to negotiate a CBA, GMC did not send any counter-proposal.
On December 16, 1991, GMC wrote a letter to the unions officers, Rito Mangubat
and Victor Lastimoso. The letter stated that it felt there was no basis to negotiate with a
union which no longer existed, but that management was nonetheless always willing to
dialogue with them on matters of common concern and was open to suggestions on
how the company may improve its operations.
In answer, the union officers wrote a letter dated December 19, 1991 disclaiming
any massive disaffiliation or resignation from the union and submitted a manifesto,
signed by its members, stating that they had not withdrawn from the union.
On January 13, 1992, GMC dismissed Marcia Tumbiga, a union member, on the
ground of incompetence. The union protested and requested GMC to submit the matter
to the grievance procedure provided in the CBA. GMC, however, advised the union to
refer to our letter dated December 16, 1991.[3]
Thus, the union filed, on July 2, 1992, a complaint against GMC with the NLRC,
Arbitration Division, Cebu City. The complaint alleged unfair labor practice on the part of
GMC for: (1) refusal to bargain collectively; (2) interference with the right to self-
organization; and (3) discrimination. The labor arbiter dismissed the case with the
recommendation that a petition for certification election be held to determine if the union
still enjoyed the support of the workers.
The union appealed to the NLRC.
On January 30, 1998, the NLRC set aside the labor arbiters decision. Citing Article
253-A of the Labor Code, as amended by Rep. Act No. 6715, [4] which fixed the terms of
a collective bargaining agreement, the NLRC ordered GMC to abide by the CBA draft
that the union proposed for a period of two (2) years beginning December 1, 1991, the
date when the original CBA ended, to November 30, 1993. The NLRC also ordered
GMC to pay the attorneys fees.[5]
In its decision, the NLRC pointed out that upon the effectivity of Rep. Act No. 6715,
the duration of a CBA, insofar as the representation aspect is concerned, is five (5)
years which, in the case of GMC-Independent Labor Union was from December 1, 1988
to November 30, 1993. All other provisions of the CBA are to be renegotiated not later
than three (3) years after its execution. Thus, the NLRC held that respondent union
remained as the exclusive bargaining agent with the right to renegotiate the economic
provisions of the CBA. Consequently, it was unfair labor practice for GMC not to enter
into negotiation with the union.
The NLRC likewise held that the individual letters of withdrawal from the union
submitted by 13 of its members from February to June 1993 confirmed the pressure
exerted by GMC on its employees to resign from the union. Thus, the NLRC also found
GMC guilty of unfair labor practice for interfering with the right of its employees to self-
organization.
With respect to the unions claim of discrimination, the NLRC found the claim
unsupported by substantial evidence.
On GMCs motion for reconsideration, the NLRC set aside its decision of January
30, 1998, through a resolution dated October 6, 1998. It found GMCs doubts as to the
status of the union justified and the allegation of coercion exerted by GMC on the
unions members to resign unfounded. Hence, the union filed a petition
for certiorari before the Court of Appeals. For failure of the union to attach the required
copies of pleadings and other documents and material portions of the record to support
the allegations in its petition, the CA dismissed the petition on February 9, 1999. The
same petition was subsequently filed by the union, this time with the necessary
documents. In its resolution dated April 26, 1999, the appellate court treated the refiled
petition as a motion for reconsideration and gave the petition due course.
On July 19, 2000, the appellate court rendered a decision the dispositive portion of
which reads:

WHEREFORE, the petition is hereby GRANTED. The NLRC Resolution of October

6, 1998 is hereby SET ASIDE, and its decision of January 30, 1998 is, except with
respect to the award of attorneys fees which is hereby deleted, REINSTATED. [6]

A motion for reconsideration was seasonably filed by GMC, but in a resolution dated
October 26, 2000, the CA denied it for lack of merit.
Hence, the instant petition for certiorari alleging that:
I
THE COURT OF APPEALS DECISION VIOLATED THE CONSTITUTIONAL RULE
THAT NO DECISION SHALL BE RENDERED BY ANY COURT WITHOUT
EXPRESSING THEREIN CLEARLY AND DISTINCTLY THE FACTS AND THE LAW
ON WHICH IT IS BASED.
II
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN
REVERSING THE DECISION OF THE NATIONAL LABOR RELATIONS
COMMISSION IN THE ABSENCE OF ANY FINDING OF SUBSTANTIAL ERROR OR
GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION.
III
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN NOT
APPRECIATING THAT THE NLRC HAS NO JURISDICTION TO DETERMINE THE
TERMS AND CONDITIONS OF A COLLECTIVE BARGAINING AGREEMENT.[7]
Thus, in the instant case, the principal issue for our determination is whether or not
the Court of Appeals acted with grave abuse of discretion amounting to lack or excess
of jurisdiction in (1) finding GMC guilty of unfair labor practice for violating the duty to
bargain collectively and/or interfering with the right of its employees to self-organization,
and (2) imposing upon GMC the draft CBA proposed by the union for two years to begin
from the expiration of the original CBA.
On the first issue, Article 253-A of the Labor Code, as amended by Rep. Act No.
6715, states:

ART. 253-A. Terms of a collective bargaining agreement. Any Collective

Bargaining Agreement that the parties may enter into shall, insofar as the
representation aspect is concerned, be for a term of five (5) years. No petition
questioning the majority status of the incumbent bargaining agent shall be entertained
and no certification election shall be conducted by the Department of Labor and
Employment outside of the sixty-day period immediately before the date of expiry of
such five year term of the Collective Bargaining Agreement. All other provisions of
the Collective Bargaining Agreement shall be renegotiated not later than three (3)
years after its execution....

The law mandates that the representation provision of a CBA should last for five
years. The relation between labor and management should be undisturbed until the last
60 days of the fifth year. Hence, it is indisputable that when the union requested for a
renegotiation of the economic terms of the CBA on November 29, 1991, it was still the
certified collective bargaining agent of the workers, because it was seeking said
renegotiation within five (5) years from the date of effectivity of the CBA on December 1,
1988. The unions proposal was also submitted within the prescribed 3-year period from
the date of effectivity of the CBA, albeit just before the last day of said period. It was
obvious that GMC had no valid reason to refuse to negotiate in good faith with the
union. For refusing to send a counter-proposal to the union and to bargain anew on the
economic terms of the CBA, the company committed an unfair labor practice under
Article 248 of the Labor Code, which provides that:

ART. 248. Unfair labor practices of employers. It shall be unlawful for an employer
to commit any of the following unfair labor practice:

...

(g) To violate the duty to bargain collectively as prescribed by this Code;

...

Article 252 of the Labor Code elucidates the meaning of the phrase duty to bargain
collectively, thus:

ART. 252. Meaning of duty to bargain collectively. The duty to bargain collectively
means the performance of a mutual obligation to meet and convene promptly and
expeditiously in good faith for the purpose of negotiating an agreement....

We have held that the crucial question whether or not a party has met his statutory
duty to bargain in good faith typically turn$ on the facts of the individual case.[8] There is
no per se test of good faith in bargaining.[9] Good faith or bad faith is an inference to be
drawn from the facts.[10] The effect of an employers or a unions actions individually is not
the test of good-faith bargaining, but the impact of all such occasions or actions,
considered as a whole.[11]
Under Article 252 abovecited, both parties are required to perform their mutual
obligation to meet and convene promptly and expeditiously in good faith for the purpose
of negotiating an agreement. The union lived up to this obligation when it presented
proposals for a new CBA to GMC within three (3) years from the effectivity of the
original CBA. But GMC failed in its duty under Article 252. What it did was to devise a
flimsy excuse, by questioning the existence of the union and the status of its
membership to prevent any negotiation.
It bears stressing that the procedure in collective bargaining prescribed by the Code
is mandatory because of the basic interest of the state in ensuring lasting industrial
peace. Thus:

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

observed in collective bargaining:

(a) When a party desires to negotiate an agreement, it shall serve a written notice upon
the other party with a statement of its proposals. The other party shall make a reply
thereto not later than ten (10) calendar days from receipt of such
notice. (Underscoring supplied.)

GMCs failure to make a timely reply to the proposals presented by the union is
indicative of its utter lack of interest in bargaining with the union. Its excuse that it felt
the union no longer represented the workers, was mainly dilatory as it turned out to be
utterly baseless.
We hold that GMCs refusal to make a counter-proposal to the unions proposal for
CBA negotiation is an indication of its bad faith. Where the employer did not even
bother to submit an answer to the bargaining proposals of the union, there is a clear
evasion of the duty to bargain collectively.[12]
Failing to comply with the mandatory obligation to submit a reply to the unions
proposals, GMC violated its duty to bargain collectively, making it liable for unfair labor
practice. Perforce, the Court of Appeals did not commit grave abuse of discretion
amounting to lack or excess of jurisdiction in finding that GMC is, under the
circumstances, guilty of unfair labor practice.
Did GMC interfere with the employees right to self-organization? The CA found that
the letters between February to June 1993 by 13 union members signifying their
resignation from the union clearly indicated that GMC exerted pressure on its
employees. The records show that GMC presented these letters to prove that the union
no longer enjoyed the support of the workers. The fact that the resignations of the union
members occurred during the pendency of the case before the labor arbiter shows
GMCs desperate attempts to cast doubt on the legitimate status of the union. We agree
with the CAs conclusion that the ill-timed letters of resignation from the union members
indicate that GMC had interfered with the right of its employees to self-organization.
Thus, we hold that the appellate court did not commit grave abuse of discretion in
finding GMC guilty of unfair labor practice for interfering with the right of its employees
to self-organization.
 Finally, did the CA gravely abuse its discretion when it imposed on GMC the draft
CBA proposed by the union for two years commencing from the expiration of the
original CBA?
The Code provides:

ART. 253. Duty to bargain collectively when there exists a collective bargaining
agreement. ....It shall be the duty of both parties to keep the status quo and to
continue in full force and effect the terms and conditions of the existing
agreement during the 60-day period [prior to its expiration date] and/or until a new
agreement is reached by the parties. (Underscoring supplied.)

The provision mandates the parties to keep the status quo while they are still in the
process of working out their respective proposal and counter proposal. The general rule
is that when a CBA already exists, its provision shall continue to govern the relationship
between the parties, until a new one is agreed upon. The rule necessarily presupposes
that all other things are equal. That is, that neither party is guilty of bad faith. However,
when one of the parties abuses this grace period by purposely delaying the bargaining
process, a departure from the general rule is warranted.
In Kiok Loy vs. NLRC,[13] we found that petitioner therein, Sweden Ice Cream Plant,
refused to submit any counter proposal to the CBA proposed by its employees certified
bargaining agent. We ruled that the former had thereby lost its right to bargain the terms
and conditions of the CBA. Thus, we did not hesitate to impose on the erring company
the CBA proposed by its employees union - lock, stock and barrel. Our findings in Kiok
Loy are similar to the facts in the present case, to wit:

petitioner Companys approach and attitude stalling the negotiation by a series of

postponements, non-appearance at the hearing conducted, and undue delay in
submitting its financial statements, lead to no other conclusion except that it is
unwilling to negotiate and reach an agreement with the Union. Petitioner has not at
any instance, evinced good faith or willingness to discuss freely and fully the claims
and demands set forth by the Union much less justify its objection thereto. [14]

Likewise, in Divine Word University of Tacloban vs. Secretary of Labor and

Employment,[15] petitioner therein, Divine Word University of Tacloban, refused to
perform its duty to bargain collectively. Thus, we upheld the unilateral imposition on the
university of the CBA proposed by the Divine Word University Employees Union. We
said further:

That being the said case, the petitioner may not validly assert that its consent should
be a primordial consideration in the bargaining process. By its acts, no less than its
action which bespeak its insincerity, it has forfeited whatever rights it could have
asserted as an employer. [16]
 Applying the principle in the foregoing cases to the instant case, it would be unfair to
the union and its members if the terms and conditions contained in the old CBA would
continue to be imposed on GMCs employees for the remaining two (2) years of the
CBAs duration. We are not inclined to gratify GMC with an extended term of the old
CBA after it resorted to delaying tactics to prevent negotiations. Since it was GMC
which violated the duty to bargain collectively, based on Kiok Loy and Divine Word
University of Tacloban, it had lost its statutory right to negotiate or renegotiate the terms
and conditions of the draft CBA proposed by the union.
We carefully note, however, that as strictly distinguished from the facts of this case,
there was no pre-existing CBA between the parties in Kiok Loy and Divine Word
University of Tacloban. Nonetheless, we deem it proper to apply in this case the
rationale of the doctrine in the said two cases. To rule otherwise would be to allow GMC
to have its cake and eat it too.
Under ordinary circumstances, it is not obligatory upon either side of a labor
controversy to precipitately accept or agree to the proposals of the other. But an erring
party should not be allowed to resort with impunity to schemes feigning negotiations by
going through empty gestures.[17] Thus, by imposing on GMC the provisions of the draft
CBA proposed by the union, in our view, the interests of equity and fair play were
properly served and both parties regained equal footing, which was lost when GMC
thwarted the negotiations for new economic terms of the CBA.
The findings of fact by the CA, affirming those of the NLRC as to the
reasonableness of the draft CBA proposed by the union should not be disturbed since
they are supported by substantial evidence. On this score, we see no cogent reason to
rule otherwise. Hence, we hold that the Court of Appeals did not commit grave abuse of
discretion amounting to lack or excess of jurisdiction when it imposed on GMC, after it
had committed unfair labor practice, the draft CBA proposed by the union for the
remaining two (2) years of the duration of the original CBA. Fairness, equity, and social
justice are best served in this case by sustaining the appellate courts decision on this
issue.
WHEREFORE, the petition is DISMISSED and the assailed decision dated July 19,
2000, and the resolution dated October 26, 2000, of the Court of Appeals in CA-G.R.
SP No. 50383, are AFFIRMED. Costs against petitioner.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.

[1]
Rollo, pp. 172-179. Penned by Associate Justice Conchita Carpio Morales (now a member of this
Court), with Associate Justices Teodoro P. Regino and Mercedes Gozo-Dadole.
[2]
Id. at 34-48.
[3]
Id. at 175; See also CA Rollo, CA G.R. No. 51763, p. 83.
[4]
Effective March 21, 1989.
[5]
Rollo, p. 44.
[6]
Id. at 178.
[7]
Id. at 10.
[8]
Hongkong and Shanghai Banking Corporation Employees Union v. National Labor Relations
Commission, G.R. No. 125038, 6 November 1997, 281 SCRA 509, 518.
[9]
Ibid.
[10]
Ibid.
[11]
Ibid.
[12]
Colegio De San Juan De Letran v. Association of Employees and Faculty of Letran, G.R. No. 141471,
18 September 2000, 340 SCRA 587, 595.
[13]
No. L-54334, 22 January 1986, 141 SCRA 179, 188.
[14]
Supra.
[15]
213 SCRA 759, 11 September 1992.
[16]
Supra.
[17]
Ibid., citing H. ROTHENBERG, ROTHENBERG ON LABOR RELATIONS 435 (1949), NLRB v.
Sunshine Mining Co., 110 F. 2d 780, NLRB v. Condenser Corp., 128 F. 2

4) Standard vs. Confessor GR No. 114974 June 16, 2004

SECOND DIVISION

[G.R. No. 114974. June 16, 2004]

STANDARD CHARTERED BANK EMPLOYEES UNION

(NUBE), petitioner, vs. The Honorable MA. NIEVES R.
CONFESOR, in her capacity as SECRETARY OF LABOR AND
EMPLOYMENT; and the STANDARD CHARTERED
BANK, respondents.

DECISION
CALLEJO, SR., J.:

This is a petition for certiorari under Rule 65 of the Rules of Court filed by the
Standard Chartered Bank Employees Union, seeking the nullification of the October 29,
1993 Order[1] of then Secretary of Labor and Employment Nieves R. Confesor and her
resolutions dated December 16, 1993 and February 10, 1994.
 The Antecedents

Standard Chartered Bank (the Bank, for brevity) is a foreign banking corporation
doing business in the Philippines. The exclusive bargaining agent of the rank and file
employees of the Bank is the Standard Chartered Bank Employees Union (the Union,
for brevity).
In August of 1990, the Bank and the Union signed a five-year collective bargaining
agreement (CBA) with a provision to renegotiate the terms thereof on the third year.
Prior to the expiration of the three-year period[2] but within the sixty-day freedom period,
the Union initiated the negotiations. On February 18, 1993, the Union, through its
President, Eddie L. Divinagracia, sent a letter[3] containing its proposals[4] covering
political provisions[5] and thirty-four (34) economic provisions.[6] Included therein was a list
of the names of the members of the Unions negotiating panel.[7]
In a Letter dated February 24, 1993, the Bank, through its Country Manager Peter
H. Harris, took note of the Unions proposals. The Bank attached its counter-proposal to
the non-economic provisions proposed by the Union.[8] The Bank posited that it would be
in a better position to present its counter-proposals on the economic items after
the Union had presented its justifications for the economic proposals.[9] The Bank,
likewise, listed the members of its negotiating panel.[10] The parties agreed to set
meetings to settle their differences on the proposed CBA.
Before the commencement of the negotiation, the Union, through Divinagracia,
suggested to the Banks Human Resource Manager and head of the negotiating panel,
Cielito Diokno, that the bank lawyers should be excluded from the negotiating team. The
Bank acceded.[11] Meanwhile, Diokno suggested to Divinagracia that Jose P. Umali, Jr.,
the President of the National Union of Bank Employees (NUBE), the federation to which
the Union was affiliated, be excluded from the Unions negotiating panel.[12] However,
Umali was retained as a member thereof.
On March 12, 1993, the parties met and set the ground rules for the
negotiation. Diokno suggested that the negotiation be kept a family affair. The proposed
non-economic provisions of the CBA were discussed first.[13] Even during the final
reading of the non-economic provisions on May 4, 1993, there were still provisions on
which the Union and the Bank could not agree. Temporarily, the notation DEFERRED
was placed therein. Towards the end of the meeting, the Union manifested that the
same should be changed to DEADLOCKED to indicate that such items remained
unresolved. Both parties agreed to place the notation DEFERRED/DEADLOCKED.[14]
On May 18, 1993, the negotiation for economic provisions commenced. A
presentation of the basis of the Unions economic proposals was made. The next
meeting, the Bank made a similar presentation. Towards the end of the Banks
presentation, Umali requested the Bank to validate the Unions guestimates, especially
the figures for the rank and file staff.[15] In the succeeding meetings, Umali chided the
Bank for the insufficiency of its counter-proposal on the provisions on salary increase,
group hospitalization, death assistance and dental benefits. He reminded the Bank, how
the Union got what it wanted in 1987, and stated that if need be, the Union would go
through the same route to get what it wanted.[16]
Upon the Banks insistence, the parties agreed to tackle the economic package item
by item. Upon the Unions suggestion, the Bank indicated which provisions it would
accept, reject, retain and agree to discuss.[17] The Bank suggested that
the Union prioritize its economic proposals, considering that many of such economic
provisions remained unresolved. The Union, however, demanded that the Bank make a
revised itemized proposal.
In the succeeding meetings, the Union made the following proposals:

Wage Increase:
1st Year Reduced from 45% to 40%
2nd Year - Retain at 20%
Total = 60%

Group Hospitalization Insurance:

Maximum disability benefit reduced from P75,000.00 to P60,000.00 per illness
annually

Death Assistance:
For the employee -- Reduced from P50,000.00 to P45,000.00
For Immediate Family Member -- Reduced from P30,000.00 to P25,000.00

Dental and all others -- No change from the original demand. [18]

In the morning of the June 15, 1993 meeting, the Union suggested that if the Bank
would not make the necessary revisions on its counter-proposal, it would be best to
seek a third party assistance.[19] After the break, the Bank presented its revised counter-
proposal[20] as follows:

Wage Increase : 1st Year from P1,000 to P1,050.00

2nd Year P800.00 no change

Group Hospitalization Insurance

From: P35,000.00 per illness
To : P35,000.00 per illness per year

Death Assistance For employee

From: P20,000.00
To : P25,000.00

Dental Retainer Original offer remains the same [21]

 The Union, for its part, made the following counter-proposal:

Wage Increase: 1st Year - 40%

2nd Year - 19.5%

Group Hospitalization Insurance

From: P60,000.00 per year
To : P50,000.00 per year

Dental:
Temporary Filling/ P150.00
Tooth Extraction
Permanent Filling 200.00
Prophylaxis 250.00
Root Canal From P2,000 per tooth
To: 1,800.00 per tooth

Death Assistance:
For Employees: From P45,000.00 to P40,000.00
For Immediate Family Member: From P25,000.00 to P20,000.00. [22]

The Unions original proposals, aside from the above-quoted, remained the same.
Another set of counter-offer followed:

Management Union
Wage Increase
1st Year P1,050.00 40%
nd
2 Year - 850.00 19.0% [23]

Diokno stated that, in order for the Bank to make a better offer, the Union should
clearly identify what it wanted to be included in the total economic package. Umali
replied that it was impossible to do so because the Banks counter-proposal was
unacceptable. He furthered asserted that it would have been easier to bargain if the
atmosphere was the same as before, where both panels trusted each other. Diokno
requested the Union panel to refrain from involving personalities and to instead focus on
the negotiations.[24]He suggested that in order to break the impasse, the Union should
prioritize the items it wanted to iron out. Divinagracia stated that the Bank should make
the first move and make a list of items it wanted to be included in the economic
package. Except for the provisions on signing bonus and uniforms, the Union and the
Bank failed to agree on the remaining economic provisions of the CBA.
The Union declared a deadlock[25] and filed a Notice of Strike before the National
Conciliation and Mediation Board (NCMB) on June 21, 1993, docketed as NCMB-NCR-
NS-06-380-93.[26]
 On the other hand, the Bank filed a complaint for Unfair Labor Practice (ULP) and
Damages before the Arbitration Branch of the National Labor Relations Commission
(NLRC) in Manila, docketed as NLRC Case No. 00-06-04191-93 against the Union on
June 28, 1993. The Bank alleged that the Union violated its duty to bargain, as it did not
bargain in good faith. It contended that the Union demanded sky high economic
demands, indicative of blue-sky bargaining.[27] Further, the Union violated its no strike- no
lockout clause by filing a notice of strike before the NCMB. Considering that the filing of
notice of strike was an illegal act, the Union officers should be dismissed. Finally, the
Bank alleged that as a consequence of the illegal act, the Bank suffered nominal and
actual damages and was forced to litigate and hire the services of the lawyer. [28]
On July 21, 1993, then Secretary of Labor and Employment (SOLE) Nieves R.
Confesor, pursuant to Article 263(g) of the Labor Code, issued an Order assuming
jurisdiction over the labor dispute at the Bank. The complaint for ULP filed by the Bank
before the NLRC was consolidated with the complaint over which the SOLE assumed
jurisdiction.After the parties submitted their respective position papers, the SOLE issued
an Order on October 29, 1993, the dispositive portion of which is herein quoted:

WHEREFORE, the Standard Chartered Bank and the Standard Chartered Bank
Employees Union NUBE are hereby ordered to execute a collective bargaining
agreement incorporating the dispositions contained herein. The CBA shall be
retroactive to 01 April 1993 and shall remain effective for two years thereafter, or
until such time as a new CBA has superseded it. All provisions in the expired CBA
not expressly modified or not passed upon herein are deemed retained while all new
provisions which are being demanded by either party are deemed denied, but without
prejudice to such agreements as the parties may have arrived at in the meantime.

The Banks charge for unfair labor practice which it originally filed with the NLRC as
NLRC-NCR Case No. 00-06-04191-93 but which is deemed consolidated herein, is
dismissed for lack of merit. On the other hand, the Unions charge for unfair labor
practice is similarly dismissed.

Let a copy of this order be furnished the Labor Arbiter in whose sala NLRC-NCR
Case No. 00-06-04191-93 is pending for his guidance and appropriate action. [29]

The SOLE gave the following economic awards:

1. Wage Increase:
a) To be incorporated to present salary rates:
Fourth year : 7% of basic monthly salary
Fifth year : 5% of basic monthly salary based on the 4th year adjusted
salary

b) Additional fixed amount:

 Fourth year : P600.00 per month
Fifth year : P400.00 per month

2. Group Insurance
a) Hospitalization : P45,000.00
b) Life : P130,000.00
c) Accident : P130,000.00

3. Medicine Allowance
Fourth year : P5,500.00
Fifth year : P6,000.00

4. Dental Benefits
Provision of dental retainer as proposed by the Bank, but without
diminishing existing benefits

5. Optical Allowance
Fourth year: P2,000.00
Fifth year : P2,500.00

6. Death Assistance
a) Employee : P30,000.00
b) Immediate Family Member : P5,000.00

7. Emergency Leave Five (5) days for each contingency

8. Loans
a) Car Loan : P200,000.00
b) Housing Loan : It cannot be denied that the costs attendant to having
ones own home have tremendously gone up. The need, therefore, to
improve on this benefit cannot be overemphasized. Thus, the
management is urged to increase the existing and allowable housing
loan that the Bank extends to its employees to an amount that will
give meaning and substance to this CBA benefit. [30]

The SOLE dismissed the charges of ULP of both the Union and the Bank,
explaining that both parties failed to substantiate their claims. Citing National Labor
Union v. Insular-Yebana Tobacco Corporation,[31] the SOLE stated that ULP charges
would prosper only if shown to have directly prejudiced the public interest.
Dissatisfied, the Union filed a motion for reconsideration with clarification, while the
Bank filed a motion for reconsideration. On December 16, 1993, the SOLE issued a
Resolution denying the motions. The Union filed a second motion for reconsideration,
which was, likewise, denied on February 10, 1994.
 On March 22, 1994, the Bank and the Union signed the CBA.[32] Immediately
thereafter, the wage increase was effected and the signing bonuses based on the
increased wage were distributed to the employees covered by the CBA.

The Present Petition

On April 28, 1994, the Union filed this petition for certiorari under Rule 65 of the
Rules of Procedure alleging as follows:
A. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DISMISSING
THE UNIONS CHARGE OF UNFAIR LABOR PRACTICE IN VIEW OF THE CLEAR
EVIDENCE OF RECORD AND ADMISSIONS PROVING THE UNFAIR LABOR
PRACTICES CHARGED.[33]
B. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN FAILING TO RULE
ON OTHER UNFAIR LABOR PRACTICES CHARGED.[34]
C. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DISMISSING THE
CHARGES OF UNFAIR LABOR PRACTICES ON THE GROUND THAT NO
PROOF OF INJURY TO THE PUBLIC INTEREST WAS PRESENTED.[35]
The Union alleges that the SOLE acted with grave abuse of discretion amounting to
lack or excess of jurisdiction when it found that the Bank did not commit unfair labor
practice when it interfered with the Unions choice of negotiator. It argued that, Dioknos
suggestion that the negotiation be limited as a family affair was tantamount to
suggesting that Federation President Jose Umali, Jr. be excluded from the Unions
negotiating panel. It further argued that contrary to the ruling of the public respondent,
damage or injury to the public interest need not be present in order for unfair labor
practice to prosper.
The Union, likewise, pointed out that the public respondent failed to rule on the ULP
charges arising from the Banks surface bargaining. The Union contended that the Bank
merely went through the motions of collective bargaining without the intent to reach an
agreement, and made bad faith proposals when it announced that the parties should
begin from a clean slate. It argued that the Bank opened the political provisions up for
grabs, which had the effect of diminishing or obliterating the gains that the Union had
made.
The Union also accused the Bank of refusing to disclose material and necessary
data, even after a request was made by the Union to validate its guestimates.
In its Comment, the Bank prayed that the petition be dismissed as the Union was
estopped, considering that it signed the Collective Bargaining Agreement (CBA) on April
22, 1994. It asserted that contrary to the Unions allegations, it was the Union that
committed ULP when negotiator Jose Umali, Jr. hurled invectives at the Banks head
negotiator, Cielito Diokno, and demanded that she be excluded from the Banks
negotiating team. Moreover, the Union engaged in blue-sky bargaining and isolated the
no strike-no lockout clause of the existing CBA.
The Office of the Solicitor General, in representation of the public respondent,
prayed that the petition be dismissed. It asserted that the Union failed to prove its ULP
charges and that the public respondent did not commit any grave abuse of discretion in
issuing the assailed order and resolutions.

The Issues

The issues presented for resolution are the following: (a) whether or not the Union
was able to substantiate its claim of unfair labor practice against the Bank arising from
the latters alleged interference with its choice of negotiator; surface bargaining; making
bad faith non-economic proposals; and refusal to furnish the Union with copies of the
relevant data; (b) whether or not the public respondent acted with grave abuse of
discretion amounting to lack or excess of jurisdiction when she issued the assailed
order and resolutions; and, (c) whether or not the petitioner is estopped from filing the
instant action.

The Courts Ruling

The petition is bereft of merit.

Interference under Article
248 (a) of the Labor Code
The petitioner asserts that the private respondent committed ULP, i.e., interference
in the selection of the Unions negotiating panel, when Cielito Diokno, the Banks Human
Resource Manager, suggested to the Unions President Eddie L. Divinagracia that Jose
P. Umali, Jr., President of the NUBE, be excluded from the Unions negotiating panel. In
support of its claim, Divinagracia executed an affidavit, stating that prior to the
commencement of the negotiation, Diokno approached him and suggested the
exclusion of Umali from the Unions negotiating panel, and that during the first meeting,
Diokno stated that the negotiation be kept a family affair.
Citing the cases of U.S. Postal Service[36] and Harley Davidson Motor Co., Inc.,
AMF,[37] the Union claims that interference in the choice of the Unions bargaining panel is
tantamount to ULP.
In the aforecited cases, the alleged ULP was based on the employers violation of
Section 8(a)(1) and (5) of the National Labor Relations Act (NLRA), [38] which pertain to
the interference, restraint or coercion of the employer in the employees exercise of their
rights to self-organization and to bargain collectively through representatives of their
own choosing; and the refusal of the employer to bargain collectively with the
employees representatives. In both cases, the National Labor Relations Board held that
upon the employers refusal to engage in negotiations with the Union for collective-
bargaining contract when the Union includes a person who is not an employee, or one
who is a member or an official of other labor organizations, such employer is engaged in
unfair labor practice under Section 8(a)(1) and (5) of the NLRA.
The Union further cited the case of Insular Life Assurance Co., Ltd. Employees
Association NATU vs. Insular Life Assurance Co., Ltd.,[39] wherein this Court said that the
test of whether an employer has interfered with and coerced employees in the exercise
of their right to self-organization within the meaning of subsection (a)(1) is whether the
employer has engaged in conduct which it may reasonably be said, tends to interfere
with the free exercise of employees rights under Section 3 of the Act.[40] Further, it is not
necessary that there be direct evidence that any employee was in fact intimidated or
coerced by statements of threats of the employer if there is a reasonable inference that
anti-union conduct of the employer does have an adverse effect on self-organization
and collective bargaining.[41]
Under the International Labor Organization Convention (ILO) No. 87 FREEDOM OF
ASSOCIATION AND PROTECTION OF THE RIGHT TO ORGANIZE to which the
Philippines is a signatory, workers and employers, without distinction whatsoever, shall
have the right to establish and, subject only to the rules of the organization concerned,
to job organizations of their own choosing without previous authorization. [42] Workers and
employers organizations shall have the right to draw up their constitutions and rules, to
elect their representatives in full freedom to organize their administration and activities
and to formulate their programs.[43] Article 2 of ILO Convention No. 98 pertaining to the
Right to Organize and Collective Bargaining, provides:

Article 2

1. Workers and employers organizations shall enjoy adequate protection against any
acts or interference by each other or each others agents or members in their
establishment, functioning or administration.
2. In particular, acts which are designed to promote the establishment of workers
organizations under the domination of employers or employers organizations or to
support workers organizations by financial or other means, with the object of placing
such organizations under the control of employers or employers organizations within
the meaning of this Article.
The aforcited ILO Conventions are incorporated in our Labor Code, particularly in
Article 243 thereof, which provides:

ART. 243. COVERAGE AND EMPLOYEES RIGHT TO SELF-ORGANIZATION. All

persons employed in commercial, industrial and agricultural enterprises and in
religious, charitable, medical or educational institutions whether operating for profit
or not, shall have the right to self-organization and to form, join, or assist labor
organizations of their own choosing for purposes of collective bargaining. Ambulant,
intermittent and itinerant workers, self-employed people, rural workers and those
without any definite employers may form labor organizations for their mutual aid and
protection.
and Articles 248 and 249 respecting ULP of employers and labor organizations.
The said ILO Conventions were ratified on December 29, 1953. However, even as
early as the 1935 Constitution,[44] the State had already expressly bestowed protection to
labor as part of the general provisions. The 1973 Constitution,[45] on the other hand,
declared it as a policy of the state to afford protection to labor, specifying that the
workers rights to self-organization, collective bargaining, security of tenure, and just and
humane conditions of work would be assured. For its part, the 1987 Constitution, aside
from making it a policy to protect the rights of workers and promote their
welfare,[46] devotes an entire section, emphasizing its mandate to afford protection to
labor, and highlights the principle of shared responsibility between workers and
employers to promote industrial peace.[47]
Article 248(a) of the Labor Code, considers it an unfair labor practice when an
employer interferes, restrains or coerces employees in the exercise of their right to self-
organization or the right to form association. The right to self-organization necessarily
includes the right to collective bargaining.
Parenthetically, if an employer interferes in the selection of its negotiators or
coerces the Union to exclude from its panel of negotiators a representative of the Union,
and if it can be inferred that the employer adopted the said act to yield adverse effects
on the free exercise to right to self-organization or on the right to collective bargaining of
the employees, ULP under Article 248(a) in connection with Article 243 of the Labor
Code is committed.
In order to show that the employer committed ULP under the Labor Code,
substantial evidence is required to support the claim. Substantial evidence has been
defined as such relevant evidence as a reasonable mind might accept as adequate to
support a conclusion.[48] In the case at bar, the Union bases its claim of interference on
the alleged suggestions of Diokno to exclude Umali from the Unions negotiating panel.
The circumstances that occurred during the negotiation do not show that the
suggestion made by Diokno to Divinagracia is an anti-union conduct from which it can
be inferred that the Bank consciously adopted such act to yield adverse effects on the
free exercise of the right to self-organization and collective bargaining of the employees,
especially considering that such was undertaken previous to the commencement of the
negotiation and simultaneously with Divinagracias suggestion that the bank lawyers be
excluded from its negotiating panel.
The records show that after the initiation of the collective bargaining process, with
the inclusion of Umali in the Unions negotiating panel, the negotiations pushed through.
The complaint was made only on August 16, 1993 after a deadlock was declared by
the Union on June 15, 1993.
It is clear that such ULP charge was merely an afterthought. The accusation
occurred after the arguments and differences over the economic provisions became
heated and the parties had become frustrated. It happened after the parties started to
involve personalities. As the public respondent noted, passions may rise, and as a
result, suggestions given under less adversarial situations may be colored with
unintended meanings.[49] Such is what appears to have happened in this case.
The Duty to Bargain
Collectively
If at all, the suggestion made by Diokno to Divinagracia should be construed as part
of the normal relations and innocent communications, which are all part of the friendly
relations between the Union and Bank.
The Union alleges that the Bank violated its duty to bargain; hence, committed ULP
under Article 248(g) when it engaged in surface bargaining. It alleged that the Bank just
went through the motions of bargaining without any intent of reaching an agreement, as
evident in the Banks counter-proposals. It explained that of the 34 economic provisions
it made, the Bank only made 6 economic counterproposals. Further, as borne by the
minutes of the meetings, the Bank, after indicating the economic provisions it had
rejected, accepted, retained or were open for discussion, refused to make a list of items
it agreed to include in the economic package.
Surface bargaining is defined as going through the motions of negotiating without
any legal intent to reach an agreement.[50] The resolution of surface bargaining
allegations never presents an easy issue. The determination of whether a party has
engaged in unlawful surface bargaining is usually a difficult one because it involves, at
bottom, a question of the intent of the party in question, and usually such intent can only
be inferred from the totality of the challenged partys conduct both at and away from the
bargaining table.[51] It involves the question of whether an employers conduct
demonstrates an unwillingness to bargain in good faith or is merely hard bargaining.[52]
The minutes of meetings from March 12, 1993 to June 15, 1993 do not show that
the Bank had any intention of violating its duty to bargain with the Union. Records show
that after the Union sent its proposal to the Bank on February 17, 1993, the latter replied
with a list of its counter-proposals on February 24, 1993. Thereafter, meetings were set
for the settlement of their differences. The minutes of the meetings show that both the
Bank and the Union exchanged economic and non-economic proposals and counter-
proposals.
The Union has not been able to show that the Bank had done acts, both at and
away from the bargaining table, which tend to show that it did not want to reach an
agreement with the Union or to settle the differences between it and
the Union. Admittedly, the parties were not able to agree and reached a
deadlock. However, it is herein emphasized that the duty to bargain does not compel
either party to agree to a proposal or require the making of a concession. [53] Hence, the
parties failure to agree did not amount to ULP under Article 248(g) for violation of the
duty to bargain.

We can hardly dispute this finding, for it finds support in the evidence. The inference
that respondents did not refuse to bargain collectively with the complaining union
because they accepted some of the demands while they refused the others even
leaving open other demands for future discussion is correct, especially so when those
demands were discussed at a meeting called by respondents themselves precisely in
view of the letter sent by the union on April 29, 1960 [54]
 In view of the finding of lack of ULP based on Article 248(g), the accusation that the
Bank made bad faith provisions has no leg to stand on. The records show that the
Banks counter-proposals on the non-economic provisions or political provisions did not
put up for grabs the entire work of the Union and its predecessors. As can be gleaned
from the Banks counter-proposal, there were many provisions which it proposed to be
retained. The revisions on the other provisions were made after the parties had come to
an agreement. Far from buttressing the Unions claim that the Bank made bad-faith
proposals on the non-economic provisions, all these, on the contrary, disprove such
allegations.
We, likewise, find that the Union failed to substantiate its claim that the Bank
refused to furnish the information it needed.
While the refusal to furnish requested information is in itself an unfair labor practice,
and also supports the inference of surface bargaining,[55] in the case at bar, Umali, in a
meeting dated May 18, 1993, requested the Bank to validate its guestimates on the data
of the rank and file. However, Umali failed to put his request in writing as provided for in
Article 242(c) of the Labor Code:

Article 242. Rights of Legitimate Labor Organization

(c) To be furnished by the employer, upon written request, with the annual audited
financial statements, including the balance sheet and the profit and loss statement,
within thirty (30) calendar days from the date of receipt of the request, after the union
has been duly recognized by the employer or certified as the sole and exclusive
bargaining representatives of the employees in the bargaining unit, or within sixty
(60) calendar days before the expiration of the existing collective bargaining
agreement, or during the collective negotiation;

The Union, did not, as the Labor Code requires, send a written request for the
issuance of a copy of the data about the Banks rank and file employees. Moreover, as
alleged by the Union, the fact that the Bank made use of the aforesaid guestimates,
amounts to a validation of the data it had used in its presentation.
No Grave Abuse of Discretion
On the Part of the Public Respondent
The special civil action for certiorari may be availed of when the tribunal, board, or
officer exercising judicial or quasi-judicial functions has acted without or in excess of
jurisdiction and there is no appeal or any plain, speedy, and adequate remedy in the
ordinary course of law for the purpose of annulling the proceeding. [56] Grave abuse of
discretion implies such capricious and whimsical exercise of judgment as is equivalent
to lack of jurisdiction, or where the power is exercised in an arbitrary or despotic manner
by reason of passion or personal hostility which must be so patent and gross as to
amount to an invasion of positive duty or to a virtual refusal to perform the duty enjoined
or to act at all in contemplation of law. Mere abuse of discretion is not enough.[57]
 While it is true that a showing of prejudice to public interest is not a requisite for
ULP charges to prosper, it cannot be said that the public respondent acted in capricious
and whimsical exercise of judgment, equivalent to lack of jurisdiction or excess thereof.
Neither was it shown that the public respondent exercised its power in an arbitrary and
despotic manner by reason of passion or personal hostility.
Estoppel not Applicable
In the Case at Bar
The respondent Bank argues that the petitioner is estopped from raising the issue of
ULP when it signed the new CBA.
Article 1431 of the Civil Code provides:

Through estoppel an admission or representation is rendered conclusive upon the

person making it, and cannot be denied or disproved as against the person relying
thereon.

A person, who by his deed or conduct has induced another to act in a particular
manner, is barred from adopting an inconsistent position, attitude or course of conduct
that thereby causes loss or injury to another.[58]
In the case, however, the approval of the CBA and the release of signing bonus do
not necessarily mean that the Union waived its ULP claim against the Bank during the
past negotiations. After all, the conclusion of the CBA was included in the order of the
SOLE, while the signing bonus was included in the CBA itself. Moreover,
the Union twice filed a motion for reconsideration respecting its ULP charges against
the Bank before the SOLE.
The Union Did Not Engage
In Blue-Sky Bargaining
We, likewise, do not agree that the Union is guilty of ULP for engaging in blue-sky
bargaining or making exaggerated or unreasonable proposals.[59] The Bank failed to
show that the economic demands made by the Union were exaggerated or
unreasonable. The minutes of the meeting show that the Union based its economic
proposals on data of rank and file employees and the prevailing economic benefits
received by bank employees from other foreign banks doing business in the Philippines
and other branches of the Bank in the Asian region.
In sum, we find that the public respondent did not act with grave abuse of discretion
amounting to lack or excess of jurisdiction when it issued the questioned order and
resolutions. While the approval of the CBA and the release of the signing bonus did not
estop the Union from pursuing its claims of ULP against the Bank, we find that the latter
did not engage in ULP. We, likewise, hold that the Union is not guilty of ULP.
IN LIGHT OF THE FOREGOING, the October 29, 1993 Order and December 16,
1993 and February 10, 1994 Resolutions of then Secretary of Labor Nieves R. Confesor
are AFFIRMED. The Petition is hereby DISMISSED.
 SO ORDERED.
Puno, (Chairman), Quisumbing, Austria-Martinez, and Tinga, JJ., concur.

[1]
Rollo, pp. 451-464.
[2]
The expiration of the CBA is on March 31, 1993.
[3]
Rollo, pp. 120-121.
[4]
Id. at 122-141.
[5]
Sometimes referred to as non-economic provisions.
[6]
Uniforms, signing bonus, wages, group insurance, medicine allowance, dental benefits, optical
allowance, death assistance, additional month in midyear allowance, additional 2.5% in the tellers
guarantee fund; profit-sharing provision, improvements in leave benefits, i.e., maternity, vacation,
sick, emergency and union leave; introduction of paternity leave, marriage leave, birthday leave
and loyalty leave; extension of the enjoyment of salary increments from 35 to 40 years of service;
provision for meal and shift allowances; increase in overtime, weekend, holiday and shift
allowances; increase emergency premiums, increase in availments of housing corresponding
lowering of interest rates and eligibility requirements, and deletion of the current rules on
availment; improvement of gratuities to a maximum of 175% and increase of medical benefits
(Rollo, p. 142).
[7]
Eddie L. Divinagracia, Rogelio Fernando, Nancy G. Sagum, Rebecca Gabay, Ray Michael Quimpo,
Reyel G. Vargas, Cipriano Garcia, Alberto Diaz, Ed De Mesa and Jose P. Umali, Jr.
[8]
The Banks counter-proposal centered on union recognition and scope (appropriate bargaining
agreement), union security and check-off (maintenance of membership), new employees,
collection of union dues, job security, hiring of next of kin, temporary personnel, redundancies,
closure and relocation, management prerogative, uniforms and grievance procedures. With
respect to the counter-proposals on all economic provisions, the Bank said that it is open for
discussion. (Rollo, p. 144).
[9]
Rollo, p. 142.
[10]
Pinky Diokno (sometimes referred to as Cielito Diokno), Jose S. Ho, Rene Padlan, Rolando Orbeta,
Janet Camarista, Sinforoso Morada and Modesto B. Lim.
[11]
Rollo, p. 544.
[12]
Id. at 288.
[13]
The negotiations for the non-economic provisions were made on March 12, 16, 23, and 30, 1993; April
6, 13, 20, 23 and 28, 1993 and May 4, 1993.
[14]
The Union defined DEADLOCKED as exhaustion of the three readings; Rollo, p. 269.
[15]
Minutes of the Meeting of June 1, 1993; Rollo, p. 277.
[16]
Rollo, p. 278.
[17]
Minutes of the Meeting of June 8, 1993; Rollo, p. 281.
[18]
Rollo, p. 284.
[19]
Ibid.
[20]
Rollo, pp. 284-285.
[21]
Id. at 285.
[22]
Id. at 285.
[23]
Id.
[24]
Id.
[25]
Minutes of the Meeting of June 15, 1993; Rollo, p. 286.
[26]
Rollo, p. 683.
[27]
Blue-Sky Bargaining is defined as unrealistic and unreasonable demands in negotiations by either or
both labor and management, where neither concedes anything and demands the impossible. It
actually is not collective bargaining at all. (Harold S. Roberts, Roberts Dictionary of Industrial
Relations (Revised Edition, 1971, p. 51); Rollo, p. 671.
[28]
Rollo, pp. 670-676.
[29]
Id. at 463-464.
[30]
Id. at 459-460.
[31]
2 SCRA 924 (1961).
[32]
Rollo, pp. 562-611.
[33]
Id. at 10.
[34]
Id. at 23.
[35]
Id. at 24.
[36]
280 NLRB No. 80 280 NLRB No. 8
[37]
214 NLRB No. 062.
[38]
Section 8.a . It shall be unfair labor practice for an employer-
(1)To interfere with, restrain or coerce employees in the exercise of their rights guaranteed under Section
7;
(5) To refuse to bargain collectively with the representatives of his employees, subject to the provisions of
Section 9. (National Labor Management Act)
Section 7. Employees shall have the right to self-organization, to form, join or assist labor organizations,
to bargain collectively through representatives of their own choosing; and to engage
in other concerted activities for the purpose of collective bargaining or other mutual aid or
protection, and shall also have the right to refrain from any or all of such activities except to the
extant that such right may be affected by an agreement requiring membership in a labor
organization as a condition of employment as authorized in Section 8(a)(3.)
[39]
37 SCRA 244 (1971).
[40]
Section 3. Employees Right to Self-Organization.- Employees shall have the right to self-organization
and to form, join or assist labor organizations of their own choosing for the purpose of collective
bargaining through representatives of their own choosing and to engage in concerted activities for
the purpose of collective bargaining and other mutual aid or protection. Individuals employed as
supervisors shall not be eligible for membership in a labor organization of employees under their
supervision but may form separate organizations of their own.
Section 4. Unfair Labor Practices.-
(a) It shall be unfair labor practice for an employer:
(1) To interfere with, restrain or coerce employees in the exercise of their rights guaranteed in Section
three; (Republic Act No. 875)
[41]
Referring to Section 3 and 4(a)(1) of the Industrial Peace Act, Republic Act No. 875.
[42]
Article 2, ILO Convention No. 87.
[43]
Article 3, ILO Convention No. 87.
[44]
Section 6, Article XIV of the 1935 Constitution provides:
Sec. 6. The State shall afford protection to labor, especially to working women and minors, and shall
regulate the relations between landowner and tenant, and between labor and capital in industry
and in agriculture. The State may provide for compulsory arbitration.
[45]
Section 9, Article II of the 1973 Constitution provides:
Sec. 9. The State shall afford protection to labor, promote full employment and equality in employment,
ensure equal work opportunities regardless of sex, race, or creed, and regulate the relations
between workers and employers. The State shall assure the rights of workers to self-organization,
collective bargaining, security of tenure, and just and humane conditions of work. The State may
provide for compulsory arbitration.
[46]
Section 18, Article II of the 1987 Constitution provides:
Sec. 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers
and promote their welfare.
[47]
Section 3, Article XIII on Social Justice and Human Rights reads as follows:
LABOR
Sec. 3. The State shall afford full protection to labor, local and overseas, organized and unorganized and
unorganized, and promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights and benefits as may be
provided by law.
The State shall promote the principle of shared responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce
their mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers, recognizing the right of labor to its
just share in the fruits of production and the right of enterprises to reasonable return on
investments, and to expansion and growth.
[48]
Rubberworld (Phils.), Inc. vs. NLRC, 175 SCRA 450 (1989).
[49]
Rollo, p. 462.
[50]
K-Mart Corporation vs. National Labor Relations Board, 626 F.2d 704 (1980).
[51]
Luck Limousine, 312 NLRB 770, 789 (1993).
[52]
Queen Mary Restaurants Corp. and Q.M. Foods, Inc. vs. National Labor Relations Board, 560 F.2d
403 (1977).
[53]
Eastern Maine Medical Center vs. National Labor Relations Board, 658 F.2d 1 (1981).
[54]
National Union of Restaurant Workers (PTUC) vs. Court of Industrial Relations, 10 SCRA 843 (1964).
[55]
K-Mart Corporation vs. NLRB, supra.
[56]
Guerrero vs. Commission on Elections, 336 SCRA 458 (2000).
[57]
Santos vs. Commission on Elections, 399 SCRA 611 (2003).
[58]
Navarro vs. Second Laguna Development Bank, 398 SCRA 227 (2003).
[59]
Arthur A. Sloane and Fred Witney, Labor Relations, 7th Edition 1991, p. 195.

5) Galaxy vs. NLRC GR No. 165757 Oct. 17, 2006

THIRD DIVISION

GALAXIE STEEL WORKERS G.R. No. 165757

UNION (GSWU-NAFLU-KMU),
EDUARDO FLORES, Present:
BONIFACIO LABACO,
SALVADOR VERDEFLOR, QUISUMBING, J., Chairperson,
PAULITO NIEVES, NILO CARPIO,
AMENAZOR, BENJAMIN CARPIO MORALES,
BEDUYA, EUTIQUIO TINGA, and
MENESES, CENON LABACO, VELASCO, JR., JJ.
DANILO MARANAN, ELISEO
LASTIMOSO, JAMES
MADERAS, EFREN LABACO,
CESARIO BOLSICO, DARIO Promulgated:
DECALAIN, SAMMY CEDENO, October 17, 2006
PRUDENCIO DELA CRUZ,
EDGARDO PASTRANA,
DANILO BERMUDEZ, BILLY
BLASCO, ROBERTO PEPINO,
RUBEN TENOSO, ORLANDO
TUDILLA, JESSIE SACE, JUNE
DALAYAT, FRANCISO
LABACO, EDIN DEMAYO,
WILFREDO CHENG, JAIME
GANDO, JOSELITO
GUANZON, VICTOR
 DELMUNDO, NATHANIEL
PEROY, ROBERTO
VIRTUDAZO, RICARDO
HILAGA, RODRIGO
FIRMANEZ, RENE VILLA,
VERGELIO ICO, NOLITO
PANUNCIA, ALDRONICO
BAHILLO, FLORENCIO
LANZADEROS, ROLLY
ROTIL, BENJAMIN ESCANO,
DOMINADOR ABAINCIA,
ROMEO LITANG, NELSON
PETALIO, MARIO
VILLAMOR, AGUSTIN
CONSTANTINO, HERMINIO
AGUSTIN, VICTORIO
NEMENZO, MABINI YARCIA,
PERCY ZOSIMO, ANGELITO
DELOS REYES, ADVINCULA
ELMEDULAN, GORGONIO
BOLORAN, ALAN MONIN,
JESSIE PACALINGGA, and
MICHAEL DACLAG,
Petitioners,

- versus -

NATIONAL LABOR
RELATIONS COMMISSION,
GALAXIE STEEL
CORPORATION and RICARDO
CHENG,
Respondents.
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION
CARPIO MORALES, J.:

Assailed via petition for review are issuances of the Court of Appeals in CA-
G.R. SP No. 68669, to wit: Decision[1] dated March 26, 2004 denying petitioners
petition for certiorari and upholding the decision of the National Labor Relations
Commission (NLRC) in NLRC NCR CA No. 026956-00, and Resolution
dated October 19, 2004 denying petitioners motion for reconsideration of the
decision.

Respondent Galaxie Steel Corporation (Galaxie) is a corporation engaged in

the business of manufacturing and sale of re-bars and steel billets which are used
primarily in the construction of high-rise buildings. On account of serious business
losses which occurred in 1997 up to mid-1999 totaling
[2]
around P127,000,000.00, Galaxie decided to close down its business operations.

Galaxie thus filed on July 30, 1999 a written notice with the Department of
Labor and Employment (DOLE) informing the latter of its intended closure and the
consequent termination of its employees effective August 31, 1999.[3] And
it posted the notice of closure on the corporate bulletin board.[4]

On September 8, 1999, petitioners Galaxie Steel Workers Union and Galaxie

employees filed a complaint for illegal dismissal, unfair labor practice, and money
claims against Galaxie.

The Labor Arbiter, by Decision of October 30, 2000, declared valid Galaxies
closure of business but nevertheless ordered it to pay petitioner-employees
separation pay, pro-rata 13th month pay, and vacation and sick leave credits. The
dispositive portion of the decision reads:

WHEREFORE, judgment is hereby rendered ordering Respondents to

pay complainants separation pay, pro-rata 13th month pay, and vacation leave
and sick leave credits in the following computed amounts:
xxxx
 Respondents are further ordered to pay complainants their tax refund for 1999
and to pay 10% attorneys fees based on the total withheld labor standard
benefits.

The complaint for unfair labor practice, illegal lockout, wage differentials, and
other money claims are hereby disallowed for lack of merit.

SO ORDERED.[5]

On appeal, the NLRC upheld the Labor Arbiters decision but reversed the award of
pro-rata 13th month pay and vacation and sick leave credits, the same not being
among petitioners causes of action as in fact they were not even mentioned in their
pleadings.[6] And it reversed too the award for separation pay, the closure of
Galaxies business being due to serious business losses. Nevertheless, the NLRC
directed Galaxie to grant petitioners, by way of financial assistance, the same
amount given to the employees who had executed quitclaims. Thus the dispositive
portion of the NLRC decision read:

WHEREFORE, the decision appealed from is hereby SET ASIDE. The

complaint for unfair labor practice and illegal dismissal is DISMISSED for
lack of merit. The respondent Galaxie Steel Corporation is hereby ordered to
extend as any by way of financial assistance the equivalent of ten (10) days
(sic) salary for every year of service to each of the following: Eduardo Flores,
Bonifacio Labaco, Salvador Verdeeflor, Paulito Nieves, Nilo Amenazor,
Benjamin Beduya, Eutiquio Meneses, Cenon Labaco, Danilo Maranan, Eliseo
Lastimoso, James Maderas, Efren Labaco, Cesario Bolsico, Dario Cecalain,
Sammy Cedeno, Prudencio dela Cruz, Edgardo Pastrana, Danilo Bermudez,
Billy Blasco, Roberto Pepino, Ruben Tenoso, Orlando Dudilla, Jessie Sace,
June Dalayat, Francisco Labaco, Edwin Demayo, Wilfredo Cheng,
Jaime Gando, Joselito Guanzon, Victor Delmundo, Nathaniel Peroy,
Roberto Virtudazo, Ricardo Hilaga, Rodrigo Firnanez, Rene
Villa, Vergelio Ico, Nolito Panuncio, Aldronico Bahillo, Florencio Lanzaderos,
Rolly Rotil, Benjamin Escano, Dominador Abaincia, Romeo Litang,
Nelson Petalio, Mario Villamor,
Agustin Constantino, Herminio Agustin, Victorio Nemenzo, MabiniYarcia,
Percy Zosimo, Angelito delos Reyes, Advincula Elmedulan, Gorgonio Boloran
, Alan Monin, Jessie Pacalingga and Michael Daclag.

All other claims are DISMISSED for lack of merit.

SO ORDERED.[7]
Their motion for reconsideration having been denied, petitioners filed a petition for
certiorari with the Court of Appeals, arguing that the NLRC acted with grave abuse
of discretion in not finding Galaxie guilty of unfair labor practice and of violating
petitioners right to notice of closure, and in deleting the award of separation pay.

In the assailed decision,[8] the Court of Appeals upheld the NLRC decision
and accordingly denied petitioners petition for certiorari as it did their motion for
reconsideration.

Hence, the present petition for review which raises the following issues:

1. Whether or not [Galaxie] is guilty of unfair labor practice in closing its

business operations shortly after petitioner union filed for certification
election.

2. Whether or not petitioners are entitled to separation pay.

3. Whether or not the written notice posted by [Galaxie] on the company

bulletin board sufficiently complies with the notice requirement under
Article 283 of the Labor Code.

Petitioners contend that the Court of Appeals erred in not finding that
Galaxies closure of business operations was motivated not by serious business
losses but by their anti-union stance.

It is settled that this Court is not a trier of facts, a rule which applies with
greater force in labor cases where the findings of fact of the NLRC are accorded
respect and even finality, as long as they are supported by substantial evidence
from which an independent evaluation of the facts may be made.[9] In this case, the
Labor Arbiter, the NLRC, and the Court of Appeals were unanimous in ruling that
Galaxies closure or cessation of business operations was due to serious business
losses or financial reverses, and not because of any alleged anti-union
position. This Court finds no reason to modify such finding.
 In any event, petitioners contend that Galaxie did not serve written notices of
the closure of business operations upon its employees, it having merely posted a
notice on the company bulletin board. Hence, petitioners conclude, following the
doctrine in Serrano v. National Labor Relations Commission,[10] Galaxie should be
liable for backwages from the date of dismissal until finality of the decision in the
case.

Further, petitioners contend that the appellate courts upholding of the

deletion by the NLRC of separation pay is contrary to the ruling in Banco Filipino
Savings and Mortgage Bank v. National Labor Relations Commission[11] which
held that separation pay is proper in cases where closure or cessation of business
operations is due to serious business losses or financial reverses.

Indeed, Galaxies documentary evidence shows that it had been experiencing

serious financial losses at the time it closed business operations. As aptly found by
the Court of Appeals:

The NLRCs finding on the legality of the closure should be upheld for
it is supported by substantial evidence consisting of the audited financial
statements showing that Galaxie continuously incurred losses from 1997 up to
mid-1999, to wit: P65,753,480.65 in 1997, P48,429,785.89 in 1998,
and P13,204,389.97 in 1999; and of the various demand notices of payments
from creditor banks. Besides, the petitioners had not presented evidence to the
contrary; nor did they
establish that the closure was motivated by Galaxies anti-union stance. True,
the union was seeking the holding of a certification election at the time that
Galaxie closed its business operation, but that, without more, was not sufficient
to attribute anti-unionism against Galaxie. (Underscoring supplied)

Upon the other hand, petitioners failed to present concrete evidence

supporting their claim of unfair labor practice. Unfair labor practice refers to acts
that violate the workers right to organize,[12] and are defined in Articles 248 and
261 of the Labor Code. The prohibited acts relate to the workers right to self-
organization and to the observance of Collective Bargaining Agreement without
which relation the acts, no matter how unfair, are not deemed unfair labor
practices.[13]
Respecting petitioners claim for separation pay, Article 283 of the Labor Code
provides:

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
unless the closing is for the purpose of circumventing the provisions of this
Title, by serving a written notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor saving devices or redundancy, the
worker affected thereby shall be entitled to a separation pay equivalent to at
least his one (1) month pay or to at least one (1) month pay for every year of
service , whichever is higher. In case of retrenchment to prevent losses and in
cases of closures or cessation of operations of establishment or under taking
not due to serious business losses or financial reverses, the separation pay shall
be equivalent to one (1) month pay or at least one-half (1/2) month pay for
every year of service, whichever is higher. A fraction of at least six (6) months
shall be considered one (1) whole year.

2///////)))))))))))))))))))))))))
In North Davao Mining Corporation v. National Labor Relations
Commission,[14] this Court held that Article 283 governs the grant of separation
benefits "in case of closures or cessation of operation" of business establishments
"NOT due to serious business losses or financial reverses . . ." Where, the closure
then is due to serious business losses, the Labor Code does not impose any
obligation upon the employer to pay separation benefits.[15]

Explaining the policy distinction in Article 283 of the Labor Code, this
Court, in Cama v. Jonis Food Services, Inc., declared:[16]

The Constitution, while affording full protection to labor, nonetheless,

recognizes the right of enterprises to reasonable returns on investments, and to
expansion and growth. In line with this protection afforded to business by the
fundamental law, Article 283 of the Labor Code clearly makes a policy
distinction. It is only in instances of retrenchment to prevent losses and in
cases of closures or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses that
employees whose employment has been terminated as a result are entitled
to separation pay. In other words, Article 283 of the Labor Code does not
obligate an employer to pay separation benefits when the closure is due to
 serious losses. To require an employer to be generous when it is no longer
in a position to do so, in our view, would be unduly oppressive, unjust, and
unfair to the employer. Ours is a system of laws, and the law in protecting
the rights of the working man, authorizes neither the oppression nor the
self-destruction of the employer. x x x (Emphasis supplied)

The denial of petitioners claim for separation pay was thus in order.

Finally, with regard to the notice requirement, the Labor Arbiter found, and it was
upheld by the NLRC and the Court of Appeals, that the written notice of closure or
cessation of Galaxies business operations was posted on the company bulletin
board one month prior to its effectivity. The mere posting on the company bulletin
board does not, however, meet the requirement under Article 283 of serving a
written notice on the workers. The purpose of the written notice is to inform the
employees of the specific date of termination or closure of business operations, and
must be served upon them at least one month before the date of effectivity to give
them sufficient time to make the necessary arrangements.[17] In order to meet the
foregoing purpose, service of the written notice must be made individually upon
each and every employee of the company.

Nevertheless, the validity of termination of services can exist independently

of the procedural infirmity in the dismissal. In Agabon v. National Labor Relations
Commission,[18] the Court deemed it best to revisit the doctrine
in Serrano,[19] which was cited by petitioners, in relation to Wenphil Corp. v.
National Labor Relations Commission.[20] After analyzing the consequences of the
divergent doctrines on employment termination, the Court held that in cases
involving dismissals for cause, but without observance of statutory due process, the
better rule is to abandon the Serrano doctrine and to follow Wenphil by declaring
that the dismissal was for cause but imposing sanctions on the employer. By so
doing, dispensing justice not just to employees but to employers as well is
achieved.[21]

In Business Services of the Future Today, Inc. v. Court of Appeals,[22] which

reiterated the ruling in Agabon v. National Labor Relations Commission,[23] this
Court held that where the dismissal is for an authorized cause, the lack of statutory
due process should not nullify the dismissal, or render it illegal, or
ineffectual. However, the employer should indemnify the employee, in the form of
nominal damages, for the violation of his right to statutory due process.

Ultimately, however, the amount of damages to be awarded the employee is

addressed to the sound discretion of the Court, taking into account the relevant
circumstances.[24]
Under the facts and circumstances attendant to the case, this Court finds the
amount of P20,000 in nominal damages sufficient to vindicate each petitioners
right to due process.

WHEREFORE, the assailed Decision dated March 26, 2004 and Resolution
dated October 19, 2004 issued by the Court of Appeals in CA-G.R. SP No. 68669
are AFFIRMED with the MODIFICATION that respondent Galaxie Steel
Corporation is ORDERED to PAY each of the individual petitioners the amount
of P20,000.00 as nominal damages for non-compliance with statutory due process.

SO ORDERED.

CONCHITA CARPIO MORALES

Associate Justice

WE CONCUR:

LEONARDO A. QUISUMBING
Associate Justice
Chairperson
 ANTONIO T. CARPIO DANTE O. TINGA
Associate Justice Associate Justice

PRESBITERO J. VELASCO, JR.

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision were reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, and the Division

Chairpersons Attestation, it is hereby certified that the conclusions in the above
Decision were reached in consultation before the case was assigned to the writer of
the opinion of the Court.
ARTEMIO V. PANGANIBAN
Chief Justice

[1]
Penned by Associate Justice Lucas P. Bersamin and concurred in by Associate Justices Godardo A. Jacinto
and Elvi John S. Asuncion; CA rollo, pp. 139-151.
[2]
NLRC records, pp. 43-53.
[3]
Id. at 64 & 109.
[4]
Id. at 109.
[5]
Id. at 164-167.
[6]
Id. at 264.
[7]
Id. at 265-266.
[8]
CA rollo, pp. 139-151.
[9]
Amadeo Fishing Corporation v. Nierra, G.R. No. 163099, October 4, 2005, 472 SCRA 13.
[10]
380 Phil. 416 (2000).
[11]
G.R. No. 82135, August 20, 1990, 188 SCRA 700.
[12]
Philcom Employees Union v. Philippine Global Communications, G.R. No. 144315, July 17, 2006.
[13]
Ibid. citing Great Pacific Life Employees Union v. Great Pacific Life Assurance Corporation, G.R. No. 126717,
11 February 1999, 303 SCRA 113; CESARIO A. AZUCENA, JR., II THE LABOR CODE WITH
COMMENTS AND CASES 210 (5th ed. 2004) [THE LABOR CODE WITH COMMENTS AND CASES].
[14]
325 Phil. 202 (1996).
[15]
North Davao Mining Corporation v. National Labor Relations Commission, supra; Reahs Corp v. National
Labor Relations Commission, 337 Phil 698 (1997); Cama v. Jonis Food Services, Inc.,G.R. No. 153021, March
10, 2004, 425 SCRA 259; Alabang Country Club, Inc. v. National Labor Relations Commission, G.R. No.
157611, August 9, 2005, 466 SCRA 329.
[16]
Supra.
[17]
DAP Corporation v. Court of Appeals, G.R. No. 165811, December 14, 2005, 477 SCRA 792.
[18]
G.R. No. 158693, November 17, 2004, 442 SCRA 573.
[19]
Supra.
[20]
G.R. No. 80587, February 8, 1989, 170 SCRA 69.
[21]
Agabon v. National Labor Relations Commission, supra.
[22]
G.R. No. 157133, January 30, 2006, 480 SCRA 571.
[23]
Supra.
[24]
Agabon v. National Labor Relations Commission, supra; TPI Philippines Cement Corporation v

6) Tunay vs. Asia Brewery GR No. 162025 Aug. 3, 2010

THIRD DIVISION

TUNAY NA PAGKAKAISA NG G.R. No. 162025

MANGGAGAWA
SA ASIABREWERY, Present:
Petitioner,
CARPIO MORALES, J.,
Chairperson,
- versus - BRION,
BERSAMIN,
 ABAD, and
VILLARAMA, JR., JJ.

ASIA BREWERY, INC., Promulgated:

Respondent.
August 3, 2010
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

VILLARAMA, JR., J.:

For resolution is an appeal by certiorari filed by petitioner under Rule 45 of

the 1997 Rules of Civil Procedure, as amended, assailing the Decision[1] dated
November 22, 2002 and Resolution[2] dated January 28, 2004 rendered by the
Court of Appeals (CA) in CA-G.R. SP No. 55578, granting the petition of
respondent company and reversing the Voluntary Arbitrators
[3]
Decision dated October 14, 1999.

The facts are:

Respondent Asia Brewery, Inc. (ABI) is engaged in the manufacture, sale and
distribution of beer, shandy, bottled water and glass products. ABI entered into a
Collective Bargaining Agreement (CBA),[4] effective for five (5) years
from August 1, 1997 to July 31, 2002, with Bisig at Lakas ng mga Manggagawa sa
Asia-Independent (BLMA-INDEPENDENT), the exclusive bargaining
representative of ABIs rank-and-file employees. On October 3, 2000, ABI and
BLMA-INDEPENDENT signed a renegotiated CBA effective from August 1,
2000 to 31 July 2003.[5]

Article I of the CBA defined the scope of the bargaining unit, as follows:
Section 1. Recognition. The COMPANY recognizes the UNION as the
sole and exclusive bargaining representative of all the regular rank-and-file daily
paid employees within the scope of the appropriate bargaining unit with respect to
rates of pay, hours of work and other terms and conditions of
employment. The UNION shall not represent or accept for membership
employees outside the scope of the bargaining unit herein defined.

Section 2. Bargaining Unit. The bargaining unit shall be comprised of all

regular rank-and-file daily-paid employees of the COMPANY. However, the
 following jobs/positions as herein defined shall be excluded from the bargaining
unit, to wit:

1. Managers
2. Assistant Managers
3. Section Heads
4. Supervisors
5. Superintendents
6. Confidential and Executive Secretaries
7. Personnel, Accounting and Marketing Staff
8. Communications Personnel
9. Probationary Employees
10. Security and Fire Brigade Personnel
11. Monthly Employees
12. Purchasing and Quality Control Staff[6] [EMPHASIS
SUPPLIED.]

Subsequently, a dispute arose when ABIs management stopped deducting union

dues from eighty-one (81) employees, believing that their membership in BLMA-
INDEPENDENT violated the CBA. Eighteen (18) of these affected employees are
QA Sampling Inspectors/Inspectresses and Machine Gauge Technician who
formed part of the Quality Control Staff. Twenty (20) checkers are assigned at the
Materials Department of the Administration Division, Full Goods Department of
the Brewery Division and Packaging Division. The rest are secretaries/clerks
directly under their respective division managers.[7]

BLMA-INDEPENDENT claimed that ABIs actions restrained the employees right

to self-organization and brought the matter to the grievance machinery. As the
parties failed to amicably settle the controversy, BLMA-INDEPENDENT lodged a
complaint before the National Conciliation and Mediation Board (NCMB). The
parties eventually agreed to submit the case for arbitration to resolve the issue
of [w]hether or not there is restraint to employees in the exercise of their right to
self-organization.[8]

In his Decision, Voluntary Arbitrator Bienvenido Devera sustained the BLMA-

INDEPENDENT after finding that the records submitted by ABI showed that the
positions of the subject employees qualify under the rank-and-file category
because their functions are merely routinary and clerical. He noted that the
positions occupied by the checkers and secretaries/clerks in the different divisions
are not managerial or supervisory, as evident from the duties and responsibilities
assigned to them. With respect to QA Sampling Inspectors/Inspectresses and
Machine Gauge Technician, he ruled that ABI failed to establish with sufficient
clarity their basic functions as to consider them Quality Control Staff who were
excluded from the coverage of the CBA. Accordingly, the subject employees were
declared eligible for inclusion within the bargaining unit represented by BLMA-
INDEPENDENT.[9]

On appeal, the CA reversed the Voluntary Arbitrator, ruling that:

WHEREFORE, foregoing premises considered, the questioned decision of
the Honorable Voluntary Arbitrator Bienvenido De Vera is hereby REVERSED
and SET ASIDE, and A NEW ONE ENTERED DECLARING THAT:

a) the 81 employees are excluded from and are not eligible for
inclusion in the bargaining unit as defined in Section 2, Article
I of the CBA;

b) the 81 employees cannot validly become members of

respondent and/or if already members, that their membership is
violative of the CBA and that they should disaffiliate from
respondent; and

c) petitioner has not committed any act that restrained or tended to

restrain its employees in the exercise of their right to self-
organization.

NO COSTS.

SO ORDERED.[10]

BLMA-INDEPENDENT filed a motion for reconsideration. In the meantime, a

certification election was held on August 10, 2002 wherein petitioner Tunay na
Pagkakaisa ng Manggagawa sa Asia (TPMA) won. As the incumbent bargaining
representative of ABIs rank-and-file employees claiming interest in the outcome of
the case, petitioner filed with the CA an omnibus motion for reconsideration of the
decision and intervention, with attached petition signed by the union
officers.[11]Both motions were denied by the CA.[12]

The petition is anchored on the following grounds:

(1)
THE COURT OF APPEALS ERRED IN RULING THAT THE 81
EMPLOYEES ARE EXCLUDED FROM AND ARE NOT ELIGIBLE FOR
 INCLUSION IN THE BARGAINING UNIT AS DEFINED IN SECTION 2,
ARTICLE 1 OF THE CBA[;]
(2)
THE COURT OF APPEALS ERRED IN HOLDING THAT THE 81
EMPLOYEES CANNOT VALIDLY BECOME UNION MEMBERS, THAT
THEIR MEMBERSHIP IS VIOLATIVE OF THE CBA AND THAT THEY
SHOULD DISAFFILIATE FROM RESPONDENT;
(3)
THE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT
PETITIONER (NOW PRIVATE RESPONDENT) HAS NOT COMMITTED
ANY ACT THAT RESTRAINED OR TENDED TO RESTRAIN ITS
EMPLOYEES IN THE EXERCISE OF THEIR RIGHT TO SELF-
ORGANIZATION.[13]

Although Article 245 of the Labor Code limits the ineligibility to join, form and
assist any labor organization to managerial employees, jurisprudence has extended
this prohibition to confidential employees or those who by reason of their positions
or nature of work are required to assist or act in a fiduciary manner to managerial
employees and hence, are likewise privy to sensitive and highly confidential
records.[14] Confidential employees are thus excluded from the rank-and-file
bargaining unit. The rationale for their separate category and disqualification to
join any labor organization is similar to the inhibition for managerial employees
because if allowed to be affiliated with a Union, the latter might not be assured of
their loyalty in view of evident conflict of interests and the Union can also become
company-denominated with the presence of managerial employees in the Union
membership.[15] Having access to confidential information, confidential employees
may also become the source of undue advantage. Said employees may act as a spy
or spies of either party to a collective bargaining agreement.[16]

In Philips Industrial Development, Inc. v. NLRC,[17] this Court held that petitioners
division secretaries, all Staff of General Management, Personnel and Industrial
Relations Department, Secretaries of Audit, EDP and Financial Systems are
confidential employees not included within the rank-and-file bargaining
unit.[18] Earlier, in Pier 8 Arrastre & Stevedoring Services, Inc. v. Roldan-
Confesor,[19] we declared that legal secretaries who are tasked with, among others,
the typing of legal documents, memoranda and correspondence, the keeping of
records and files, the giving of and receiving notices, and such other duties as
required by the legal personnel of the corporation, fall under the category of
confidential employees and hence excluded from the bargaining unit composed of
rank-and-file employees.[20]

Also considered having access to vital labor information are the executive
secretaries of the General Manager and the executive secretaries of the Quality
Assurance Manager, Product Development Manager, Finance Director,
Management System Manager, Human Resources Manager, Marketing Director,
Engineering Manager, Materials Manager and Production Manager.[21]

In the present case, the CBA expressly excluded Confidential and Executive
Secretaries from the rank-and-file bargaining unit, for which reason ABI seeks
their disaffiliation from petitioner. Petitioner, however, maintains that except for
Daisy Laloon, Evelyn Mabilangan and Lennie Saguan who had been promoted to
monthly paid positions, the following secretaries/clerks are deemed included
among the rank-and-file employees of ABI:[22]
NAME DEPARTMENT IMMEDIATE SUPERIOR

C1 ADMIN DIVISION
1. Angeles, Cristina C.
2. Barraquio, Carina P.
3. Cabalo, Marivic B.
4. Fameronag, Leodigario C.
Transportation Mr. Melito K. Tan
Transportation Mr. Melito K. Tan
Transportation Mr. Melito K. Tan
Transportation Mr. Melito K. Tan

1. Abalos, Andrea A. Materials Mr. Andres G. Co

2. Algire, Juvy L. Materials Mr. Andres G. Co
3. Anouevo, Shirley P. Materials Mr. Andres G. Co
4. Aviso, Rosita S. Materials Mr. Andres G. Co
5. Barachina, Pauline C. Materials Mr. Andres G. Co
6. Briones, Catalina P. Materials Mr. Andres G. Co
7. Caralipio, Juanita P. Materials Mr. Andres G. Co
8. Elmido, Ma. Rebecca S. Materials Mr. Andres G. Co
9. Giron, Laura P. Materials Mr. Andres G. Co
10. Mane, Edna A. Materials Mr. Andres G. Co

xxxx

C2 BREWERY DIVISION

1. Laloon, Daisy S. Brewhouse Mr. William Tan

1. Arabit, Myrna F. Bottling Production Mr. Julius Palmares

2. Burgos, Adelaida D. Bottling Production Mr. Julius Palmares
3. Menil, Emmanuel S. Bottling Production Mr. Julius Palmares
4. Nevalga, Marcelo G. Bottling Production Mr. Julius Palmares
 1. Mapola, Ma. Esraliza T. Bottling Maintenance Mr. Ernesto Ang
2. Velez, Carmelito A. Bottling Maintenance Mr. Ernesto Ang

1. Bordamonte, Rhumela D. Bottled Water Mr. Faustino Tetonche

2. Deauna, Edna R. Bottled Water Mr. Faustino Tetonche
3. Punongbayan, Marylou F. Bottled Water Mr. Faustino Tetonche
4. Saguan, Lennie Y. Bottled Water Mr. Faustino Tetonche

1. Alcoran, Simeon A. Full Goods Mr. Tsoi Wah Tung

2. Cervantes, Ma. Sherley Y. Full Goods Mr. Tsoi Wah Tung
3. Diongco, Ma. Teresa M. Full Goods Mr. Tsoi Wah Tung
4. Mabilangan, Evelyn M. Full Goods Mr. Tsoi Wah Tung
5. Rivera, Aurora M. Full Goods Mr. Tsoi Wah Tung
6. Salandanan, Nancy G. Full Goods Mr. Tsoi Wah Tung

1. Magbag, Ma. Corazon C. Tank Farm/ Mr. Manuel Yu Liat

Cella Services

1. Capiroso, Francisca A. Quality Assurance Ms. Regina Mirasol

1. Alconaba, Elvira C. Engineering Mr. Clemente Wong

2. Bustillo, Bernardita E. Electrical Mr. Jorge Villarosa
3. Catindig, Ruel A. Civil Works Mr. Roger Giron
4. Sison, Claudia B. Utilities Mr. Venancio Alconaba

xxxx

C3 PACKAGING DIVISION

1. Alvarez, Ma. Luningning L. GP Administration Ms. Susan Bella

2. Caiza, Alma A. GP Technical Mr. Chen Tsai Tyan
3. Cantalejo, Aida S. GP Engineering Mr. Noel Fernandez
4. Castillo, Ma. Riza R. GP Production Mr. Tsai Chen Chih
5. Lamadrid, Susana C. GP Production Mr. Robert Bautista
6. Mendoza, Jennifer L. GP Technical Mr. Mel Oa

As can be gleaned from the above listing, it is rather curious that there would be
several secretaries/clerks for just one (1) department/division performing tasks
which are mostly routine and clerical. Respondent insisted they fall under the
Confidential and Executive Secretaries expressly excluded by the CBA from the
rank-and-file bargaining unit. However, perusal of the job descriptions of these
secretaries/clerks reveals that their assigned duties and responsibilities involve
routine activities of recording and monitoring, and other paper works for their
respective departments while secretarial tasks such as receiving telephone calls and
filing of office correspondence appear to have been commonly imposed as
additional duties.[23] Respondent failed to indicate who among these numerous
secretaries/clerks have access to confidential data relating to management policies
that could give rise to potential conflict of interest with their Union membership.
Clearly, the rationale under our previous rulings for the exclusion of executive
secretaries or division secretaries would have little or no significance considering
the lack of or very limited access to confidential information of these
secretaries/clerks. It is not even farfetched that the job category may exist only on
paper since they are all daily-paid workers. Quite understandably, petitioner had
earlier expressed the view that the positions were just being reclassified as these
employees actually discharged routine functions.

We thus hold that the secretaries/clerks, numbering about forty (40), are rank-and-
file employees and not confidential employees.

With respect to the Sampling Inspectors/Inspectresses and the Gauge Machine

Technician, there seems no dispute that they form part of the Quality Control Staff
who, under the express terms of the CBA, fall under a distinct category. But we
disagree with respondents contention that the twenty (20) checkers are similarly
confidential employees being quality control staff entrusted with the handling and
custody of company properties and sensitive information.

Again, the job descriptions of these checkers assigned in the storeroom section of
the Materials Department, finishing section of the Packaging Department, and the
decorating and glass sections of the Production Department plainly showed that
they perform routine and mechanical tasks preparatory to the delivery of the
finished products.[24] While it may be argued that quality control extends to post-
production phase -- proper packaging of the finished products -- no evidence was
presented by the respondent to prove that these daily-paid checkers actually form
part of the companys Quality Control Staff who as such were exposed to sensitive,
vital and confidential information about [companys] products or have knowledge
of mixtures of the products, their defects, and even their formulas which are
considered trade secrets. Such allegations of respondent must be supported by
evidence.[25]

Consequently, we hold that the twenty (20) checkers may not be considered
confidential employees under the category of Quality Control Staff who were
expressly excluded from the CBA of the rank-and-file bargaining unit.
Confidential employees are defined as those who (1) assist or act in a confidential
capacity, (2) to persons who formulate, determine, and effectuate management
policies in the field of labor relations. The two (2) criteria are cumulative, and both
must be met if an employee is to be considered a confidential employee that is, the
confidential relationship must exist between the employee and his supervisor, and
the supervisor must handle the prescribed responsibilities relating to labor
relations.The exclusion from bargaining units of employees who, in the normal
course of their duties, become aware of management policies relating to labor
relations is a principal objective sought to be accomplished by the confidential
employee rule.[26] There is no showing in this case that the secretaries/clerks and
checkers assisted or acted in a confidential capacity to managerial employees and
obtained confidential information relating to labor relations policies. And even
assuming that they had exposure to internal business operations of the company,
respondent claimed, this is not per se ground for their exclusion in the bargaining
unit of the daily-paid rank-and-file employees.[27]

Not being confidential employees, the secretaries/clerks and checkers are not
disqualified from membership in the Union of respondents rank-and-file
employees. Petitioner argues that respondents act of unilaterally stopping the
deduction of union dues from these employees constitutes unfair labor practice as
it restrained the workers exercise of their right to self-organization, as provided in
Article 248 (a) of the Labor Code.

Unfair labor practice refers to acts that violate the workers right to organize. The
prohibited acts are related to the workers right to self organization and to the
observance of a CBA. For a charge of unfair labor practice to prosper, it must be
shown that ABI was motivated by ill will, bad faith, or fraud, or was oppressive to
labor, or done in a manner contrary to morals, good customs, or public policy, and,
of course, that social humiliation, wounded feelings or grave anxiety resulted x x
x[28] from ABIs act in discontinuing the union dues deduction from those
employees it believed were excluded by the CBA. Considering that the herein
dispute arose from a simple disagreement in the interpretation of the CBA
provision on excluded employees from the bargaining unit, respondent cannot be
said to have committed unfair labor practice that restrained its employees in the
exercise of their right to self-organization, nor have thereby demonstrated an anti-
union stance.

WHEREFORE, the petition is GRANTED. The Decision dated November 22,

2002 and Resolution dated January 28, 2004 of the Court of Appeals in CA-G.R.
SP No. 55578 are hereby REVERSED and SET ASIDE. The checkers and
secretaries/clerks of respondent company are hereby declared rank-and-file
employees who are eligible to join the Union of the rank-and-file employees.

No costs.

SO ORDERED.

MARTIN S. VILLARAMA, JR.

Associate Justice

WE CONCUR:

CONCHITA CARPIO MORALES

Associate Justice
Chairperson

LUCAS P. BERSAMIN
Associate Justice
ARTURO D. BRION
Associate Justice

ROBERTO A. ABAD
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 Courts Division.
 CONCHITA CARPIO MORALES
Associate Justice
Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the 1987 Constitution and the Division
Chairpersons 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 Courts Division.

RENATO C. CORONA
Chief Justice


Designated additional member per Special Order No. 843 dated May 17, 2010.
[1]
CA rollo, pp. 190-201. Penned by Associate Justice Jose L. Sabio, Jr. and concurred in by Associate Justices
Portia Alio-Hormachuelos and Amelita G. Tolentino.
[2]
Id. at 245-246.
[3]
Id. at 27-40.
[4]
Id. at 80-101.
[5]
Rollo, pp. 103-124.
[6]
Id. at 105.
[7]
CA rollo, pp. 47-49, 61-63.
[8]
Records, pp. 220-221.
[9]
CA rollo, pp. 37-40.
[10]
Id. at 200.
[11]
Id. at 204-219.
[12]
Id. at 245-246.
[13]
Rollo, pp. 53, 59, 61.
[14]
Metrolab Industries, Inc. v. Roldan-Confesor, G.R. No. 108855, February 28, 1996, 254 SCRA 182, 197.
[15]
Bulletin Publishing Corporation v. Sanchez, No. L-74425, October 7, 1986, 144 SCRA 628, 635.
[16]
Golden Farms, Inc. v. Ferrer-Calleja, G.R. No. 78755, July 19, 1989, 175 SCRA 471, 477.
[17]
G.R. No. 88957, June 25, 1992, 210 SCRA 339.
[18]
Id. at 347.
[19]
G.R. No. 110854, February 13, 1995, 241 SCRA 294.
[20]
Id. at 305.
[21]
Metrolab Industries, Inc. v. Roldan-Confesor, supra note 14, at 196-197.
[22]
CA rollo, pp. 62-63.
[23]
Id. at 68-79.
[24]
Id. at 64-67.
[25]
See Standard Chartered Bank Employees Union (SCBEU-NUBE) v. Standard Chartered Bank, G.R. No.
161933, April 22, 2008, 552 SCRA 284, 293.
[26]
San Miguel Corp. Supervisors and Exempt Employees Union v. Laguesma, G.R. No. 110399, August 15, 1997,
277 SCRA 370, 374-375, citing Westinghouse Electric Corp. v. NLRB (CA6) 398 F2d 669 (1968), Ladish Co.,
178 NLRB 90 (1969) and B.F. Goodrich Co., 115 NLRB 722 (1956).
[27]
Id. at 378.
[28]
Union of Filipro Employees-Drug, Food and Allied Industries Unions-Kilusang Mayo Uno v. Nestl Philippines,
Incorporated, G.R. Nos. 158930-31 & 158944-45, March 3, 2008, 547 SCRA 323, 335, citing San Miguel
Corporation v. Del Rosario, G.R. Nos. 168194 & 168603, December 13, 2005, 477 SCRA 604, 619.

7) Hacienda vs. National GR No.149440 Jan. 28, 2003

G.R. No. 149440 January 28, 2003

HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS and CRISTINE

SEGURA, petitioners,
vs.
NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD AND GENERAL
TRADE, respondents.

PANGANIBAN, J.:

Although the employers have shown that respondents performed work that was seasonal in nature,
they failed to prove that the latter worked only for the duration of one particular season. In fact,
petitioners do not deny that these workers have served them for several years already. Hence, they
are regular — not seasonal — employees.

The Case

Before the Court is a Petition for Review under Rule 45 of the Rules of Court, seeking to set aside
the February 20, 2001 Decision of the Court of Appeals 1 (CA) in CA-GR SP No. 51033. The
dispositive part of the Decision reads:

"WHEREFORE, premises considered, the instant special civil action for certiorari is hereby
DENIED." 2

On the other hand, the National Labor Relations Commission (NLRC) Decision, 3 upheld by
the CA, disposed in this wise:

"WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET
ASIDE and VACATED and a new one entered declaring complainants to have been illegally
dismissed. Respondents are hereby ORDERED to reinstate complainants except Luisa
Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva to their previous position and to
pay full backwages from September 1991 until reinstated. Respondents being guilty of unfair
 labor practice are further ordered to pay complainant union the sum of P10,000.00 as moral
damages and P5,000.00 as exemplary damages." 4

The Facts

The facts are summarized in the NLRC Decision as follows:

"Contrary to the findings of the Labor Arbiter that complainants [herein respondents] refused
to work and/or were choosy in the kind of jobs they wanted to perform, the records is replete
with complainants' persistence and dogged determination in going back to work.

"Indeed, it would appear that respondents did not look with favor workers' having organized
themselves into a union. Thus, when complainant union was certified as the collective
bargaining representative in the certification elections, respondents under the pretext that the
result was on appeal, refused to sit down with the union for the purpose of entering into a
collective bargaining agreement. Moreover, the workers including complainants herein were
not given work for more than one month. In protest, complainants staged a strike which was
however settled upon the signing of a Memorandum of Agreement which stipulated among
others that:

'a) The parties will initially meet for CBA negotiations on the 11th day of January
1991 and will endeavor to conclude the same within thirty (30) days.

'b) The management will give priority to the women workers who are members of the
union in case work relative . . . or amount[ing] to gahit and [dipol] arises.

'c) Ariston Eruela Jr. will be given back his normal work load which is six (6) days in a
week.

'd) The management will provide fifteen (15) wagons for the workers and that existing
workforce prior to the actual strike will be given priority. However, in case the said
workforce would not be enough, the management can hire additional workers to
supplement them.

'e) The management will not anymore allow the scabs, numbering about eighteen
(18) workers[,] to work in the hacienda; and

'f) The union will immediately lift the picket upon signing of this agreement.'

"However, alleging that complainants failed to load the fifteen wagons, respondents reneged
on its commitment to sit down and bargain collectively. Instead, respondent employed all
means including the use of private armed guards to prevent the organizers from entering the
premises.

"Moreover, starting September 1991, respondents did not any more give work assignments
to the complainants forcing the union to stage a strike on January 2, 1992. But due to the
conciliation efforts by the DOLE, another Memorandum of Agreement was signed by the
complainants and respondents which provides:

'Whereas the union staged a strike against management on January 2, 1992 grounded on
the dismissal of the union officials and members;
'Whereas parties to the present dispute agree to settle the case amicably once and for all;

'Now therefore, in the interest of both labor and management, parties herein agree as
follows:

'1. That the list of the names of affected union members hereto attached and made
part of this agreement shall be referred to the Hacienda payroll of 1990 and
determine whether or not this concerned Union members are hacienda workers;

'2. That in addition to the payroll of 1990 as reference, herein parties will use as
guide the subjects of a Memorandum of Agreement entered into by and between the
parties last January 4, 1990;

'3. That herein parties can use other employment references in support of their
respective claims whether or not any or all of the listed 36 union members are
employees or hacienda workers or not as the case may be;

'4. That in case conflict or disagreement arises in the determination of the status of
the particular hacienda workers subject of this agreement herein parties further agree
to submit the same to voluntary arbitration;

'5. To effect the above, a Committee to be chaired by Rose Mengaling is hereby

created to be composed of three representatives each and is given five working days
starting Jan. 23, 1992 to resolve the status of the subject 36 hacienda workers.
(Union representatives: Bernardo Torres, Martin Alas-as, Ariston Arulea Jr.)"

"Pursuant thereto, the parties subsequently met and the Minutes of the Conciliation Meeting
showed as follows:

'The meeting started at 10:00 A.M. A list of employees was submitted by Atty. Tayko
based on who received their 13th month pay. The following are deemed not
considered employees:

1. Luisa Rombo
2. Ramona Rombo
3. Bobong Abrega
4. Boboy Silva

'The name Orencio Rombo shall be verified in the 1990 payroll.

'The following employees shall be reinstated immediately upon availability of work:

1. Jose Dagle 7. Alejandro Tejares

2. Rico Dagle 8. Gaudioso Rombo
3. Ricardo Dagle 9. Martin Alas-as Jr.
4. Jesus Silva 10. Cresensio Abrega
5. Fernando Silva 11. Ariston Eruela Sr.
6. Ernesto Tejares 12. Ariston Eruela Jr.'
 "When respondents again reneged on its commitment; complainants filed the present
complaint.

"But for all their persistence, the risk they had to undergo in conducting a strike in the face of
overwhelming odds, complainants in an ironic twist of fate now find themselves being
accused of 'refusing to work and being choosy in the kind of work they have to
perform'." 5 (Citations omitted)

Ruling of the Court of Appeals

The CA affirmed that while the work of respondents was seasonal in nature, they were considered to
be merely on leave during the off-season and were therefore still employed by petitioners. Moreover,
the workers enjoyed security of tenure. Any infringement upon this right was deemed by the CA to
be tantamount to illegal dismissal.

The appellate court found neither "rhyme nor reason in petitioner's argument that it was the workers
themselves who refused to or were choosy in their work." As found by the NLRC, the record of this
case is "replete with complainants' persistence and dogged determination in going back to work." 6

The CA likewise concurred with the NLRC's finding that petitioners were guilty of unfair labor
practice.

Hence this Petition. 7

Issues

Petitioners raise the following issues for the Court's consideration:

"A. Whether or not the Court of Appeals erred in holding that respondents, admittedly
seasonal workers, were regular employees, contrary to the clear provisions of Article 280 of
the Labor Code, which categorically state that seasonal employees are not covered by the
definition of regular employees under paragraph 1, nor covered under paragraph 2 which
refers exclusively to casual employees who have served for at least one year.

"B. Whether or not the Court of Appeals erred in rejecting the ruling in Mercado, . . . and
relying instead on rulings which are not directly applicable to the case at bench, viz,
Philippine Tobacco, Bacolod-Murcia, and Gaco, . . .

"C Whether or not the Court of Appeals committed grave abuse of discretion in upholding the
NLRC's conclusion that private respondents were illegally dismissed, that petitioner[s were]
guilty of unfair labor practice, and that the union be awarded moral and exemplary
damages." 8

Consistent with the discussion in petitioners' Memorandum, we shall take up Items A and B as the
first issue and Item C as the second.

The Court's Ruling

The Petition has no merit.

First Issue:
 Regular Employment

At the outset, we must stress that only errors of law are generally reviewed by this Court in petitions
for review on certiorari of CA decisions. 9 Questions of fact are not entertained. 10 The Court is not a
trier of facts and, in labor cases, this doctrine applies with greater force. 11 Factual questions are for
labor tribunals to resolve. 12 In the present case, these have already been threshed out by the NLRC.
Its findings were affirmed by the appellate court.

Contrary to petitioners' contention, the CA did not err when it held that respondents were regular
employees.

Article 280 of the Labor Code, as amended, states:

"Art. 280. Regular and Casual Employment. — The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreement of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer,
except where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of
the employee or where the work or services to be performed is seasonal in nature and the
employment is for the duration of the season.

"An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue while such
activity exist." (Italics supplied)

For respondents to be excluded from those classified as regular employees, it is not enough that
they perform work or services that are seasonal in nature. They must have also been employed only
for the duration of one season. The evidence proves the existence of the first, but not of the second,
condition. The fact that respondents — with the exception of Luisa Rombo, Ramona Rombo,
Bobong Abriga and Boboy Silva — repeatedly worked as sugarcane workers for petitioners for
several years is not denied by the latter. Evidently, petitioners employed respondents for more than
one season. Therefore, the general rule of regular employment is applicable.

In Abasolo v. National Labor Relations Commission, 13 the Court issued this clarification:

"[T]he test of whether or not an employee is a regular employee has been laid down in De
Leon v. NLRC, in which this Court held:

"The primary standard, therefore, of determining regular employment is the reasonable

connection between the particular activity performed by the employee in relation to the usual
trade or business of the employer. The test is whether the former is usually necessary or
desirable in the usual trade or business of the employer. The connection can be determined
by considering the nature of the work performed and its relation to the scheme of the
particular business or trade in its entirety. Also if the employee has been performing the job
for at least a year, even if the performance is not continuous and merely intermittent, the law
deems repeated and continuing need for its performance as sufficient evidence of the
necessity if not indispensability of that activity to the business. Hence, the employment is
considered regular, but only with respect to such activity and while such activity exists.
 xxx xxx xxx

". . . [T]he fact that [respondents] do not work continuously for one whole year but only for
the duration of the . . . season does not detract from considering them in regular employment
since in a litany of cases this Court has already settled that seasonal workers who are called
to work from time to time and are temporarily laid off during off-season are not separated
from service in said period, but merely considered on leave until re-employed." 14

The CA did not err when it ruled that Mercado v. NLRC 15 was not applicable to the case at bar. In
the earlier case, the workers were required to perform phases of agricultural work for a definite
period of time, after which their services would be available to any other farm owner. They were not
hired regularly and repeatedly for the same phase/s of agricultural work, but on and off for any single
phase thereof. On the other hand, herein respondents, having performed the same tasks for
petitioners every season for several years, are considered the latter's regular employees for their
respective tasks. Petitioners' eventual refusal to use their services — even if they were ready, able
and willing to perform their usual duties whenever these were available — and hiring of other
workers to perform the tasks originally assigned to respondents amounted to illegal dismissal of the
latter.

The Court finds no reason to disturb the CA's dismissal of what petitioners claim was their valid
exercise of a management prerogative. The sudden changes in work assignments reeked of bad
faith. These changes were implemented immediately after respondents had organized themselves
into a union and started demanding collective bargaining. Those who were union members were
effectively deprived of their jobs. Petitioners' move actually amounted to unjustified dismissal of
respondents, in violation of the Labor Code.

"Where there is no showing of clear, valid and legal cause for the termination of employment, the law
considers the matter a case of illegal dismissal and the burden is on the employer to prove that the
termination was for a valid and authorized cause." 16 In the case at bar, petitioners failed to prove
any such cause for the dismissal of respondents who, as discussed above, are regular employees.

Second Issue:

Unfair Labor Practice

The NLRC also found herein petitioners guilty of unfair labor practice. It ruled as follows:

"Indeed, from respondents' refusal to bargain, to their acts of economic inducements

resulting in the promotion of those who withdrew from the union, the use of armed guards to
prevent the organizers to come in, and the dismissal of union officials and members, one
cannot but conclude that respondents did not want a union in their hacienda—a clear
interference in the right of the workers to self-organization." 17

We uphold the CA's affirmation of the above findings. Indeed, factual findings of labor officials, who
are deemed to have acquired expertise in matters within their respective jurisdictions, are generally
accorded not only respect but even finality. Their findings are binding on the Supreme
Court. 18 Verily, their conclusions are accorded great weight upon appeal, especially when supported
by substantial evidence. 19 Consequently, the Court is not duty-bound to delve into the accuracy of
their factual findings, in the absence of a clear showing that these were arbitrary and bereft of any
rational basis." 20
The finding of unfair labor practice done in bad faith carries with it the sanction of moral and
exemplary damages." 21

WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against
petitioners.

SO ORDERED.

Puno, Sandoval-Gutierrez and Corona, JJ., concur.

Footnotes

1Eighth Division, composed of Justices Ramon A. Barcelona (chairman and ponente),

Rodrigo V. Cosico and Alicia L. Santos (members).

2 Assailed CA Decision, p. 7; rollo, p. 36.

3Fourth Division, composed of Commissioner Bernabe S. Batuhan (ponente), Presiding

Commissioner Irenea E. Ceniza and Commissioner Amorito V. Cañete.

4 NLRC Decision, pp. 9–10; rollo, pp. 63–64; records, pp. 28–29.

5 NLRC Decision, pp. 5–9; rollo, pp. 59–63; records, pp. 24–28. Italics provided.

6 Assailed CA Decision, p. 6; rollo, p. 35.

7This case was deemed submitted for resolution on April 30, 2002, upon receipt by the Court
of petitioners' Memorandum, which was signed by Atty. Teodoro V. Cortes. Respondents'
Memorandum, signed by Attys. Francisco D. Yap and Whelma F. Siton-Yap, was received
by the Court on March 7, 2002.

8 Petitioners' Memorandum, p. 6; rollo, p. 275.

9 Viloria v. Court of Appeals, 309 SCRA 529, June 30, 1999.

10Cebu Shipyard and Engineering Works, Inc. v. William Lines, Inc., 306 SCRA 762, May 5,
1999; Villarico v. Court of Appeals, 309 SCRA 193, June 28, 1999; Alipoon v. Court of
Appeals, 305 SCRA 118, March 22, 1999; Baguio v. Republic, 301 SCRA 450, January 21,
1999.

Rapali Trading Corporation v. National Labor Relations Commission, 296 SCRA 309,
11

September 25, 1998.

12 Chua v. National Labor Relations Commission, 267 SCRA 196, January 30, 1997.

13 346 SCRA 293, November 29, 2000.

 14 Id., pp. 304–305, per De Leon Jr., J.

15 201 SCRA 332, September 5, 1991.

16Valiant Machinery and Metal Corp. v. National Labor Relations Commission, 252 SCRA
369, January 25, 1996, per Mendoza, J.

17 NLRC Decision, p. 9; rollo, p. 63; records, p. 28.

18C. Planar Commercial v. National Labor Relations Commission, 303 SCRA 49, February
11, 1999.

19 Barros v. National Labor Relations Commission, 315 SCRA 23, September 22, 1999.

20 Tan v. National Labor Relations Commission, supra.

Nueva Ecija I Electric Cooperative, Inc. v. National Labor Relations Commission, 323
21

SCRA 86, January 24, 2000.

8) Colegio vs. Association GR No. 141471 Sept. 18, 2000

FIRST DIVISION

[G.R. No. 141471. September 18, 2000]

COLEGIO DE SAN JUAN DE LETRAN, petitioner, vs. ASSOCIATION

OF EMPLOYEES AND FACULTY OF LETRAN and ELEONOR
AMBAS, respondents.

DECISION
KAPUNAN, J.:

This is a petition for review on certiorari seeking the reversal of the Decision of the
Court of Appeals, promulgated on 9 August 1999, dismissing the petition filed by
Colegio de San Juan de Letran (hereinafter, "petitioner") and affirming the Order of the
Secretary of Labor, dated December 2, 1996, finding the petitioner guilty of unfair labor
practice on two (2) counts.
The facts, as found by the Secretary of Labor and affirmed by the Court of Appeals,
are as follows:
"On December 1992, Salvador Abtria, then President of respondent union,
Association of Employees and Faculty of Letran, initiated the renegotiation of its
Collective Bargaining Agreement with petitioner Colegio de San Juan de Letran for
the last two (2) years of the CBA's five (5) year lifetime from 1989-1994. On the same
year, the union elected a new set of officers wherein private respondent Eleanor
Ambas emerged as the newly elected President (Secretary of Labor and Employment's
Order dated December 2, 1996, p. 12).

Ambas wanted to continue the renegotiation of the CBA but petitioner, through Fr.
Edwin Lao, claimed that the CBA was already prepared for signing by the parties. The
parties submitted the disputed CBA to a referendum by the union members, who
eventually rejected the said CBA (Ibid, p. 2).

Petitioner accused the union officers of bargaining in bad faith before the National
Labor Relations Commission (NLRC). Labor Arbiter Edgardo M. Madriaga decided
in favor of petitioner. However, the Labor Arbiter's decision was reversed on appeal
before the NLRC (Ibid, p. 2).

On January 1996, the union notified the National Conciliation and Mediation Board
(NCMB) of its intention to strike on the grounds (sic) of petitioner's: non-
compliance with the NLRC (1) order to delete the name of Atty. Federico Leynes as
the union's legal counsel; and (2) refusal to bargain (Ibid, p. 1).

On January 18, 1996, the parties agreed to disregard the unsigned CBA and to start
negotiation on a new five-year CBA starting 1994-1999. On February 7, 1996, the
union submitted its proposals to petitioner, which notified the union six days later or
on February 13, 1996 that the same had been submitted to its Board of Trustees. In the
meantime, Ambas was informed through a letter dated February 15, 1996 from her
superior that her work schedule was being changed from Monday to Friday to
Tuesday to Saturday. Ambas protested and requested management to submit the issue
to a grievance machinery under the old CBA (Ibid, p. 2-3).

Due to petitioner's inaction, the union filed a notice of strike on March 13, 1996. The
parties met on March 27, 1996 before the NCMB to discuss the ground rules for the
negotiation. On March 29, 1996, the union received petitioner's letter dismissing
Ambas for alleged insubordination. Hence, the union amended its notice of strike to
include Ambas' dismissal. (Ibid, p. 2-3).

On April 20, 1996, both parties again discussed the ground rules for the CBA
renegotiation. However, petitioner stopped the negotiations after it purportedly
received information that a new group of employees had filed a petition for
certification election (Ibid, p. 3).
On June 18, 1996, the union finally struck. On July 2, 1996, public respondent the
Secretary of Labor and Employment assumed jurisdiction and ordered all striking
employees including the union president to return to work and for petitioner to accept
them back under the same terms and conditions before the actual strike. Petitioner
readmitted the striking members except Ambas. The parties then submitted their
pleadings including their position papers which were filed on July 17, 1996 ( Ibid, pp.
2-3).

On December 2, 1996, public respondent issued an order declaring petitioner guilty of

unfair labor practice on two counts and directing the reinstatement of private
respondent Ambas with backwages. Petitioner filed a motion for reconsideration
which was denied in an Order dated May 29, 1997 (Petition, pp. 8-9)."[1]

Having been denied its motion for reconsideration, petitioner sought a review of the
order of the Secretary of Labor and Employment before the Court of Appeals. The
appellate court dismissed the petition and affirmed the findings of the Secretary of Labor
and Employment. The dispositive portion of the decision of the Court of Appeals sets
forth:

WHEREFORE, foregoing premises considered, this Petition is DISMISSED, for

being without merit in fact and in law.

With cost to petitioner.

SO ORDERED.[2]

Hence, petitioner comes to this Court for redress.

Petitioner ascribes the following errors to the Court of Appeals:
I

THE HONORABLE COURT OF APPEALS ERRED AND ACTED WITH GRAVE

ABUSE OF DISCRETION IN AFFIRMING THE RULING OF THE SECRETARY
OF LABOR AND EMPLOYMENT WHICH DECLARES PETITIONER LETRAN
GUILTY OF REFUSAL TO BARGAIN (UNFAIR LABOR PRACTICE) FOR
SUSPENDING THE COLLECTIVE BARGAINING NEGOTIATIONS WITH
RESPONDENT AEFL, DESPITE THE FACT THAT THE SUSPENSION OF THE
NEGOTIATIONS WAS BROUGHT ABOUT BY THE FILING OF A PETITION
FOR CERTIFICATION ELECTION BY A RIVAL UNION WHO CLAIMED TO
COMMAND THE MAJORITY OF THE EMPLOYEES WITHIN THE
BARGAINING UNIT.
II
THE HONORABLE COURT OF APPEALS ERRED AND ACTED WITH GRAVE
ABUSE OF DISCRETION IN AFFIRMING THE RULING OF THE SECRETARY
OF LABOR AND EMPLOYMENT WHICH DECLARES PETITIONER LETRAN
GUILTY OF UNFAIR LABOR PRACTICE FOR DISMISSING RESPONDENT
AMBAS, DESPITE THE FACT THAT HER DISMISSAL WAS CAUSED BY HER
INSUBORDINATE ATTITUDE, SPECIFICALLY, HER REFUSAL TO FOLLOW
THE PRESCRIBED WORK SCHEDULE.[3]

The twin questions of law before this Court are the following: (1) whether petitioner
is guilty of unfair labor practice by refusing to bargain with the union when it unilaterally
suspended the ongoing negotiations for a new Collective Bargaining Agreement (CBA)
upon mere information that a petition for certification has been filed by another
legitimate labor organization? (2) whether the termination of the union president
amounts to an interference of the employees' right to self-organization?
The petition is without merit.
After a thorough review of the records of the case, this Court finds that petitioner
has not shown any compelling reason sufficient to overturn the ruling of the Court of
Appeals affirming the findings of the Secretary of Labor and Employment. It is axiomatic
that the findings of fact of the Court of Appeals are conclusive and binding on the
Supreme Court and will not be reviewed or disturbed on appeal. In this case, the
petitioner failed to show any extraordinary circumstance justifying a departure from this
established doctrine.
As regards the first issue, Article 252 of the Labor Code defines the meaning of the
phrase "duty to bargain collectively," as follows:

Art. 252. Meaning of duty to bargain collectively. - The duty to bargain collectively
means the performance of a mutual obligation to meet and convene promptly and
expeditiously in good faith for the purpose of negotiating an agreement with respect to
wages, hours of work and all other terms and conditions of employment including
proposals for adjusting any grievances or questions arising under such agreement and
executing a contract incorporating such agreements if requested by either party but
such duty does not compel any party to agree to a proposal or to make any concession.

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

performance of the mutual obligation to meet and convene promptly and expeditiously
in good faith for the purpose of negotiating an agreement. Undoubtedly, respondent
Association of Employees and Faculty of Letran (AEFL) (hereinafter, "union") lived up to
this requisite when it presented its proposals for the CBA to petitioner on February 7,
1996. On the other hand, petitioner devised ways and means in order to prevent the
negotiation.
Petitioner's utter lack of interest in bargaining with the union is obvious in its failure
to make a timely reply to the proposals presented by the latter. More than a month after
the proposals were submitted by the union, petitioner still had not made any counter-
proposals. This inaction on the part of petitioner prompted the union to file its second
notice of strike on March 13, 1996. Petitioner could only offer a feeble explanation that
the Board of Trustees had not yet convened to discuss the matter as its excuse for
failing to file its reply. This is a clear violation of Article 250 of the Labor Code governing
the procedure in collective bargaining, to wit:

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

observed in collective bargaining:

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

xxx
As we have held in the case of Kiok Loy vs. NLRC,[5] the company's refusal to make
counter-proposal to the union's proposed CBA is an indication of its bad faith. Where the
employer did not even bother to submit an answer to the bargaining proposals of the union,
there is a clear evasion of the duty to bargain collectively.[6] In the case at bar, petitioner's
actuation show a lack of sincere desire to negotiate rendering it guilty of unfair labor practice.
Moreover, the series of events that transpired after the filing of the first notice of
strike in January 1996 show petitioner's resort to delaying tactics to ensure that
negotiation would not push through. Thus, on February 15, 1996, or barely a few days
after the union proposals for the new CBA were submitted, the union president was
informed by her superior that her work schedule was being changed from Mondays to
Fridays to Tuesdays to Saturdays. A request from the union president that the issue be
submitted to a grievance machinery was subsequently denied. Thereafter, the petitioner
and the union met on March 27, 1996 to discuss the ground rules for
negotiation. However, just two days later, or on March 29, 1996, petitioner dismissed
the union president for alleged insubordination. In its final attempt to
thwart the bargaining process, petitioner suspended the negotiation on the ground that it
allegedly received information that a new group of employees called the Association of
Concerned Employees of Colegio (ACEC) had filed a petition for certification election.
Clearly, petitioner tried to evade its duty to bargain collectively.
Petitioner, however, argues that since it has already submitted the union's
proposals to the Board of Trustees and that a series of conferences had already been
undertaken to discuss the ground rules for negotiation such should already be
considered as acts indicative of its intention to bargain. As pointed out earlier, the
evidence on record belie the assertions of petitioner.
Petitioner, likewise, claims that the suspension of negotiation was proper since by
the filing of the petition for certification election the issue on majority representation of
the employees has arose. According to petitioner, the authority of the union to negotiate
on behalf of the employees was challenged when a rival union filed a petition for
certification election. Citing the case of Lakas Ng Manggagawang Makabayan v.
Marcelo Enterprises,[7] petitioner asserts that in view of the pendency of the petition for
certification election, it had no duty to bargain collectively with the union.
We disagree. In order to allow the employer to validly suspend the bargaining
process there must be a valid petition for certification election raising a legitimate
representation issue. Hence, the mere filing of a petition for certification election does
not ipso facto justify the suspension of negotiation by the employer. The petition must
first comply with the provisions of the Labor Code and its Implementing Rules. Foremost
is that a petition for certification election must be filed during the sixty-day freedom
period. The "Contract Bar Rule" under Section 3, Rule XI, Book V, of the Omnibus
Rules Implementing the Labor Code, provides that: " . If a collective bargaining
agreement has been duly registered in accordance with Article 231 of the Code, a
petition for certification election or a motion for intervention can only be entertained
within sixty (60) days prior to the expiry date of such agreement." The rule is based on
Article 232,[8] in relation to Articles 253, 253-A and 256 of the Labor Code. No petition for
certification election for any representation issue may be filed after the lapse of the sixty-day
freedom period. The old CBA is extended until a new one is signed. The rule is that despite the
lapse of the formal effectivity of the CBA the law still considers the same as continuing in force
and effect until a new CBA shall have been validly executed.[9] Hence, the contract bar rule still
applies.[10] The purpose is to ensure stability in the relationship of the workers and the company
by preventing frequent modifications of any CBA earlier entered into by them in good faith and
for the stipulated original period.[11]
In the case at bar, the lifetime of the previous CBA was from 1989-1994. The
petition for certification election by ACEC, allegedly a legitimate labor organization, was
filed with the Department of Labor and Employment (DOLE) only on May 26,
1996. Clearly, the petition was filed outside the sixty-day freedom period. Hence, the
filing thereof was barred by the existence of a valid and existing collective bargaining
agreement. Consequently, there is no legitimate representation issue and, as such, the
filing of the petition for certification election did not constitute a bar to the ongoing
negotiation. Reliance, therefore, by petitioner of the ruling in Lakas Ng Manggagawang
Makabayan v. Marcelo Enterprises[12] is misplaced since that case involved a legitimate
representation issue which is not present in the case at bar.
Significantly, the same petition for certification election was dismissed by the
Secretary of Labor on October 25, 1996. The dismissal was upheld by this Court in a
Resolution, dated April 21, 1997.[13]
In view of the above, there is no doubt that petitioner is guilty of unfair labor practice
by its stern refusal to bargain in good faith with respondent union.
Concerning the issue on the validity of the termination of the union president, we
hold that the dismissal was effected in violation of the employees' right to self-
organization.
To justify the dismissal, petitioner asserts that the union president was terminated
for cause, allegedly for insubordination for her failure to comply with the new working
schedule assigned to her, and pursuant to its managerial prerogative to discipline
and/or dismiss its employees. While we recognize the right of the employer to terminate
the services of an employee for a just or authorized cause, nevertheless, the dismissal
of employees must be made within the parameters of law and pursuant to the tenets of
equity and fair play.[14] The employer's right to terminate the services of an employee for
just or authorized cause must be exercised in good faith. [15] More importantly, it must not
amount to interfering with, restraining or coercing employees in the exercise of their
right to self-organization because it would amount to, as in this case, unlawful labor
practice under Article 248 of the Labor Code.
The factual backdrop of the termination of Ms. Ambas leads us to no other
conclusion that she was dismissed in order to strip the union of a leader who would fight
for the right of her co-workers at the bargaining table. Ms. Ambas, at the time of her
dismissal, had been working for the petitioner for ten (10) years already. In fact, she
was a recipient of a loyalty award. Moreover, for the past ten (10) years her working
schedule was from Monday to Friday. However, things began to change when she was
elected as union president and when she started negotiating for a new CBA. Thus, it
was when she was the union president and during the period of tense and difficult
negotiations when her work schedule was altered from Mondays to Fridays to Tuesdays
to Saturdays. When she did not budge, although her schedule was changed, she was
outrightly dismissed for alleged insubordination.[16] We quote with approval the following
findings of the Secretary of Labor on this matter, to wit:

"Assuming arguendo that Ms. Ambas was guilty, such disobedience was not,
however, a valid ground to teminate her employment. The disputed management
action was directly connected with Ms. Ambas' determination to change the
complexion of the CBA. As a matter of fact, Ms. Ambas' unflinching position in
faithfully and truthfully carrying out her duties and responsibilities to her Union and
its members in getting a fair share of the fruits of their collective endeavors was the
proximate cause for her dismissal, the charge of insubordination being merely a ploy
to give a color of legality to the contemplated management action to dismiss
her. Thus, the dismissal of Ms. Ambas was heavily tainted with and evidently done in
bad faith. Manifestly, it was designed to interfere with the members' right to self-
organization.

Admittedly, management has the prerogative to discipline its employees for

insubordination. But when the exercise of such management right tends to interfere
with the employees' right to self-organization, it amounts to union-busting and is
therefore a prohibited act. The dismissal of Ms. Ambas was clearly designed to
frustrate the Union in its desire to forge a new CBA with the College that is reflective
of the true wishes and aspirations of the Union members. Her dismissal was merely a
subterfuge to get rid of her, which smacks of a pre-conceived plan to oust her from the
premises of the College. It has the effect of busting the Union, stripping it of its
strong-willed leadership. When management refused to treat the charge of
insubordination as a grievance within the scope of the Grievance Machinery, the
action of the College in finally dismissing her from the service became arbitrary,
capricious and whimsical, and therefore violated Ms. Ambas' right to due process."[17]
 In this regard, we find no cogent reason to disturb the findings of the Court of
Appeals affirming the findings of the Secretary of Labor and Employment. The right to
self-organization of employees must not be interfered with by the employer on the
pretext of exercising management prerogative of disciplining its employees. In this case,
the totality of conduct of the employer shows an evident attempt to restrain the
employees from fully exercising their rights under the law. This cannot be done under
the Labor Code.
WHEREFORE, premises considered, the petition is DENIED for lack of merit.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, and Pardo, JJ., concur.
Ynares-Santiago, J., on leave.

[1] Rollo, pp. 32-34.

[2] Id., at 37-38.
[3] Id., at 16.
[4] Underscoring supplied.
[5] 141 SCRA 179, 186 (1986).
[6] The Bradman Co., Inc. vs. Court of Industrial Relations, 78 SCRA 10, 15 (1977).
[7] 118 SCRA 422 (1982).
[8] Article 232. Prohibition on Certification Election. -- The Bureau shall not entertain any petition for

certification election or any other action which may disturb the administration of duly registered existing
collective bargaining agreements affecting the parties except under Articles 253, 253-A and 256 of this
Code.
[9] Pier 8 Arrastre and Stevedoring Services, Inc. vs. Roldan-Confesor, 241 SCRA 294, 307 (1995).
[10] National Congress of Unions in the Sugar Industry of the Philippines vs. Ferrer-Calleja, 205 SCRA

478, 485 (1992).

[11] Ibid.

[12] Supra; note 6.

[13] G.R.
No 128483, Association of Concerned Employees of Colegio (ACEC) vs. Secretary of Labor
and Employment, et al.
[14] Philippine Singapore Transport Services, Inc. vs. NLRC, 277 SCRA 506, 512 (1997).
[15] Samar II Electric Cooperative, Inc. vs. NLRC, 270 SCRA 290, 295 (1997).
[16] Rollo, p. 45.
[17] Id., at 46.
 9) St. John vs. Faculty GR No. 167892 Oct. 27, 2006

FIRST DIVISION

ST. JOHN COLLEGES, INC., G.R. No. 167892

Petitioner,
Present:
Panganiban, C.J. (Chairperson),
- versus - Ynares-Santiago,
Austria-Martinez,
Callejo, Sr., and
Chico-Nazario, JJ.
ST. JOHN ACADEMY FACULTY
AND EMPLOYEES UNION, Promulgated:
Respondent.
October 27, 2006
x ---------------------------------------------------------------------------------------- x

DECISION
YNARES-SANTIAGO, J.:

This petition for review on certiorari assails the April 22, 2004
Decision[1] of the Court of Appeals in CA-G.R. SP No. 74519, which affirmed with
modifications the June 28, 2002 Resolution[2] of the National Labor Relations
Commission (NLRC) in NLRC CN RAB IV 5-10035-98-1, and its April 15, 2005
Resolution[3] denying petitioners motion for reconsideration.

Petitioner St. John Colleges, Inc. (SJCI) is a domestic corporation which

owns and operates the St. Johns Academy (later renamed St. John Colleges) in
Calamba, Laguna. Prior to 1998, the Academy offered a secondary course
only. The high school then employed about 80 teaching and non-teaching
personnel who were members of the St. John Academy Faculty & Employees
Union (Union).

The Collective Bargaining Agreement (CBA) between SJCI and

the Union was set to expire on May 31, 1997. During the ensuing collective
bargaining negotiations, SJCI rejected all the proposals of the Union for an
increase in workers benefits. This resulted to a bargaining deadlock which led to
the holding of a valid strike by the Union on November 10, 1997. In order to end
the strike, on November 27, 1997, SJCI and the Union, through the efforts of the
National Conciliation and Mediation Board (NCMB), agreed to refer the labor
dispute to the Secretary of Labor and Employment (SOLE) for assumption of
jurisdiction:

AGREEMENT AND JOINT PETITION FOR ASSUMPTION OF

JURISDICTION

Both parties agree as follows:

1. That the issue raised by the Union shall be referred to the Honorable Secretary
of Labor by way of Assumption of Jurisdiction. Note this will serve as a
joint petition for Assumption of Jurisdiction.

2. Parties shall submit their respective position paper within 10 days upon the
signing of this agreement and to be decided within two months.

3. That management shall grant the employees cash advance of P1,800.00 each to
be given on or before December 5, 1997 deductible after two months
payable in two installments starting January 31, 1998. The decision re:
assumption [of] jurisdiction has not been resolved.

4. Union shall lift the picket immediately and remove all obstruction and return to
work on Monday, December 1, 1997.

5. No retaliatory action shall be undertaken by either party against each other in

relation to the strike.[4]

After which, the strike ended and classes resumed. Subsequently, the SOLE issued
an Order dated January 19, 1998 assuming jurisdiction over the labor dispute
pursuant to Article 263 of the Labor Code. The parties were required to submit
their respective position papers within ten (10) days from receipt of said Order.
 Pending resolution of the labor dispute before the SOLE, the Board of
Directors of SJCI approved on February 22, 1998 a resolution recommending the
closure of the high school which was approved by the stockholders on even
date. The Minutes[5] of the stockholders meeting stated the reasons therefor, to wit:

98-3 CLOSURE OF THE SCHOOL

The President, Mr. Rivera, informed the stockholders that the Board at its
meeting on February 15, 1998 unanimously approved to recommend to the
stockholders the closure of the school because of the irreconcilable differences
between the school management and the Academys Union particularly the safety
of our students and the financial aspect of the ongoing CBA negotiations.

After due deliberations, and upon motion of Dr. Jose O. Juliano seconded
by Miss Eva Escalano, it was unanimously resolved, as it is hereby resolved, that
the Board of St. John Colleges, Inc. be authorized to decide on the terms and
conditions of closure, if such decision is made, to the best interest of the
stockholders, parents and students.[6]

Thereafter, SJCI informed the Department of Labor and Employment (DOLE),

Department of Education, Culture and Sports (DECS), parents, students and
the Unionof the impending closure of the high school which took effect on March
31, 1998.

Subsequently, some teaching and non-teaching personnel of the high school agreed
to the closure. On April 2, 1998, SJCI informed the DOLE that as of March 31,
1998, 51 employees had received their separation compensation package while 25
employees refused to accept the same.

On May 4, 1998, the aforementioned 25 employees conducted a protest action

within the perimeter of the high school. The Union filed a notice of strike with the
NCMB only on May 7, 1998.

On May 19, 1998, SJCI filed a petition to declare the strike illegal before the
NLRC which was docketed as NLRC Case No. RAB-IV-5-10035-98-L. It claimed
that the strike was conducted in violation of the procedural requirements for
holding a valid strike under the Labor Code.
 On May 21, 1998, the 25 employees filed a complaint for unfair labor
practice (ULP), illegal dismissal and non-payment of monetary benefits against
SJCI before the NLRC which was docketed as RAB-IV-5-10039-98-L. The Union
members alleged that the closure of the high school was done in bad faith in order
to get rid of the Union and render useless any decision of the SOLE on the CBA
deadlocked issues.

These two cases were then consolidated. On January 8, 1999, Labor Arbiter
Antonio R. Macam rendered a Decision[7] dismissing the Unions complaint for
ULP and illegal dismissal while granting SJCIs petition to declare the strike illegal
coupled with a declaration of loss of employment status of the 25 Union members
involved in the strike.

Meanwhile, in the proceedings before the SOLE, the Union filed a

manifestation[8] to maintain the status quo on March 30, 1998 praying that SJCI be
enjoined from closing the high school. It claimed that the decision of SJCI to close
the high school violated the SOLEs assumption order and the agreement of the
parties not to take any retaliatory action against the other. For its part, SJCI filed a
motion to dismiss with entry of appearance[9] on October 14, 1998 claiming that
the closure of the high school rendered the CBA deadlocked issues moot. Upon
receipt of the Labor Arbiters decision in the aforesaid consolidated cases, SJCI
filed a second motion to dismiss[10] on February 1, 1999 arguing that the case had
already been resolved.

Moreover, after the favorable decision of the Labor Arbiter, SJCI resolved to
reopen the high school for school year 1999-2000. However, it did not restore the
high school teaching and non-teaching employees it earlier terminated. That same
school year SJCI opened an elementary and college department.

On July 23, 1999, the SOLE denied SJCIs motions to dismiss and certified
the CBA deadlock case to the NLRC. It ordered the consolidation of the CBA
deadlock case with the ULP, illegal dismissal, and illegal strike cases which were
then pending appeal before the NLRC.

On June 28, 2002, the NLRC rendered judgment reversing the decision of
the Labor Arbiter. It found SJCI guilty of ULP and illegal dismissal and ordered it
to reinstate the 25 employees to their former positions without loss of seniority
rights and other benefits, and with full backwages. It also required SJCI to pay
moral and exemplary damages, attorneys fees, and two (2) months
summer/vacation pay. Moreover, it ruled that the mass actions conducted by the 25
employees on May 4, 1998could not be considered as a strike since, by then, the
employer-employee relationship had already been terminated due to the closure of
the high school. Finally, it dismissed, without prejudice, the certified case on the
CBA deadlocked issues for failure of the parties to substantiate their respective
positions.

On appeal, the Court of Appeals, in its Decision dated April 22, 2004,
affirmed with modification the decision of the NLRC:

WHEREFORE, in light of the preceding discussions, the decision subject

of the instant petition is hereby affirmed with a modification that in the
computation of backwages, the two month unworked summer vacation should
excluded.

SO ORDERED.[11]

With the denial of its motion for reconsideration, SJCI interposed the instant
petition essentially raising two issues: (1) whether it is liable for ULP and illegal
dismissal when it closed down the high school on March 31, 1998 and (2) whether
the Union is liable for illegal strike due to the protest actions which its 25 members
undertook within the high schools perimeter on May 4, 1998.

The petition lacks merit.

Under Article 283 of the Labor Code, the following requisites must concur
for a valid closure of the business: (1) serving a written notice on the workers at
least one (1) month before the intended date thereof; (2) serving a notice with the
DOLE one month before the taking effect of the closure; (3) payment of separation
pay equivalent to one (1) month or at least one half (1/2) month pay for every year
of service, whichever is higher, with a fraction of at least six (6) months to be
considered as a whole year; and (4) cessation of the operation must be bona
fide.[12] It is not disputed that the first two requisites were satisfied. The third
requisite would have been satisfied were it not for the refusal of the herein private
respondents to accept the separation compensation package. The instant case, thus,
revolves around the fourth requisite, i.e., whether SJCI closed the high school in
good faith.

Whether or not the closure of the high school was done in good faith is a
question of fact and is not reviewable by this Court in a petition for review
on certiorari save for exceptional circumstances. In fine, the finding of the NLRC,
which was affirmed by the Court of Appeals, that SJCI closed the high school in
bad faith is supported by substantial evidence and is, thus, binding on this
Court. Consequently, SJCI is liable for ULP and illegal dismissal.

The determination of whether SJCI acted in bad faith depends on the

particular facts as established by the evidence on record. Bad faith is, after all, an
inference which must be drawn from the peculiar circumstances of a case. The two
decisive factors in determining whether SJCI acted in bad faith are (1) the timing
of, and reasons for the closure of the high school, and (2) the timing of, and the
reasons for the subsequent opening of a college and elementary department, and,
ultimately, the reopening of the high school department by SJCI after only one
year from its closure.

Prior to the closure of the high school by SJCI, the parties agreed to refer the 1997
CBA deadlock to the SOLE for assumption of jurisdiction under Article 263 of the
Labor Code. As a result, the strike ended and classes resumed. After the SOLE
assumed jurisdiction, it required the parties to submit their respective position
papers. However, instead of filing its position paper, SJCI closed its high school,
allegedly because of the irreconcilable differences between the school management
and the Academys Union particularly the safety of our students and the financial
aspect of the ongoing CBA negotiations. Thereafter, SJCI moved to dismiss the
pending labor dispute with the SOLE contending that it had become moot because
of the closure. Nevertheless, a year after said closure, SJCI reopened its high
school and did not rehire the previously terminated employees.

Under these circumstances, it is not difficult to discern that the closure was done to
defeat the parties agreement to refer the labor dispute to the SOLE; to unilaterally
end the bargaining deadlock; to render nugatory any decision of the SOLE; and to
circumvent the Unions right to collective bargaining and its members right to
security of tenure. By admitting that the closure was due to irreconcilable
differences between the Union and school management, specifically, the financial
aspect of the ongoing CBA negotiations, SJCI in effect admitted that it wanted to
end the bargaining deadlock and eliminate the problem of dealing with the
demands of the Union. This is precisely what the Labor Code abhors and
punishes as unfair labor practice since the net effect is to defeat the Unions
right to collective bargaining.

However, SJCI contends that these circumstances do not establish its bad
faith in closing down the high school. Rather, it claims that it was forced to close
down the high school due to alleged difficult labor problems that it encountered
while dealing with the Union since 1995, specifically, the Unions illegal demands
in violation of R.A. 6728 or the Government Assistance to Students and Teachers
in Private Education Act. Under R.A. 6728, the income from tuition fee increase is
to be used as follows: (a) 70% of the tuition fee shall go to the payment of salaries,
wages, allowances, and other benefits of teaching and non-teaching personnel, and
(b) 20% of the tuition fee increase shall go to the improvement or modernization of
the buildings, equipment, and other facilities as well as payment of the cost of
operations. However, sometime in 1995, SJCI claims that it was forced to give-in
to the demands of the Union by allocating 100% of the tuition fee increase for
teachers benefits even though the same was in violation of R.A. 6728 in order to
end the on-going strike of the Union and avoid prolonged disturbances of
classes. Subsequently or during the school year 1996-1997, SJCI claims that it
obtained an approval from the DECS for a 30% tuition fee increase, however, only
10% was implemented. Despite this, the Union persisted in making illegal
demands by filing a complaint before the DOLE claiming that they were entitled to
the unimplemented 20% tuition fee increase. Finally, during the collective
bargaining negotiations in 1997, the Union again made economic demands in
excess of the 70% of the tuition fee increase under R.A. 6728. As a result, SJCI
claims it had no choice but to refuse the Unions demands which thereafter led to
the holding of a strike on November 10, 1998. It argues that the Unions alleged
illegal demands was a valid justification for the closure of the high school
considering that it was financially incapable of meeting said demands and that it
would violate R.A. 6728 if it gave in to said demands which carried corresponding
penalties to be imposed by the DECS.
 We are not persuaded.

These alleged difficult labor problems merely show that SJCI and
the Union had disagreements regarding workers benefits which is normal in any
business establishment. That SJCI agreed to appropriate 100% of the tuition fee
increase to the workers benefits sometime in 1995 does not mean that it was
helpless in the face of the Unions demands because neither party is obligated to
precipitately give in to the proposal of the other party during collective
bargaining.[13] If SJCI found the Unions demands excessive, its remedy under the
law is to refer the matter for voluntary or compulsory dispute resolution. Besides,
this incident which occurred in 1995, could hardly establish the good faith of SJCI
or justify the high schools closure in 1998.

Anent the Unions claim for the unimplemented 20% tuition fee increase in
1996, suffice it to say that it is erroneous to rule on said issue since the same was
submitted before the Voluntary Arbitrator[14] and is not on appeal before this
Court.[15] Besides, by referring the labor dispute to the Voluntary Arbitrator, the
parties themselves acknowledged that there is a sufficient mechanism to resolve
the said dispute. Again, we fail to see how this alleged labor problem in 1996
shows the good faith of SJCI in closing the high school in 1998.

With respect to SJCIs claim that during the 1997 CBA negotiations the
Union made illegal demands because they exceeded the 70% limitation set by R.A.
No. 6728, it is important to note that the alleged illegality or excessiveness of the
Unions demands were the issues to be resolved by the SOLE after the parties
agreed to refer the said labor dispute to the latter for assumption of jurisdiction. As
previously mentioned, the SOLE certified the case to the NLRC, which on June 28,
2002, rendered a decision finding that there was insufficient evidence to
determine the reasonableness of the Unions proposals. The NLRC found that SJCI
failed to establish that the Unions demands were illegal or excessive. A review of
the records clearly shows that the Union submitted a position paper detailing its
demands in actual monetary terms. However, SJCI failed to establish how and why
these demands were in excess of the limitation set by R.A. 6728. Up to this point in
the proceedings, it has merely relied on its self-serving statements that the Unions
demands were illegal and excessive. There is no basis, therefore, to hold that
the Unionever made illegal or excessive demands.
 At any rate, even assuming that the Unions demands were illegal or
excessive, the important and crucial point is that these alleged illegal or excessive
demands did not justify the closure of the high school and do not, in any way,
establish SJCIs good faith. The employer cannot unilaterally close its
establishment on the pretext that the demands of its employees are excessive. As
already discussed, neither party is obliged to give-in to the others excessive or
unreasonable demands during collective bargaining, and the remedy in such case is
to refer the dispute to the proper tribunal for resolution. This was what SJCI and
the Union did when they referred the 1997 CBA bargaining deadlock to the SOLE;
however, SJCI pre-empted the resolution of the dispute by closing the high
school. SJCI disregarded the whole dispute resolution mechanism and undermined
the Unions right to collective bargaining when it closed down the high school
while the dispute was still pending with the SOLE.

The Labor Code does not authorize the employer to close down the
establishment on the ground of illegal or excessive demands of the Union. Instead,
aside from the remedy of submitting the dispute for voluntary or compulsory
arbitration, the employer may file a complaint for ULP against the Union for
bargaining in bad faith. If found guilty, this gives rise to civil and criminal
liabilities and allows the employer to implement a lock out, but not the closure of
the establishment resulting to the permanent loss of employment of the whole
workforce.

In fine, SJCI undermined the Labor Codes system of dispute resolution by

closing down the high school while the 1997 CBA negotiations deadlock issues
were pending resolution before the SOLE. The closure was done in bad faith for
the purpose of defeating the Unions right to collective bargaining. Besides, as
found by the NLRC, the alleged illegality and excessiveness of the Unions
demands were not sufficiently proved by SJCI. Even on the assumption that
the Unions demands were illegal or excessive, SJCIs remedy was to await the
resolution by the SOLE and to file a ULP case against the Union. However, SJCI
did not have the power to take matters into its own hands by closing down the
school in order to get rid of the Union.
 SJCI next argues that the Union unduly endangered the safety and well-
being of the students who joined the valid strike held on November 10, 1997, thus
it closed down the high school on March 31, 1998. It claims that the Union coerced
the students to join the protest actions to pressure SJCI to give-in to the demands of
the Union.

However, SJCI provided no evidence to substantiate these claims except for

its self-serving statements in its position paper before the Labor Arbiter and
pictures belatedly attached to the instant petition before this Court. However, the
pictures were never authenticated and, on its face, only show that some students
watched the Union members while they conducted their protest actions. More
importantly, it is not true, as SJCI claims, that the Union admitted that it coerced
the students to join the protest actions and recklessly placed the students in harms
way. In its Reply[16] to SJCIs position paper before the Labor Arbiter,
the Unioncategorically denied that it put the students in harms way or pressured
them to join the protest actions. Given this denial by the Union, it was incumbent
upon SJCI to prove that the students were actually harmed or put in harms way
and that the Union coerced them to join the protest actions. The reason for this is
that the employer carries the burden of proof to establish that the closure of the
business was done in good faith. In the instant case, SJCI had the burden of
proving that, indeed, the closure of the school was necessary to uphold the safety
and well-being of the students.

SJCI presented no evidence to show that the protest actions turned violent;
that the parents did not give their consent to their children who allegedly joined the
protest actions; that the Union did not take the necessary steps to protect some of
the students who allegedly joined the same; or that the Union forced or pressured
the said students to join the protest actions. Moreover, if the problem was the
endangerment of the students well-being due to the protest actions by the Union,
then the natural response would have been to immediately go after the Union
members who allegedly coerced the students to join the protest actions and thereby
endangered the students safety. But no such action appears to have been
undertaken by SJCI. There is even no showing that it prohibited its students from
joining the protest actions or informed the parents of the activities of the students
who allegedly joined the protest actions. This raises serious doubts as to whether
SJCI was really looking after the welfare of its students or merely using them as a
scapegoat to justify the closure of the school and thereby get rid of the Union.

Even assuming arguendo that the safety and well-being of some of the
students who allegedly joined the protest actions were compromised, still, the
closure was done in bad faith because it was done long after the strike had
ended. Thus, there is no more danger to the students well-being posed by the strike
to speak of. It bears stressing that the closure was implemented on March 31,
1998 but the risk to the safety of the students had long ceased to exist as early
as November 28, 1997when the parties agreed to refer the labor dispute to the
SOLE, thus, betraying SJCIs claim that it wanted to safeguard the interest of the
students.

Furthermore, if SJCI was after the interests of the students, then it should not have
closed the school because the parents and the students were vehemently opposed to
the same, as shown by the letter dated March 9, 1998 written by Mr. Teofilo G.
Mamplata, President of the Parents Association, and addressed to the Secretary of
DECS, to wit:

As per letters sent recently by the school Management to the teachers and parents,
notifying of its closure on March 31, 1998, as decided upon by its Board of
Trustees and Stockholders on February 22, 1998 no reasons were stated to justify
said decision and action which will definitely affect adversely and to the detriment
of the plight of parents, teachers, students and other personnel of the school.

In this connection and due to the urgency of the matter, we hereby reiterate our
appeal with our prayer that the management and Board of Trustees of St. John
Academy of Calamba, Laguna, be stopped from pursuing their most sudden,
unfair, unfavorable and detrimental decision and action, and if warranted,
sanctions be imposed against the erring party.[17] (Italics supplied)

Along the same vein, the parents voiced out their strong objections to the proposed
closure of the school, to wit:

PAHAYAG NG PAGTUTOL

Kami, mga magulang, mag-aaral, guro, propesyonal, manggagawa at iba pang

sector ng pamayanan sa bayan ng Calamba, Laguna ay nagpapahayag ng pagtutol
sa hindi makatarungang pagsasara ng paaralang SAINT JOHN ACADEMY.
 Ang kagyat na pagsasara nito ay nagdulot ng malaking suliranin sa 2,300
estudyante (incoming 2nd year 4thyear), kagaya ng mga sumusunod:

1. Kakaunti ang bilang ng paaralan sa Calamba;

2. Walang paaralan na basta tatanggap sa 700 incoming third year at
800 incoming fourth year;
3. Ang lahat ng HONOR STUDENTS ay mababaliwala ang
kanilang pinagsikapan;
4. Negatibo ang epekto sa moral ng mga batang estudyante ang
pagkakaroon ng physical and moral displacement dahil sa biglaang
pagsasara nito;
5. Hindi lahat ng magulang ay kakayaning bumayad ng mataas na
tuition fee sa ibang paaralan;
6. Ang mataas na kalidad ng turo ng mga guro sa paaralang ito ay
mahirap pantayan; at
7. HIGIT NA LIGTAS SA SAKUNA ANG AMING MGA ANAK sa
nasabing paaralan.

Bilang pagtutol sa pagsasara ng SAINT JOHN ACADEMY ay inilalagda

namin ang aming pangalan sa libis nito. (56 signatures follow)[18] [Italics
supplied]

Worth noting is the belief of the parents that the safety of their children was
properly secured in said high school. This was obviously in response to the claim
of SJCI that the school was being closed, inter alia, for the safety and well-being
of the students. As correctly observed by the CA:

The petitioner urges this Court to believe that they closed down the school
out of their sheer concern for the students, some of whom have started to
sympathize and participate in the unions cause.

As intimated by the private respondent, however, the petitioner itself said

that the closing down of the school was, inter alia, because of irreconcilable
differences between the school management and the Academys Union. Indeed,
this translates into an admission that the cessation of business was neither due to
any patrician nor noble objective of protecting the studentry but because the
administration no longer wished to deal with respondent Union.

We are further tempted to doubt the verity of the petitioners claim that in
deciding to shut down the school, it only had the welfare of its students in
mind. There is evidence on record which hints otherwise. Apparently, the parents
of the students were vehemently against the idea of closing down the academy as
this would be, as it later did prove, more detrimental to the studentry. No less
than Mr. Teofilo Mamplata, President of St. John Academy Parents Association
of Calamba expressed the groups aversion against such move and even wrote a
 letter to the then Secretary of the Department of Education seeking immediate
intervention to enjoin the school from closing. This is an indication that the
parents were unanimous in their sentiment that the shutdown would result in
inconvenience and displacement of the students who had already been halfway
through elementary school and high school. It turned out some were even forced
to pay higher tuition fees just so they would be admitted in other
academies.[19] (Italics supplied)

To recapitulate, there is insufficient evidence to hold that the safety and

well-being of the students were endangered and/or compromised, and that
the Unionwas responsible therefor. Even assuming arguendo that the students
safety and well-being were jeopardized by the said protest actions, the alleged
threat to the students safety and well-being had long ceased by the time the high
school was closed. Moreover, the parents were vehemently opposed to the closure
of the school because there was no basis to claim that the students safety was at
risk. Taken together, these circumstances lead to the inescapable conclusion that
SJCI merely used the alleged safety and well-being of the students as a subterfuge
to justify its actions.

SJCI next contends that the subsequent reopening of the high school after
only one year from its closure did not show that the previous decision to close the
high school was tainted with bad faith because the reopening was done due to the
clamor of the high schools former students and their parents. It claims that its
former students complained about the cramped classrooms in the schools where
they transferred.

The contention is untenable.

First, the fact that after one year from the time it closed its high school, SJCI
opened a college and elementary department, and reopened its high school
department showed that it never intended to cease operating as an educational
institution. Second, there is evidence on record contesting the alleged reason of
SJCI for reopening the high school, i.e., that its former students and their parents
allegedly clamored for the reopening of the high school. In a
letter[20] dated December 15, 2000 addressed to the NLRC, which has never been
rebutted by SJCI, Mr. Mamplata, stated that
 Para po sa inyong kabatiran xxx isinara nila ang paaralang ito dahil sa mga nag-
alsang guro.

Sa ganitong kalagayan kaming pamunuan at kasapi ng PTA ay nakipag-usap sa

pamunuan ng paaralang ito na huwag naming isara dahil malaking epekto ito sa
aming mga anak dahil noon ay kalagitnaan pa lamang ng pasukan. Sa kabila ng
pakiusap naming ito ay hindi kami pinakinggan at sa halip ay tuluyang isinara. Sa
kanilang ginawang ito marami sa mga bata ang hindi nakapasok sa ibang paaralan
at ang iba naman ay nadoble ang pinagbayaran sa matrikula. Sa kabuuan nito ay
malaking paghirap ang ginawa nila sa aming mga magulang at anak na nag-aaral
sa paaralang ito dahil lamang sa panggigipit sa mga gurong walang tanging
hangarin kundi bayaran sila ng naaayon sa itinakda ng batas.

Sa taong 1999-2000 ay muling binuksan ang paaralang ito na sabi nila ay sa

kahilingan ng PTA. Alin kayang PTA ang tinutukoy nila. Paanong magkakaroon
ng PTA samantalang ito ay nakasara at kami ang PTA bago ito isinara.

Kaya po pinaabot naming sa inyong kaalaman na kaming PTA ng paaralang (St.

John Academy) ito ay hindi kailanman humiling sa kanila na pamuling buksan
ito.[21] (Italics supplied)

Finally, when SJCI reopened its high school, it did not rehire the Union
members. Evidently, the closure had achieved its purpose, that is, to get rid of the
Union members.

Clearly, these pieces of evidence regarding the subsequent reopening of the

high school after only one year from its closure further show that the high schools
closure was done in bad faith.

Lastly, SJCI asserts that the strike conducted by the 25 employees on May 4,
1998 was illegal for failure to take the necessary strike vote and give a notice of
strike. However, we agree with the findings of the NLRC and CA that the protest
actions of the Union cannot be considered a strike because, by then, the employer-
employee relationship has long ceased to exist because of the previous closure of
the high school on March 31, 1998.

In sum, the timing of, and the reasons for the closure of the high school and its
reopening after only one year from the time it was closed down, show that the
closure was done in bad faith for the purpose of circumventing the Unions right to
collective bargaining and its members right to security of tenure. Consequently,
SJCI is liable for ULP and illegal dismissal.

WHEREFORE, the petition is DENIED. The April 22, 2004 Decision

and April 15, 2005 Resolution of the Court Appeals in CA-G.R. SP No. 74519
are AFFIRMED.

SO ORDERED.

CONSUELO YNARES-SANTIAGO
Associate Justice

WE CONCUR:

ARTEMIO V. PANGANIBAN
Chief Justice
Chairperson

MA. ALICIA AUSTRIA-MARTINEZ ROMEO J. CALLEJO, SR.

Associate Justice Associate Justice

MINITA V. CHICO-NAZARIO
Associate Justice

CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that
the conclusions in the above Decision were reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.

ARTEMIO V. PANGANIBAN
Chief Justice

[1]
Rollo, pp. 56-66. Penned by Associate Justice Bienvenido L. Reyes and concurred in by Associate Justices
Salvador J. Valdez, Jr. and Arsenio J. Magpale.
[2]
Id. at 114-129. Penned by Commissioner Ireneo B. Bernardo and concurred in by Commissioner Lourdes C.
Javier.
[3]
Id. at 68-71. Penned by Associate Justice Bienvenido L. Reyes and concurred in by Associate Justices Martin S.
Villarama, Jr. and Regalado E. Maambong.
[4]
CA rollo, p. 224.
[5]
Id. at 222-223.
[6]
Id. at 223.
[7]
Rollo, pp. 99-107.
[8]
NLRC Record of Certified Case, pp. 130.
[9]
Id. at 174.
[10]
Id. at 233.
[11]
Rollo, p. 65.
[12]
Mobil Employees Association v. National Labor Relations Commission, G.R. No. 79329, March 28, 1990, 183
SCRA 737, 745.
[13]
General Milling Corporation v. Court of Appeals, G.R. No. 146728, February 11, 2004, 422 SCRA 514, 525.
[14]
The records show that this case was filed with the NCMB, Voluntary Arbitration, Regional Office No.
IV, Quezon City and before VA Reynaldo Garcia but the records do not reveal the docket number of said case.
[15]
Parenthetically, the contention of the Union in the voluntary arbitrator case is, on its face, not totally devoid of
merit. Basically, the Union argued that the 20% refund to the parents/students is contrary to SJCIs past practice of
giving the full value of the tuition fee increase to its workers. The Union has made a case for diminution of workers
benefits based on an alleged past practice of the company. Also, if the law unequivocally allocates the tuition fee
increase for the benefit of the workers, then the Union might have reason to complain that the 20% refund of the
tuition fee increase to the parents/students was illegal. In fine, it is difficult to resolve the merits of the voluntary
arbitrator case on the basis of the position papers only since neither party was able to rebut the allegations of the
other party. No replies appear to have been filed or the replies of both parties were not attached by SJCI to its
petition before the CA. This is the problem of delving into the merits of this voluntary arbitrator case which is a non-
issue in the instant case.
[16]
Records of NLRC NCR CA No. 018460-99 (R2), Unions reply to SJCIs position paper, pp. 1-2.
[17]
Rollo, p. 281.
[18]
Id. at 282-283.
[19]
Id. at 62-63.
[20]
Id. at 284.
[21]
Id.
 10) Purefoods vs. Nagkakaisang Samahan GR No.150896 Aug. 28, 2008

THIRD DIVISION

PUREFOODS CORPORATION, G.R. No. 150896

Petitioner,
Present:

- versus -
YNARES-SANTIAGO, J.,

Chairperson,

AUSTRIA-MARTINEZ,
NAGKAKAISANG SAMAHANG
MANGGAGAWA NG PUREFOODS RANK- CHICO-NAZARIO,
AND-FILE, ST. THOMAS FREE NACHURA, and
WORKERS UNION, PUREFOODS
GRANDPARENT FARM REYES, JJ.
WORKERS UNION and PUREFOODS UNIFIED
LABOR ORGANIZATION,
Promulgated:
Respondents.

August 28, 2008

x------------------------------------------------------------------------------------x

DECISION
NACHURA, J.:

The petitioner, Purefoods Corporation, in this Rule 45 petition seeks the

reversal of the appellate courts dismissal of its certiorari petition, and our
consequent review of the labor commissions finding that it committed unfair
labor practice and illegally dismissed the concerned union members.

Three labor organizations and a federation are respondents in this

caseNagkakaisang Samahang Manggagawa Ng Purefoods Rank-And-
File (NAGSAMA-Purefoods), the exclusive bargaining agent of the rank-and-file
workers of Purefoods meat division throughout Luzon; St. Thomas Free Workers
Union (STFWU), of those in the farm in Sto. Tomas, Batangas; and Purefoods
Grandparent Farm Workers Union (PGFWU), of those in the poultry farm in Sta.
Rosa, Laguna. These organizations were affiliates of the respondent federation,
Purefoods Unified Labor Organization (PULO).[1]

On February 8, 1995, NAGSAMA-Purefoods manifested to petitioner

corporation its desire to re-negotiate the collective bargaining agreement (CBA)
then due to expire on the 28th of the said month. Together with its demands and
proposal, the organization submitted to the company its January 28, 1995 General
Membership Resolution approving and supporting the unions affiliation with
PULO, adopting the draft CBA proposals of the federation, and authorizing a
negotiating panel which included among others a PULO representative. While
Purefoods formally acknowledged receipt of the unions proposals, it refused to
recognize PULO and its participation, even as a mere observer, in the negotiation.
Consequently, notwithstanding the PULO representatives non-involvement, the
negotiation of the terms of the CBA still resulted in a deadlock. A notice of strike
was then filed by NAGSAMA-Purefoods on May 15, 1995. In the subsequent
conciliation conference, the deadlock issues were settled except the matter of the
companys recognition of the unions affiliation with PULO.[2]

In the meantime, STFWU and PGFWU also submitted their respective

proposals for CBA renewal, and their general membership resolutions which,
among others, affirmed the two organizations affiliation with PULO. Consistent
with its stance, Purefoods refused to negotiate with the unions should a PULO
representative be in the panel. The parties then agreed to postpone the
negotiations indefinitely.[3]

On July 24, 1995, however, the petitioner company concluded a new CBA
with another union in its farm in Malvar, Batangas. Five days thereafter, or on July
29, 1995, at around 8:00 in the evening, four company employees facilitated the
transfer of around 23,000 chickens from the poultry farm in Sto. Tomas, Batangas
(where STFWU was the exclusive bargaining agent) to that in Malvar. The
following day, the regular rank-and-file workers in the Sto. Tomas farm were
refused entry in the company premises; and on July 31, 1995, 22 STFWU
members were terminated from employment. The farm manager, supervisors and
electrical workers of the Sto. Tomas farm, who were members of another union,
were nevertheless retained by the company in its employ.[4]

Aggrieved by these developments, the four respondent labor organizations

jointly instituted a complaint for unfair labor practice (ULP), illegal
lockout/dismissal and damages, docketed as NLRC Case No. NLRC-NCR-00-07-
05159-95, with the Labor Arbitration Branch of the National Labor Relations
Commission (NLRC).[5]

In the proceedings before the Labor Arbiter (LA), Purefoods interposed,

among others, the defenses that PULO was not a legitimate labor organization or
federation for it did not have the required minimum number of member unions;
that the closure of the Sto. Tomas farm was not arbitrary but was the result of the
financial non-viability of the operations therein, or the consequence of the
landowners pre-termination of the lease agreement; that the other complainants
had no cause of action considering that it was only the Sto. Tomas farm which
was closed; that the termination of the employees complied with the 30-day
notice requirement and that the said employees were paid 30-day advance salary
in addition to separation pay; and that the concerned union, STFWU, lost its
status as bargaining representative when the Sto. Tomas farm was closed.[6]

On August 17, 1999, the LA rendered a Decision[7] dismissing the complaint,

and declaring that the company neither committed ULP nor illegally dismissed the
employees.

On appeal, the NLRC reversed the ruling of the LA, ordered the payment
of P500,000.00 as moral and exemplary damages and the reinstatement with full
backwages of the STFWU members. In its March 16, 2001 Decision (CA No.
022059-00), the labor commission ruled that the petitioner companys refusal to
recognize the labor organizations affiliation with PULO was unjustified considering
that the latter had been granted the status of a federation by the Bureau of Labor
Relations; and that this refusal constituted undue interference in, and restraint on
the exercise of the employees right to self-organization and free collective
bargaining. The NLRC said that the real motive of the company in the sudden
closure of the Sto. Tomas farm and the mass dismissal of the STFWU members
was union busting, as only the union members were locked out, and the company
subsequently resumed operations of the closed farm under a new contract with
the landowner. Because the requisites of a valid lockout were absent, the NLRC
concluded that the company committed ULP. The dispositive portion of the NLRC
decision reads:

WHEREFORE, respondent Purefoods Corporation is hereby directed to reinstate

effective October 1, 2000 employees-members of the STFWU-PULO who were illegally
locked out on July 30, 1995 and to pay them their full backwages.
 SO ORDERED.

Its motion for reconsideration having been denied,[8] the petitioner

corporation filed a Rule 65 petition before the Court of Appeals (CA) docketed as
CA-G.R. SP No. 66871.

In the assailed October 25, 2001 Resolution,[9] the appellate court dismissed
outright the companys petition for certiorari on the ground that the verification
and certification of non-forum shopping was defective since no proof of authority
to act for and on behalf of the corporation was submitted by the corporations
senior vice-president who signed the same; thus, the petition could not be
deemed filed for and on behalf of the real party-in-interest. Then, the CA, in
its November 22, 2001 Resolution,[10] denied petitioners motion for
reconsideration of the dismissal order.

Dissatisfied, petitioner instituted before us the instant petition for review

on certiorari under Rule 45.

The petition is denied.

Section 1, Rule 65 of the Rules of Court explicitly mandates that the petition
for certiorari shall be accompanied by a sworn certification of non-forum
shopping.[11] When the petitioner is a corporation, inasmuch as corporate powers
are exercised by the board, the certification shall be executed by a natural person
authorized by the corporations board of directors.[12] Absent any authority from
the board, no person, not even the corporate officers, can bind the
corporation.[13]Only individuals who are vested with authority by a valid board
resolution may sign the certificate of non-forum shopping in behalf of the
corporation, and proof of such authority must be attached to the
petition.[14] Failure to attach to the certification any proof of the signatorys
authority is a sufficient ground for the dismissal of the petition.[15]

In the instant case, the senior vice-president of the petitioner corporation

signed the certificate of non-forum shopping. No proof of his authority to sign the
said certificate was, however, attached to the petition. Thus, applying settled
jurisprudence, we find that the CA committed no error when it dismissed the
petition.

The Court cannot even be liberal in the application of the rules because
liberality is warranted only in instances when there is substantial compliance with
the technical requirements in pleading and practice, and when there is sufficient
explanation that the non-compliance is for a justifiable cause, such that the
outright dismissal of the case will defeat the administration of justice.[16] Here, the
petitioner corporation, in its motion for reconsideration before the appellate
court and in its petition before us, did not present a reasonable explanation for its
non-compliance with the rules. Further, it cannot be said that petitioner
substantially complied therewith, because it did not attach to its motion for
reconsideration any proof of the authority of its signatory. It stands to reason,
therefore, that this Court now refuses to condone petitioners procedural
transgression.

We must reiterate that the rules of procedure are mandatory, except only
when, for the most persuasive of reasons, they may be relaxed to relieve a litigant
of an injustice not commensurate to the degree of his thoughtlessness in not
complying therewith.[17] While technical rules of procedure are not designed to
frustrate the ends of justice, they are provided to effect the proper and orderly
disposition of cases and effectively prevent the clogging of court dockets.[18]
 Be that as it may, this Court has examined the records if only to dispel any
doubt on the propriety of the dismissal of the case, and we found no abuse of
discretion, much more a grave one, on the part of the labor commission in
reversing the ruling of the LA.

It is crystal clear that the closure of the Sto. Tomas farm was made in bad
faith. Badges of bad faith are evident from the following acts of the petitioner:
it unjustifiably refused to recognize the STFWUs and the other unions
affiliation with PULO;
it concluded a new CBA with another union in another farm during the
agreed indefinite suspension of the collective bargaining negotiations;
it surreptitiously transferred and continued its business in a less hostile
environment; and it suddenly terminated the STFWU members, but retained and
brought the non-members to the Malvar farm.
Petitioner presented no evidence to support the contention that it was
incurring losses or that the subject farms lease agreement was pre-terminated.
Ineluctably, the closure of the Sto. Tomas farm circumvented the labor
organizations right to collective bargaining and violated the members right to
security of tenure.[19]

The Court reiterates that the petition for certiorari under Rule 65 of the
Rules of Court filed with the CA will prosper only if there is clear showing of grave
abuse of discretion or an act without or in excess of jurisdiction on the part of the
NLRC.[20] It was incumbent, then, for petitioner to prove before the appellate
court that the labor commission capriciously and whimsically exercised its
judgment tantamount to lack of jurisdiction, or that it exercised its power in an
arbitrary or despotic manner by reason of passion or personal hostility, and that
its abuse of discretion is so patent and gross as to amount to an evasion of a
positive duty enjoined or to act at all in contemplation of law.[21] Here, as
aforesaid, no such proof was adduced by petitioner. We, thus, declare that the
NLRC ruling is not characterized by grave abuse of discretion. Accordingly, the
same is also affirmed.

However, this Court makes the following observations and modifications:

We deem as proper the award of moral and exemplary damages. We hold

that the sudden termination of the STFWU members is tainted with ULP because
it was done to interfere with, restrain or coerce employees in the exercise of their
right to self-organization. Thus, the petitioner company is liable for the payment
of the aforesaid damages.[22] Notable, though, is that this award, while stated in
the body of the NLRC decision, was omitted in the dispositive portion of the said
ruling. To prevent any further confusion in the implementation of the said
decision, we correct the dispositive portion of the ruling to include the payment
of P500,000.00 as moral and exemplary damages to the illegally dismissed STFWU
members.

As to the order of reinstatement, the Court modifies the same in that if it is

no longer feasible considering the length of time that the employees have been
out of petitioners employ,[23] the company is ordered to pay the illegally
dismissed STFWU members separation pay equivalent to one (1) month pay, or
one-half (1/2) month pay for every year of service, whichever is higher.[24]

The releases and quitclaims, as well as the affidavits of

desistance,[25] signed by the concerned employees, who were then necessitous
men at the time of execution of the documents, are declared invalid and
ineffective. They will not bar the workers from claiming the full measure of
benefits flowing from their legal rights.[26]
WHEREFORE, premises considered, the petition for review
on certiorari is DENIED. The October 25, 2001 and the November 22,
2001 Resolutions of the Court of Appeals in CA-G.R. SP No.
66871 are AFFIRMED. The March 16, 2001 Decision of the National Labor
Relations Commission in NLRC-NCR-00-07-05159-95 (CA No. 022059-00)
is AFFIRMED with the MODIFICATION that petitioner company is ordered to: (1)
reinstate the illegally dismissed STFWU members and pay them full backwages
from the time of illegal termination up to actual reinstatement; (2) if
reinstatement is no longer feasible, pay the illegally dismissed STFWU members
their separation pay equivalent to one month pay, or one-half month pay for
every year of service, whichever is higher; and (3) pay moral and exemplary
damages in the aggregate amount of P500,000.00 to the said illegally dismissed
STFWU members.

SO ORDERED.

ANTONIO EDUARDO B. NACHURA

Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
 Chairperson

MA. ALICIA AUSTRIA-MARTINEZ MINITA V. CHICO-NAZARIO

Associate Justice Associate Justice

RUBEN T. REYES
Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision were reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
 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 Courts Division.

REYNATO S. PUNO
Chief Justice

[1]
Rollo, pp. 130-131.
[2]
Id. at 116-117.
[3]
Id. at 117.
[4]
Id. at 117-118.
[5]
Id. at 70-80.
[6]
Id. at 107-110.
[7]
Id. at 114-127. The dispositive portion of the Labor Arbiters decision reads:
CONFORMABLY WITH THE FOREGOING, judgment is hereby rendered declaring that the respondents
did not commit unfair labor practice against complainants and that there was no illegal dismissal committed.
SO ORDERED.
[8]
Id. at 149.
[9]
Penned by Associate Justice Rodrigo V. Cosico, with Associate Justices Eubulo G. Verzola and Eliezer R. De Los
Santos, concurring; id. at 176-177.
[10]
Id. at 187-188.
[11]
Rule 65, Section 1 of the Rules of Court reads:
Section 1. Petition for certiorari.When any tribunal, board or officer exercising judicial or quasi-judicial
functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack
or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of
law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and
praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and
granting such incidental reliefs as law and justice may require.
The petition shall be accompanied by a certified true copy of the judgment, order or resolution subject
thereof, copies of all pleadings and documents relevant and pertinent thereto, and a sworn certification of non-forum
shopping as provided in the third paragraph of section 3, Rule 46. (Italics supplied.)
[12]
Fuentebella v. Castro, G.R. No. 150865, June 30, 2006, 494 SCRA 183, 190-191; Philippine Airlines, Inc. v.
Flight Attendants and Stewards Association of the Philippines, G.R. No. 143088, January 24, 2006, 479 SCRA 605,
608; Expertravel & Tours, Inc. v. Court of Appeals, G.R. No. 152392, May 26, 2005, 459 SCRA 147, 157; Eslaban,
Jr. v. Vda. de Onorio, 412 Phil. 667 (2001).
[13]
San Pablo Manufacturing Corporation v. Commissioner of Internal Revenue, G.R. No. 147749, June 22, 2006,
492 SCRA 192, 197.
[14]
Philippine Airlines, Inc. v. Flight Attendants and Stewards Association of the Philippines, supra note 12.
[15]
Shipside Incorporated v. Court of Appeals, 404 Phil. 981, 995 (2001).
[16]
United Paragon Mining Corporation v. Court of Appeals, G.R. No. 150959, August 4, 2006, 497 SCRA 638,
647-648; Philippine Valve Manufacturing Company v. National Labor Relations Commission, G.R. No. 152304,
November 12, 2004, 442 SCRA 383, 387. Cf. Estrebillo v. Department of Agrarian Reform, G.R. No. 159674, June
30, 2006, 494 SCRA 218; LDP Marketing, Inc. v. Monter, G.R. No. 159653, January 25, 2006, 480 SCRA
137;China Banking Corporation v. Mondragon International Philippines, Inc., G.R. No. 164798, November 17,
2005, 475 SCRA 332; Vicar International Construction, Inc. v. FEB Leasing and Finance Corporation, G.R. No.
157195, April 22, 2005, 456 SCRA 588, in which the Court relaxed in these cases the application of procedural rules
in the interest of justice.
[17]
Spouses Ortiz v. Court of Appeals, 360 Phil. 95, 101 (1998).
[18]
Santos v. Court of Appeals, 413 Phil. 41, 53-54 (2001).
[19]
See St. John Colleges, Inc. v. St. John Academy Faculty and Employees Union, G.R. No. 167892, October 27,
2006, 505 SCRA 764, in which the Court found the company to have acted in bad faith when it suddenly closed its
high school department during collective bargaining.
[20]
Palomado v. National Labor Relations Commission, G.R. No. 96520, June 28, 1996, 257 SCRA 680, 689.
[21]
Machica v. Roosevelt Services Center, Inc., G.R. No. 168664, May 4, 2006, 489 SCRA 534, 547.
[22]
Quadra v. Court of Appeals, G.R. No. 147593, July 31, 2006, 497 SCRA 221, 228.
[23]
Jardine Davies, Inc. v. National Labor Relations Commission, 370 Phil. 310, 322 (1999).
[24]
Philippine Carpet Employees Association (PHILCEA) v. Sto. Tomas, G.R. No. 168719, February 22, 2006, 483
SCRA 128, 152.
[25]
Rollo, pp. 68-69, 212-213.
[26]
Mindoro Lumber and Hardware v. Bacay, G.R. No. 158753, June 8, 2005, 459 SCRA 714, 722-733; Peftok
Integrated Services, Inc. v. National Labor Relations Commission, 355 Phil. 247, 253 (1998).

11) Portuguez vs. GSIS GR No. 169570 March 2, 2007

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 169570 March 2, 2007

RICARDO PORTUGUEZ, Petitioner,

vs.
GSIS FAMILY BANK (Comsavings Bank) and THE HON. COURT OF APPEALS, Respondents.
 DECISION

CHICO-NAZARIO, J.:

For resolution is a Petition for Review by Certiorari under Rule 45 of the Revised Rules of Court, of
the Decision1dated 25 April 2005 and the Resolution2 dated 25 August 2005 of the Court of Appeals.
The assailed Decision and Resolution reversed the findings of both the National Labor Relations
Commission (NLRC) and the Labor Arbiter, in their Decisions dated 30 January 2004 and 30 June
2003, respectively, that respondent GSIS Family Bank is guilty of the illegal dismissal of petitioner
Ricardo Portuguez. The dispositive portion of the assailed decision of the appellate court reads:

IN VIEW OF ALL THE FOREGOING, the instant petition is hereby GRANTED, the assailed NLRC
Decision dated January 30, 2004, together with the Resolution dated June 22, 2004, are RECALLED
and SET ASIDE, and a new one entered DISMISSING NLRC NCR CA No. 037015-03 (NLRC NCR
Case. No. 07-05075-2002). No pronouncement as to costs.3

The factual and procedural antecedents of this instant petition are as follows:

Petitioner was employed by the respondent bank as utility clerk on 1 February 1971. Later, he rose
from the ranks and was promoted as branch manager of the Gen. Trias Branch, and was
subsequently assigned to other branches of respondent bank within the Province of Cavite.
Eventually, he was appointed as Business Development and Public Relations (BDPR) Officer of the
entire respondent bank.4

In addition to his regular duties as BDPR Officer, petitioner was designated as a member of the
Procurement Bidding and Awards Committee (PBAC), Oversight Committee and Investigating
Committee of the respondent bank.5

On 23 October 1997, petitioner was temporarily assigned as caretaker of respondent bank. Finally,
he was designated as Acting Assistant Vice-President and at the same time Officer-In-Charge of the
respondent bank on 15 June 1998.6

Respondent bank, on the other hand, is a banking institution duly authorized and existing as such
under the Philippine laws. It was originally known as Royal Savings Bank. In 1983 and the early part
of 1984, respondent bank underwent serious liquidity problems and was placed by the Central Bank
of the Philippines (Central Bank) under receivership. However, due to the continued inability to
maintain a state of liquidity, the Central Bank ordered its closure on 9 July 1984. After two months,
the respondent bank was reopened under the control and management of the Commercial Bank of
Manila and was then renamed as Comsavings Bank.7

In 1987, the Government Service Insurance System (GSIS) acquired the interest of the Commercial
Bank of Manila in the respondent bank and together with the Central Bank and the Philippine
Deposit Insurance Corporation (PDIC), GSIS infused a substantial amount of fresh capital into
respondent bank in order to ensure its effective rehabilitation. Resultantly, GSIS took over the
control and management of the respondent bank that was renamed as GSIS Family Savings Bank.8

Accordingly, Amando Macalino (Macalino) was appointed as President of the respondent bank on 21
December 1998. In view of Macalino’s appointment, the designation of petitioner as Officer-In-
Charge and caretaker of respondent bank was recalled; however, his appointment as Acting
Assistant Vice-President, was retained.9
In line with its policy to attain financial stability, respondent bank adopted measures directed to cut
down administrative overhead expenses through streamlining. Thus, respondent bank came up with
an early voluntary retirement program. On 15 April 2001, petitioner opted to avail himself of this
retirement package, supposedly, under protest, and received the amount of ₱1.324 Million as
retirement pay.10

On 11 July 2002, petitioner filed a complaint against the respondent bank and Macalino for
constructive dismissal and underpayment of wages, 13th month pay and retirement benefits before
the Labor Arbiter.11 In his Position Paper,12 petitioner alleged that due to discrimination, unfair
treatment, and intense pressure he had received from the new management through Macalino, he
was forced to retire at the prime of his life.

In a Decision13 dated 30 June 2003, the Labor Arbiter adjudged the respondent bank guilty of illegal
dismissal, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered, finding complainant to have been illegally dismissed.
Concomitantly, Respondents are jointly and solidarily liable to pay RICARDO PORTUGUEZ the
following:

₱1,148,333.33 – representing backwages;

1,280,000.00 – representing separation pay;
443,884.32 – representing salary differentials;
500,000.00 – representing moral damages;
400,000.00 – representing exemplary damages;

Ten percent of the total award as attorney’s fees.

Other claims are dismissed for lack of merit.

The detailed computation of the Computation & Examination Unit, National Capital Region is made
part of this Decision.14

Aggrieved, respondent bank appealed the adverse decision to the NLRC which adopted in toto the
findings of the Labor Arbiter. In a Decision15 dated 30 January 2004, the NLRC dismissed the appeal
and found the decision of the Labor Arbiter to be sufficiently supported by the facts on record and
law on the matter.

Respondent bank’s Motion for Reconsideration was likewise denied by the NLRC in its
Resolution16 dated 22 June 2004 for failing to show that patent or palpable errors have been
committed in the assailed decision.

The NLRC Resolution dated 22 June 2004, denying respondent bank’s motion for reconsideration,
was prematurely declared final and executory and was entered into judgment on 6 August 2004.17

Shortly thereafter, on 16 August 2004, respondent bank timely elevated the matter to the Court of
Appeals through a Special Civil Action for Certiorari18 under Rule 65 of the Revised Rules of Court.
Incorporated with its petition was the Urgent Application for the Issuance of Temporary Restraining
Order (TRO) and/or Writ of Preliminary Injunction.
Pending resolution of its petition and application for the issuance of TRO and/or writ of preliminary
injunction before the appellate court, the Labor Arbiter, on 16 September 2004, issued a Writ of
Execution19 for the satisfaction of the NLRC decision dated 30 January 2004. On the same date, a
Notice of Garnishment20 was served on the manager/cashier of respondent bank in the Pamplona
Uno, Las Piñas City Branch.

Acting on the application for TRO, the Court of Appeals enjoined the implementation of the NLRC
decision dated 30 January 2004 and therefore, the satisfaction of the Writ of Execution dated 16
September 2004 issued by the Labor Arbiter was tolled for a period of 60 days.21

Eventually, the appellate court issued a Writ of Preliminary Injunction22 permanently enjoining the
execution of the NLRC decision dated 30 January 2004 until the final resolution of the case.

On 25 April 2005, the Court of Appeals resolved the controversy by reversing the judgment of the
Labor Arbiter and the NLRC and ruling out constructive dismissal considering that petitioner’s
separation from service was voluntary on his part when he chose to avail himself of the respondent
bank’s early retirement program and received the amount of ₱1.324 Million as retirement pay.23

Similarly ill-fated was Petitioner’s Motion for Reconsideration which was denied by the Court of
Appeals in its Resolution24 dated 25 August 2005.

Hence, this instant Petition for Review on Certiorari.25

For the resolution of this Court are the following issues:

I.

WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT DECLARED THAT

PETITIONER WAS NOT CONSTRUCTIVELY DISMISSED FROM EMPLOYMENT.

II.

WHETHER OR NOT THE COURT OF APPEALS ERRED WHEN IT DECLARED THAT

PETITIONER IS NOT ENTITLED TO SALARY DIFFERENTIAL.

Before we delve into the merits of the case, it is best to underscore that the factual findings of the
NLRC affirming those of the Labor Arbiter, who are deemed to have acquired expertise on the
matters within their jurisdiction, when sufficiently supported by evidence on record, are accorded
respect if not finality, and are considered binding on this Court.26 It is equally true, however, that
when the findings of the Labor Arbiter and the NLRC are inconsistent with that of the Court of
Appeals, there is a need to review the records to determine which of them should be preferred as
more conformable to evidentiary facts.27

As borne by the records, it appears that there is a divergence between the findings of the Labor
Arbiter as affirmed by the NLRC, and those of the Court of Appeals. For the purpose of clarity and
intelligibility, therefore, this Court will make an infinitesimal scrunity of the records and recalibrate
and reevaluate the evidence presented by the parties all over again.

We have already repeatedly held that this Court is not a trier of facts. Rule 45 of the Revised Rules
of Court limits the office of a Petition for Review to questions of law and leaves the factual issues as
found by the quasi-judicial bodies, as long as they are supported by evidence.28 We never fail to
stress as well that when the rulings of the labor tribunal and the appellate court are in conflict, we are
constrained to analyze and weigh the evidence again.29

Substantively, petitioner alleges that respondent bank, through Macalino, subjected him to all forms
of unbearable harassment that can be mustered in order to force him to resign. Petitioner specifically
claims that he was deprived of his salary and other benefits and privileges appurtenant to his
position as the Acting Assistant Vice-President, including his office. Respondent bank allegedly
granted much higher salary to the newly hired bank officers compared to what he was receiving
during his tenure.

In contrast, respondent bank maintains that petitioner was not coerced to resign but voluntarily opted
to avail himself of the early retirement program and was duly paid his retirement benefits. It posits
that petitioner was merely holding the position of Assistant Vice-President in acting capacity subject
to the ratification of the respondent bank’s Board of Directors and since his appointment has never
been ratified by the Board, respondent bank cannot therefore grant him the salary and benefits
accorded to such position.

In finding that petitioner was not constructively dismissed from employment, the Court of Appeals
stressed that there was no showing that petitioner’s separation from employment was due to
involuntary resignation or forced severance. Neither was it shown that there was a decrease in
salary and privileges or downgrading of petitioner’s rank. What can be clearly deduced from the
evidence was that until his voluntary retirement in 2001, petitioner was holding the position of Acting
Assistant Vice-President and was receiving the salary and benefits accorded thereto.

After scrupulously examining the contrasting positions of the parties, and the conflicting decisions of
the Labor Arbiter and the NLRC, on one hand, and the appellate court, on the other, we find the
records of the case bereft of evidence to substantiate the conclusions reached by both the Labor
Arbiter and the NLRC that petitioner was constructively dismissed from employment.

Constructive dismissal or constructive discharge has been defined as quitting because continued
employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in
rank and a diminution in pay. 30 In the case at bar, a demotion in rank or diminution in pay was never
raised as an issue. Settled then is the fact that petitioner suffered no demotion in rank or diminution
in pay that could give rise to a cause of action against respondent bank for constructive dismissal
under this definition.

Worthy to stress, however, is that constructive dismissal does not always take the form of demotion
in rank or diminution in pay. In several cases, we have ruled that the act of a clear discrimination,
insensibility or disdain by an employer may become so unbearable on the part of the employee so
as to foreclose any choice on his part except to resign from such employment.31

It is upon the aforementioned legal tenet that petitioner anchored his case. Petitioner strenuously
argues that while the newly hired bank officers were given higher salaries and fat allowances, he
was merely paid the amount of ₱15,000 basic pay and ₱4,000 allowance for the position of Acting
Assistant Vice-President which, according to him, was way below what the newly hired bank officers
were enjoying. Stated differently, petitioner avers that he was discriminated against by the
respondent bank in terms of payment of salary and grant of benefits and allowances.

We do not agree.

Upon careful perusal of the position papers, memoranda and other pleadings submitted by petitioner
from the Labor Arbiter up to this Court, including the evidence appended thereon, we find that no
evidence, substantial or otherwise, was ever submitted by petitioner to buttress the very premise of
his position that there was discrimination.

Discrimination has been defined as the failure to treat all persons equally when no reasonable
distinction can be found between those favored and those not favored.32 Thus, before a claim for
discrimination can prosper, it must be established that, first, there is no reasonable distinction or
classification that can be obtained between persons belonging to the same class, and second,
persons belonging to the same class have not been treated alike.33

Apropos thereto, petitioner failed to establish that he possessed the same skills, competencies and
expertise as those of the newly hired bank officers so as to eliminate any possibility of substantial
distinction that may warrant the unequal treatment between them. No proof was likewise presented
by petitioner to show that the functions, duties and responsibilities he was performing are the same
as those of the newly hired bank officers.

Petitioner likewise failed to present any proof tending to show that he was discriminated against by
the respondent bank. While he vigorously cried that the newly hired bank officers were afforded
higher salaries and benefits compared to what he was earning, petitioner, however, miserably failed
to substantiate his claim. No evidence was ever offered by petitioner to prove the amount of salaries
and bonuses actually enjoyed by the newly hired bank officers, except for his bare allegations
contained in his demand letter34 dated 20 February 2001, to wit:

Mr. Portuguez has reliably learned that Bank records could show that your newly hired officers are
being paid the basic salaries in the range of ₱25,000 to ₱30,000.35

Such bare and sweeping statement contains nothing but empty imputation of a fact that could hardly
be given any evidentiary weight by this Court. It is indeed true that the demand letter made reference
to bank records upon which petitioner purportedly derived his allegation but no such bank records
were ever presented as evidence at any stage of the proceedings.

Indubitably, such self-serving and unsubstantiated declaration is insufficient to establish a case

before quasi-judicial bodies. Well-entrenched is the rule that the quantum of evidence required to
establish a fact in quasi-judicial bodies is substantial evidence. Substantial evidence is such amount
of relevant evidence which a reasonable mind might accept as adequate to support a conclusion,
even if other equally reasonable minds might opine otherwise.36

It is beyond question that the evidence presented by petitioner cannot be considered as substantial
evidence. Verily, petitioner’s case is devoid of substance to convince even the unreasonable minds,
for evidently the records are stripped of supporting proofs to, at the very least, even just verify his
claim.

In addition, petitioner asseverates that in cases of constructive dismissal, the burden of proof rests
on the employer to show that the employee was dismissed on a valid and just cause.37 And failing to
discharge such presumption, as in the case at bar, respondent bank should be adjudged guilty of
illegal dismissal.

Again, we are not persuaded. We are not unaware of the statutory rule that in illegal dismissal
cases, the employer has the onus probandi to show that the employee’s separation from
employment is not motivated by discrimination, made in bad faith, or effected as a form of
punishment or demotion without sufficient cause.38 It bears stressing, however, that this legal
principle presupposes that there is indeed an involuntary separation from employment and the facts
attendant to such forced separation was clearly established.
This legal principle has no application in the instant controversy for as we have succinctly pointed
above, petitioner failed to establish that indeed he was discriminated against and on account of such
discrimination, he was forced to sever his employment from the respondent bank. What is
undisputed is the fact that petitioner availed himself of respondent bank’s early voluntary retirement
program and accordingly received his retirement pay in the amount of ₱1.324 Million under such
program. Consequently, the burden of proof will not vest on respondent bank to prove the legality of
petitioner’s separation from employment but aptly remains with the petitioner to prove his allegation
that his availment of the early voluntary retirement program was, in fact, done involuntarily.

As we have explicitly ruled in Machica v. Roosevelt Service Center, Inc.39:

The rule is that one who alleges a fact has the burden of proving it; thus, petitioners were
burdened to prove their allegation that respondents dismissed them from their employment. It must
be stressed that the evidence to prove this fact must be clear, positive and convincing. The
rule that the employer bears the burden of proof in illegal dismissal cases finds no application here
because the respondents deny having dismissed the petitioners. (Emphases supplied.)

Verily, petitioner did not present any clear, positive or convincing evidence in the present case to
support his claims. Indeed, he never presented any evidence at all other than his own self-serving
declarations. We must bear in mind the legal dictum that, "he who asserts, not he who denies,
must prove."40

In the same breath, we are constrained to deny petitioner’s claim for salary differentials. We are not
unmindful that the amount of ₱19,000 a month may not be commensurate compensation to the
position of Acting Assistant Vice-President, but in the case at bar, the facts and the evidence did not
establish even at least a rational basis for how much the standard compensation for the said position
must be. It is not enough that petitioner perceived that he was receiving a very low salary in the
absence of a comparative standard upon which he can peg his supposed commensurate
compensation.

Petitioner’s incessant reliance on the findings of the Labor Arbiter and the NLRC is equally
unavailing. At the outset, we have already laid down that findings of fact of quasi-judicial bodies are
conclusive and are not subject to review by the Court. However, this rule does not apply if such
findings are tainted with mistake or not supported by evidence. 41

In finding that respondent bank is guilty of constructive dismissal, the Labor Arbiter mainly hinges its
ruling on the Constitutional dogma that due to the lopsided power of capital over labor, the State
shall intervene as an equalizer consistent with the social justice policy affording protection to labor.42

While we agree with the Labor Arbiter that in light of this Constitutional mandate, we must be vigilant
in striking down any attempt of the management to exploit or oppress the working class, it does not
mean, however, that we are but bound to uphold the working class in every labor dispute brought
before this Court for our resolution.

While our laws endeavor to give life to the constitutional policy on social justice and on the protection
of labor, it does not mean that every labor dispute will be decided in favor of the workers. The law
also recognizes that management has rights which are also entitled to respect and enforcement in
the interest of fair play.43

It should be remembered that the Philippine Constitution, while inexorably committed towards the
protection of the working class from exploitation and unfair treatment, nevertheless mandates the
policy of social justice so as to strike a balance between an avowed predilection for labor, on the one
hand, and the maintenance of the legal rights of capital, the proverbial hen that lays the golden egg,
on the other. Indeed, we should not be unmindful of the legal norm that justice is in every case for
the deserving, to be dispensed with in light of established facts, the applicable law, and existing
jurisprudence.44

The presumption in favor of labor cannot defeat the very purpose for which our labor laws exist: to
balance the conflicting interest of labor and management and to guaranty that labor and
management stand on equal footing when bargaining in good faith with each other, not to tilt the
scale to favor one over the other.

WHEREFORE, in view of the foregoing, the instant petition is DENIED. The Decision dated 25 April
2005, and the Resolution dated 25 August 2005, both rendered by the Court of Appeals in CA-G.R.
SP No. 85723, are hereby AFFIRMED. No costs.

SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

MA. ALICIA AUSTRIA-MARTINEZ ROMEO J. CALLEJO, SR.

Associate Justice Asscociate Justice

ANTONIO EDUARDO B. NACHURA

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision were reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, it
is hereby certified that the conclusions in the above Decision were reached in consultation before
the case was assigned to the writer of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice

Footnotes

1Penned by Associate Justice Conrado M. Vasquez, Jr. with Associate Justices Josefina
Guevara-Salonga and Fernanda Lampas Peralta, concurring.

2 Rollo, p. 61.

3 Id. at 59.

4 Id. at 13.

5 Id.

6 Id.

7 Id. at 276.

8 Id.

9 Id.

10 Id. at 53.

11 Id. at 62.

12 Id. at 63-90.

13 Id. at 107-134.

14
Id. at 133-134.

15 Id. at 153-157.

16 Id. at 182-183.

17 Id. at 184.

18 CA rollo, pp. 2-22.

Under Section 4, Rule 65 of the Revised Rules of Court, the Petition shall be filed not
later than sixty (60) days from notice of judgment, order or resolution. In case a
motion for reconsideration or new trial is timely filed, whether such motion is required
or not, the sixty (60)-day period shall be counted from notice of the denial of said
motion.
 The NLRC Decision dated 30 January 2004 was received by respondent bank on 20
April 2004. On 29 April 2004, respondent bank filed a Motion for Reconsideration. On
22 June 2004, the NLRC issued a Resolution denying respondent bank’s motion for
reconsideration, a copy of which was received by the respondent bank on 20 July
2004. Pursuant to Section 4, Rule 65 of the Revised Rules of Court, respondent bank
has sixty (60) days or until 18 September 2004, within which to file the Petition for
Certiorari.

19 Rollo, pp. 205-208.

20 Id. at 209.

21 Id. at 210-211.

22 Id. at 233-235.

23 Id. at 52-60.

24 Id. at 61.

25 Id. at 9-51.

26Bolinao Security and Investigation Service, Inc. v. Toston, G.R. No. 139135, 29 January
2004, 421 SCRA 406, 412.

27Philippine American Life Gen. Insurance Co. v. Gramaje, G.R. No. 156963, 11 November
2004, 442 SCRA 274, 284-285.

28Dusit Hotel Nikko v. National Union of Workers in Hotel Restaurant and Allied Industries
(NUWHRAIN)-Dusit Hotel NIkko Chapter, G.R. No. 160391, 9 August 2005, 466 SCRA 374,
387-388.

29J.A.T. General Services v. National Labor Relations Commission, G.R. No. 148340, 26
January 2004, 421 SCRA 78, 90.

30Unicorn Safety Glass, Inc. v. Basarte, G.R. No. 154689, 25 November 2004, 444 SCRA
287, 294-295.

31 Id.

32 Philippine American Life Gen. Insurance Co. v. Gramaje, supra note 27 at 284-285.

Wise and Co., Inc. v. Wise and Co., Inc. Employees Union-NATU, G.R. No. 87672, 13
33

October 1989, 178 SCRA 536, 539.

34 Rollo, p. 80.

35 Id.

36 Vertudes v. Buenaflor, G.R. No. 153166, 16 December 2005, 478 SCRA 210, 230.
 37 Suldao v. Cimtech System Construction, Inc., G.R. No. 171392, 30 October 2006.

38 Mendoza v. Rural Bank of Lucban, G.R. No. 155421, 7 July 2004, 433 SCRA 756, 766.

39 G.R. No. 168664, 4 May 2006, 489 SCRA 534, 544-545.

40 Kar Asia, Inc. v. Corona, G.R. No. 154985, 24 August 2004, 437 SCRA 184, 189.

41 J.A.T. General Services v. National Labor Relations Commission, supra note 29.

42 Rollo, pp. 114-115.

43Duncan Association of Detailman-PTGWO v. Glaxo Wellcome Philippines, Inc., G.R. No.

162994, 17 September 2004, 438 SCRA 343, 353.

44 Cebu Metal Corporation v. Roberto Saliling, G. R. No. 154463, 5 September 2006.

12) Bondoc vs. CIR GR No. 33955 Jan.26,1989

FIRST DIVISION

[G.R. No. 33955. January 26, 1989.]

FORTUNATO DA. BONDOC, Petitioner, v. COURT OF INDUSTRIAL RELATIONS PHILIPPINE

NATIONAL RAILWAYS AND LIBERTADO S. CASTRO, Respondents.

The Government Corporate Counsel for respondent Phil. National Railways.

13) SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; APPEAL; FINDINGS OF FACT OF COURT OF INDUSTRIAL

RELATIONS ARE ACCORDED FULL RESPECT BY SUPREME COURT IF SUPPORTED BY SUBSTANTIAL
EVIDENCE. — We have, time and again, ruled that findings of fact of the CIR are accorded full
respect by the Supreme Court if supported by substantial evidence (Community Sawmill Company
v. CIR, 89 SCRA 164; Dy Keh Beng v. International Labor & Marine Union of the Phil., 90 SCRA 162;
Lirag Textile Mills, Inc. v. Blanco, 109 SCRA 97). In this case, We find no reason to depart from that
doctrine.

DECISION

GRIÑO-AQUINO, J.:

This is a petition for review of the order dated January 11, 1971 of the Court of Industrial Relations
(CIR for short), dismissing the charge of unfair labor practice against the private respondents in
Case No. 4927-ULP, as well as the Resolution dated March 2, 1971 of that court, denying
petitioner’s motion for reconsideration.

On January 10, 1968, a complaint for unfair labor practices under Section 4(a), sub-sections 4 and
5 of Republic Act No. 875 was filed by the Acting Prosecutor of the CIR against the private
respondents based on the complaint of petitioner Fortunato Da. Bondoc charging the private
respondents with having discriminated against him in the giving of promotions to its employees
 because he was not a member of any labor organization. Bondoc prayed for a cease and desist
order against the respondents and for his promotion to the position of General Road Foreman
effective July 1, 1962 with the corresponding salary and benefits.

The private respondents denied the material allegations of the complaint and, on July 1, 1968, filed
a motion to dismiss the complaint for failure to allege a valid cause of action. The CIR deferred the
resolution of the motion until after it had heard the merits of the case.

Petitioner presented evidence in the CIR to show that, in derogation of his seniority, rank,
competence, and fitness, and because he did not belong to any labor union, private respondents
discriminated against him by promoting and appointing Simeon Mendoza on July 1, 1962 to the
position of Road Foreman of the engineering Department, instead of him. Again, on January 1,
1965, Simeon Mendoza, instead of petitioner, was promoted to the position of General Road
Foreman of the Engineering Department. Private respondents paid no heed to petitioner’s protests
against such discrimination. Instead of promoting him, the private respondents assigned him at the
Hearing Committee without per diems. When Simeon Mendoza retired as General Road Foreman,
private respondents appointed someone else — Simeon Malinay — to the vacant position, by-
passing the petitioner. Finally, private respondents subdivided the Central Division of the
Engineering Department, thereby reducing petitioner’s area of responsibility. Petitioner alleged he
had exhausted all his administrative remedies in vain. chanrob les vi rtua l lawlib ra ry

Answering the complaint, the private respondents alleged that petitioner was not next-in-rank to
the position of Road Foreman; that based on individual work merits and the Revised Civil Service
Rules, Mendoza and Malinay obtained higher ratings than the petitioner; that Mendoza was
promoted to Assistant General Foreman because he was next-in-rank; that Simeon Malinay was
next-in-rank to Simeon Mendoza; that when the position of General Road Foreman became vacant,
Mendoza was recommended for the position but his retirement precluded his appointment thereto;
that the position of General Road Foreman was later abolished; that the reorganization was for the
best interest of the company; that contrary to petitioner’s allegation, his transfer to the Hearing
Committee was done at his own request. As for per diems, he was paid for the first month, but he
was not paid per diems for services rendered in excess of one month because it would have been
contrary to law, rules and regulations.

As aptly put by the CIR, the issue in this case is whether or not the private respondents were guilty
of unfair labor practice under Section 4 (a) (4) of Republic Act 875, otherwise known as the
Industrial Peace Act, which provides: red:cha nrob les.com. ph

"SEC. 4. Unfair Labor Practices. —

"(a) It shall be unfair labor practice for an employer: cha nrob 1es vi rtua l 1aw lib rary

14) x x x
15)

"(4) To discriminate in regard to hire or tenure of employment or any term or condition of

employment to encourage or discourage membership in any labor organization; . . . (As amended
by R.A. No. L-3350, approved June 17, 1961)." cralaw virt ua1aw lib ra ry

In dismissing the charge of unfair labor practice, the CIR found that the alleged discriminatory acts
against the petitioner did not arise from union membership or activity because he was not in fact a
union member.

Petitioner’s allegation that he was discriminated against to force him to join a labor organization is
unconvincing since no specific union was mentioned in his complaint. It is unbelievable that the
private respondents would harass and oppress him to force him to join any labor union for We do
not see how that can possibly be advantageous to the former.

The petitioner does not show how or why the CIR Order allegedly conflicts with the evidence
presented at the trial. We have, time and again, ruled that findings of fact of the CIR are accorded
full respect by the Supreme Court if supported by substantial evidence (Community Sawmill
Company v. CIR, 89 SCRA 164; Dy Keh Beng v. International Labor & Marine Union of the Phil., 90
SCRA 162; Lirag Textile Mills, Inc. v. Blanco, 109 SCRA 97). In this case, We find no reason to
depart from that doctrine.
 WHEREFORE, the petition for review is denied for lack of merit.

Narvasa, Cruz, Gancayco and Medialdea, JJ., concur.

13) BPI vs. BPI Employees GR No. 164301 Aug.10,2010

Republic of the Philippines

Supreme Court
Manila

EN BANC

BANK OF THE PHILIPPINE G.R. No. 164301

ISLANDS,

Petitioner, Present:

CORONA, C.J.,
CARPIO,
CARPIO MORALES,
VELASCO, JR.,*
NACHURA,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
- versus - DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
 PEREZ, and
MENDOZA, JJ.

Promulgated:

August 10, 2010

BPI EMPLOYEES UNION-DAVAO
CHAPTER-FEDERATION OF
UNIONS
IN BPI UNIBANK,

Respondent.

x------------------------------------------------x

DECISION

LEONARDO-DE CASTRO, J.:

May a corporation invoke its merger with another corporation as a valid ground
to exempt its absorbed employees from the coverage of a union shop clause
contained in its existing Collective Bargaining Agreement (CBA) with its own
certified labor union? That is the question we shall endeavor to answer in this
petition for review filed by an employer after the Court of Appeals decided in
favor of respondent union, which is the employees recognized collective
bargaining representative.
 At the outset, we should call to mind the spirit and the letter of the Labor
Code provisions on union security clauses, specifically Article 248 (e), which
states, x x x Nothing in this Code or in any other law shall stop the parties from
requiring membership in a recognized collective bargaining agent as a condition
for employment, except those employees who are already members of another
union at the time of the signing of the collective bargaining agreement.[1] This
case which involves the application of a collective bargaining agreement with a
union shop clause should be resolved principally from the standpoint of the clear
provisions of our labor laws, and the express terms of the CBA in question, and
not by inference from the general consequence of the merger of corporations
under the Corporation Code, which obviously does not deal with and, therefore, is
silent on the terms and conditions of employment in corporations or juridical
entities.

This issue must be resolved NOW, instead of postponing it to a future time

when the CBA is renegotiated as suggested by the Honorable Justice Arturo D.
Brion because the same issue may still be resurrected in the renegotiation if the
absorbed employees insist on their privileged status of being exempt from any
union shop clause or any variant thereof.

We find it significant to note that it is only the employer, Bank of the Philippine
Islands (BPI), that brought the case up to this Court via the instant petition for
review; while the employees actually involved in the case did not pursue the same
relief, but had instead chosen in effect to acquiesce to the decision of the Court of
Appeals which effectively required them to comply with the union shop clause
under the existing CBA at the time of the merger of BPI with Far East Bank and
Trust Company (FEBTC), which decision had already become final and executory
as to the aforesaid employees. By not appealing the decision of the Court of
Appeals, the aforesaid employees are bound by the said Court of Appeals decision
to join BPIs duly certified labor union. In view of the apparent acquiescence of the
affected FEBTC employees in the Court of Appeals decision, BPI should not have
pursued this petition for review. However, even assuming that BPI may do so, the
same still cannot prosper.

What is before us now is a petition for review under Rule 45 of the Rules of Court
of the Decision[2] dated September 30, 2003 of the Court of Appeals, as reiterated
in its Resolution[3] of June 9, 2004, reversing and setting aside the
Decision[4] dated November 23, 2001 of Voluntary Arbitrator Rosalina Letrondo-
Montejo, in CA-G.R. SP No. 70445, entitled BPI Employees Union-Davao Chapter-
Federation of Unions in BPI Unibank v. Bank of the Philippine Islands, et al.

The antecedent facts are as follows:

On March 23, 2000, the Bangko Sentral ng Pilipinas approved the Articles of
Merger executed on January 20, 2000 by and between BPI, herein petitioner, and
FEBTC.[5] This Article and Plan of Merger was approved by the Securities and
Exchange Commission on April 7, 2000.[6]

Pursuant to the Article and Plan of Merger, all the assets and liabilities of FEBTC
were transferred to and absorbed by BPI as the surviving corporation. FEBTC
employees, including those in its different branches across the country, were
hired by petitioner as its own employees, with their status and tenure recognized
and salaries and benefits maintained.

Respondent BPI Employees Union-Davao Chapter - Federation of Unions in BPI

Unibank (hereinafter the Union, for brevity) is the exclusive bargaining agent of
BPIs rank and file employees in Davao City. The former FEBTC rank-and-file
employees in Davao City did not belong to any labor union at the time of the
merger.Prior to the effectivity of the merger, or on March 31, 2000, respondent
Union invited said FEBTC employees to a meeting regarding the Union Shop
Clause (Article II, Section 2) of the existing CBA between petitioner BPI and
respondent Union.[7]

The parties both advert to certain provisions of the existing CBA, which are
quoted below:

ARTICLE I
Section 1. Recognition and Bargaining Unit The BANK recognizes the UNION as
the sole and exclusive collective bargaining representative of all the regular rank
and file employees of the Bank offices in Davao City.

Section 2. Exclusions

Section 3. Additional Exclusions

Section 4. Copy of Contract

ARTICLE II

Section 1. Maintenance of Membership All employees within the bargaining unit who
are members of the Union on the date of the effectivity of this Agreement as well as
employees within the bargaining unit who subsequently join or become members of the
Union during the lifetime of this Agreement shall as a condition of their continued
employment with the Bank, maintain their membership in the Union in good standing.

Section 2. Union Shop - New employees falling within the bargaining unit as defined in
Article I of this Agreement, who may hereafter be regularly employed by the Bank
shall, within thirty (30) days after they become regular employees, join the Union as a
condition of their continued employment. It is understood that membership in good
standing in the Union is a condition of their continued employment with the
Bank.[8] (Emphases supplied.)
 After the meeting called by the Union, some of the former FEBTC
employees joined the Union, while others refused. Later, however, some of
those who initially joined retracted their membership.[9]

Respondent Union then sent notices to the former FEBTC employees who
refused to join, as well as those who retracted their membership, and called them
to a hearing regarding the matter. When these former FEBTC employees refused
to attend the hearing, the president of the Union requested BPI to implement the
Union Shop Clause of the CBA and to terminate their employment pursuant
thereto.[10]

After two months of management inaction on the request, respondent

Union informed petitioner BPI of its decision to refer the issue of the
implementation of the Union Shop Clause of the CBA to the Grievance
Committee. However, the issue remained unresolved at this level and so it was
subsequently submitted for voluntary arbitration by the parties.[11]

Voluntary Arbitrator Rosalina Letrondo-Montejo, in a Decision[12] dated

November 23, 2001, ruled in favor of petitioner BPIs interpretation that the
former FEBTC employees were not covered by the Union Security Clause of the
CBA between the Union and the Bank on the ground that the said employees
were not new employees who were hired and subsequently regularized, but were
absorbed employees by operation of law because the former employees of FEBTC
can be considered assets and liabilities of the absorbed corporation. The
Voluntary Arbitrator concluded that the former FEBTC employees could not be
compelled to join the Union, as it was their constitutional right to join or not to
join any organization.

Respondent Union filed a Motion for Reconsideration, but the Voluntary

Arbitrator denied the same in an Order dated March 25, 2002.[13]
 Dissatisfied, respondent then appealed the Voluntary Arbitrators decision to
the Court of Appeals. In the herein assailed Decision dated September 30, 2003,
the Court of Appeals reversed and set aside the Decision of the Voluntary
Arbitrator.[14] Likewise, the Court of Appeals denied herein petitioners Motion for
Reconsideration in a Resolution dated June 9, 2004.

The Court of Appeals pertinently ruled in its Decision:

A union-shop clause has been defined as a form of union security provision

wherein non-members may be hired, but to retain employment must become union
members after a certain period.

There is no question as to the existence of the union-shop clause in the CBA

between the petitioner-union and the company. The controversy lies in its application to
the absorbed employees.

This Court agrees with the voluntary arbitrator that the ABSORBED employees
are distinct and different from NEW employees BUT only in so far as their employment
service is concerned. The distinction ends there. In the case at bar, the absorbed
employees length of service from its former employer is tacked with their employment
with BPI.Otherwise stated, the absorbed employees service is continuous and there is
no gap in their service record.

This Court is persuaded that the similarities of new and absorbed employees far
outweighs the distinction between them. The similarities lies on the following, to wit: (a)
they have a new employer; (b) new working conditions; (c) new terms of employment
and; (d) new company policy to follow. As such, they should be considered as new
employees for purposes of applying the provisions of the CBA regarding the union-shop
clause.
 To rule otherwise would definitely result to a very awkward and unfair situation
wherein the absorbed employees shall be in a different if not, better situation than the
existing BPI employees. The existing BPI employees by virtue of the union-shop clause
are required to pay the monthly union dues, remain as members in good standing of the
union otherwise, they shall be terminated from the company, and other union-related
obligations. On the other hand, the absorbed employees shall enjoy the fruits of labor of
the petitioner-union and its members for nothing in exchange. Certainly, this would
disturb industrial peace in the company which is the paramount reason for the existence
of the CBA and the union.

The voluntary arbitrators interpretation of the provisions of the CBA concerning

the coverage of the union-shop clause is at war with the spirit and the rationale why the
Labor Code itself allows the existence of such provision.

The Supreme Court in the case of Manila Mandarin Employees Union vs. NLRC
(G.R. No. 76989, September 29, 1987) rule, to quote:

This Court has held that a valid form of union security, and such
a provision in a collective bargaining agreement is not a restriction of
the right of freedom of association guaranteed by the Constitution.

A closed-shop agreement is an agreement whereby an

employer binds himself to hire only members of the contracting union
who must continue to remain members in good standing to keep their
jobs. It is THE MOST PRIZED ACHIEVEMENT OF UNIONISM. IT ADDS
MEMBERSHIP AND COMPULSORY DUES. By holding out to loyal
members a promise of employment in the closed-shop, it wields group
solidarity. (Emphasis supplied)

Hence, the voluntary arbitrator erred in construing the CBA literally at the
expense of industrial peace in the company.
 With the foregoing ruling from this Court, necessarily, the alternative prayer of
the petitioner to require the individual respondents to become members or if they
refuse, for this Court to direct respondent BPI to dismiss them, follows.[15]

Hence, petitioners present recourse, raising the following issues:

I
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN
RULING THAT THE FORMER FEBTC EMPLOYEES SHOULD BE
CONSIDERED NEW EMPLOYEES OF BPI FOR PURPOSES OF APPLYING
THE UNION SHOP CLAUSE OF THE CBA

II
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN
FINDING THAT THE VOLUNTARY ARBITRATORS INTERPRETATION
OF THE COVERAGE OF THE UNION SHOP CLAUSE IS AT WAR WITH
THE SPIRIT AND THE RATIONALE WHY THE LABOR CODE ITSELF
ALLOWS THE EXISTENCE OF SUCH PROVISION[16]

In essence, the sole issue in this case is whether or not the former FEBTC
employees that were absorbed by petitioner upon the merger between FEBTC
and BPI should be covered by the Union Shop Clause found in the existing CBA
between petitioner and respondent Union.

Petitioner is of the position that the former FEBTC employees are not new
employees of BPI for purposes of applying the Union Shop Clause of the CBA, on
this note, petitioner points to Section 2, Article II of the CBA, which provides:

New employees falling within the bargaining unit as defined in Article I of this
Agreement, who may hereafter be regularly employed by the Bank shall, within thirty
(30) days after they become regular employees, join the Union as a condition of their
continued employment. It is understood that membership in good standing in the
 Union is a condition of their continued employment with the Bank.[17] (Emphases
supplied.)

Petitioner argues that the term new employees in the Union Shop Clause of
the CBA is qualified by the phrases who may hereafter be regularly employed and
after they become regular employees which led petitioner to conclude that the
new employees referred to in, and contemplated by, the Union Shop Clause of
the CBA were only those employees who were new to BPI, on account of having
been hired initially on a temporary or probationary status for possible regular
employment at some future date. BPI argues that the FEBTC employees absorbed
by BPI cannot be considered as new employees of BPI for purposes of applying
the Union Shop Clause of the CBA.[18]

According to petitioner, the contrary interpretation made by the Court of

Appeals of this particular CBA provision ignores, or even defies, what petitioner
assumes as its clear meaning and scope which allegedly contradicts the Courts
strict and restrictive enforcement of union security agreements.

We do not agree.

Section 2, Article II of the CBA is silent as to how one becomes a regular

employee of the BPI for the first time. There is nothing in the said provision
which requires that a new regular employee first undergo a temporary or
probationary status before being deemed as such under the union shop clause
of the CBA.

Union security is a generic term which is applied to and comprehends closed

shop, union shop, maintenance of membership or any other form of agreement
which imposes upon employees the obligation to acquire or retain union
membership as a condition affecting employment. There is union shop when all
new regular employees are required to join the union within a certain period for
their continued employment. There is maintenance of membership shop when
employees, who are union members as of the effective date of the agreement, or
who thereafter become members, must maintain union membership as a
condition for continued employment until they are promoted or transferred out
of the bargaining unit or the agreement is terminated. A closed-shop, on the
other hand, may be defined as an enterprise in which, by agreement between the
employer and his employees or their representatives, no person may be
employed in any or certain agreed departments of the enterprise unless he or she
is, becomes, and, for the duration of the agreement, remains a member in good
standing of a union entirely comprised of or of which the employees in interest
are a part.[19]
In the case of Liberty Flour Mills Employees v. Liberty Flour Mills, Inc.,[20] we
ruled that:

It is the policy of the State to promote unionism to enable the workers to

negotiate with management on the same level and with more persuasiveness than if
they were to individually and independently bargain for the improvement of their
respective conditions. To this end, the Constitution guarantees to them the rights to
self-organization, collective bargaining and negotiations and peaceful concerted actions
including the right to strike in accordance with law. There is no question that these
purposes could be thwarted if every worker were to choose to go his own separate way
instead of joining his co-employees in planning collective action and presenting a united
front when they sit down to bargain with their employers. It is for this reason that the
law has sanctioned stipulations for the union shop and the closed shop as a means of
encouraging the workers to join and support the labor union of their own choice as their
representative in the negotiation of their demands and the protection of their
interest vis--vis the employer. (Emphasis ours.)

In other words, the purpose of a union shop or other union security

arrangement is to guarantee the continued existence of the union through
enforced membership for the benefit of the workers.

All employees in the bargaining unit covered by a Union Shop Clause in their CBA
with management are subject to its terms. However, under law and
jurisprudence, the following kinds of employees are exempted from its
coverage, namely, employees who at the time the union shop agreement takes
effect are bona fide members of a religious organization which prohibits its
members from joining labor unions on religious grounds;[21] employees already in
the service and already members of a union other than the majority at the time
the union shop agreement took effect;[22] confidential employees who are
excluded from the rank and file bargaining unit;[23] and employees excluded from
the union shop by express terms of the agreement.

When certain employees are obliged to join a particular union as a requisite

for continued employment, as in the case of Union Security Clauses, this condition
is a valid restriction of the freedom or right not to join any labor organization
because it is in favor of unionism. This Court, on occasion, has even held that a
union security clause in a CBA is not a restriction of the right of freedom of
association guaranteed by the Constitution.[24]
Moreover, a closed shop agreement is an agreement whereby an employer binds
himself to hire only members of the contracting union who must continue to
remain members in good standing to keep their jobs. It is the most prized
achievement of unionism. It adds membership and compulsory dues. By holding
out to loyal members a promise of employment in the closed shop, it wields
group solidarity.[25]
Indeed, the situation of the former FEBTC employees in this case clearly
does not fall within the first three exceptions to the application of the Union Shop
Clause discussed earlier. No allegation or evidence of religious exemption or prior
membership in another union or engagement as a confidential employee was
presented by both parties. The sole category therefore in which petitioner may
prove its claim is the fourth recognized exception or whether the former FEBTC
employees are excluded by the express terms of the existing CBA between
petitioner and respondent.

To reiterate, petitioner insists that the term new employees, as the same is used
in the Union Shop Clause of the CBA at issue, refers only to employees hired by
BPI as non-regular employees who later qualify for regular employment and
become regular employees, and not those who, as a legal consequence of a
merger, are allegedly automatically deemed regular employees of BPI. However,
the CBA does not make a distinction as to how a regular employee attains such a
status.Moreover, there is nothing in the Corporation Law and the merger
agreement mandating the automatic employment as regular employees by the
surviving corporation in the merger.

It is apparent that petitioner hinges its argument that the former FEBTC
employees were absorbed by BPI merely as a legal consequence of a merger
based on the characterization by the Voluntary Arbiter of these absorbed
employees as included in the assets and liabilities of the dissolved corporation -
assets because they help the Bank in its operation and liabilities because
redundant employees may be terminated and company benefits will be paid to
them, thus reducing the Banks financial status. Based on this ratiocination, she
ruled that the same are not new employees of BPI as contemplated by the CBA at
issue, noting that the Certificate of Filing of the Articles of Merger and Plan of
Merger between FEBTC and BPI stated that x x x the entire assets and liabilities of
FAR EASTERN BANK & TRUST COMPANY will be transferred to and absorbed by
the BANK OF THE PHILIPPINE ISLANDS x x x (underlining supplied).[26] In sum, the
Voluntary Arbiter upheld the reasoning of petitioner that the FEBTC employees
became BPI employees by operation of law because they are included in the term
assets and liabilities.

Absorbed FEBTC Employees are Neither

Assets nor Liabilities

In legal parlance, however, human beings are never embraced in the term
assets and liabilities. Moreover, BPIs absorption of former FEBTC employees was
neither by operation of law nor by legal consequence of contract. There was no
government regulation or law that compelled the merger of the two banks or the
absorption of the employees of the dissolved corporation by the surviving
corporation. Had there been such law or regulation, the absorption of employees
of the non-surviving entities of the merger would have been mandatory on the
surviving corporation.[27] In the present case, the merger was voluntarily entered
into by both banks presumably for some mutually acceptable consideration. In
fact, the Corporation Code does not also mandate the absorption of the
employees of the non-surviving corporation by the surviving corporation in the
case of a merger. Section 80 of the Corporation Code provides:

SEC. 80. Effects of merger or consolidation. The merger or consolidation, as provided in

the preceding sections shall have the following effects:

1. The constituent corporations shall become a single corporation which, in case of

merger, shall be the surviving corporation designated in the plan of merger; and, in case
of consolidation, shall be the consolidated corporation designated in the plan of
consolidation;

2. The separate existence of the constituent corporations shall cease, except that of the
surviving or the consolidated corporation;

3. The surviving or the consolidated corporation shall possess all the rights, privileges,
immunities and powers and shall be subject to all the duties and liabilities of a
corporation organized under this Code;

4. The surviving or the consolidated corporation shall thereupon and thereafter possess
all the rights, privileges, immunities and franchises of each of the constituent
corporations; and all property, real or personal, and all receivables due on whatever
account, including subscriptions to shares and other choses in action, and all and every
other interest of, or belonging to, or due to each constituent corporation, shall be taken
and deemed to be transferred to and vested in such surviving or consolidated
corporation without further act or deed; and

5. The surviving or the consolidated corporation shall be responsible and liable for all
the liabilities and obligations of each of the constituent corporations in the same
manner as if such surviving or consolidated corporation had itself incurred such
liabilities or obligations; and any claim, action or proceeding pending by or against any
of such constituent corporations may be prosecuted by or against the surviving or
consolidated corporation, as the case may be. Neither the rights of creditors nor any lien
 upon the property of any of such constituent corporations shall be impaired by such
merger or consolidated.

Significantly, too, the Articles of Merger and Plan of Merger dated April 7, 2000
did not contain any specific stipulation with respect to the employment contracts
of existing personnel of the non-surviving entity which is FEBTC. Unlike the
Voluntary Arbitrator, this Court cannot uphold the reasoning that the general
stipulation regarding transfer of FEBTC assets and liabilities to BPI as set forth in
the Articles of Merger necessarily includes the transfer of all FEBTC employees
into the employ of BPI and neither BPI nor the FEBTC employees allegedly could
do anything about it. Even if it is so, it does not follow that the absorbed
employees should not be subject to the terms and conditions of employment
obtaining in the surviving corporation.

The rule is that unless expressly assumed, labor contracts such as employment contracts
and collective bargaining agreements are not enforceable against a transferee of an
enterprise, labor contracts being in personam, thus binding only between the parties. A
labor contract merely creates an action in personam and does not create any real right
which should be respected by third parties. This conclusion draws its force from the
right of an employer to select his employees and to decide when to engage them as
protected under our Constitution, and the same can only be restricted by law through
the exercise of the police power.[28]

Furthermore, this Court believes that it is contrary to public policy to

declare the former FEBTC employees as forming part of the assets or liabilities of
FEBTC that were transferred and absorbed by BPI in the Articles of Merger. Assets
and liabilities, in this instance, should be deemed to refer only to property rights
and obligations of FEBTC and do not include the employment contracts of its
personnel. A corporation cannot unilaterally transfer its employees to another
employer like chattel. Certainly, if BPI as an employer had the right to choose who
to retain among FEBTCs employees, FEBTC employees had the concomitant right
to choose not to be absorbed by BPI. Even though FEBTC employees had no
choice or control over the merger of their employer with BPI, they had a choice
whether or not they would allow themselves to be absorbed by BPI. Certainly
nothing prevented the FEBTCs employees from resigning or retiring and seeking
employment elsewhere instead of going along with the proposed absorption.

Employment is a personal consensual contract and absorption by BPI of a

former FEBTC employee without the consent of the employee is in violation of an
individuals freedom to contract. It would have been a different matter if there
was an express provision in the articles of merger that as a condition for the
merger, BPI was being required to assume all the employment contracts of all
existing FEBTC employees with the conformity of the employees. In the absence
of such a provision in the articles of merger, then BPI clearly had the business
management decision as to whether or not employ FEBTCs employees. FEBTC
employees likewise retained the prerogative to allow themselves to be absorbed
or not; otherwise, that would be tantamount to involuntary servitude.

There appears to be no dispute that with respect to FEBTC employees that

BPI chose not to employ or FEBTC employees who chose to retire or be separated
from employment instead of being absorbed, BPIs assumed liability to these
employees pursuant to the merger is FEBTCs liability to them in terms of
separation pay,[29] retirement pay[30] or other benefits that may be due them
depending on the circumstances.

Legal Consequences of Mergers

Although not binding on this Court, American jurisprudence on the

consequences of voluntary mergers on the right to employment and seniority
rights is persuasive and illuminating. We quote the following pertinent discussion
from the American Law Reports:

Several cases have involved the situation where as a result of mergers,

consolidations, or shutdowns, one group of employees, who had accumulated seniority
at one plant or for one employer, finds that their jobs have been discontinued except to
the extent that they are offered employment at the place or by the employer where the
work is to be carried on in the future. Such cases have involved the question whether
such transferring employees should be entitled to carry with them their accumulated
seniority or whether they are to be compelled to start over at the bottom of the seniority
list in the "new" job. It has been recognized in some cases that the accumulated seniority
does not survive and cannot be transferred to the "new" job.

In Carver v Brien (1942) 315 Ill App 643, 43 NE2d 597, the shop work of three
formerly separate railroad corporations, which had previously operated separate
facilities, was consolidated in the shops of one of the roads. Displaced employees of the
other two roads were given preference for the new jobs created in the shops of the
railroad which took over the work. A controversy arose between the employees as to
whether the displaced employees were entitled to carry with them to the new jobs the
seniority rights they had accumulated with their prior employers, that is, whether the
rosters of the three corporations, for seniority purposes, should be "dovetailed" or
whether the transferring employees should go to the bottom of the roster of their new
employer. Labor representatives of the various systems involved attempted to work out
an agreement which, in effect, preserved the seniority status obtained in the prior
employment on other roads, and the action was for specific performance of this
agreement against a demurring group of the original employees of the railroad which
was operating the consolidated shops. The relief sought was denied, the court saying
that, absent some specific contract provision otherwise, seniority rights were ordinarily
limited to the employment in which they were earned, and concluding that the contract
for which specific performance was sought was not such a completed and binding
agreement as would support such equitable relief, since the railroad, whose
concurrence in the arrangements made was essential to their effectuation, was not a
party to the agreement.

Where the provisions of a labor contract provided that in the event that a
trucker absorbed the business of another private contractor or common carrier, or was
a party to a merger of lines, the seniority of the employees absorbed or affected thereby
should be determined by mutual agreement between the trucker and the unions
involved, it was held in Moore v International Brotherhood of Teamsters, etc. (1962,
Ky) 356 SW2d 241, that the trucker was not required to absorb the affected employees
as well as the business, the court saying that they could find no such meaning in the
above clause, stating that it dealt only with seniority, and not with initial
employment. Unless and until the absorbing company agreed to take the employees of
the company whose business was being absorbed, no seniority problem was created,
said the court, hence the provision of the contract could have no
application. Furthermore, said the court, it did not require that the absorbing company
 take these employees, but only that if it did take them the question of seniority between
the old and new employees would be worked out by agreement or else be submitted to
the grievance procedure.[31] (Emphasis ours.)

Indeed, from the tenor of local and foreign authorities, in voluntary

mergers, absorption of the dissolved corporations employees or the recognition
of the absorbed employees service with their previous employer may be
demanded from the surviving corporation if required by provision of law or
contract. The dissent of Justice Arturo D. Brion tries to make a distinction as to
the terms and conditions of employment of the absorbed employees in the case
of a corporate merger or consolidation which will, in effect, take away from
corporate management the prerogative to make purely business decisions on the
hiring of employees or will give it an excuse not to apply the CBA in force to the
prejudice of its own employees and their recognized collective bargaining
agent. In this regard, we disagree with Justice Brion.

Justice Brion takes the position that because the surviving corporation continues
the personality of the dissolved corporation and acquires all the latters rights and
obligations, it is duty-bound to absorb the dissolved corporations employees,
even in the absence of a stipulation in the plan of merger. He proposes that this
interpretation would provide the necessary protection to labor as it spares
workers from being left in legal limbo.

However, there are instances where an employer can validly discontinue or

terminate the employment of an employee without violating his right to security
of tenure.Among others, in case of redundancy, for example, superfluous
employees may be terminated and such termination would be authorized under
Article 283 of the Labor Code.[32]

Moreover, assuming for the sake of argument that there is an obligation to hire or
absorb all employees of the non-surviving corporation, there is still no basis to
conclude that the terms and conditions of employment under a valid collective
bargaining agreement in force in the surviving corporation should not be made to
apply to the absorbed employees.

The Corporation Code and the Subject

Merger Agreement are Silent on Efficacy,
Terms and Conditions of Employment
Contracts

The lack of a provision in the plan of merger regarding the transfer of employment
contracts to the surviving corporation could have very well been deliberate on the
part of the parties to the merger, in order to grant the surviving corporation the
freedom to choose who among the dissolved corporations employees to retain, in
accordance with the surviving corporations business needs. If terminations, for
instance due to redundancy or labor-saving devices or to prevent losses, are done
in good faith, they would be valid. The surviving corporation too is duty-bound to
protect the rights of its own employees who may be affected by the merger in
terms of seniority and other conditions of their employment due to the
merger. Thus, we are not convinced that in the absence of a stipulation in the
merger plan the surviving corporation was compelled, or may be judicially
compelled, to absorb all employees under the same terms and conditions obtaining
in the dissolved corporation as the surviving corporation should also take into
consideration the state of its business and its obligations to its own employees, and
to their certified collective bargaining agent or labor union.

Even assuming we accept Justice Brions theory that in a merger situation the
surviving corporation should be compelled to absorb the dissolved corporations
employees as a legal consequence of the merger and as a social justice
consideration, it bears to emphasize his dissent also recognizes that the employee
may choose to end his employment at any time by voluntarily resigning. For the
employee to be absorbed by BPI, it requires the employees implied or express
consent. It is because of this human element in employment contracts and the
personal, consensual nature thereof that we cannot agree that, in a merger
situation, employment contracts are automatically transferable from one entity to
another in the same manner that a contract pertaining to purely proprietary
rights such as a promissory note or a deed of sale of property is perfectly and
automatically transferable to the surviving corporation.

That BPI is the same entity as FEBTC after the merger is but a legal fiction
intended as a tool to adjudicate rights and obligations between and among the
merged corporations and the persons that deal with them. Although in a merger it
is as if there is no change in the personality of the employer, there is in reality a
change in the situation of the employee. Once an FEBTC employee is absorbed,
there are presumably changes in his condition of employment even if his previous
tenure and salary rate is recognized by BPI. It is reasonable to assume that BPI
would have different rules and regulations and company practices than FEBTC and
it is incumbent upon the former FEBTC employees to obey these new rules and
adapt to their new environment. Not the least of the changes in employment
condition that the absorbed FEBTC employees must face is the fact that prior to
the merger they were employees of an unorganized establishment and after the
merger they became employees of a unionized company that had an existing
collective bargaining agreement with the certified union. This presupposes that the
union who is party to the collective bargaining agreement is the certified union that
has, in the appropriate certification election, been shown to represent a majority of
the members of the bargaining unit.

Likewise, with respect to FEBTC employees that BPI chose to employ and
who also chose to be absorbed, then due to BPIs blanket assumption of liabilities
and obligations under the articles of merger, BPI was bound to respect the years
of service of these FEBTC employees and to pay the same, or commensurate
salaries and other benefits that these employees previously enjoyed with FEBTC.
As the Union likewise pointed out in its pleadings, there were benefits under the
CBA that the former FEBTC employees did not enjoy with their previous
employer. As BPI employees, they will enjoy all these CBA benefits upon their
absorption. Thus, although in a sense BPI is continuing FEBTCs employment of
these absorbed employees, BPIs employment of these absorbed employees was
not under exactly the same terms and conditions as stated in the latters
employment contracts with FEBTC. This further strengthens the view that BPI and
the former FEBTC employees voluntarily contracted with each other for their
employment in the surviving corporation.
Proper Appreciation of the Term New
Employees Under the CBA

In any event, it is of no moment that the former FEBTC employees retained

the regular status that they possessed while working for their former employer
upon their absorption by petitioner. This fact would not remove them from the
scope of the phrase new employees as contemplated in the Union Shop Clause of
the CBA, contrary to petitioners insistence that the term new employees only
refers to those who are initially hired as non-regular employees for possible
regular employment.

The Union Shop Clause in the CBA simply states that new employees who
during the effectivity of the CBA may be regularly employed by the Bank must join
the union within thirty (30) days from their regularization. There is nothing in the
said clause that limits its application to only new employees who possess non-
regular status, meaning probationary status, at the start of their
employment. Petitioner likewise failed to point to any provision in the CBA
expressly excluding from the Union Shop Clause new employees who are
absorbed as regular employees from the beginning of their employment. What is
indubitable from the Union Shop Clause is that upon the effectivity of the CBA,
petitioners new regular employees (regardless of the manner by which they
became employees of BPI) are required to join the Union as a condition of their
continued employment.
 The dissenting opinion of Justice Brion dovetails with Justice Carpios view
only in their restrictive interpretation of who are new employees under the
CBA. To our dissenting colleagues, the phrase new employees (who are covered
by the union shop clause) should only include new employees who were hired as
probationary during the life of the CBA and were later granted regular
status. They propose that the former FEBTC employees who were deemed regular
employees from the beginning of their employment with BPI should be treated as
a special class of employees and be excluded from the union shop clause.

Justice Brion himself points out that there is no clear, categorical definition of new
employee in the CBA. In other words, the term new employee as used in the union
shop clause is used broadly without any qualification or distinction. However, the
Court should not uphold an interpretation of the term new employee based on the
general and extraneous provisions of the Corporation Code on merger that would
defeat, rather than fulfill, the purpose of the union shop clause. To reiterate, the
provision of the Article 248(e) of the Labor Code in point mandates that
nothing in the said Code or any other law should stop the parties from
requiring membership in a recognized collective bargaining agent as a
condition of employment.

Significantly, petitioner BPI never stretches its arguments so far as to state

that the absorbed employees should be deemed old employees who are not
covered by the Union Shop Clause. This is not surprising.

By law and jurisprudence, a merger only becomes effective upon approval

by the Securities and Exchange Commission (SEC) of the articles of
merger. In Associated Bank v. Court of Appeals,[33] we held:

The procedure to be followed is prescribed under the Corporation Code. Section 79 of

said Code requires the approval by the Securities and Exchange Commission (SEC) of the
articles of merger which, in turn, must have been duly approved by a majority of the
respective stockholders of the constituent corporations. The same provision further
 states that the merger shall be effective only upon the issuance by the SEC of a
certificate of merger. The effectivity date of the merger is crucial for determining when
the merged or absorbed corporation ceases to exist; and when its rights, privileges,
properties as well as liabilities pass on to the surviving corporation. (Emphasis ours.)

In other words, even though BPI steps into the shoes of FEBTC as the
surviving corporation, BPI does so at a particular point in time, i.e., the effectivity
of the merger upon the SECs issuance of a certificate of merger. In fact, the
articles of merger themselves provided that both BPI and FEBTC will continue
their respective business operations until the SEC issues the certificate of merger
and in the event SEC does not issue such a certificate, they agree to hold each
other blameless for the non-consummation of the merger.

Considering the foregoing principle, BPI could have only become the
employer of the FEBTC employees it absorbed after the approval by the SEC of
the merger. If the SEC did not approve the merger, BPI would not be in the
position to absorb the employees of FEBTC at all. Indeed, there is evidence on
record that BPI made the assignments of its absorbed employees in BPI effective
April 10, 2000, or after the SECs approval of the merger.[34] In other words, BPI
became the employer of the absorbed employees only at some point after the
effectivity of the merger, notwithstanding the fact that the absorbed employees
years of service with FEBTC were voluntarily recognized by BPI.

Even assuming for the sake of argument that we consider the absorbed
FEBTC employees as old employees of BPI who are not members of any union
(i.e., it is their date of hiring by FEBTC and not the date of their absorption that
is considered), this does not necessarily exclude them from the union security
clause in the CBA. The CBA subject of this case was effective from April 1, 1996
until March 31, 2001. Based on the allegations of the former FEBTC employees
themselves, there were former FEBTC employees who were hired by FEBTC after
April 1, 1996 and if their date of hiring by FEBTC is considered as their date of
hiring by BPI, they would undeniably be considered new employees of BPI within
the contemplation of the Union Shop Clause of the said CBA. Otherwise, it would
lead to the absurd situation that we would discriminate not only between new
BPI employees (hired during the life of the CBA) and former FEBTC employees
(absorbed during the life of the CBA) but also among the former FEBTC employees
themselves. In other words, we would be treating employees who are exactly
similarly situated (i.e., the group of absorbed FEBTC employees) differently. This
hardly satisfies the demands of equality and justice.

Petitioner limited itself to the argument that its absorbed employees do

not fall within the term new employees contemplated under the Union Shop
Clause with the apparent objective of excluding all, and not just some, of the
former FEBTC employees from the application of the Union Shop Clause.

However, in law or even under the express terms of the CBA, there is no special
class of employees called absorbed employees. In order for the Court to apply or
not apply the Union Shop Clause, we can only classify the former FEBTC
employees as either old or new. If they are not old employees, they are
necessarily new employees. If they are new employees, the Union Shop Clause
did not distinguish between new employees who are non-regular at their hiring
but who subsequently become regular and new employees who are absorbed as
regular and permanent from the beginning of their employment. The Union Shop
Clause did not so distinguish, and so neither must we.

No Substantial Distinction Under the CBA

Between Regular Employees Hired After
Probationary Status and Regular Employees
Hired After the Merger

Verily, we agree with the Court of Appeals that there are no substantial
differences between a newly hired non-regular employee who was regularized
weeks or months after his hiring and a new employee who was absorbed from
another bank as a regular employee pursuant to a merger, for purposes of
applying the Union Shop Clause. Both employees were hired/employed only after
the CBA was signed. At the time they are being required to join the Union, they
are both already regular rank and file employees of BPI. They belong to the same
bargaining unit being represented by the Union. They both enjoy benefits that the
Union was able to secure for them under the CBA. When they both entered the
employ of BPI, the CBA and the Union Shop Clause therein were already in effect
and neither of them had the opportunity to express their preference for unionism
or not. We see no cogent reason why the Union Shop Clause should not be
applied equally to these two types of new employees, for they are undeniably
similarly situated.

The effect or consequence of BPIs so-called absorption of former FEBTC

employees should be limited to what they actually agreed to, i.e. recognition of
the FEBTC employees years of service, salary rate and other benefits with their
previous employer. The effect should not be stretched so far as to exempt former
FEBTC employees from the existing CBA terms, company policies and rules which
apply to employees similarly situated. If the Union Shop Clause is valid as to other
new regular BPI employees, there is no reason why the same clause would be a
violation of the absorbed employees freedom of association.

Non-Application of Union Shop Clause Contrary

to the Policy of the Labor Code and Inimical to
Industrial Peace

It is but fair that similarly situated employees who enjoy the same
privileges of a CBA should be likewise subject to the same obligations the CBA
imposes upon them. A contrary interpretation of the Union Shop Clause will be
inimical to industrial peace and workers solidarity. This unfavorable situation will
not be sufficiently addressed by asking the former FEBTC employees to simply pay
agency fees to the Union in lieu of union membership, as the dissent of Justice
Carpio suggests. The fact remains that other new regular employees, to whom the
absorbed employees should be compared, do not have the option to simply pay
the agency fees and they must join the Union or face termination.
Petitioners restrictive reading of the Union Shop Clause could also
inadvertently open an avenue, which an employer could readily use, in order to
dilute the membership base of the certified union in the collective bargaining unit
(CBU). By entering into a voluntary merger with a non-unionized company that
employs more workers, an employer could get rid of its existing union by the
simple expedient of arguing that the absorbed employees are not new
employees, as are commonly understood to be covered by a CBAs union security
clause. This could then lead to a new majority within the CBU that could
potentially threaten the majority status of the existing union and, ultimately, spell
its demise as the CBUs bargaining representative. Such a dreaded but not entirely
far-fetched scenario is no different from the ingenious and creative union-busting
schemes that corporations have fomented throughout the years, which this Court
has foiled time and again in order to preserve and protect the valued place of
labor in this jurisdiction consistent with the Constitutions mandate of insuring
social justice.

There is nothing in the Labor Code and other applicable laws or the CBA
provision at issue that requires that a new employee has to be of probationary or
non-regular status at the beginning of the employment relationship. An employer
may confer upon a new employee the status of regular employment even at the
onset of his engagement. Moreover, no law prohibits an employer from
voluntarily recognizing the length of service of a new employee with a previous
employer in relation to computation of benefits or seniority but it should not
unduly be interpreted to exclude them from the coverage of the CBA which is a
binding contractual obligation of the employer and employees.

Indeed, a union security clause in a CBA should be interpreted to give

meaning and effect to its purpose, which is to afford protection to the certified
bargaining agent and ensure that the employer is dealing with a union that
represents the interests of the legally mandated percentage of the members of
the bargaining unit.
 The union shop clause offers protection to the certified bargaining agent by
ensuring that future regular employees who (a) enter the employ of the company
during the life of the CBA; (b) are deemed part of the collective bargaining unit;
and (c) whose number will affect the number of members of the collective
bargaining unit will be compelled to join the union. Such compulsion has legal
effect, precisely because the employer by voluntarily entering in to a union shop
clause in a CBA with the certified bargaining agent takes on the responsibility of
dismissing the new regular employee who does not join the union.

Without the union shop clause or with the restrictive interpretation thereof as
proposed in the dissenting opinions, the company can jeopardize the majority
status of the certified union by excluding from union membership all new regular
employees whom the Company will absorb in future mergers and all new regular
employees whom the Company hires as regular from the beginning of their
employment without undergoing a probationary period. In this manner, the
Company can increase the number of members of the collective bargaining unit
and if this increase is not accompanied by a corresponding increase in union
membership, the certified union may lose its majority status and render it
vulnerable to attack by another union who wishes to represent the same
bargaining unit.[35]

Or worse, a certified union whose membership falls below twenty percent (20%)
of the total members of the collective bargaining unit may lose its status as a
legitimate labor organization altogether, even in a situation where there is no
competing union.[36] In such a case, an interested party may file for the
cancellation of the unions certificate of registration with the Bureau of Labor
Relations.[37]

Plainly, the restrictive interpretation of the union shop clause would place the
certified unions very existence at the mercy and control of the
employer. Relevantly, only BPI, the employer appears to be interested in
pursuing this case. The former FEBTC employees have not joined BPI in this
appeal.
For the foregoing reasons, Justice Carpios proposal to simply require the former
FEBTC to pay agency fees is wholly inadequate to compensate the certified union
for the loss of additional membership supposedly guaranteed by compliance with
the union shop clause. This is apart from the fact that treating these absorbed
employees as a special class of new employees does not encourage worker
solidarity in the company since another class of new employees (i.e. those whose
were hired as probationary and later regularized during the life of the CBA) would
not have the option of substituting union membership with payment of agency
fees.

Justice Brion, on the other hand, appears to recognize the inherent unfairness of
perpetually excluding the absorbed employees from the ambit of the union shop
clause. He proposes that this matter be left to negotiation by the parties in the next
CBA. To our mind, however, this proposal does not sufficiently address the
issue.With BPI already taking the position that employees absorbed pursuant to its
voluntary mergers with other banks are exempt from the union shop clause, the
chances of the said bank ever agreeing to the inclusion of such employees in a
future CBA is next to nil more so, if BPIs narrow interpretation of the union shop
clause is sustained by this Court.

Right of an Employee not to Join a Union is not

Absolute and Must Give Way to the Collective
Good of All Members of the Bargaining Unit

The dissenting opinions place a premium on the fact that even if the former
FEBTC employees are not old employees, they nonetheless were employed as
regular and permanent employees without a gap in their service. However, an
employees permanent and regular employment status in itself does not
necessarily exempt him from the coverage of a union shop clause.
In the past this Court has upheld even the more stringent type of union security
clause, i.e., the closed shop provision, and held that it can be made applicable to
old employees who are already regular and permanent but have chosen not to
join a union. In the early case of Juat v. Court of Industrial Relations,[38] the Court
held that an old employee who had no union may be compelled to join the union
even if the collective bargaining agreement (CBA) imposing the closed shop
provision was only entered into seven years after of the hiring of the said
employee. To quote from that decision:

A closed-shop agreement has been considered as one form of union security

whereby only union members can be hired and workers must remain union
members as a condition of continued employment. The requirement for
employees or workers to become members of a union as a condition for
employment redounds to the benefit and advantage of said employees because
by holding out to loyal members a promise of employment in the closed-shop the
union wields group solidarity. In fact, it is said that "the closed-shop contract is
the most prized achievement of unionism."
xxxx
This Court had categorically held in the case of Freeman Shirt Manufacturing Co., Inc., et
al. vs. Court of Industrial Relations, et al., G.R. No. L-16561, Jan. 28, 1961, that
the closed-shop proviso of a collective bargaining agreement entered into between an
employer and a duly authorized labor union is applicable not only to the employees or
laborers that are employed after the collective bargaining agreement had been
entered into but also to old employees who are not members of any labor union at
the time the said collective bargaining agreement was entered into. In other words, if
an employee or laborer is already a member of a labor union different from the union
that entered into a collective bargaining agreement with the employer providing for a
closed-shop, said employee or worker cannot be obliged to become a member of that
union which had entered into a collective bargaining agreement with the employer as a
condition for his continued employment. (Emphasis and underscoring supplied.)

Although the present case does not involve a closed shop provision that included
even old employees, the Juat example is but one of the cases that laid down the
doctrine that the right not to join a union is not absolute. Theoretically, there is
nothing in law or jurisprudence to prevent an employer and a union from
stipulating that existing employees (who already attained regular and permanent
status but who are not members of any union) are to be included in the coverage
of a union security clause. Even Article 248(e) of the Labor Code only expressly
exempts old employees who already have a union from inclusion in a union
security clause.[39]

Contrary to the assertion in the dissent of Justice Carpio, Juat has not been
overturned by Victoriano v. Elizalde Rope Workers Union[40] nor by Reyes v.
Trajano.[41]The factual milieus of these three cases are vastly different.

In Victoriano, the issue that confronted the Court was whether or not employees
who were members of the Iglesia ni Kristo (INK) sect could be compelled to join
the union under a closed shop provision, despite the fact that their religious
beliefs prohibited them from joining a union. In that case, the Court was asked to
balance the constitutional right to religious freedom against a host of other
constitutional provisions including the freedom of association, the non-
establishment clause, the non-impairment of contracts clause, the equal
protection clause, and the social justice provision. In the end, the Court held that
religious freedom, although not unlimited, is a fundamental personal right and
liberty, and has a preferred position in the hierarchy of values.[42]

However, Victoriano is consistent with Juat since they both affirm that the right to
refrain from joining a union is not absolute. The relevant portion of Victoriano is
quoted below:

The right to refrain from joining labor organizations recognized by Section 3 of the
Industrial Peace Act is, however, limited. The legal protection granted to such right to
refrain from joining is withdrawn by operation of law, where a labor union and an
employer have agreed on a closed shop, by virtue of which the employer may employ
only member of the collective bargaining union, and the employees must continue to
be members of the union for the duration of the contract in order to keep their
jobs.Thus Section 4 (a) (4) of the Industrial Peace Act, before its amendment by Republic
Act No. 3350, provides that although it would be an unfair labor practice for an
employer "to discriminate in regard to hire or tenure of employment or any term or
condition of employment to encourage or discourage membership in any labor
 organization" the employer is, however, not precluded "from making an agreement
with a labor organization to require as a condition of employment membership
therein, if such labor organization is the representative of the employees." By virtue,
therefore, of a closed shop agreement, before the enactment of Republic Act No. 3350,
if any person, regardless of his religious beliefs, wishes to be employed or to keep his
employment, he must become a member of the collective bargaining union. Hence, the
right of said employee not to join the labor union is curtailed and
withdrawn.[43] (Emphases supplied.)

If Juat exemplified an exception to the rule that a person has the right not to join
a union, Victoriano merely created an exception to the exception on the ground
of religious freedom.

Reyes, on the other hand, did not involve the interpretation of any union security
clause. In that case, there was no certified bargaining agent yet since the
controversy arose during a certification election. In Reyes, the Court highlighted
the idea that the freedom of association included the right not to associate or join
a union in resolving the issue whether or not the votes of members of the INK
sect who were part of the bargaining unit could be excluded in the results of a
certification election, simply because they were not members of the two
contesting unions and were expected to have voted for NO UNION in view of their
religious affiliation.The Court upheld the inclusion of the votes of the INK
members since in the previous case of Victoriano we held that INK members may
not be compelled to join a union on the ground of religious freedom and even
without Victoriano every employee has the right to vote no union in a certification
election as part of his freedom of association. However, Reyes is not authority for
Justice Carpios proposition that an employee who is not a member of any union
may claim an exemption from an existing union security clause because he
already has regular and permanent status but simply prefers not to join a union.

The other cases cited in Justice Carpios dissent on this point are likewise
inapplicable. Basa v. Federacion Obrera de la Industria Tabaquera y Otros
Trabajadores de Filipinas,[44] Anucension v. National Labor Union,[45] and Gonzales
v. Central Azucarera de Tarlac Labor Union[46] all involved members of the INK. In
line with Victoriano, these cases upheld the INK members claimed exemption
from the union security clause on religious grounds. In the present case, the
former FEBTC employees never claimed any religious grounds for their exemption
from the Union Shop Clause. As for Philips Industrial Development, Inc. v. National
Labor Relations Corporation[47] and Knitjoy Manufacturing, Inc. v. Ferrer-
Calleja,[48] the employees who were exempted from joining the respondent union
or who were excluded from participating in the certification election were found
to be not members of the bargaining unit represented by respondent union and
were free to form/join their own union. In the case at bar, it is undisputed that
the former FEBTC employees were part of the bargaining unit that the Union
represented. Thus, the rulings in Philips and Knitjoy have no relevance to the
issues at hand.

Time and again, this Court has ruled that the individual employees right not
to join a union may be validly restricted by a union security clause in a CBA [49]and
such union security clause is not a violation of the employees constitutional right
to freedom of association.[50]

It is unsurprising that significant provisions on labor protection of the 1987

Constitution are found in Article XIII on Social Justice. The constitutional
guarantee given the right to form unions[51] and the State policy to promote
unionism[52] have social justice considerations. In Peoples Industrial and
Commercial Employees and Workers Organization v. Peoples Industrial and
Commercial Corporation,[53] we recognized that [l]abor, being the weaker in
economic power and resources than capital, deserve protection that is actually
substantial and material.

The rationale for upholding the validity of union shop clauses in a CBA, even
if they impinge upon the individual employees right or freedom of association, is
not to protect the union for the unions sake. Laws and jurisprudence promote
unionism and afford certain protections to the certified bargaining agent in a
unionized company because a strong and effective union presumably benefits all
employees in the bargaining unit since such a union would be in a better position
to demand improved benefits and conditions of work from the employer. This is
the rationale behind the State policy to promote unionism declared in the
Constitution, which was elucidated in the above-cited case of Liberty Flour Mills
Employees v. Liberty Flour Mills, Inc.[54]

In the case at bar, since the former FEBTC employees are deemed covered by the
Union Shop Clause, they are required to join the certified bargaining agent, which
supposedly has gathered the support of the majority of workers within the
bargaining unit in the appropriate certification proceeding. Their joining the
certified union would, in fact, be in the best interests of the former FEBTC
employees for it unites their interests with the majority of employees in the
bargaining unit. It encourages employee solidarity and affords sufficient protection
to the majority status of the union during the life of the CBA which are the
precisely the objectives of union security clauses, such as the Union Shop Clause
involved herein. We are indeed not being called to balance the interests of
individual employees as against the State policy of promoting unionism, since the
employees, who were parties in the court below, no longer contested the adverse
Court of Appeals decision. Nonetheless, settled jurisprudence has already swung
the balance in favor of unionism, in recognition that ultimately the individual
employee will be benefited by that policy. In the hierarchy of constitutional values,
this Court has repeatedly held that the right to abstain from joining a labor
organization is subordinate to the policy of encouraging unionism as an instrument
of social justice.

Also in the dissenting opinion of Justice Carpio, he maintains that one of the dire
consequences to the former FEBTC employees who refuse to join the union is the
forfeiture of their retirement benefits. This is clearly not the case precisely because
BPI expressly recognized under the merger the length of service of the absorbed
employees with FEBTC. Should some refuse to become members of the union,
they may still opt to retire if they are qualified under the law, the applicable
retirement plan, or the CBA, based on their combined length of service with
FEBTC and BPI. Certainly, there is nothing in the union shop clause that should be
read as to curtail an employees eligibility to apply for retirement if qualified under
the law, the existing retirement plan, or the CBA as the case may be.

In sum, this Court finds it reasonable and just to conclude that the Union
Shop Clause of the CBA covers the former FEBTC employees who were
hired/employed by BPI during the effectivity of the CBA in a manner which
petitioner describes as absorption. A contrary appreciation of the facts of this
case would, undoubtedly, lead to an inequitable and very volatile labor situation
which this Court has consistently ruled against.

In the case of former FEBTC employees who initially joined the union but
later withdrew their membership, there is even greater reason for the union to
request their dismissal from the employer since the CBA also contained a
Maintenance of Membership Clause.

A final point in relation to procedural due process, the Court is not

unmindful that the former FEBTC employees refusal to join the union and BPIs
refusal to enforce the Union Shop Clause in this instance may have been based on
the honest belief that the former FEBTC employees were not covered by said
clause. In the interest of fairness, we believe the former FEBTC employees should
be given a fresh thirty (30) days from notice of finality of this decision to join the
union before the union demands BPI to terminate their employment under the
Union Shop Clause, assuming said clause has been carried over in the present CBA
and there has been no material change in the situation of the parties.

WHEREFORE, the petition is hereby DENIED, and the Decision dated

September 30, 2003 of the Court of Appeals is AFFIRMED, subject to the thirty
(30) day notice requirement imposed herein. Former FEBTC employees who opt
not to become union members but who qualify for retirement shall receive their
retirement benefits in accordance with law, the applicable retirement plan, or the
CBA, as the case may be.

SO ORDERED.

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

WE CONCUR:
 RENATO C. CORONA
Chief Justice

ANTONIO T. CARPIO CONCHITA CARPIO MORALES

Associate Justice Associate Justice

On leave
PRESBITERO J. VELASCO, JR. ANTONIO EDUARDO B. NACHURA
Associate Justice
Associate Justice

ARTURO D. BRION DIOSDADO M. PERALTA

Associate Justice Associate Justice

 LUCAS P. BERSAMIN MARIANO C. DEL CASTILLO

Associate Justice Associate Justice

ROBERTO A. ABAD MARTIN S. VILLARAMA, JR.

Associate Justice
Associate Justice

JOSE PORTUGAL PEREZ JOSE CATRAL MENDOZA

Associate Justice Associate Justice
 CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, 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.

RENATO C. CORONA
Chief Justice

*
On official leave.
[1]
Presidential Decree No. 442, as amended. Emphasis added.
[2]
Penned by Associate Justice Arsenio J. Magpale (ret.) with Associate Justices Conrado M. Vasquez, Jr. and
Bienvenido L. Reyes, concurring; rollo, pp. 15-25.
[3]
Rollo, pp. 41-42.
[4]
Id. at 86-93.
[5]
Id. at 78.
[6]
Id. at 79.
[7]
Id. at 18.
[8]
Id. at 16-17.
[9]
Records, p. 8.
[10]
Id. at 18.
[11]
Id. at 19.
[12]
Supra note 4.
[13]
Rollo, p. 19.
[14]
Id. at 24.
[15]
Rollo, pp. 229-231.
[16]
Id. at 66.
[17]
Id. at 17.
[18]
Id. at 68-69.
[19]
Inguillo v. First Philippine Scales, Inc., G.R. No. 165407, June 5, 2009, 588 SCRA 471, 485-486.
[20]
259 Phil. 1156, 1167-1168 (1989).
[21]
Victoriano v. Elizalde Rope Workers Union, G.R. No. L-25246, September 12, 1974, 59 SCRA 54, 68.
[22]
Freeman Shirt Manufacturing Co. v. Court of Industrial Relations, G.R. No. L-16561, January 28,1961, 1 SCRA
353, 356; Sta. Cecilia Sawmills v. Court of Industrial Relations, G.R. No. L-19273-4, February 29, 1964,
10 SCRA 433, 437.
[23]
Metrolab Industries, Inc. v. Confesor, G.R. No. 108855, February 28, 1996, 254 SCRA 182, 197.
[24]
Manila Mandarin Employees Union v. National Labor Relations Commission, G.R. No. 76989, September 29,
1987, 154 SCRA 368, 375 (citing Lirag Textile Mills, Inc. v. Blanco, G.R. No. L-27029, November 12,
1981, 109 SCRA 87 and Manalang v. Artex Development Company, Inc., G.R. No. L-20432, October 30,
1967, 21 SCRA 561).
[25]
Id. at 375.
[26]
Rollo, p. 79.
[27]
Filipinas Port Services, Inc. v. National Labor Relations Commission, G.R. No. 97237, August 16, 1991, 200
SCRA 773, 780.
[28]
Sundowner Development Corporation v. Drilon, G.R. No. 82341, December 6, 1989, 180 SCRA 14, 18.
[29]
Art. 283 of the Labor Code provides:
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 unless the
closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the
worker and Ministry of Labor an Employment at least one (1) month before the intended date thereof. In
case of termination due to the installation of labor saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to at least one (1) month pay or to at least one (1)
month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in
cases of closures or cessation of operations of establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half
(1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered as one (1) whole year.
[30]
Art. 287 of the Labor Code states:
RETIREMENT. Any employees may be retired upon reaching the retirement age established in the collective
bargaining agreement or other applicable employment contact.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under
existing laws and any collective bargaining agreement and other agreements: Provided, however, That an
employees retirement benefits under any collective bargaining and other agreements shall not be less than
those provided herein.
In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment,
an employee upon reaching the age of sixty (6) years or more, but not beyond sixty-five (65) years which is
hereby declared the compulsory retirement age, who has served at least five (5) years in the said
establishment may retire and shall be entitled to retirement pay equivalent to at least one half (1/2) month
salary for every year of service, a fraction of at least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shall mean fifteen (15) days
plus one twelfth (1/12) of the 13 th-month pay and the cash equivalent of not more than five (5) days of
service incentive leaves.
An underground mining employee upon reaching the age of fifty (50) years or more, but not beyond sixty (60) years
which is hereby declared the compulsory retirement age for underground mine workers, who has served at
least five (5) years as underground mine workers, who has served at least (5) years as underground mine
worker, may retire and shall be entitled to all the retirement benefits provided for in this Article. (R.A.
No.8558, approved on February 26, 1998.)
Retail, service and agricultural establishments or operations employing not more than ten (10) employees or workers
are exempted from the coverage of this provision.
Violation of this provision is hereby declared unlawful and subject to the final provisions provided under Article 288
of this Code.
[31]
90 ALR 2D 975, 983-984.

[32]
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 unless the
closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the
workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof.
In case of termination due to the installation of labor-saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1)
month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in
cases of closures or cessation of operations of establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half
(1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.
[33]
G.R. No. 123793, June 29, 1998, 291 SCRA 511, 521-522.
[34]
CA rollo, p. 218.
[35]
Article 256 of the Labor Code provides:
Art. 256. Representation issue in organized establishments. In organized establishments, when a verified
petition questioning the majority status of the incumbent bargaining agent is filed before the
Department of Labor and Employment within the sixty-day period before the expiration of the collective
bargaining agreement, the Med-Arbiter shall automatically order an election by secret ballot when the
verified petition is supported by the written consent of at least twenty-five percent (25%) of all the
employees in the bargaining unit to ascertain the will of the employees in the appropriate bargaining unit.
To have a valid election, at least a majority of all eligible voters in the unit must have cast their votes. The
labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent
of all the workers in the unit. When an election which provides for three or more choices results in no
choice receiving a majority of the valid votes cast, a run-off election shall be conducted between the labor
unions receiving the two highest number of votes: Provided, that the total number of votes for all
contending unions is at least fifty percent (50%) of the number of votes cast.
At the expiration of the freedom period, the employer shall continue to recognize the majority status of the
incumbent bargaining agent where no petition for certification election is filed. (Emphases supplied.)
[36]
Article 234 of the Labor Code provides:
Art. 234. Requirements of registration. Any applicant labor organization, association or group of unions or
workers shall acquire legal personality and shall be entitled to the rights and privileges granted by law to
legitimate labor organizations upon issuance of the certificate of registration based on the following
requirements. x x x
xxxx

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

[37]
Article 238 of the Labor Code provides [t]he certificate of registration of any legitimate labor organization,
whether national or local, shall be cancelled by the Bureau if it has reason to believe, after due hearing, that
the said labor organization no longer meets one or more of the requirements herein prescribed.
[38]
G.R. No. L-20764, November 29, 1965, 15 SCRA 391, 395-397.
[39]
Article 248. Unfair Labor Practices of Employers. It shall be unlawful for an employer to commit any of the
following unfair labor practice: x x 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. Nothing in this Code or in any other law
shall stop the parties from requiring membership in a recognized collective bargaining agent as a
condition for employment, except those employees who are already members of another union at the
time of the signing of the collective bargaining agreement.
Employees of an appropriate collective bargaining agent may be assessed a reasonable fee
equivalent to the dues and other fees paid by members of the recognized bargaining agent, if such non-
union members accept the benefits under the collective agreement: Provided, that the individual
authorization required under Article 242, paragraph (o) of this Code shall not apply to the non-members of
the recognized collective bargaining agent. x x x. (Emphasis supplied.)
[40]
Supra note 21.
[41]
G.R. No. 84433, June 2, 1992, 209 SCRA 484.
[42]
Victoriano v. Elizalde Rope Workers Union, supra note 21 at 72.
[43]
Id. at 67-68.
[44]
G.R. No. L-27113, November 19, 1974, 61 SCRA 93.
[45]
G.R. No. L-26097, November 29, 1977, 80 SCRA 350.
[46]
G.R. No. L-38178, October 3, 1985, 139 SCRA 30.
[47]
G.R. No. 88957, June 25, 1992, 210 SCRA 339.
[48]
G.R. Nos. 81883 and 82111, September 23, 1992, 214 SCRA 174.
[49]
Dela Salle University v. Dela Salle University Employees Association, 386 Phil. 569, 590 (2000).
[50]
Liberty Flour Mills Employees v. Liberty Flour Mills, Inc., supra note 20.
[51]
Article III, Section 8 of the 1987 Constitution states: The right of the people, including those employed in the
public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall
not be abridged.
[52]
Article XIII, Section 3 of the 1987 Constitution provides:
Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and
promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful
concerted activities, including the right to strike in accordance with law.
They shall be entitled to security of tenure, humane conditions of work, and a living wage. They
shall also participate in policy and decision-making processes affecting their rights and benefits as may be
provided by law.

The State shall promote the principle of shared responsibility between workers and employers and the preferential
use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.

The State shall regulate the relations between workers and employers, recognizing the right of labor to its just
share in the fruits of production and the right of enterprises to reasonable returns to investments, and to
expansion and growth.

[53]
G.R. No. L-37687, March 15, 1982, 112 SCRA 440, 455.
[54]
Supra note 20.

14) Holy Cross vs. Joaquin GR No. 110007 Oct.18,1996

THIRD DIVISION

[G.R. No. 110007. October 18, 1996]

HOLY CROSS OF DAVAO COLLEGE, INC., petitioner, vs. HON.

JEROME JOAQUIN, in his capacity as Voluntary Arbitrator, and
HOLY CROSS OF DAVAO COLLEGE UNION KALIPUNAN NG
MANGGAGAWANG PILIPINO (KAMAPI), respondents.
 DECISION
NARVASA, C.J.:

A collective bargaining agreement, effective from June 1, 1986 to May 31, 1989 was
entered into between petitioner Holy Cross of Davao College, Inc. (hereafter Holy
Cross), an educational institution, and the affiliate labor organization representing its
employees, respondent Holy Cross of Davao College Union-KAMAPI (hereafter
KAMAPI).Shortly before the expiration of the agreement, KAMAPI President Jose
Lagahit, wrote Holy Cross under date of April 12, 1989 expressing his unions desire to
renew the agreement, withal seeking its extension for two months, or until July 31,
1989, on the ground that the teachers were still on summer vacation and union activities
necessary or incident to the negotiation of a new agreement could not yet be
conducted.[1] Holy Cross President Emilio P. Palma-Gil replied that he had no objection
to the extension sought, it being allowable under the collective bargaining agreement.[2]
On July 24, 1989, Jose Lagahit convoked a meeting of the KAMAPI membership for
the purpose of electing a new set of union officers, at which Rodolfo Gallera won
election as president. To the surprise of many, and with resultant dissension among the
membership, Galera forthwith initiated discussions for the unions disaffiliation from the
KAMAPI Federation.
Galleras group subsequently formed a separate organization known as the Holy
Cross of Davao College Teachers Union, and elected its own officers. For its part, the
existing union, KAMAPI, sent to the School its proposals for a new collective bargaining
contract; this it did on July 31, 1989, the expiry date of the two-month extension it had
sought.[3]
Holy Cross thereafter stopped deducting from the salaries and wages of its teachers
and employees the corresponding union dues and special assessment (payable by
union members), and agency fees (payable by non-members), in accordance with the
check-off clause of the CBA,[4] prompting KAMAPI, on September 1, 1989, to demand
an explanation.
In the meantime, there ensued between the two unions a full-blown action on the
basic issue of representation, which was to last for some two years. It began with the
filing by the new union (headed by Gallera) of a petition for certification election in the
Office of the Med-Arbiter.[5] KAMAPI responded by filing a motion asking the Med-
Arbiter to dismiss the petition. On August 31, 1989, KAMAPI also advised Holy Cross of
the election of a new set of officers who would also comprise its negotiating panel.[6]
The Med-Arbiter denied KAMAPIs motion to dismiss, and ordered the holding of a
certification election. On appeal, however, the Secretary of Labor reversed the Med-
Arbiters ruling and ordered the dismissal of the petition for certification election, which
action was eventually sustained by this Court in appropriate proceedings.
After its success in the certification election case KAMAPI presented, on April 11,
1991, revised bargaining proposals to Holy Cross;[7] and on July 11, 1991, it sent a letter
to the School asking for its counter-proposals. The School replied, that it did not know if
the Supreme Court had in fact affirmed the Labor Secretarys decision in favor of
KAMAPI as the exclusive bargaining representative of the School employees,
whereupon KAMAPIs counsel furnished it with a copy of the Courts resolution to that
effect; and on September 7, 1991, KAMAPI again wrote to Holy Cross asking for its
counter-proposals as regards the terms of a new CBA.
In response, Holy Cross declared that it would take no action towards a new CBA
without a definitive ruling on the proper interpretation of Article I of the old CBA which
should have expired on May 31, 1989 (but, as above stated, had been extended for two
months at the KAMAPIs request). Said Article provides inter alia for the automatic
extension of the CBA for another period of three (3) years counted from its expiration, if
the parties fail to agree on a renewal, modification or amendment thereof. It appears, in
fact, that the opinion of the DOLE Regional Director on the meaning and import of said
article I had earlier been sought by the College president, Emilio Palma Gil.[8]
KAMAPI then sent another letter to Holy Cross, this time accusing it of unfair labor
practice for refusing to bargain despite the formers repeated demands; and on the
following day, it filed a notice of strike with the National Mediation and Conciliation
Board..[9]
KAMAPI and Holy Cross were ordered to appear before Conciliator-Mediator
Agapito J. Adipen on October 2, 1991. Several conciliation meetings were thereafter
held between them, and when these failed to bring about any amicable settlement, the
parties agreed to submit the case to voluntary arbitration. [10] Both parties being of the
view that the dispute did indeed revolve around the interpretation of 1 and 2 of Article I
of the CBA, they submitted position papers explicitly dealing with the following issues
presented by them for resolution to the voluntary arbitrator:
a. Whether or not the CBA which expired on May 31, 1989 was automatically renewed
and did not serve merely as a holdover CBA; and
b. Whether or not there was refusal to negotiate on the part of the Holy Cross of Davao
College.
On both issues, Voluntary Arbitrator Jerome C. Joaquin found in favor of KAMAPI.
Respecting the matter of the automatic renewal of the bargaining agreement, the
Voluntary Arbitrator ruled that the request for extension filed by KAMAPI constituted
seasonable notice of its intention to renew, modify or amend the agreement, which it
could not however pursue because of the absence of the teachers who were then on
summer vacation.[11] He rejected the contention of Holy Cross that KAMAPI had
unreasonably delayed (until July 31, 1989) the submission of bargaining proposals,
opining that the delay was partly attributable to the Schools prolonged inaction on
KAMAPIs request for extension of the CBA. He also ruled that Holy Cross was
estopped from claiming automatic renewal of the CBA because it ceased to implement
the check-off provision embodied in the CBA, declaring said Schools argument -- that
a "definitive ruling" by the DOLE on the correct interpretation of the automatic-extension
clause of the old CBA was a condition precedent to negotiation for a new CBA -- to be a
mere afterthought set up to justify its refusal to bargain with KAMAPI after the latter had
proven that it was the legally-empowered bargaining agent of the school employees. In
the dispositive portion of his award, the Voluntary Arbitrator ordered Holy Cross to:
1. sit down, negotiate and conclude (an agreement) with the Holy Cross of Davao College
Faculty Union-KAMAPI, which, by Resolution of the Supreme Court, remains the
collective bargaining agent of the permanent and regular teachers of said educational
institution; (and)
2. pay to the Union the amount equivalent to the uncollected union dues from
August 1989 up to the time respondent shall have concluded a new CBA with
the Union, it appearing that respondent stopped complying with the CBAs check-
off provisions as of said date.[12]
The Voluntary Arbitrator also requested the Fiscal Examiner of the NLRC, region
XI, Davao City, to make the proper computation of the union dues to be paid by
management to the complainant union.
Dissatisfied, Holy Cross filed the petition at bar, challenging the Voluntary
Arbitrators decision on the following grounds, viz.:[13]
1. That the voluntary arbitrator erred and acted in grave abuse of discretion amounting to
lack or excess of jurisdiction in ordering petitioner to pay the union the uncollected
union dues to private respondent which was not even an issue submitted for voluntary
arbitration, resulting in serious violation of due process.
2. That the voluntary arbitrator erred in considering that petitioner refused to negotiate with
(the) Union, contrary to the records and evidence presented in the case.
The Voluntary Arbitrators conclusion -- that petitioner Holy Cross had, in light of the
evidence on record, failed to negotiate with KAMAPI, adjudged as the collective
bargaining agent of the schools permanent and regular teachers -- is a conclusion of
fact that the Court will not review, the inquiry at bar being limited to the issue of whether
or not said Voluntary Arbitrator had acted without or in excess of his jurisdiction, or with
grave abuse of discretion; nor does the Court see its way clear, after analyzing the
record, to pronouncing that reasoned conclusion to have been made so whimsically,
capriciously, oppressively, or unjustifiably -- in other words, attended by grave abuse of
discretion amounting to lack or excess of jurisdiction -- as to call for extension of the
Courts correcting hand through the extraordinary writ of certiorari. Said finding should
therefore be, and is hereby, sustained.
Now, concerning its alleged failure to observe the check-off provisions of the
collective bargaining agreement, Holy Cross contends that this was not one of the
issues raised in the arbitration proceedings; that said issue was therefore extraneous
and improper; and that even assuming the contrary, it (Holy Cross) had not in truth
violated the CBA.
Holy Cross asserts that it could not comply with the check-off provisions because
contrary to established practice prior to August, 1989, KAMAPI failed to submit to the
college comptroller every 8th day of the month, a list of employees from whom union
dues and the corresponding agency fees were to be deducted; further, that there was
an uncertainty as to the recognized bargaining agent with whom it would deal -- a
matter settled only upon its receipt of a copy of this Courts Resolution on July 18, 1991 -
- and in any case, the Voluntary Arbitrators order for it to pay to the union the
uncollected employees' dues or agency fees -- would amount to the unions unjust
enrichment.[14]
KAMAPI maintains, on the other hand, that the check-off issue was raised in the
position paper it submitted in the voluntary arbitration proceedings; and that in any case,
the issue was intimately connected with those submitted for resolution and necessary
for complete adjudication of the rights and obligations of the parties; [15] and that said
position paper had alleged the manifest bad faith of management in not providing
information as to who were regular employees, thereby precluding determination of
teachers eligible for union membership.
Disregarding the objection of failure to seasonably set up the check-off question --
the factual premises thereof not being indisputable, and technical objections of this sort
being generally inconsequential in quasi-judicial proceedings -- the issues here
ultimately boil down to whether or not an employer is liable to pay to the union of its
employees, the amounts it failed to deduct from their salaries -- as union dues (with
respect to union members) or agency fees (as regards those not union members) -- in
accordance with the check-off provisions of the collective bargaining contract (CBA)
which it claims to have been automatically extended.
A check-off is a process or device whereby the employer, on agreement with the
union recognized as the proper bargaining representatives, or on prior authorization
from its employees, deducts union dues or agency fees from the latter's wages and
remits them directly to the union.[16] Its desirability to a labor organization is quite
evident; by it, it is assured of continuous funding. Indeed, this Court has acknowledged
that the system of check-off is primarily for the benefit of the union and, only indirectly,
of the individual laborers.[17] When stipulated in a collective bargaining agreement, or
authorized in writing by the employees concerned -- the labor Code and its
Implementing Rules recognize it to be the duty of the employer to deduct sums
equivalent to the amount of union dues from the employees' wages for direct remittance
to the union, in order to facilitate the collection of funds vital to the role of the union as
representative of employees in a bargaining unit to the role of the union as
representative of employees in a bargaining unit if not, indeed, to its very existence. And
it may be mentioned in this connection that the right to union dues deducted pursuant to
a check of, pertains to the local union which continues to represent the employees
under the terms of a CBA, and not to the parent association from which it has
dissaffiliated.[18]
The legal basis of check-off is thus found in statute or in contract.[19] Statutory
limitations on check-offs generally require written authorization from each employee to
deduct wages; however, a resolution approved and adopted by a majority of the union
members at a general meeting will suffice when the right to check-off has been
recognized by the employer, including collection of reasonable assessments in
connection with mandatory activities of the union, or other special assessments and
extraordinary fees.[20]
Authorization to effect a check-off of union dues is co-terminous with the union
affiliation or membership of employees.[21] On the other hand, the collection of agency
feesin an amount equivalent to union dues and fees, from employees who are not union
members, is recognized by Article 248 (e) of the Labor Code. No requirement of written
authorization from the non-union employee is imposed. The employees acceptance of
benefits resulting from a collective bargaining agreement justifies the deduction of
agency fees from his pay and the unions entitlement thereto. In this aspect, the legal
basis of the unions right to agency fees is neither contractual nor statutory, but quasi-
contractual, deriving from the established principle that non-union employees may not
unjustly enrich themselves by benefiting from employment conditions negotiated by the
bargaining union.[22]
No provision of law makes the employer directly liable for the payment to the labor
organization of union dues and assessments that the former fails to deduct from its
employees salaries and wages pursuant to a check-off stipulation. The employers
failure to make the requisite deductions may constitute a violation of a contractual
commitment for which it may incur liability for unfair labor practice. [23] But it does not by
that omission, incur liability to the union for the aggregate of dues or assessments
uncollected from the union members, or agency fees for non-union employees.
Check-offs in truth impose as extra burden on the employer in the form of additional
administrative and bookkeeping costs. It is a burden assumed by management at the
instance of the union and for its benefit, in order to facilitate the collection of dues
necessary for the latters life and sustenance. But the obligation to pay union dues and
agency fees obviously devolves not upon the employer, but the individual employee. It
is a personal obligation not demandable from the employer upon default or refusal of
the employer to consent to a check-off. The only obligation of the employer under a
check-off is to effect the deductions and remit the collections to the union. The principle
of unjust enrichment necessarily precludes recovery of union dues -- or agency fees --
from the employer, these being, to repeat, obligations pertaining to the individual worker
in favor of the bargaining union. Where the employer fails or refuses to implement a
check-off agreement, logic and prudence dictate that the union itself undertake the
collection of union dues and assessments from its members (and agency fees from
non-union employees); this, of course, without prejudice to suing the employer for unfair
labor practice.
There was thus no basis for the Voluntary Arbitrator to require Holy Cross to
assume liability for the union dues and assessments, and agency fees that it had failed
to deduct from its employees salaries on the proffered plea that contrary to established
practice, KAMAPI had failed to submit to the college comptroller every 8 th day of the
month, a list of employees from whose pay union dues and the corresponding agency
fees were to be deducted.
WHEREFORE, the requirement imposed on petitioner Holy Cross by the challenged
decision of the Voluntary Arbitrator, to pay respondent KAMAPI the amount equivalent
to the uncollected union dues and agency fees from August 1989 up to the time a new
collective bargaining agreement is concluded, is NULLIFIED and SET ASIDE; but in all
other respects, the decision of the Voluntary Arbitrator is hereby AFFIRMED.
SO ORDERED.
Davide, Jr., Melo, Francisco, and Panganiban, JJ., concur.
[1] Among them, the holding of a general assembly, election of new officers, selection of a negotiating
panel and submission of proposal for a new collective bargaining agreement; Rollo, p. 57.
[2] Letter dated August 3, 1989; Id. at p. 58.
[3] Supra note 1 and related text.
[4] 1, 2 and of Article IV of the CBA provides that the management is authorized to deduct union dues and

special assessments from the basic salaries and wages of union members and future union members,
and agency fees from non-union members who avail of any benefits under the CBA, without need for
individual check-off authorization. 3 of the same Article provides that the management shall remit the
collections to the union. Rollo, pp. 23 and 42-3.
[5] Filed on July 28, 1989; see Rollo, p. 22.
[6] Id. At p. 23.
[7] Supra, at note 3.
[8] This is so stated by Mr. Emilio Palma Gil, in a letter addressed to Mrs. Caballero, president of the

HCDCU-KAMAPI. SEE 1 and 2 of Art. I; also p. 41.

[9] September 27, 1991.
[10] See Annex R of Conciliation Proceedings;, dated Oct. 19, 1991 Rollo at p. 109.
[11] Supra at notes 1and 3.
[12] Decision of the Voluntary Arbitrator, July 22, 1992; Rollo at p. 31.
[13] See Assignment of Errors, Petition; Rollo at p. 10.
[14] See Petition and Reply, Rollo at pp. 5, and 155, respectively.
[15] See Comment, Rollo at p. 218; See also Annex 1 thereof, Rollo at 221, 229.
[16] Pascual, C., Labor Relations Law, at 173.
[17] See A.L. Ammen Trans. Co. v. Bicol Trans Employees Mutual Assn. And CIR, 91 Phils. 649.
[18] Volkchel Labor Union v. BLR, et al., GR No. L-45824, June 19, 1985.
[19] Though not ordinarily perceived in the context of Check-off, statutory authority for deductions from

employees' wages include the withholding of contributions to insurance or housing funds (e..g. SSS,
GSIS or PAGIBIG), or of taxes under relevant tax legislation; deduction for debts owned the employer or
third persons (Art. 1706 Civil Code) or for breakages (Art. 114 Labor Code and 14 Rule VIII, Book III,
Implementing Rules and Regulations). In the case of contract, as in the case of provisions in the CBA;
see also Fernandez, Labor Law, at 132.
[20] See Art 241 (n) and (o) of the Labor Code.
[21] See Alcantara, Reviewer in Labor and Social Legislation at p. 211, 1988 ed.
[22] Id.
[23] Sec. 248 (I) of the Labor Code, as amended, provides that it shall be unlawful for an employer to ** **

violate a collective bargaining agreement; and under Art. 261 declares that except flagrant and/or
malicious refusal to comply with economic provisions, CBA violations are mere grievances, not ULP, thus
subject to grievance machinery and volu

15) Flight vs. PAL GR No. 178083 July 22, 2008

SPECIAL THIRD DIVISION

FLIGHT ATTENDANTS AND G.R. No. 178083

STEWARDS ASSOCIATION OF
THE PHILIPPINES (FASAP),
Petitioner, Present:
Ynares-Santiago, J. (Chairperson),
- versus - Chico-Nazario,

Nachura,

Peralta, and

Bersamin,* JJ.

PHILIPPINE AIRLINES, INC.,

PATRIA CHIONG and COURT Promulgated:

OF APPEALS,

Respondents. October 2, 2009

x ---------------------------------------------------------------------------------------- x

RESOLUTION

YNARES-SANTIAGO, J.:

For resolution is respondent Philippine Airlines, Inc.s (PAL) Motion

for Reconsideration[1] of our Decision of July 22, 2008, the dispositive portion of
which provides:

WHEREFORE, the instant petition is GRANTED. The assailed Decision of the

Court of Appeals in CA-G.R. SP No. 87956 dated August 23, 2006, which affirmed the
Decision of the NLRC setting aside the Labor Arbiters findings of illegal retrenchment
and its Resolution of May 29, 2007 denying the motion for reconsideration, are
REVERSED and SET ASIDE and a new one is rendered:
 1. FINDING respondent Philippine Airlines, Inc. GUILTY of illegal
dismissal;

2. ORDERING Philippine Airlines, Inc. to reinstate the cabin crew

personnel who were covered by the retrenchment and demotion
scheme of June 15, 1998 made effective on July 15, 1998, without loss
of seniority rights and other privileges, and to pay them full backwages,
inclusive of allowances and other monetary benefits computed from the
time of their separation up to the time of their actual reinstatement,
provided that with respect to those who had received their respective
separation pay, the amounts of payments shall be deducted from their
backwages. Where reinstatement is no longer feasible because the
positions previously held no longer exist, respondent Corporation shall
pay backwages plus, in lieu of reinstatement, separation pay equal to
one (1) month pay for every year of service;

3. ORDERING Philippine Airlines, Inc. to pay attorneys fees

equivalent to ten percent (10%) of the total monetary award.

Costs against respondent PAL.

SO ORDERED.

In its Motion for Reconsideration, PAL maintains that it was suffering from
financial distress which justified the retrenchment of more than 1,400 of its flight
attendants. This, it argued, was an established fact. Furthermore, FASAP never
assailed the economic basis for the retrenchment, but only the allegedly
discriminatory and baseless manner by which it was carried out.

PAL asserts that it has presented proof of its claimed losses by attaching its
petition for suspension of payments, as well as the June 23, 1998 Order of the
Securities and Exchange Commission (SEC) approving the said petition for
suspension of payments, in its Motion to Dismiss and/or Consolidation of
Case filed with the Labor Arbiter in NLRC-NCR Case No. 06-05100-98, or the labor
case subject of the herein petition. Also attached to the petition for suspension of
payments were its audited financial statements for its fiscal year ending March
1998, and interim financial statements as of the end of the month prior to the
filing of its petition for suspension of payments, as well as:

a) A summary of its debts and other liabilities;

b) A summary of its assets and properties;

c) List of its equity security shareholders showing the name of the security
holder and the kind of interest registered in the name of each holder;

d) A schedule which contains a full and true statement of all of its debts and
liabilities, together with a list of all those to whom said debts and liabilities are due;

e) An inventory which contains an accurate description of all the real and

personal property, estate and effects of PAL, together with a statement of the value of
each item of said property, estate and effects, their respective location and a statement
of the encumbrances thereon.

In the instant Motion for Reconsideration, PAL attached a copy of its

audited financial statements for fiscal years 1996, 1997 and 1998. It justifies the
submission before the Court of Appeals of its 2002-2004, and not the 1996-1998,
audited financial statements, to show that as of the time of their submission with
the Court of Appeals, PAL was still under rehabilitation, and not for the purpose of
establishing its financial problems during the retrenchment period.
 PAL asserts further that the Court should have accorded the SECs findings
as regards its financial condition respect and finality, considering that said findings
were based on the financial statements and other documents submitted to it,
which PAL now submits, albeit belatedly, via the instant Motion for
Reconsideration. It cites the case of Clarion Printing House Inc. v. National Labor
Relations Commission,[2] where the Court declared that the appointment of a
receiver or management committee by the SEC presupposes a finding that, inter
alia, a company possesses sufficient property to cover all its debts but foresees
the impossibility of meeting them when they respectively fall due and there is
imminent danger of dissipation, loss, wastage or destruction of assets or other
properties or paralyzation of business operations. On the other hand, it claims
that in Rivera v. Espiritu,[3] the Court made a finding that as a result of the pilots
three-week strike that began on June 5, 1998, PALs financial situation went from
bad to worse and it was faced with bankruptcy, requiring it to seek rehabilitation
and downsize its labor force by more than one-third; and that said pilots strike
was immediately followed by another four-day employee-wide strike on July 22,
1998, which involved 1,899 union[4] members.

PAL likewise cites previous decisions of the Court which declared a

suspension of claims against it in light of pending rehabilitation proceedings and
the issuance of a stay order in the enforcement of all claims, whether for money
or otherwise, which is effective from the date of its issuance until the dismissal of
the petition or the termination of the rehabilitation proceedings.[5] Moreover, it
claims that the infusion of $200 million in PAL in June 1999 is proof of the airlines
financial distress, and was a condition sine qua non if PALs Amended and Restated
Rehabilitation Plan were to be approved by the SEC, and if the absolute closure of
PAL were to be averted.

PAL underscores that its situation in 1998 was unique, as it had to contend
with

the very distinct possibility that its losses would eventually result in default on its
payments to creditors for its aircraft leases. If that happened, creditors could have
 immediately seized all its leased planes and that would have spelled PALs demise. The
petition for rehabilitation and suspension of payments was precisely intended to avoid
PALs collapse and eventual liquidation.[6]

Exercising its management prerogative and sound business judgment, it

decided to cut its fleet of aircraft in order to minimize its operating losses and
rescue itself from total downfall; which meant that a corresponding company-
wide reduction in manpower necessarily had to be made. As a result, 5,000 PAL
employees (including the herein 1,400 cabin attendants) were retrenched.

Further, PAL argues that aside from the confluence of simultaneous

unfortunate events that occurred during the time, like successive strikes, peso
depreciation and the Asian currency crisis, there was a serious drop in passenger
traffic which necessitated the closure of PALs entire European, Australian,
and Middle Eastoperations and numerous Asian stations, as well as some of its
domestic stations. Consequently, its 27 international routes were reduced to only
7, and its 37 domestic routes to just 17.

PAL claims that it did not act with undue haste in effecting the mass
retrenchment of cabin attendants since, as early as February 17, 1998,
consultations were being held in connection with the proposed retrenchment,
and that twice-weekly meetings between the union and the airline were being
held since February 12, 1998. It claims that it took PAL four months before the
retrenchment scheme was finally implemented.

With regard to the implementation of Plan 22 instead of the original Plan

14, PAL asserts that, in so doing, it should not be found guilty of bad faith. It sets
out the chronology of events that led it to implement Plan 22 instead of Plan 14,
thus:
 The initial plan was, indeed, to reduce PALs fleet from 54 planes to 14. With a
smaller fleet, PAL necessarily had to reduce manpower accordingly, and this was the
basis for the retrenchment. The retrenchment was done on the basis of the conditions
and circumstances existing at that time. However, a series of events ensued

PAL was placed under corporate rehabilitation by the SEC on June 23, 1998.

Later, on July 22, 1998, the rank-and-file employees belonging to PALEA staged
a strike.

Then, on August 28, 1998, President Joseph Ejercito Estrada issued

Administrative Order No. 16 creating Inter-Agency Task Force to aid PAL and its
employees in solving the problem.

On September 4, 1998, PAL submitted an offer to the Task Force of a plan to

transfer shares of stocks to its employees with a request to suspend existing Collective
Bargaining Agreements, which was later rejected by the employees.

On September 23, 1998, PAL ceased operations.

Then, President Estrada intervened again through the request of PAL

employees. PALEA made an offer, which was rejected by PAL. Finally, PALEA made an
offer again which was successfully ratified by the employees on October 2, 1998 and
accepted by PAL.

Subsequently, PAL partially resumed domestic operations on October 7, 1998

believing that the mutually beneficial terms of the suspension agreement could possibly
redeem PAL. Later, it partially resumed its operations internationally (Los
Angeles and San Francisco, United States).
 True enough, with some degree of relief as a result of the suspension of
payment and rehabilitation proceedings in the SEC and the suspension of the CBA, PAL
began to see slow but steady improvements. Also, airline industry experts who were
commissioned by PAL to assist in drafting its Amended and Restated Rehabilitation Plan
came to a conclusion that PAL had to increase its fleet of planes to improve its financial
and operational viability. This advice was adopted by PAL in its Amended and Restated
Rehabilitation Plan, which was eventually approved by the SEC.

With these supervening events, PAL decided to implement Plan 22 upon

reevaluation and optimistic future projection for its operations. The decision to abandon
Plan 14 was not done with precipitate haste. The Honorable Court should appreciate
that the chain of unfolding events after the retrenchment encouraged PAL, in the
exercise of its sound business discretion, to implement Plan 22. This was not a
capricious decision. In fact, the SEC approved PALs Amended and Restated
Rehabilitation Plan, which includes, among others, PALs Fleet Plan composed of 22
planes.

Neither does it show that PAL was uncertain of its financial condition when it
retrenched based on Plan 14. PAL would not have even petitioned the SEC for its
rehabilitation were it not certain of its dire financial state. The decision to later abandon
Plan 14 was a business judgment that PAL made in good faith upon the advice of foreign
airline industry experts and in light of the supervening circumstances explained above.

In this regard, this Honorable Court has once held that

Questions of policy or of management are left solely to the honest

decision of the board as the business manager of the corporation, and
the court is without authority to substitute its judgment for that of the
board, and as long as it acts in good faith and in the exercise of honest
judgment in the interest of the corporation, its orders are not
reviewable by the courts.

On the basis of Plan 22, PAL decided to

recall/rehire some of the retrenched
employees.
 With due respect, this Honorable Court is mistaken in its ruling that PAL acted in
bad faith simply because it later on decided to recall or rehire the employees it initially
retrenched. The decision to recall/rehire was a logical consequence of PALs decision to
increase its fleet from 14 to 22 planes, which as discussed earlier, was a business
judgment exercised in good faith by PAL after a series of significant events.

PAL did not even have any legal obligation to rehire the employees who have
already been paid their separation pay and who have executed valid quitclaims. PAL,
instead of being accused of bad faith for rehiring these employees, should in fact be
commended. That the retrenched employees were given priority in hiring is certainly
not bad faith. Noteworthy is the fact that PAL never hired NEW employees until
November 2000 or more than 2 years after the 1998 retrenchment.

It is respectfully submitted that the legality of the retrenchment could not be

made to depend on the fact that PAL recalled/rehired some of the employees after five
months without taking into account the supervening events. At the exact time of
retrenchment, PAL was not in a position to know with certainty that it could actually
recover from the precarious financial problem it was facing and, if so, when.

The only thing PAL knew at that exact point in time was that it was in its most
critical condition when its liabilities amounted to about Php 85,109,075,351.00, while its
assets amounted to only about Php 90,642,330,919.00 aggravated by many other
circumstances as explained earlier. At the time of the retrenchment in June 1998, PAL
was at the brink of total collapse and it could not have known that in five months, there
will be supervening events that will impel it to reassess its initial decisions.

xxxx

In the present case, PAL beseeches this Honorable Court to take a second look
at the peculiar facts and circumstances that clearly show that the recall/rehire was done
in good faith. These facts and circumstances make the case of PAL totally different from
the other cases decided by this Honorable Court where it found bad faith on the part of
the employer for immediately rehiring or hiring employees after retrenchment.
 xxxx

But even then, PAL still endeavored to recall or rehire the maximum number of
FASAP members that it could. Thus, out of the 1,423 FASAP members who were
retrenched, 496 were eventually recalled or reinstated (those who did not receive
separation pay and opted to resume their employment with PAL with no loss of
seniority).

On the other hand, 321 FASAP members were rehired (those who received
separation pay and voluntarily rejoined PAL as new employees). In this regard, PAL
would like to take exception to the Honorable Courts observation that these employees
were taken in as new hires without due regard to their long years of service. The FASAP
members who were rehired as new employees were those who already received their
separation pay because of the retrenchment but voluntarily accepted PALs offer for
them to be rehired when Plan 22 was implemented. It cannot be said that they were
prejudiced by the rehire process, as they already cashed in on their tenure when they
accepted the separation pay. That they later on accepted PALs offer to rehire them as
new employees was purely voluntary on their part.

Meanwhile, around 591 FASAP members opted not to return anymore after
receiving their full separation pay. Thus, including those who voluntarily opted not to
resume their employment with PAL, only about 591 can be considered to have remained
unrecalled or unrehired.

It is significant to mention that FASAP directly and actively participated in the

recall process, and even suggested the names of its members for prospective recall.

Likewise, in the recall process, PAL followed the provisions of the CBA and as a
result, some of the recalled employees were assigned to lower positions (or demoted as
noted by this Honorable Court). However, this was only because there were not enough
positions for all of them to be restored to their previous posts. Evidently, with lesser
planes flying international routes, not all international flight attendants would be
restored to international flight posts. Some of them would be downgraded to domestic
 flights. This was the natural and logical effect of the fleet downsizing that PAL adopted.
This could not be a badge of bad faith, as this Honorable Court seems to believe.

xxxx

Likewise, no bad faith should be inferred from PALs closure in September 1998.
That decision was by no means easy being the national flag carrier and the oldest airline
in Asia (having operated for 57 years at the time). The closure could not have been a
mere retaliation for rejecting the offer of PAL, as it would have aggravated matters
further and rendered rehabilitation impossible.

Hence, PALs decision to resume operations when the employees acceded to its
request to suspend the CBA should be seen in this context. This was not a coercive
posture. PAL resumed operations only because the suspension of the CBA, among
others, gave it hope that it could recover.

Furthermore, any issue on the legality of the suspension of the CBA had already
been put to rest by no less than this Honorable Court in the case of Rivera vs. Espiritu
where it held that

The assailed PAL-PALEA agreement was the result of voluntary collective

bargaining negotiations undertaken in the light of the severe financial
situation faced by the employer, with the peculiar and unique intention
of not merely promoting industrial peace at PAL, but preventing the
latters closure.[7] (Emphasis supplied)

PAL explains that the 140 probationary cabin attendants who were fired
and subsequently rehired were part of an earlier retrenchment process in
February and March 1998, a component of PALs less drastic cost cutting measures
then being implemented. Eventually, these rehired probationary cabin attendants
were included in the subject retrenchment of more than 1,400. Thus, it claims
that it was inaccurate for the Court to have held that these 140 probationary
cabin attendants were retained while those with permanent status were fired.

Finally, PAL begs the Court to reconsider its finding that the retrenchment
scheme in question did not pass the test of fairness and reasonableness with
respect to the criteria used in selecting those whose services should be retained
or terminated. That it merely used the criteria stipulated in its CBA with FASAP
where efficiency rating and inverse seniority are the basic considerations as
carried over from the parties previous CBAs could allegedly be seen from the
manner the retrenchment plan was carried out. The rating variables contained in
the Performance Evaluation Form of each and every cabin crew personnels
Grooming and Appearance Handbook are fair and reasonable since they are
inherent requirements (necessarily intertwined, as PAL would put it) for
employment as flight attendant or steward. More significantly, it claims that the
criteria used in the implementation of the retrenchment scheme in question was
based on the ratified PAL-FASAP 1996-2000 CBA, which should be considered as
the law between the parties.

PAL believes that the Court may have misconstrued the significance of the
term other reasons which the NLRC utilized in its summary of FASAP members
and causes for their retrenchment,[8] arguing that the use of the phrase does not
necessarily mean that the employees were retrenched for obscure reasons that
are not acceptable under the law; it simply points to the NLRCs economy of
language in lumping together various reasons for retrenchment, such as excess
sick leaves, previous admonitions, suspensions, passenger complaints, poor
performance, tardiness, etc. It claims that it used seniority in conjunction with a
combination of these grounds in arriving at a conclusion of whether to retain or
retrench.

PAL defends as well its use of a single year (1997) as basis for assessing the
cabin attendants fitness for retention or retrenchment, stressing that its CBA with
FASAP requires as basis for reduction in personnel only one efficiency rating,
which should be construed as that obtained by each cabin attendant for
a single year, in accordance with Section 112 of the CBA which provides:

In the event of redundancy, phase-out of equipment or reduction of operations,

the following rules in the reduction of personnel shall apply:

A. Reduction in the number of Pursers:

1. In the event of a reduction of purser OCARs, pursers who have

not attained an efficiency rating of 85% shall be downgraded to
international Cabin Attendant in the reverse order of seniority.

2. If the reduction of purser OCARs would involve more than the

number of pursers who have not attained an efficiency rating of
85%, then pursers who have attained an efficiency rating of 85%
shall be downgraded to international Cabin Attendant in the
inverse order of seniority.

B. In reducing the number of international Cabin Attendants due to

reduction in international Cabin Attendant OCARs, the same process in
paragraph A shall be observed. International Cabin Attendants shall be
downgraded to domestic.

C. In the event of reduction of domestic OCARs thereby necessitating the

retrenchment of personnel, the same process shall be observed.

In no case, however, shall a regular Cabin Attendant be separated from the

service in the event of retrenchment until all probationary or contractual Cabin
Attendant in the entire Cabin Attendants Corps, in that order, shall have been
retrenched. (Emphasis and underscoring supplied)
 PAL asserts that since efficiency ratings for each cabin or flight attendant
are computed on an annual basis, it should therefore mean that when Section
112 referred to an efficiency rating of 85%, then it should logically and practically
follow that only one years worth of performance should be used as criteria for the
retrenchment of cabin attendants that is, the most recent efficiency rating
obtained by each of them. For purposes of the present case, it would necessarily
be that for the year 1997, or the year immediately prior to the retrenchment, and
no other.

Finally, regarding the quitclaims executed, PAL maintains that since the
retrenchment scheme it implemented was essentially valid, then it should follow
that the quitclaims are regular as well, and more so given the absence of mistake,
duress, fraud or misrepresentation.

In its Comment[9] to PALs Motion for Reconsideration, FASAP asserts that

the issue is not centered on PALs financial condition but whether the
retrenchment of the 1,400 cabin personnel was warranted. It alleges that:

The issue is whether or not the nature and extent of the financial circumstances and the
methods used to resolve fiscal difficulties warranted the illegal and unceremonious
dismissal of around 1,400 flight attendants, stewards, and cabin crew. It was the
termination without considering the legal factors for retrenchment. Because of the
difficulties that the entire nation was going through, the ostensible name given was
retrenchment. But it was really an illegal dismissal and arbitrary termination. x x x

The casualties of illegal action, the ones sacrificed in the early stages of the situation and
not as a last resort, are not the employer and its officers or owner. As the Honorable
Court pointed out, the questioned action struck at the very heart of the workers
employment, the lifeblood upon which the worker and his family owe their survival. No
proof has been adduced in ten long years of litigation that retrenchment was only a
measure of last resort, (that) other less drastic means were considered and tried and
found inadequate.
 xxxx

The Court has treated the instant case for what it truly is an illegal
retrenchment, one that was prematurely done and whimsically carried out. x x x

This is about a bad faith retrenchment one which neither complied with the
legal prerequisites therefor nor observed the provisions of the PAL-FASAP CBA thereon;
one which was not employed as a last resort and which did not have any fair and
reasonable criteria to serve as basis for selecting who would be retrenched; one which
was capriciously and whimsically implemented; one which was illegally made.[10]

FASAP declares that although it recognized PALs financial difficulties in

1997 and 1998, it never conceded the same to be valid reason upon which to base
the questioned retrenchment, citing that in proceedings below, the reasonable
necessity of the retrenchment and its effectiveness in preventing losses to PAL
had been squarely raised. FASAP maintains that prior negotiations with PAL (on
the possible implementation of cost-cutting measures, employee rotation plans,
triple and quadruple room sharing arrangements, allocation of vacation leaves
without pay, etc.) is proof of that recognition, but that ultimately, it was
incumbent upon PAL to have shown that it undertook a retrenchment scheme
that was in proportion to and commensurate with the financial distress it was
experiencing at the time.

Essentially, FASAP merely echoed our pronouncements, focusing upon our

dissertation on each of the elements required in order to justify retrenchment,
most of which were found lacking in PALs retrenchment program or
scheme. Specifically, FASAP points to the lack of prior resort to cost-cutting
measures, the rehiring of probationary employees, prior assurances by PAL that
retrenchment was no longer necessary, and lack of fair and reasonable criteria in
selecting the employees to retrench.
 Specifically, mention is made that there is nothing in its then existing CBA
with PAL which mandates that a single year 1997 should be used as the gauge or
measure for determining the flight attendants performance for purposes of
retrenchment. Asserting that PALs justification of its use of a single year was a
very strained interpretation of the provisions in the CBA, FASAP insists that
seniority, loyalty and past efficiency are requirements of law and jurisprudence
which may not be summarily disregarded in choosing whom to retrench, demote
or retain, a proposition it claims to find support in Article III, Section 7(A) of its
CBA which provides:

The Association (FASAP) hereby acknowledges that the management of the

Company (PAL) and the direction of its employees; x x x; and the lay-off and re-
employment of employees in connection with increases or decreases in the work force
are the exclusive rights and functions of management provided only that the Company
act in accordance with applicable laws and the provisions of this Agreement.[11] (Words
in parentheses supplied)

FASAP goes on further to suggest that the basic criterion for effecting the
retrenchment scheme should have been seniority, as enunciated in Maya Farms
Employees Organization v. National Labor Relations Commission.[12] In said case,
the employer was constrained to streamline its manpower base owing to losses
and setbacks in operations. Management sent notices of termination (due to
redundancy) to 66 of its employees. In the labor case that ensued, the union
pointed to a violation of a specific provision in its CBA which declared, thus:

Sec. 2. LIFO RULE. In all cases of lay-off or retrenchment resulting in termination

of employment in the line of work, the Last-In-First-Out (LIFO) Rule must always be
strictly observed.

Ultimately, we held therein that the employer did not violate the LIFO rule in the
CBA. We explained therein that
 It is not disputed that the LIFO rule applies to termination of employment in the
line of work. Verily, what is contemplated in the LIFO rule is that when there are two or
more employees occupying the same position in the company affected by the
retrenchment program, the last one employed will necessarily be the first to go.

Moreover, the reason why there was no violation of the LIFO rule was amply
explained by public respondent in this wise:

. . . The LIFO rule under the CBA is explicit. It is ordained that in

cases of retrenchment resulting in termination of employment in line of
work, the employee who was employed on the latest date must be the
first one to go. The provision speaks of termination in the line of work.
This contemplates a situation where employees occupying the same
position in the company are to be affected by the retrenchment
program. Since there ought to be a reduction in the number of
personnel in such positions, the length of service of each employee is
the determining factor, such that the employee who has a longer period
of employment will be retained.

In the case under consideration, specifically with respect to

Maya Farms, several positions were affected by the special involuntary
redundancy program. These are packers, egg sorters/stockers, drivers.
In the case of packers, prior to the involuntary redundancy program,
twenty-one employees occupied the position of packers. Out of this
number, only 5 were retained. In this group of employees, the earliest
date of employment was October 27, 1969, and the latest packer was
employed in 1989. The most senior employees occupying the position of
packers who were retained are as follows:

Santos, Laura C. Oct. 27, 1969

Estrada, Mercedes Aug. 20, 1970

Hortaleza, Lita June 11, 1971

Jimenez, Lolita April 25, 1972

Aquino, Teresita June 25, 1975

 All the other packers employed after June 2, 1975 (sic) were
separated from the service.

The same is true with respect to egg sorters. The egg sorters
employed on or before April 26, 1972 were retained. All those
employed after said date were separated.

With respect to the position of drivers, there were eight drivers

prior to the involuntary redundancy program. Thereafter only 3
positions were retained. Accordingly, the three drivers who were most
senior in terms of period of employment, were retained.

They are: Ceferino D. Narag, Efren Macaraig and Pablito

Macaraig.

The case of Roberta Cabrera and Lydia C. Bandong, Asst.

Superintendent for packing and Asst. Superintendent for meat
processing respectively was presented by the union as an instance
where the LIFO rule was not observed by management. The union
pointed out that Lydia Bandong who was retained by management was
employed on a much later date than Roberta Cabrera, and both are
Assistant Superintendent. We cannot sustain the union's argument. It is
indeed true that Roberta Cabrera was employed earlier (January 28,
1961) and (sic) Lydia Bandong (July 9, 1966). However, it is maintained
that in meat processing department there were 3 Asst. Superintendents
assigned as head of the 3 sections thereat. The reason advanced by the
company in retaining Bandong was that as Asst. Superintendent for
meat processing she could already take care of the operations of the
other sections. The nature of work of each assistant superintendent as
well as experience were taken into account by management. Such
criteria was not shown to be whimsical nor carpricious (sic).[13]
 Finally, FASAP claims that PAL did not provide reasons for retrenching the
more than 1,400 flight attendants; that it was only when it filed its Supplemental
Memorandum before the Labor Arbiter in March 2000 that the airline submitted
in evidence the ICCD Masterank and Seniority 1997 Ratings, which allegedly took
into account the subjective factors such as appearance and good grooming, which
supposedly require the written conformity of its members if they were to be
considered at all, in accordance with Section 124, Article XXVI of the CBA.

By way of reply to FASAPs Comment, PAL insists that its decision to

downsize the flight fleet was the principal reason why it had to put into effect a
corresponding downsizing of cabin crew personnel; that the reduction in fleet size
was an integral part of its SEC-approved rehabilitation plan; that the reduction in
the number of its aircraft by 75% from 54 to just 14 likewise necessitated a
corresponding 75% reduction in its total cabin crew personnel; and that its
subsequent decision to increase its remaining fleet from 14 aircraft to 22 was a
business judgment exercised in good faith after a series of significant events and
upon the advice of airline industry experts who were assisting it in its
rehabilitation efforts.[14] This increase from 14 to 22 aircraft was then included in
its Amended and Restated Rehabilitation Plan, which was subsequently approved
by the SEC. Because of this, it then had to increase its manpower; it recalled or
rehired the services of the employees it had previously terminated.

PAL begs the Court to recognize this downsizing of aircraft as a valid

exercise of its management prerogative to close its business operations, and not
merely to reduce personnel. In other words, PAL would have the Court believe
that its retrenchment program is not merely a reduction of personnel for the
purpose of cutting on costs of operations, but as a closure of its business, a
cessation of business operations to prevent further financial drain.[15] PAL argues
that cost-cutting measures could not have sufficed to nurse the airline back to
financial health; it had to resort to partial closure of its business. Thus:

18. Moreover, how can PAL possibly implement the cost-cutting measures
allegedly suggested by FASAP with 75% of its fleet already gone? The situation would be
different if PAL retained its 54-plane fleet, and PALs only concern was to save on salaries
and wages. In such a situation, PAL is indeed obliged to resort to less drastic cost-cutting
measures before it can validly proceed with retrenchment. But this is not the case here.
PALs financial condition could not have improved by merely adopting cost-cutting
measures such as work rotation and forced leaves. In fact, retrenchment alone could
not have saved PAL from financial ruin. PAL had to resort to the drastic action of
partially closing its business operations by downsizing its fleet of aircrafts. This naturally
resulted in the reduction of PALs personnel.

19. Assuming arguendo that the jurisprudence relied upon by FASAP apply, the
proven facts in this case show that retrenchment was not the only option for PAL. The
problem with FASAP is that it is taking a myopic view of what truly happened. It
stubbornly claims that the reduction of employees is a simple case of retrenchment
program that was implemented in the first instance. But it is clear from the record that
when PAL suffered serious business losses, retrenchment was not the only option,
obviously because the objective was to cut down on operating expenses as a whole, and
not merely in terms of salaries and wages, which is the only purpose of a retrenchment.

20. What PAL did was to reduce its fleet of 54 planes to only 14 planes. It was
only after PAL reduced its fleet of aircrafts that it had to terminate the employment of
its employees who were already in excess of the workforce required under the reduced
fleet set-up. In other words, retrenchment was merely a necessary and natural
consequence of PALs earlier decision to downsize its fleet of aircrafts. There is thus
simply no basis to say that PAL implemented retrenchment in the first instance.

xxxx

22. Neither is there basis to FASAPs claim that PAL made the assurance that
there will be no more need for retrenchment. How could have PAL given such assurance
in light of its huge business losses, bordering on bankruptcy? The truth is, no such
assurance was ever given by PAL. This is clear in the minutes of all of the meetings with
FASAP where the only issue discussed was how to proceed with the retrenchment.
These meetings were held in February to April 1998, or two to three months before the
decision to reduce operations was made by PAL due to various serious supervening
events the strike staged by the Airline Pilots Association of the Philippines (ALPAP) and
by the Philippine Airlines Employees Association (PALEA).[16]
 On the use of efficiency ratings obtained for the year 1997 as singular basis
for determining the fitness of cabin crew personnel to continue working with it,
PAL explains that

24. There is nothing unreasonable in using the year 1997 as basis for arriving at
the efficiency ratings. FASAPs insinuations that it ignored the employees alleged
exceptional performance ratings and exemplary attendance records in the past are
simply baseless, misleading and erroneous.

24.1. First, while an employee may rack up hundreds of awards

and commendations and hundreds of hours of leave credits, it does not
necessarily follow that the same employee, although admittedly of
exceptional caliber, cannot be terminated if just or authorized cause
subsequently exists. For instance, if there is redundancy, an employee
holding a superfluous position may be terminated regardless of
numerous awards and leave credits he may have earned. In this case, it
cannot be denied that PALs reduction, or partial closure, of its business
operations, i.e., downsizing its flight fleet from 54 to 14 aircrafts, in
order to prevent business losses and avoid total closure of its business,
is one of the recognized authorized causes expressly provided under
Article 283 of the Labor Code.

PAL could, therefore, retrench employees regardless of the

number of commendations, awards and accumulated leave credits the
latter obtained in the course of employment provided, of course, that
the retrenchment is valid and legal. In this case, the Labor Arbiter, the
NLRC and the Court of Appeals unanimouslyfound that the
retrenchment is intrinsically valid and legal based on the same set of
evidence. In fact, the Labor Arbiter categorically ruled:

there is no question that the rules imposed by law and

jurisprudence to sustain retrenchment have been
amply satisfied by PAL. The only issue at hand is
whether or not the retrenchment can be upheld for
 complying with rules set forth in the collective
bargaining agreement.

24.2. Second, in implementing retrenchment, the law does not

require an employer to look back into far reaches of time to check every
good deed performed by every employee. This would not only be highly
impractical, but manifestly absurd as well. In evaluating job efficiency, it
is enough for an employer to fix a determinate time frame within which
to base its evaluation. It can be six months, one year, two years, three
years or ten years. It can in fact be any period of time, subject to
managements sound discretion.

But to be fair and reasonable, the application of the period must

be uniform and consistent. It cannot be one year for employee A, two
years for employee B and three years for employee C. In this case, PAL
selected a period of one year (the year 1997), which was uniformly and
consistently applied to all, without exception.

The year 1997 was chosen by PAL as it was the most logical
period being the year immediately preceding the retrenchment. All
relevant records for the year 1997, such as attendance and performance
evaluation, were complete and accurate. Certainly, the year 1997 was
not selected for the purpose of discriminating against any employee,
but with the sole objective of retaining the more efficient among the
employees.

xxxx

26. FASAP then insists that the basic criterion to effect lay-off or retrenchment is
seniority. FASAP cites Article VII, Section 23 of the PAL-FASAP 1995-2000 CBA:

The term seniority whenever used in this Agreement shall be deemed to

mean a measure of a regular Cabin Attendants claim in relation to other
regular Cabin Attendants holding similar positions, to preferential
 consideration whenever the Company exercises its right to promote to a
higher paying position or lay-off of any Cabin Attendant.

27. FASAP obviously misread and misinterpreted Section 23 of the PAL-FASAP

1995-2000 CBA. The provision does not even mandate seniority to be a criterion
whenever PAL implements a reduction or retrenchment, much less does it say that
seniority is the one and only criterion to be applied. Section 23 simply defines seniority
and states that seniority may be given preferential consideration whenever PAL
exercises its right to promote to a higher paying position or lay-off of cabin attendants.
PAL did just that in complying with Section 112 of the PAL-FASAP CBA 1995-2000 when
seniority was applied whenever all other factors were found to be equal. PAL clearly
followed Section 23 of the PAL-FASAP CBA in giving seniority preferential consideration.
This is also reflected in the tabulation made by the NLRC in its Decision.[17]

PAL argues that in its past two CBAs with FASAP prior to the one under
controversy, the same provisions and criteria for appearance, grooming,
efficiency and performance were used, without objections having been advanced
by FASAP.

During oral arguments, PAL advanced an altogether new line of reasoning

that has, until now, never been advanced as the primary argument in defense of
its retrenchment scheme: that the principal and true reason why PAL had to
implement the mass lay-off of cabin personnel was not the downsizing of
aircraft fleet size, but the June 5, 1998 pilots strike, where approximately six
hundred (600) of its pilots apparently abandoned their planes and simultaneously
refused to fly. Thus, counsel for PAL manifested to the Court that

ATTY. MENDOZA

As a consequence, if your Honor please, but what really brought about, shall we say,
the really perilous situation of closure was that on June 5, 1998, the pilots went on
strike, ninety (90%) per cent of the pilots went on strike, approximately six hundred
(600). These pilots strike was so devastating because the pilots, if your Honors please,
 even left their place where they were at the time, somewhere in Bangkok, somewhere
in Taipei and they just left the planes. Without any pilots no plane can fly, your Honor,
that is the stark reality of the situation, and without airplanes flying, there would be no
place for employment of cabin attendants.[18] (Emphasis supplied)

As a result of this pilots strike, PAL claims to have suffered daily revenue
losses equivalent to P100 million and P50 million of lost fixed costs, which came
at a time when PAL had no more money.[19] Owing to this pilots strike, PAL was
brought to the brink of disaster and emergency that it needed to align the
number of cabin attendants with the number of airplanes that were
flying.[20] After the pilots went on strike, PAL was left with only 68 pilots who
chose to remain, but with 2,039 cabin attendants. Faced with this
disproportionate ratio of pilots to cabin attendants, PAL immediately decided to
terminate the services of more than 1,400 cabin attendants via the retrenchment
scheme in question. At the same time, the reduction in fleet which until that time
remained a mere proposal had to be immediately implemented, and cost-cutting
measures were simply out of the question. Thus:

ATTY. MENDOZA

While meetings between PAL and FASAP may have occurred prior to June 1998
to discuss measures in which to possibly avoid retrenchment with its planned reduction
of fleet, PALs financial circumstances drastically changed in June 1998 that necessitated
immediate and corresponding measures. Harsh reality was that, there simply was no
time. FASAP-suggested less drastic measures of work rotation, forced vacation leaves,
hotel sharing etc. were no longer feasible. Indeed, reduction by about 5,000
employees, including 1,423 cabin crew, was the less drastic measure. The alternative,
harsher obviously, was closure and liquidation.[21] (Emphasis supplied)

All throughout, it has been impressed upon us that PALs decision to

downsize its fleet size is the principal reason why it had to put into effect a
corresponding downsizing of cabin crew personnel. However, on oral arguments
before us, PAL now makes a total turnaround and attributes the retrenchment to
the June 5, 1998 pilots strike. Repeatedly, counsel for PAL blamed the pilots strike
as the main culprit, thus:

ATTY. MENDOZA

As a consequence, if your Honor please, but what really brought about, shall we say,
the really perilous situation of closure was that on June 5, 1998, the pilots went on
strike, ninety (90%) per cent of the pilots went on strike, approximately six hundred
(600). These pilots strike was so devastating x x x. Without any pilots no plane can fly,
your Honor, that is the stark reality of the situation, and without airplanes flying, there
would be no place for employment of cabin attendants.

xxxx

ATTY. MENDOZA

Well, according to the Court, Your Honor, the Court principally invalidated this
because, according to the Court it was fraudulent. And it was fraudulent because PAL
misrepresented that it was losing, but in fact it was not as the Court found. So, in other
words, if Your Honor please, as I have explained, there was no misrepresentation
because the members of FASAP could not have but known that there were less planes
that were flying. And they could not have but known that the number of cabin
attendants cannot have exceed that which were required by the number of planes that
were flying. So that was basically the reason for the redundancy and so it can never be
said that this was redundant. But as I have said, if Your Honor please, if the Court
reconsiders its finding that there was illegal dismissal there would really be no relevance
to this quitclaim because, in any event, the separation pay has been received by some,
except for those who declined it.

So therefore, if Your Honor please, if I may conclude since my time is practically

up. First, there can hardly be any question, in fact, it is considered by FASAP and found
by the National Labor Relations Commission, the Labor Arbiter, and the Court of Appeals
that circumstances existed that did not only warrant the reduction of personnel
including the members of FASAP and the cabin attendants but that these were
compelled by circumstances. If the cabin attendants were not retrenched you would
have a situation where cabin attendants would be there but were not needed but would
earn compensation.

Second, if Your Honor please, as to the second issue, cost-cutting measures

they were contemplated. But when the pilots struck, an emergency situation arose
and so there needed to be an immediate response to that situation and the only one
of the components of that response is this retrenchment.

Incidentally, if Your Honor please, a basic core of the rehabilitation of PAL was
for the creditors to agree. PAL is a different business than other businesses, Your Honor.
An airline cannot stand still and the creditors demands are not met immediately, PAL
would simply lose its airplanes. And so far as Point No. 3 is concerned, if Your Honor
please, PAL did the best it could under the circumstances. And as to number 3, as I said,
if Your Honor please, PAL acted in accordance with criteria in the Collective Bargaining
Agreement which it followed meticulously and religiously.

Whereas for the fourth, if Your Honor please, there was no fraud in the
execution of the quitclaim but I must emphasize once again that PALs case does not
really rest on the quitclaims. PALs case rests on the response that we made on the first
three (3) questions.

xxxx

ATTY. MENDOZA

Yes. As I explained, Your Honor, when the 1997 economic crisis took place and
PAL saw that it was going to create a problem, PAL started studying measures already.
But before it could implement any of these measures, even conclude the study the
pilots struck, when the pilots struck the situations changed entirely. It put PAL in
complete peril of total closure because no planes could fly, so that changed the
picture, there was no more time to engage in cost-cutting measures. What needed to
be done, if Your Honor please, is to do what was necessary to survive at that point? The
first thing to do to survive was to fly as many planes as possible in order to earn some
revenue. But you could only fly as many planes as there were pilots, and that was the
reason for the initial flights.

xxxx

ASSOCIATE JUSTICE NACHURA

During these conferences, did FASAP not suggest any other cost-cutting
measures in order to determine the immediate implementation of a retrenchment
program?

ATTY. MENDOZA

Well, there was an endorsed initial conversation; there were suggestions if

there is to be reduction of personnel, rotations, and so on and so forth, Your Honor.
So, by the time the pilots struck you have to retrench quickly x x x.

ASSOCIATE JUSTICE NACHURA

Because related to this is a statement in our Decision that the retrenchment was
illegal because it was not actually the last resort that PAL could have; it was not the last
resort that PAL could have attended, well used. That means, there were other options
that would probably have opened to PAL which would not be as detrimental to FASAP as
retrenchment.

ATTY. MENDOZA

If Your Honor please, may I put it this way? It was not just the last; it was the
only resort, Your Honor, because of these circumstances. There was no other option,
 but to operate flghts and spend only as necessary. If you have more cabin attendants
than we required for those planes which were flying you are spending needlessly
actually, Your Honor, and that is certainly not conducive to bring about a recovery of
Philippine Airlines.

xxxx

ASSOCIATE JUSTICE DE CASTRO

You mentioned thatbefore that, that there is a need for rehabilitation because
the PAL was in dire financial condition at that time, and it was

ATTY. MENDOZA

Your Honor please, the rehabilitation came after the pilots strike. Actually,
before the pilots strike the effort of PAL is to find the way to address the Asian
economic crisis. Its just like, if Your Honor please, a factory which is to be more efficient
in order to be able to compete, let us say, with the imported goods, so you downsize or
you may try to be more efficient but the situation PAL confronted after the pilots strike
was entirely different. It was a case of survival already, Your Honor, because it meant
closure and PAL was able to operate some planes only because of what they called
management pilots. There were certain pilots who were occupying supervisory positions
but who were employed still by PAL. They were the ones who actually flew the plane
because the members of the pilots union simply stopped working.[22] (Emphasis
supplied)

On the other hand, FASAP argued and reiterated its original

contentions, inter alia, that during negotiations for the implementation of cost-
cutting measures, it was assured by PAL that since there were negotiations with
possible investors who were being eyed as business partners, retrenchment was
no longer necessary;[23]that although it admitted PALs financial difficulties, it did
not concede that these losses justified the urgency, necessity and extent of the
questioned retrenchment scheme;[24] that the ICCD Masterank Listing was an
afterthought, the same having been presented only on March 13, 2000, and was
never shown to the retrenched employees during the period of
retrenchment;[25] that the criteria for retrenchment did not conform to the
CBA;[26] and that no cost-cutting measures were implemented.[27]

PAL has all this time tried to convince the Court that its decision to
downsize its flight fleet was the principal reason why it undertook a
corresponding downsizing of cabin crew personnel. This time, however, it
significantly changed stance and blamed the June 5, 1998 pilots strike as the real
culprit which drove it to undertake the massive retrenchment under scrutiny. This
time, PAL characterizes the retrenchment scheme and the downsizing of aircraft
as mere necessary reactions to or unfortunate consequences of the pilots strike,
which it claims likewise necessitated a disregard of all previous negotiations for
the implementation of cost-cutting measures that could have rendered the
retrenchment scheme unnecessary, and which cost-cutting measures it no longer
found necessary to undertake.

We find this argument untenable. The strike was a temporary occurrence

that did not necessitate the immediate and sweeping retrenchment of 1,400
cabin or flight attendants. By PALs own account, some of the striking pilots went
back to work in July 1998, or less than one month after the strike
began. Moreover, PAL admitted that it remedied the situation by employing
management pilots.[28] It could have hired new pilots as well. Certainly, it could
have implemented the cost-cutting measures being discussed as a temporary
measure to obviate the adverse effects of the pilots strike. There was no reason
to drastically implement a permanentretrenchment scheme in response to
a temporary strike, which could have ended at any time, or remedied promptly, if
management acted with alacrity. Juxtaposed with its failure to implement the
required cost-cutting measures, the retrenchment scheme was a knee-jerk
solution to a temporary problem that beset PAL at the time.
 Besides, we cannot simply allow PAL to conveniently blame the striking
pilots for causing the massive retrenchment of cabin personnel. Using them as
scapegoats to validate a comprehensive retrenchment scheme of cabin personnel
without observing the requirements set by law is both unfair and
underhanded. PAL must still prove that it implemented cost-cutting measures to
obviate retrenchment, which under the law should be the last resort. By PALs
own admission, however, the cabin personnel retrenchment scheme was one of
the first remedies it resorted to, even before it could complete the proposed
downsizing of its aircraft fleet. It admittedly dropped all plans of implementing
cost-cutting measures as soon as the pilots went on strike, and right away it sent
notices of termination to its cabin personnel.[29] This knee-jerk reaction would
explain why it had to eventually recall and rehire some of the cabin attendants
almost immediately after it retrenched them, because the retrenchment simply
was not commensurate with the downsizing of aircraft fleet size. This outcome
only proves to show that the decision to retrench came even before a final
determination of how many aircraft were needed to be retained or discarded, or
even before the rehabilitation plan could be approved.[30]

Again, it must be emphasized that in order for a retrenchment scheme to

be valid, all of the following elements under Article 283 of the Labor Code must
concur or be present, to wit:

(1) That retrenchment is reasonably necessary and likely to prevent business

losses which, if already incurred, are not merely de minimis, but substantial, serious,
actual and real, or if only expected, are reasonably imminent as perceived objectively
and in good faith by the employer;

(2) That the employer served written notice both to the employees and to the
Department of Labor and Employment at least one month prior to the intended date of
retrenchment;
 (3) That the employer pays the retrenched employees separation pay equivalent
to one (1) month pay or at least one-half () month pay for every year of service,
whichever is higher;

(4) That the employer exercises its prerogative to retrench employees in good
faith for the advancement of its interest and not to defeat or circumvent the employees
right to security of tenure; and,

(5) That the employer uses fair and reasonable criteria in ascertaining who
would be dismissed and who would be retained among the employees, such as status,
efficiency, seniority, physical fitness, age, and financial hardship for certain workers.

In the absence of one element, the retrenchment scheme becomes an

irregular exercise of management prerogative. The employers obligation to
exhaust all other means to avoid further losses without retrenching its employees
is a component of the first element as enumerated above. To impart operational
meaning to the constitutional policy of providing full protection to labor, the
employers prerogative to bring down labor costs by retrenching must be
exercised essentially as a measure of last resort, after less drastic means have
been tried and found wanting.[31]

In the instant case, PAL admitted that since the pilots strike allegedly
created a situation of extreme urgency, it no longer implemented cost-cutting
measures and proceeded directly to retrench. This being so, it clearly did not
abide by all the requirements under Article 283 of the Labor Code. At the time it
was implemented, the retrenchment scheme under scrutiny was not triggered
directly by any financial difficulty PAL was experiencing at the time, nor borne of
an actual implementation of its proposed downsizing of aircraft. It was brought
about by and resorted to as an immediate reaction to a pilots strike which, in
strict point of law and as herein earlier discussed, may not be considered as a
valid reason to retrench, nor may it be used to excuse PAL for its non-observance
of the requirements of the law on retrenchment under the Labor Code.
 On the basis of the foregoing disquisition, we find no further need to
discuss the other arguments advanced by the parties in their pleadings and during
the oral arguments.

Therefore, this Court finds no reason to disturb its finding that the
retrenchment of the flight attendants was illegally executed. As held in the
Decision sought to be reconsidered, PAL failed to observe the procedure and
requirements for a valid retrenchment. Assuming that PAL was indeed suffering
financial losses, the requisite proof therefor was not presented before the NLRC
which was the proper forum. More importantly, the manner of the retrenchment
was not in accordance with the procedure required by law. Hence, the
retrenchment of the flight attendants amounted to illegal
dismissal. Consequently, the flight attendants affected are entitled to the reliefs
provided by law, which include backwages and reinstatement or separation pay,
as the case may be.

PAL begs the compassion of this Court and alleges that the monetary award
it stands to pay to the affected flight attendants totals a whopping P2.3 billion,
the payment of which will certainly paralyze its operations and even lead to its
untimely demise. However, a careful review of the records of the case, as well as
the respective allegations of the parties, shows that several of the crew members
do not need to be paid full backwages or separation pay. A substantial fraction of
the 1,400 flight attendants have already been either recalled, reinstated or
relieved from the service. Still, some of them have reached the age of compulsory
retirement or even died. Likewise, a significant portion of these retrenched flight
attendants have already received separation pay and signed quitclaim. All of
these factors, to the mind of the Court, will greatly reduce the quoted amount of
the money judgment that PAL will have to pay.

After finality of this case, the records will have to be remanded to the Labor
Arbiter who decided the case at the first instance. There, the actual amount of
PALs liability to each and every flight attendant will be computed. Both parties
will have a chance to submit further proof and argument in support of their
respective proposed computations. For the guidance of the Labor Arbiter as well
as the parties, this Court lays down the following yardsticks in the computation of
the final amount of liability, in order to avoid any protracted and heated debates
which can again lead to further delays in the final resolution of this case and the
full realization by the retrenched flight attendants of the amounts necessary to
compensate and indemnify them for the wrongful retrenchment.

1. Flight attendants who have been re-employed without loss of seniority

rights shall be paid backwages but only up to the time of their actual
reinstatement.

2. Flight attendants who have been re-employed as new hires shall be

restored their seniority and other preferential rights. However, their backwages
shall be computed only up to the date of actual re-hiring.

3. Flight attendants who have reached their compulsory age of retirement

shall receive backwages up to the date of their retirement only. The same is true
as regards the heirs of those who have passed away.

4. Flight attendants who have not been re-employed by PAL, including

those who executed quitclaims and received separation pay or financial
assistance, shall be reinstated without loss of seniority rights and paid full
backwages. However, the amounts they already received should be deducted
from whatever amounts are finally adjudged to them individually.

Four members of the Division voted to include a fifth (5th) criterion, namely that
flight attendants who had obtained substantially equivalent or even more
lucrative employment elsewhere in 1998 or thereafter are deemed to have
severed their employment with PAL. They shall be entitled to full backwages from
the date of their retrenchment only up to the date they found employment
elsewhere.

On a final note, this Court finds that the award of attorneys fees equivalent
to 10% of the total monetary award should be tempered, considering the number
of flight attendants who stand to receive monetary awards and the totality of all
amounts due to them. To be sure, attorneys fees in labor cases are awarded
specifically in actions for recovery of wages or where an employee was forced to
litigate and thus incurred expenses to protect his rights and interests. In such
cases, a maximum of 10% of the total monetary award is justifiable under Article
111 of the Labor Code, Section 8, Rule VIII, Book III of its Implementing Rules and
paragraph 7, Article 2208 of the Civil Code.[32] The award of attorneys fees is
proper where there is a showing that the lawful wages were not paid
accordingly.[33]

x x x [T]here are two commonly accepted concepts of attorneys fees, the

so-called ordinary and extraordinary. In its ordinary concept, an attorneys fee is
the reasonable compensation paid to a lawyer by his client for the legal services
he has rendered to the latter. The basis of this compensation is the fact of his
employment by and his agreement with the client. In its extraordinary concept,
attorneys fees are deemed indemnity for damages ordered by the court to be paid
by the losing party in a litigation. The instances where these may be awarded are
those enumerated in Article 2208 of the Civil Code, specifically par. 7 thereof
which pertains to actions for recovery of wages, and is payable not to the lawyer
but to the client, unless they have agreed that the award shall pertain to the lawyer
as additional compensation or as part thereof. The extraordinary concept
of attorneys fees is the one contemplated in Article 111 of the Labor Code, which
provides:

Art. 111. Attorneys fees. (a) In cases of unlawful

withholding of wages, the culpable party may be assessed
attorneys fees equivalent to ten percent of the amount of
wages recovered x x x

The afore-quoted Article 111 is an exception to the declared policy of

strict construction in the awarding of attorneys fees. Although an
express finding of facts and law is still necessary to prove the merit of the
 award, there need not be any showing that the employer acted maliciously or
in bad faith when it withheld the wages. There need only be a showing that
the lawful wages were not paid accordingly, as in this case.

In carrying out and interpreting the Labor Codes provisions and its
implementing regulations, the employees welfare should be the primordial and
paramount consideration. This kind of interpretation gives meaning and substance
to the liberal and compassionate spirit of the law as provided in Article 4 of the
Labor Code which states that [a]ll doubts in the implementation and interpretation
of the provisions of [the Labor] Code including its implementing rules and
regulations, shall be resolved in favor of labor, and Article 1702 of the Civil Code
which provides that [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.
(Emphasis supplied)[34]
In the case of Concept Placement Resources, Inc. v. Funk,[35] this Court reduced
the amount of attorneys fees which it ruled to be iniquitous and unconscionable
after finding that the lawyer did not encounter difficulty in representing his
client. It was held:

We observe, however, that respondent did not encounter difficulty in

representing petitioner. The complaint against it was dismissed with prejudice. All that
respondent did was to prepare the answer with counterclaim and possibly petitioners
position paper. Considering respondents limited legal services and the case involved is
not complicated, the award of P50,000.00 as attorneys fees is a bit excessive. In First
Metro Investment Corporation vs. Este del Sol Mountain Reserve, Inc., we ruled that
courts are empowered to reduce the amount of attorneys fees if the same is iniquitous
or unconscionable. Under the circumstances obtaining in this case, we consider the
amount of P20,000.00 reasonable.[36]

In the case at bar, we find that the flight attendants were represented by
respondent union which, in turn, engaged the services of its own counsel. The
flight attendants had a common cause of action. While the work performed by
respondents counsel was by no means simple, seeing as it spanned the whole
litigation from the Labor Arbiter stage all the way to this Court, nevertheless, the
issues involved in this case are simple, and the legal strategies, theories and
arguments advanced were common for all the affected crew members. Hence, it
may not be reasonable to award said counsel an amount equivalent to 10% of all
monetary awards to be received by each individual flight attendant. Based on the
length of time that this case has been litigated, however, we find that the amount
of P2,000,000.00 is reasonable as attorneys fees. This amount should include all
expenses of litigation that were incurred by respondent union.

WHEREFORE, for lack of merit, the Motion for Reconsideration is

hereby DENIED with FINALITY. The assailed Decision dated July 22, 2008
is AFFIRMED with MODIFICATION in that the award of attorneys fees and
expenses of litigation is reduced to P2,000,000.00. The case is
hereby REMANDED to the Labor Arbiter solely for the purpose of computing the
exact amount of the award pursuant to the guidelines herein stated.

No further pleadings will be entertained.

SO ORDERED.

CONSUELO YNARES-SANTIAGO

Associate Justice

WE CONCUR:

MINITA V. CHICO-NAZARIO

Associate Justice
ANTONIO EDUARDO B. NACHURA DIOSDADO M. PERALTA

Associate Justice Associate Justice

LUCAS P. BERSAMIN

Associate Justice

ATTESTATION

I attest that the conclusions in the above resolution were reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.
CONSUELO YNARES-SANTIAGO

Associate Justice

Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairpersons Attestation, it is hereby certified that the conclusions in the above
Resolution were reached in consultation before the case was assigned to the
writer of the opinion of the Courts Division.

REYNATO S. PUNO

Chief Justice
*
Designated member vice Justice Teresita J. Leonardo-De Castro per raffle dated September 28, 2009.
[1]
Rollo, pp. 1549-1719.
[2]
G.R. No. 148372, June 27, 2005, 461 SCRA 272.
[3]
G.R. No. 135547, January 23, 2002, 374 SCRA 351.
[4]
Philippine Airlines Employees Association (PALEA).
[5]
Among others, Philippine Airlines v. Kurangking, G.R. No. 146698, September 24, 2002, 389 SCRA 588, cited in
the main Decision of July 22, 2008.
[6]
Rollo, p. 1569.
[7]
Id. at 1571-1576.
[8]
Id. at 686.
[9]
Id. at 1726-1770.
[10]
Id. at 1727-1729.
[11]
Id. at 1752.
[12]
239 SCRA 508 (1994).
[13]
Id. at 515-517.
[14]
Id. at 1788.
[15]
Citing Alabang Country Club, Inc. v. NLRC, G.R. No. 157611, August 9, 2005, 466 SCRA 329.
[16]
Rollo, pp. 1793-1794.
[17]
Id. at 1796-1798.
[18]
Transcript of Stenographic Notes, March 18, 2009 Oral Arguments, pp. 10-11. (Emphasis supplied)
[19]
Id. at 11.
[20]
Id. at 12.
[21]
Rollo, p. 1925; Memorandum for PAL submitted after oral arguments. (Emphasis supplied)
[22]
Transcript of Stenographic Notes, March 18, 2009 Oral Arguments, pp. 10-11, 27-30, 62-66, 68-69. (Emphasis
supplied)
[23]
Id. at 96.
[24]
Id. at 98.
[25]
Id. at 99.
[26]
Id. at 100.
[27]
Id. at 109-112.
[28]
Id. at 69.
[29]
The pilots strike was held on June 5, 1998; the retrenchment process (giving out of notices of retrenchment to the
employees) was initiated on June 15, 1998, or just ten (10) days from the start of the pilots strike.
[30]
The rehabilitation plan was approved by the Securities and Exchange Commission (SEC) only on June 23, 1998.
[31]
Lopez Sugar Corporation v. Federation of Free Workers, 189 SCRA 179, 188 (1990).
[32]
San Miguel Corporation v. Del Rosario, G.R. Nos. 168194 & 168603, December 13, 2005, 477 SCRA 604, 619.
[33]
Id.
[34]
PCL Shipping Philippines, Inc. v. NLRC, G.R. No. 153031, December 14, 2006, 511 SCRA 44, 64-65,
citing Reyes v. Court of Appeals, 456 Phil. 520, 539-540.
[35]
G.R. No. 137680, February 6, 2004, 422 SCRA 317.
[36]
Id. at 322-323

16) Bagong vs. Secretary GR Nos.167401-07 July 5, 2010

Case Digest: Bagong Pagkakaisa ng Manggagawa, et al. v. Secretary & Triumph International

G.R. No. 167401: July 5, 2010

BAGONG PAGKAKAISA NG MANGGAGAWA NG TRIUMPH INTERNATIONAL, represented by SABINO F.

GRAGANZA, Union President, and REYVILOSA TRINIDAD,Petitioners, v. SECRETARY OF THE DEPARTMENT OF
LABOR AND EMPLOYMENT and TRIUMPH INTERNATIONAL (PHILS.), INC., Respondents.

BRION, J.:

FACTS:

The union and the company had a collective bargaining agreement (CBA) that expired. The union seasonably
submitted proposals to the company for its renegotiation. The negotiations reached a deadlock, leading to a
Notice of Strike the union. The National Conciliation and Mediation Board (NCMB) exerted efforts but failed
to resolve the deadlock.

The company filed a Notice of Lock-out for unfair labor practice due to the unions alleged work slowdown.
The unionwent on strike three days later. Secretary Bienvenido E. Laguesma (Labor Secretary) of the
Department of Labor and Employment (DOLE) assumed jurisdiction over the labor dispute, pursuant to
Article 263(g) of the Labor Code.The Labor Secretary directed all striking workers to return to work within
twenty-four (24) hours from receipt of the assumption order, while the company was directed to accept
them back to work under the same terms and conditions existing before the strike.

Several employees attempted to report for work, but the striking employees prevented them from entering
the company premises. The union and the officers filed a petition to cite the company and its responsible
officers for contempt, and moved that a reinstatement order be issued. They claimed that: (1) the company
officials violated the Labor Secretarys return-to-work order when these officials placed them under
preventive suspension and refused them entry into the company premises; (2) the company also violated the
March 9, 2000 order of the Labor Secretary when they were reinstated only in the payroll; and (3) the
company committed unfair labor practice and dismissed them without basis.
The Labor Secretary resolved the bargaining deadlock and awarded a wage increase of P48.00 distributed
over three years. The unions other economic demands and non-economic proposals were all denied. The
union elevated the case to the CA, through a petition for certiorari under Rule 65 of the Rules of Court. The
CA found the petition partly meritorious. It affirmed the Labor Secretary's wage increase award, but modified
his ruling on the dismissal of the union officers. On the wage issue and related matters, the CA found the
Labor Secretary's award legally in order.

ISSUE:

Whether or not the award of P40.00 wage increase of the Labor Arbiter is proper?

HELD:

LABOR LAW

The conclusions of the Labor Secretary, drawn as they were from a close examination of the submissions of
the parties, do not indicate any legal error, much less any grave abuse of discretion. We accord respect to
these conclusions as they were made by a public official especially trained in the delicate task of resolving
collective bargaining disputes, and are on their face just and reasonable. "[U]nless there is a clear showing of
grave abuse of discretion, this Court cannot, and will not, interfere with the labor expertise of the public
respondent Secretary of Labor," as the Court held in Pier Arrastre and Stevedoring Services v. Ma. Nieves
Roldan-Confesor, et al.

LABOR LAW

We agree with the CA's conclusion that the Labor Secretary erred, to the point of abusing his discretion,
when he did not resolve the dismissal issue on the mistaken reading that this issue falls within the jurisdiction
of the labor arbiter. This was an egregious error and an abdication of authority on the matter of strikes the
ultimate weapon in labor disputes that the law specifically singled out under Article 263 of the Labor Code by
granting the Labor Secretary assumption of jurisdiction powers. Article 263(g) is both an extraordinary and a
preemptive power to address an extraordinary situation a strike or lockout in an industry indispensable to
the national interest. This grant is not limited to the grounds cited in the notice of strike or lockout that may
have preceded the strike or lockout; nor is it limited to the incidents of the strike or lockout that in the
meanwhile may have taken place. As the term "assume jurisdiction" connotes, the intent of the law is to give
the Labor Secretary full authority to resolve all matters within the dispute that gave rise to or which arose out
of the strike or lockout; it includes and extends to all questions and controversies arising from or related to
the dispute, including cases over which the labor arbiter has exclusive jurisdiction.
LABOR LAW

Under the law, the Labor Secretary's assumption of jurisdiction over the dispute or its certification to the
National Labor Relations Commission for compulsory arbitration shall have the effect of automatically
enjoining the intended or impending strike or lockout and all striking or locked out employees shall
immediately return to work and the employer shall immediately resume operations and readmit all workers
under the same terms and conditions before the strike or lockout. The union and its officers, as well as the
workers, defied the Labor Secretary's assumption of jurisdiction, especially the accompanying return-to-work
order within twenty-four (24) hours; their defiance made the strike illegal under the law and applicable
jurisprudence. Consequently, it constitutes a valid ground for dismissal. Article 264(a), paragraph 3 of the
Labor Code provides that "Any union officer who knowingly participates in an illegal strike and any worker or
union officer who knowingly participates in the commission of illegal acts during a strike may be declared to
have lost his employment status."

The union officers were answerable not only for resisting the Labor Secretary's assumption of jurisdiction and
return-to-work orders; they were also liable for leading and instigating and, in the case of Figura, for
participating in a work slowdown (during the CBA negotiations), a form of strike undertaken by the union
without complying with the mandatory legal requirements of a strike notice and strike vote. These acts are
similarly prohibited activities.

In a different vein, the union faulted the company for having dismissed the officers, there being no case filed
on the legality or illegality of the strike. We see no merit in this argument. In Gold City Integrated Port
Service, Inc. v. NLRC, we held that "[t]he law, in using the word may, grants the employer the option of
declaring a union officer who participated in an illegal strike as having lost his employment." We reiterated
this principle in San Juan De Dios Educational Foundation Employees Union-Alliance of Filipino Workers v. San
Juan De Dios Educational Foundation, Inc., where we stated that "Despite the receipt of an order from the
SOLE to return to their respective jobs, the Union officers and members refused to do so and defied the
same. Consequently, then, the strike staged by the Union is a prohibited activity under Article 264 of the
Labor Code. Hence, the dismissal of its officers is in order. The respondent Foundation was, thus, justified in
terminating the employment of the petitioner Union's officers."

Republic of the Philippines

Supreme Court

Manila

THIRD DIVISION
 G.R. No. 167401
BAGONG PAGKAKAISA NG
MANGGAGAWA NG TRIUMPH
INTERNATIONAL, represented by
SABINO F. GRAGANZA, Union
President, and REYVILOSA
TRINIDAD,

Petitioners,

- versus -

SECRETARY OF THE DEPARTMENT

OF LABOR AND EMPLOYMENT and
TRIUMPH INTERNATIONAL (PHILS.),
INC.,

Respondents.

x ---------------------------------------- x

TRIUMPH INTERNATIONAL (PHILS.),

INC.,

Petitioner, G.R. No. 167407

- versus - Present:

BAGONG PAGKAKAISA NG CARPIO MORALES, J., Chairperson,

MANGGAGAWA NG TRIUMPH
INTERNATIONAL, ELOISA FIGURA, BRION,
JERRY JAICTEN, ROWELL FRIAS,
MARGARITA PATINGO and BERSAMIN,
ROSALINDA OLANGAR, 
ABAD, and
Respondents.
VILLARAMA, JR., JJ.

Promulgated:

July 5, 2010

x----------------------------------------------------------------------------------------x

DECISION
BRION, J.:

Before the Court are two separate petitions[1] which were consolidated pursuant
to our Resolution dated June 8, 2005.[2] The first,[3] filed by the Bagong Pagkakaisa
ng Manggagawa ng Triumph International (union), seeks to set aside the
decision[4] of the Court of Appeals (CA) in CA-G.R. SP No. 60516, and the
subsequent resolution[5] of March 10, 2005, on the parties motion for
reconsideration. The second,[6] filed by Triumph International (Phils.), Inc.
(company), prays for the annulment of the same decision and resolution with
respect to the illegal dismissal issue.

THE ANTECEDENTS

The relevant facts, clearly laid out in the challenged CA decision, are
summarized below.

The union and the company had a collective bargaining agreement (CBA)
that expired on July 18, 1999. The union seasonably submitted proposals to the
company for its renegotiation. Among these proposals were economic demands
for a wage increase of P180.00 a day, spread over three (3) years, as
follows: P70.00/day from July 19, 1999; P60.00/day from July 19, 2000,
and P50.00/day from July 19, 2001. The company countered with a wage increase
offer, initially at P42.00 for three years, then increased it to P45.00, also for three
years.

The negotiations reached a deadlock, leading to a Notice of Strike the union

filed on October 15, 1999.[7] The National Conciliation and Mediation Board
(NCMB) exerted efforts but failed to resolve the deadlock.
 On November 15, 1999, the company filed a Notice of Lock-out[8] for unfair
labor practice due to the unions alleged work slowdown. The union went on strike
three days later, or on November 18, 1999.

On January 27, 2000, Secretary Bienvenido E. Laguesma (Labor Secretary)

of the Department of Labor and Employment (DOLE) assumed jurisdiction over
the labor dispute, pursuant to Article 263(g) of the Labor Code.[9] The Labor
Secretary directed all striking workers to return to work within twenty-four (24)
hours from receipt of the assumption order, while the company was directed to
accept them back to work under the same terms and conditions existing before
the strike. The Labor Secretary also required the parties to submit their respective
position papers.

On February 2 and 3, 2000, several employees attempted to report for

work, but the striking employees prevented them from entering the company
premises.

In a petition dated February 8, 2000,[10] the company asked the Labor

Secretary to issue an order directing the union to allow free ingress to and egress
from the company premises; to dismantle all structures obstructing free ingress
and egress; and, to deputize the Philippine National Police to assist the DOLE in
the peaceful implementation of the Labor Secretary's January 27, 2000 order.

The Labor Secretary reiterated his directives in another order

dated February 22, 2000,[11] and deputized Senior Superintendent Manuel A.
Cabigon, Director of the Southern Police District, to assist in the peaceful and
orderly implementation of this Order.

At a conciliation meeting held on February 29, 2000, the company agreed

to extend the implementation of the return-to-work order until March 6,
2000.[12]The union, through a letter dated March 2, 2000,[13] advised the NCMB
Administrator of the union executive boards decision to return to work the
following day. In a letter also dated March 2, 2000,[14] the company advised the
NCMB Administrator that it was willing to accept all returning employees, without
prejudice to whatever legal action it may take against those who committed
illegal acts. The company also stated that all the union officers and members and
the union board members would be placed under preventive suspension, pending
investigation of their alleged illegal acts.

The striking employees returned to work on March 3 and 4, 2000 but

twenty (20) union officers and a shop steward were not allowed entry into the
company premises. The excluded union leaders were each served identical
letters[15] directing them to explain in writing why their employment should not
be terminated or why no disciplinary action should be imposed on them for
defying and violating the Labor Secretarys assumption order of January 27, 2000
and the second return-to-work order of February 22, 2000; for blocking and
resisting the entry of returning employees on February 2, 3, and 8, 2000; for acts
of violence committed on February 24 and 25, 2000; and for defying the
company's return-to-work order of all employees on February 8, 2000.[16]

On March 6, 2000, the twenty-one (21) union officers, by motion, asked the
Labor Secretary to issue a reinstatement order and to cite the company for
contempt. On March 9, 2000, the Labor Secretary directed the company to accept
the union officers and the shop steward back to work, without prejudice to the
continuation of the investigation.[17]
At the conciliation meeting of March 15, 2000, the company agreed to
reinstate the union officers in the payroll effective March 13, 2000[18] and
withdrew its notice of lockout.[19]
 On March 21, 2000, the union officers again received identically worded
letters requiring them to explain in writing within twenty-four (24) hours why no
disciplinary action, including dismissal, should be taken against them for leading,
instigating, and participating in a deliberate work slowdown during the CBA
negotiations.[20]

The union officers explained, as required, through their respective

affidavits,[21] and a hearing followed on May 5, 2000. Thereafter, the union
officers were each served a notice of termination of employment effective at the
close of office hours on May 11, 2000.[22]

On June 8, 2000, the union and the officers filed a petition to cite the
company and its responsible officers for contempt, and moved that a
reinstatement order be issued.[23] They claimed that: (1) the company officials
violated the Labor Secretarys return-to-work order when these officials placed
them under preventive suspension and refused them entry into the company
premises; (2) the company also violated the March 9, 2000 order of the Labor
Secretary when they were reinstated only in the payroll; and (3) the company
committed unfair labor practice and dismissed them without basis.

THE LABOR SECRETARYS DECISION

The Labor Secretary resolved the bargaining deadlock[24] and awarded a

wage increase of P48.00 distributed over three years, as follows:[25]

Effective July 19, 1999 P15.00/day

Effective July 19, 2000 P16.00/day
Effective July 19, 2001 - P17.00/day
The unions other economic demands and non-economic proposals were all
denied.

The union moved for the reconsideration[26] of the Labor Secretarys decision,
while the company moved for its own partial reconsideration.[27] The Labor
Secretary denied both motions, declaring that the petition to cite the company
and its responsible officers for contempt had already been rendered moot and
academic.[28] He also ruled that the legality of the union officers dismissal properly
falls within the original and exclusive jurisdiction of the labor arbiter under Article
217 of the Labor Code.

The union elevated the case to the CA, through a petition for certiorari under Rule
65 of the Rules of Court,[29] on the following grounds:

1. The Labor Secretary committed grave abuse of discretion amounting to lack

or excess of jurisdiction when he denied the proposals of the 1,130 union
members to improve the existing CBA.

2. The Labor Secretary committed grave abuse of discretion when he declared

that the issue of reinstatement of the officers of the union and the petition
to cite the company and its responsible officers for contempt had become
academic.

The union insisted on its demanded P180.00 daily wage increase distributed over
three years (1999 to 2001), arguing that the demand is just, fair and reasonable
based on the company's capacity to pay and the companys bargaining history. It
noted that the company gave a P55.00 increase for the years 1993-1995,
and P64.00 for the years 1996 to 1998. It also objected the rejection of its other
economic demands and non-economic proposals.
 The union also contended that the company and its responsible officers
should have been held in contempt for violating the Labor Secretarys return-to-
work order. It argued that the officers should have been reinstated in the absence
of substantial evidence supporting the charges against them.

The company responded by praying for the dismissal of the petition for lack of
abuse of discretion on the part of the Labor Secretary. It posited that the P48.00
wage increase award is more than reasonable, and that the Labor Secretary
properly stayed his hand on the issue of illegal dismissal as the matter was
beyond his jurisdiction. The company likewise argued that any question on the
award had been mooted by the workers acceptance of the wage increase.

While the petition was pending, individual settlements were reached between
certain individual petitioners (Cenon N. Dionisio, Catalina N. Velasquez, Nila P.
Tresvalles, Vivian A. Arcos, Delia N. Soliven, Leticia S. Santos, Emerita D. Maniebo,
Conchita R. Encinas, Elpidia C. Cancino, Consolacion S. Umalia, Nenette N.
Gonzales, Creselita D. Rivera, and Rolando O. Madera) and the company. These
petitioners executed their respective Release, Waiver and Quitclaim after
receiving their separation pay and other benefits from the company.[30]

In light of these developments and the workers acceptance of the wage award
(except for the union officers), the company moved for the dismissal of the
petition.[31]The union and the remaining union officers opposed the motion,
contending that the workers acceptance of the awarded wage increase cannot be
considered a waiver of their demand; the receipt of the P48.00 award was merely
an advance on their demand. The Release, Waiver and Quitclaim executed by the
13 officers, on the other hand, cannot bind the officers who opted to maintain the
petition.
On December 17, 2001, two more officers Juliana D. Galo and Remedios C. Barque
also executed their respective Release, Waiver and Quitclaim.[32]

THE CA DECISION

The CA found the petition partly meritorious. It affirmed the Labor Secretary's
wage increase award, but modified his ruling on the dismissal of the union
officers.[33]

On the wage issue and related matters, the CA found the Labor Secretarys award
legally in order. It noted the following factors supportive of the award:

1. The average daily salary of an employee of P310.00 is more than the

statutory minimum wage as admitted by the union itself.

2. The company grants to its employees forty-two (42) other monetary and
welfare benefits.

3. The increase in the wages of the employees carries with it a corresponding

increase in their salary-based benefits.

4. The wage increase granted to workers employed in the industry is less than
the increase proposed by the company.

5. The Asian financial crisis.

The CA also noted that, in the meantime, the parties had executed a new CBA for
the years 2002 to 2005 where they freely agreed on a total P45.00/day wage
increase distributed over three years.

On the other hand, the CA faulted the Labor Secretary for not ruling on the
dismissal of the union officers. It took exception to the Labor Secretary's view that
the dismissal question is within the exclusive jurisdiction of the labor arbiter
pursuant to Article 217 of the Labor Code. It invoked the ruling of this Court
in Interphil Laboratories Employees Union-FFW v. Interphil Laboratories,
Inc.,[34] which, in turn, cited International Pharmaceuticals, Inc. v. Secretary of
Labor,[35] where we held that the Labor Secretary has jurisdiction over all
questions and controversies arising from an assumed dispute, including cases
over which the labor arbiter has exclusive jurisdiction.

The CA pointed out that while the labor dispute before the Labor Secretary
initially involved a bargaining deadlock, a related strike ensued and charges were
brought against the union officers (for defiance of the return-to-work order of the
Labor Secretary, and leading, instigating, and participating in a deliberate work
slowdown during the CBA negotiations) resulting in their dismissal from
employment; thus, the dismissal is intertwined with the strike that was the
subject of the Labor Secretarys assumption of jurisdiction.

The CA, however, avoided a remand of the illegal dismissal aspect of the case to
the Labor Secretary on the ground that it would compel the remaining six officers,
lowly workers who had been out of work for four (4) years, to go through
the calvary of a protracted litigation. In the CAs view, it was in keeping with
justice and equity for it to proceed to resolve the dismissal issue itself.

The six remaining officers of the union Reyvilosa Trinidad, Eloisa Figura, Jerry
Jaicten, Rowell Frias, Margarita Patingo, and Rosalinda Olangar (shop steward) all
stood charged with defying (1) the Labor Secretarys return-to-work order
of January 27, 2000,[36] and (2) the companys general notice for the return of all
employees on February 8, 2000.[37] Later, they were also charged with leading,
instigating, and participating in a deliberate slowdown during the CBA
negotiations.

The charges were supported by the affidavits of Ernesto P. Dayag, Salvio

Bayon, Victoria Sanchez, Lyndon Dinglasan, Teresita Nacion, Herman Vinoya, and
Leonardo Gomez.[38] The CA noted that in all these affidavits, no mention was
ever made of [anyone] of the six (6) remaining individual petitioners, save for
Reyvilosa Trinidad. Also, none of the said affidavits even hinted at the culpabilities
of petitioners Eloisa Figura, Jerry Jaicten, Rowell Frias, Margarita Patingo, and
Rosalinda Olangar for the alleged illegal acts imputed to them.[39]

For failure of the company to prove by substantial evidence the charges against
the remaining officers, the CA concluded that their employment was terminated
without valid and just cause, making their dismissal illegal.

With respect to Trinidad, the CA found that her presence in the picket line and
participation in an illegal act obstructing the ingress to and egress from the
company's premises were duly established by the affidavit of Bayon.[40] For this
reason, the CA found Trinidad's dismissal valid.
The appellate court thus affirmed the May 31, 2000[41] order of the Labor
Secretary and modified the resolution dated July 14, 2000.[42]

The CA denied the motions for reconsideration that the union and its officers, and
the company filed.[43] Hence, the present petitions.

THE PETITIONS
G.R. No. 167401

The petition is anchored on the following grounds

1. The CA erred in sustaining the Labor Secretary's wage increase award

of P48.00/day spread over three years.

2. The CA erred in finding the dismissal of Trinidad valid.

The union presents the following arguments

On the CBA Award

The union contends that the CBA wage increases from 1994 to 1998 ranged
from P16.00/day to P27.00/day for every year of the CBA period; the arguments
behind the companys decreased wage offer were the same arguments it raised in
previous CBA negotiations; the alleged financial crisis in the region on which the
CBA award was based actually did not affect the company because it sourced its
raw materials from its mother company, thereby avoiding losses; the companys
leading status in the industry in terms of wages should not be used in the
determination of the award; rather, it should be based on the companys financial
condition and its number one rank among 7,000 corporations in the country
manufacturing ladies, girls, and babies garments, and number 46 in revenues with
gross revenues ofP1.08B, assets of P525.5M and stockholders equity of P232.1M;
in granting only a wage increase out of 44 items in its proposal, the award
disregarded the factors on which its demands were based such as the peso
devaluation and the daily expenditure of P1,400.00/day for a family of six (6) as
found by the National Economic and Development Authority.

On the Dismissal of Reyvilosa Trinidad

The union seeks a reversal of the dismissal of Trinidad. It argues that she was
dismissed for alleged illegal acts based solely on the self-serving affidavits
executed by officers of the company; the strike had not been declared illegal for
the company had not initiated an action to have it declared illegal; Trinidad was
discriminated against because of the four union officers mentioned in the
affidavits, three were granted one month separation pay plus other benefits to
settle the dispute in regard to the three; also the same arrangement was entered
into with the other officers, which resulted in the signing of the waiver, quitclaim
and release; the only statement in the affidavits against Trinidad was her alleged
megaphone message to the striking employees not to return to work.

The union thus asks this Court to modify the assailed CA ruling through an order
improving the CBA wage award and the grant of the non-wage proposals. It also
asks that the dismissal of Trinidad be declared illegal, and that the company be
ordered to pay the union moral and exemplary damages, litigation expenses, and
attorney's fees.

G.R. No. 167407

For its part, the company seeks to annul the CA rulings on the dismissal issue, on
the following grounds

1. The CA erred in ruling that the Labor Secretary abused his discretion in not
resolving the issue of the validity of the dismissal of the officers of the
union.
 2. The CA erred in resolving the factual issue of dismissal instead of
remanding the case for further proceedings.

3. In resolving the issue, the company was deprived of its right to present
evidence and, therefore, to due process of law.

The company submits that the Labor Secretary has no authority to decide
the legality or illegality of strikes or lockouts, jurisdiction over such issue having
been vested on the labor arbiters pursuant to Article 217 of the Labor Code;
under Article 263 of the Code, the Labor Secretarys authority over a labor dispute
encompasses only the issues, not the legality or illegality of any strike that may
have occurred in the meantime.[44] It points out that before the Labor Secretary
can take cognizance of an incidental issue such as a dismissal question, it must
first be properly submitted to him, as in the case of International
Pharmaceuticals, Inc. v. Secretary of Labor[45] where the Labor Secretary was
adjudged to have the power to assume jurisdiction over a labor dispute and its
incidental issues such as unfair labor practices subject of cases already ongoing
before the National Labor Relations Commission (NLRC).

The company takes exception to the CA ruling that it submitted the

dismissal issue to the Labor Secretary claiming that it can be seen from its
opposition to the unions petition to cite the company for contempt;[46] that it
consistently maintained that the Labor Secretary has no jurisdiction over the
dismissal issue; that the affidavits it submitted to the Labor Secretary were only
intended to establish the unions violation of the return-to-work orders and, to
support its petition, on February 8, 2000,[47] for the issuance of a return-to-work
order; and, that the CA overstepped its jurisdiction when it ruled on a factual
issue, the sole office of certiorari being the corrections of errors of jurisdiction,
including the commission of grave abuse of discretion.

The company likewise disputes the CAs declaration that it took into
consideration all the evidence on the dismissal issue, claiming that the evidence
on record is deficient, for it did not have the opportunity to adduce evidence to
prove the involvement of the union officers in the individual acts for which they
were dismissed; had it been given the opportunity to present evidence, it could
have done so. To prove its point, it included in its motion for partial
reconsideration[48] a copy of the information,[49] charging union officers Nenette
Gonzales and Margarita Patingo of malicious mischief for stoning a company
vehicle on February 25, 2000, while the strike was ongoing.

Even assuming that it could no longer submit evidence on the dismissal of

the union officers, the company posits that sufficient grounds exist to uphold the
dismissals. It maintains that the officers are liable to lose their employment status
for knowingly staging a strike after the assumption of jurisdiction by the Labor
Secretary and in defying the return-to-work mandated by the assumption, which
are considered prohibited activities under Article 264(a) of the Labor Code, not to
mention that without first having filed a notice, when the union officers and
members engaged in and instigated a work slowdown, a form of strike, without
complying with the procedural requirements for staging a strike, the union
officers had engaged in an illegal strike.

The parties practically reiterated these positions and the positions taken below in
their respective comments to each others petition.

THE COURT'S RULING

The CBA Award

We affirm the CA's disposition, upholding the Labor Secretarys award in resolving
the bargaining deadlock between the union and the company for their 1999-2001
CBA.
We find no compelling justification to disturb the award. We are convinced, as the
appellate court was, of the reasonableness of the award. It was based on the
prevailing economic indicators in the workplace, in the industry, and in the local
and regional economy. As well, it took into account the comparative standing of
the company in terms of employees' wages and other economic benefits. We find
the following factors as sufficient justification for the award:

1. The regional financial crisis and the downturn in the economy at the time,
impacting on the performance of the company as indicated in its negative
financial picture in 1999.

2. The companys favorable comparison with industry standards in terms of

employee benefits, especially wages. Its average daily basic wage
of P310.00 is 40% higher than the statutory minimum wage of P223.50, and
superior to the industrys average of P258.00. For the years prior to the
1999 negotiations, its aggregate daily wage increase of P64.00 surpassed
the statutory minimum increase of P33.00.

3. The forty-two (42) non-wage benefit programs of the company which

undeniably extend the reach of the employees' cash wage in enhancing the
well-being of the employees and their families.

The Labor Secretary's Order of May 31, 2000 fully explained these
considerations as follows:[50]
We fully agree with the Union that relations between management and labor ought to

be governed by the higher precepts of social justice as enshrined in the Constitution and

in the laws. We further agree with it that the worker's over-all well-being is as much

affected by his wages as by other macro-economic factors as the CPI, cost of living, the

varied needs of the family. Yet, the other macro-economic factors cited by the company

such as the after-effects of the regional financial crisis, the existing unemployment rate,

and the need to correlate the rate of wage increase with the CPI are equally

important. Of course[,] other macro-economic factors such as the contraction of sales

and production as well as the growing lack of direct investors, are also important

considerations. It is noteworthy that both the Union and Management recognize that

the entire gamut of macro-economic factors necessarily impact on the micro-economic

conditions of an individual company even in terms of wage increases.

The Union also makes mention of the need to factor in the industry where the employer

belongs x x x. This is affirmed by the Company when it provides a comparison with the

other key players in the industry. It has been properly shown that its prevailing levels of

wages and other benefits are, generally, superior to its counterparts in the local

garments industry. x x x

But even as we agree with the Union that the Company's negative financial picture for

1999 should not be an overriding consideration in coming up with an adjudicated wage

increase, We cannot make the historical wage increases as our starting point in
 determining the appropriate wage adjustment. The Companys losses for 1999 which,

even the Union recognizes, amounts to millions of pesos, coupled with the current

economic tailspin warrant a more circumspect view[.]

Cognizance is likewise made of the Company's 42 non-wage benefits programs which

substantially [answer] the Union's concerns with respect to the living wage and the

needs of a family. It would not be amiss to mention that said benefits have their

corresponding monetary valuations that in effect increase a worker's daily pay. Likewise,

the needed family expenditure is answered for not solely by an individual family

member's income alone, but also from other incomes derived by the entire family from

all possible sources.

Considering the foregoing circumstances, We deem it reasonable and fair to balance our

award on wages.

The conclusions of the Labor Secretary, drawn as they were from a close
examination of the submissions of the parties, do not indicate any legal error,
much less any grave abuse of discretion. We accord respect to these conclusions
as they were made by a public official especially trained in the delicate task of
resolving collective bargaining disputes, and are on their face just and
reasonable. [U]nless there is a clear showing of grave abuse of discretion, this
Court cannot, and will not, interfere with the labor expertise of the public
respondent Secretary of Labor, as the Court held in Pier Arrastre and Stevedoring
Services v. Ma. Nieves Roldan-Confesor, et al.[51]
We also note that during the pendency of the present dispute, the parties entered
into a new CBA for the years 2000-2005, providing for a P45.00/day wage increase
for the workers. The CA cited this agreed wage adjustment as an indication of the
reasonableness of the disputed award. The Labor Secretary himself alluded to the
letter-manifestation received by this Office on 15 June 2000 containing the
signatures of some 700 employees of the Company indicating the acceptance of
the award rendered in the 31 May 2000 Order.[52] There was also the
manifestation of the company dated February 7, 2006, advising the Court that it
concluded another CBA with the union providing for a wage increase
of P22.00/day effective July 19, 2005; P20.00/day for July 19, 2006;
and P20.00/day for July 19, 2007.[53] The successful negotiation of two collective
agreements even before the parties could sit down and formalize the 1999-2001
CBA highlights the need for the parties to abide by the decision of the Labor
Secretary and move on to the next phase of their collective bargaining
relationship.

The Illegal Dismissal Issue

Before we rule on the substantive aspect of this issue, we deem it proper to

resolve first the companys submission that the CA erred: (1) in ruling that the
Labor Secretary gravely abused his discretion in not deciding the dismissal issue;
and, (2) in deciding the factual issue itself, instead of remanding the case, thereby
depriving it of the right to present evidence on the matter.

We agree with the CA's conclusion that the Labor Secretary erred, to the
point of abusing his discretion, when he did not resolve the dismissal issue on the
mistaken reading that this issue falls within the jurisdiction of the labor arbiter.
This was an egregious error and an abdication of authority on the matter of
strikes the ultimate weapon in labor disputes that the law specifically singled out
under Article 263 of the Labor Code by granting the Labor Secretary assumption
of jurisdiction powers. Article 263(g) is both an extraordinary and a preemptive
power to address an extraordinary situation a strike or lockout in an industry
indispensable to the national interest. This grant is not limited to the grounds
cited in the notice of strike or lockout that may have preceded the strike or
lockout; nor is it limited to the incidents of the strike or lockout that in the
meanwhile may have taken place. As the term assume jurisdiction connotes, the
intent of the law is to give the Labor Secretary full authority to resolve all matters
within the dispute that gave rise to or which arose out of the strike or lockout; it
includes and extends to all questions and controversies arising from or related to
the dispute, including cases over which the labor arbiter has exclusive
jurisdiction.[54]

In the present case, what the Labor Secretary refused to rule upon was the
dismissal from employment that resulted from the strike. Article 264 significantly
dwells on this exact subject matter by defining the circumstances when a union
officer or member may be declared to have lost his employment. We find from
the records that this was an issue that arose from the strike and was, in fact,
submitted to the Labor Secretary, through the unions motion for the issuance of
an order for immediate reinstatement of the dismissed officers and the companys
opposition to the motion. Thus, the dismissal issue was properly brought before
the Labor Secretary and this development in fact gave rise to his mistaken ruling
that the matter is legally within the jurisdiction of the labor arbiter to decide.

We cannot disagree with the CAs sympathies when it stated that a remand of the
case would only compel the individual petitioners, x x x lowly workers who have
been out of work for more than four (4) years, to tread once again the [calvary] of
a protracted litigation.[55] The dismissal issue and its resolution, however, go
beyond the realm of sympathy as they are governed by law and procedural
rules. The recourse to the CA was through the medium of a petition
for certiorari under Rule 65 an extraordinary but limited remedy. The CA was
correct in declaring that the Labor Secretary had seriously erred in not ruling on
the dismissal issue, but was totally out of place in proceeding to resolve the
dismissal issue; its action required the prior and implied act of suspending the
Rules of Court a prerogative that belongs to this Court alone. In the recent case
of Marcos-Araneta v. Court of Appeals,[56] we categorically ruled that the CA
cannot resolve the merits of the case on a petition for certiorari under Rule 65
and must confine itself to the jurisdictional issues raised. Let this case be another
reminder to the CA of the limits of its certiorarijurisdiction.

But as the CA did, we similarly recognize that undue hardship, to the point
of injustice, would result if a remand would be ordered under a situation where
we are in the position to resolve the case based on the records before us. As we
said in Roman Catholic Archbishop of Manila v. Court of Appeals:[57]

[w]e have laid down the rule that the remand of the case to the lower court for further

reception of evidence is not necessary where the Court is in a position to resolve the

dispute based on the records before it. On many occasions, the Court, in the public

interest and for the expeditious administration of justice, has resolved actions on the

merits instead of remanding them to the trial court for further proceedings, such as

where the ends of justice, would not be subserved by the remand of the case.[58]

Thus, we shall directly rule on the dismissal issue. And while we rule that the CA
could not validly rule on the merits of this issue, we shall not hesitate to refer
back to its dismissal ruling, where appropriate.

The first question to resolve is the sufficiency of the evidence and records
before us to support a ruling on the merits. We find that the union fully
expounded on the merits of the dismissal issue while the companys positions find
principal support from the affidavits of Dayag, Bayon, Sanchez, Dinglasan, Nacion,
Vinoya, andGomez. The affidavits became the bases of the individual notices of
termination of employment sent to the union officers. The parties affidavits and
their submitted positions constitute sufficient bases to support a decision on
the merits of the dismissal issue.

The dismissed union officers of the union originally numbered twenty-one (21),
twenty (20) of whom led by union President Cenon Dionisio were executive
officers and members of the union board. Completing the list was shop steward
Olangar. As mentioned earlier, fifteen (15) of the dismissed officers, including
Dionisio,executed a Release, Waiver and Quitclaim and readily accepted their
dismissal.[59] Those who remained to contest their dismissal were Reyvilosa N.
Trinidad, 2ndVice-President; Eloisa Figura, Asst. Secretary; Jerry Jaicten, PRO;
Rowell Frias, Board Member; Margarita Patingo, Board Member; and
Rosalinda Olangar, ShopSteward.

The officers of the union subject of the petition were dismissed from the service
for allegedly committing illegal acts (1) during the CBA negotiations and (2) during
the strike declared by the union, shortly after the negotiations reached a
deadlock. The acts alluded to under the first category[60] involved leading,
instigating, participating in a deliberate slowdown during the CBA
negotiations and, under the second,[61] the alleged defiance and violation by
the union officers of the assumption of jurisdiction and the return-to-work order
of the Labor Secretary dated January 27, 2000, as well as the second return-to-
work order dated February 22, 2000. More specifically, in the course of the strike,
the officers were charged with blocking and preventing the entry of returning
employees on February 2, 3, and 8, 2000; and on February 24 and 25, 2000,
when acts of violence were committed. They likewise allegedly defied the
company's general return-to-work notice for the return of all employees on
February 8, 2000.[62]
The CA erred in declaring that except for Trinidad, the company failed to prove by
substantial evidence the charges against the remaining union officers, thus
making this dismissal illegal. The appellate court noted that in all the affidavits the
company submitted as evidence no mention was ever made of [anyone] of the six
(6) remaining individual petitioners, save for Reyvilosa Trinidad. Also, none of the
said affidavits even hinted at the culpabilities of petitioners Eloisa Figuna, Jerry
Jaicten, Rowell Frias, Margarita Patingo and Rosalinda Olangar for the alleged
illegal acts imputed to them.[63]

The charges on which the company based its decision to dismiss the union officers
and the shop steward may be grouped into the following three categories: (1)
defiance of the return-to-work order of the Labor Secretary, (2) commission of
illegal acts during the strike, and (3) leading, instigating and participating in a
deliberate work slowdown during the CBA negotiations.

While it may be true that the affidavits the company submitted to the Labor
Secretary did not specifically identify Figuna, Jaiden, Frias, Patingo and Olangar to
have committed individual illegal acts during the strike, there is no dispute that
the union defied the return-to-work orders the Labor Secretary handed down on
two occasions, first on January 27, 2000 (more than two months after the union
struck on November 18, 1999) and on February 22, 2000. In decreeing a return-
to-work for the second time, the Labor Secretary noted:

To date, despite the lapse of the return-to-work period indicated in the Order,
the Union continues with its strike. A report submitted by NCMB-NCR even indicated
that all gates of the Company are blocked thereby preventing free ingress and egress to
the premises.[64]

Under the law,[65] the Labor Secretary's assumption of jurisdiction over the
dispute or its certification to the National Labor Relations Commission for
compulsory arbitration shall have the effect of automatically enjoining the
intended or impending strike or lockout and all striking or locked out employees
shall immediately return to work and the employer shall immediately resume
operations and readmit all workers under the same terms and conditions before
the strike or lockout. The union and its officers, as well as the workers, defied the
Labor Secretary's assumption of jurisdiction, especially the accompanying return-
to-work order within twenty-four (24) hours; their defiance made the strike illegal
under the law[66] and applicable jurisprudence.[67] Consequently, it constitutes a
valid ground for dismissal.[68]Article 264(a), paragraph 3 of the Labor Code
provides that Any union officer who knowingly participates in an illegal strike and
any worker or union officer who knowingly participates in the commission of
illegal acts during a strike may be declared to have lost his employment status.

The union officers were answerable not only for resisting the Labor Secretary's
assumption of jurisdiction and return-to-work orders; they were also liable for
leading and instigating and, in the case of Figura, for participating in a work
slowdown (during the CBA negotiations), a form of strike[69] undertaken by the
union without complying with the mandatory legal requirements of a strike notice
and strike vote. These acts are similarly prohibited activities.[70]

There is sufficient indication in the case record that the union officers, collectively,
save for shop steward Olangar, were responsible for the work slowdown, the
illegal strike, and the violation of the Labor Secretary's assumption order, that
started with the slowdown in July 1999 and lasted up to March 2000 (or for about
ten (10) months).[71] These illegal concerted actions could not have happened at
the spur of the moment and could not have been sustained for several months
without the sanction and encouragement of the union and its officers;
undoubtedly, they resulted from a collective decision of the entire union
leadership and constituted a major component of the unions strategy to obtain
concessions from the company management during the CBA negotiations.
 That the work slowdown happened is confirmed by the affidavits[72] and the
documentary evidence submitted by the company. Thus, Ernesto P. Dayag, a
security officer of the agency servicing the company (Tamaraw Security Service,
Inc.) stated under oath that in October 1999, the union members were engaging
in a noise-barrage everyday and when it was time to go back to work at noontime,
they would mill around the production area or were at the toilet discussing the
ongoing CBA negotiations (among others), and were slow in their movements; in
late October (October 27, 1999), they did the same thing at about seven oclock in
the morning which was already time for work; even those who were already
working were deliberately slow in their movements. On November 12, 1999,
when union officer Lisa Velasquez talked to the union members at lunchtime
regarding the CBA negotiations, only about 50% of the union members returned
to their work stations.

Victoria P. Sanchez, a sewer in the company's production department, deposed that

sometime in the middle of September 1999, the sewers were told by the shop
stewards to reduce their efficiency below 75%. They followed the order as it came
from a decision of the union officers at a meeting. It was not difficult to comply
with the order because they only had to slow down at the pre-production and early
segments of the production line so that the rest of the line would suffer.

Teresita T. Nacion, another sewer, corroborated Sanchez's deposition stating that

in mid-September 1999, during the CBA negotiations, the sewers were told by the
shop stewards to reduce their efficiency below 75% pursuant to the union
decision to slow down production so that the company would suffer losses.

The work slowdown resulted in production losses to the company which it

documented and submitted in evidence[73] before the Labor Secretary and was
summarized in the affidavit[74] of Leonardo T. Gomez, who testified on the impact
of the decrease of the workers production efficiency that peaked in September,
October, and November 1999, resulting in a financial loss to the company
of P69.277M. Specifically, the companys efficiency record for the year
1999[75] posted Eloisa C. Figuras[76] work performance from April to June 1999 at
77.19% and from July to November 1999 at 51.77%, a substantial drop in her
efficiency.

The unions two-pronged strategy to soften the companys stance in the CBA
negotiations culminated in its declaration of a strike on November 18, 1999,
which prompted the Labor Secretarys intervention through an assumption of
jurisdiction. Judging from the manner the union staged the strike, it is readily
apparent that the unions objective was to paralyze the company and to maintain
the work stoppage for as long as possible.

This is the economic war that underlies the Labor Codes strike provisions,
and which the same Code also tries to temper by regulation. Thus, even with the
assumption of jurisdiction and its accompanying return-to-work order, the union
persisted with the strike and prevented the entry to the company premises of
workers who wanted to report back for work. In particular, Salvio Bayon, a
company building technician and a member of the union, deposed that at about
seven o'clock in the morning of February 3, 2000, he and ten (10) of his co-
employees attempted to enter the company premises, but they were prevented
by a member of the strikers, led by union President Cenon Dionisio and other
officers of the union; the same thing happened on February 8, 24 and 28, 2000.[77]

In the face of the union's defiance of his first return-to-work order, the Labor
Secretary issued a second return-to-work directive on February 22, 2000 where
the labor official noted that despite the lapse of the return-to-work period
indicated in the order, the union continued with its strike.[78] At a conciliation
meeting on February 29, 2000, the company agreed to extend the
implementation of the return-to-work order to March 6, 2000.[79] The union,
through a letter dated March 2, 2000,[80]advised the NCMB administrator of the
decision of the union executive board for the return to work of all striking workers
the following day. In a letter also dated March 2, 2000,[81] the company also
advised the NCMB Administrator that it was willing to accept all returning
employees, without prejudice to whatever legal action it may take against those
who committed illegal acts.

The above union letter clearly shows the involvement of the entire union
leadership in defying the Labor Secretary's assumption of jurisdiction order as well
as return-to-work orders. From the illegal work slowdown to the filing of the
strike notice, the declaration of the strike, and the defiance of the Labor
Secretary's orders, it was the union officers who were behind the every move of
the striking workers; and collectively deciding the twists and turns of the strike
which even became violent as the striking members prevented and coerced
returning workers from gaining entry into the company premises. To our mind, all
the union officers who knowingly participated in the illegal strike knowingly
placed their employment status at risk.

In a different vein, the union faulted the company for having dismissed the
officers, there being no case filed on the legality or illegality of the strike. We see
no merit in this argument. In Gold City Integrated Port Service, Inc. v. NLRC,[82] we
held that [t]he law, in using the word may, grants the employer the option of
declaring a union officer who participated in an illegal strike as having lost his
employment. We reiterated this principle in San Juan De Dios Educational
Foundation Employees Union-Alliance of Filipino Workers v. San Juan De Dios
Educational Foundation, Inc.,[83] where we stated that Despite the receipt of an
order from the SOLE to return to their respective jobs, the Union officers and
members refused to do so and defied the same. Consequently, then, the strike
staged by the Union is a prohibited activity under Article 264 of the Labor Code.
Hence, the dismissal of its officers is in order. The respondent Foundation was,
thus, justified in terminating the employment of the petitioner Union's officers.

The union attempted to divert attention from its defiance of the return-to-work
orders with the specious submission that it was the company which violated the
Labor Secretary's January 27, 2000 order, by not withdrawing its notice of
lockout.[84]
The evidence indicates otherwise. The Labor Secretary himself, in his order of
February 22, 2000,[85] noted that the union continued its strike despite the lapse
of the return-to-work period specified in his January 27, 2000 order. There is also
the report of the NCMB-NCR clearly indicating that all gates of the company were
blocked, thereby preventing free ingress to and egress from the company
premises. There, too, was the letter of the company personnel manager, Ralph
Funtila, advising the union that the company will comply with the Labor
Secretary's January 27, 2000 order; Funtila appealed to the striking employees
and the officers to remove all the obstacles and to lift their picket line to ensure
free ingress and egress.[86] Further, as we earlier noted, the union itself, in its
letter of March 2, 2000, advised the NCMB that the union board of directors had
decided to return to work on March 3, 2000 indicating that they had been on
strike since November 18, 1999 and were defiant of the return-to-work orders
since January 28, 2000.

As a final point, the extension of the return-to-work order and the submission of
all striking workers, by the company, cannot in any way be considered a waiver
that the union officers can use to negate liability for their actions, as the CA
opined in its assailed decision.[87] In the first place, as clarified by Funtila's letter to
the NCMB dated March 2, 2000,[88] the company will accept all employees who
will report for work up to March 6, 2000, without prejudice to whatever legal
action it may take against those who committed illegal acts. He also clarified that
it extended the return-to-work, upon request of the union and the DOLE to
accommodate employees who were in the provinces, who were not notified, and
those who were sick.

As a point of law, we find that the company did not waive the right to take action
against the erring officers, and this was acknowledged by the Labor Secretary
himself in his order of March 9, 2000,[89] when he directed the company to accept
back to work the twenty (20) union officers and one (1) shop steward[,] without
prejudice to the Company's exercise of its prerogative to continue its
investigation. The order was issued upon complaint of the union that the officers
were placed under preventive suspension.

For having participated in a prohibited activity not once, but twice, the union
officers, except those our Decision can no longer reach because of the amicable
settlement they entered into with the company, legally deserve to be dismissed
from the service. For failure of the company, however, to prove by substantial
evidence the illegal acts allegedly committed by Rosalinda Olangar, who is a shop
steward but not a union officer, we find her dismissal without a valid cause.

WHEREFORE, premises considered, judgment is hereby

rendered AFFIRMING with MODIFICATION the challenged decision and
resolution of the Court of Appeals in CA-G.R. SP No. 60516, as follows:

1. The collective bargaining award of DOLE Secretary Bienvenido E.

Laguesma, contained in his order dated May 31, 2000, is
fully AFFIRMED;
2. The dismissal of REYVILOSA TRINIDAD, union 2nd Vice-President, is
likewise AFFIRMED;
3. The dismissal of ELOISA FIGURA, Assistant Secretary; JERRY JAICTEN,
Press Relations Officer; and ROWELL FRIAS, Board Member, is
declared VALID and for a just cause; and
4. The dismissal of ROSALINDA OLANGAR is declared illegal. The CA award
is SUSTAINED in her case.

SO ORDERED.
 ARTURO D. BRION

Associate Justice

WE CONCUR:

CONCHITA CARPIO MORALES

Associate Justice

Chairperson

LUCAS P. BERSAMIN ROBERTO A. ABAD

Associate Justice Associate Justice

MARTIN S. VILLARAMA, 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
Courts Division.

CONCHITA CARPIO MORALES Associate

Justice

Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairpersons Attestation, it is hereby certified 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 Courts Division.
 RENATO C. CORONA

Chief Justice


Designated additional Member of the Third Division, in view of the retirement of former Chief Justice Reynato S.
Puno, per Special Order No. 843 dated May 17, 2010.
[1]
Filed under Rule 45 of the Rules of Court.
[2]
Rollo (G.R. No. 167407), p. 1150.
[3]
G.R. No. 167401.
[4]
Rollo (G.R. No. 167401), pp. 35-71. Bagong Pagkakaisa ng Manggagawa ng Triumph International, et al. v.
Hon. Bienvenido Laguesma, et al., promulgated on August 19, 2004. Penned by Associate Justice Perlita J. Tria-
Tirona, and concurred in by Associate Justice Ruben T. Reyes (retired member of this Court) and Associate
Justice Jose C. Reyes, Jr.
[5]
Id. at 72-79.
[6]
Rollo (G.R. No. 167407).
[7]
Rollo (G.R. No. 167401), pp. 306-307.
[8]
Rollo (G.R. No. 167407), p. 290.
[9]
Rollo (G.R. No. 167401), pp. 265-266.
[10]
Id. at 320-323.
[11]
Rollo (G.R. No. 167407), pp. 247-248.
[12]
Id. at 317.
[13]
Id. at 318.
[14]
Id. at 319.
[15]
Id. at 785-824.
[16]
Id. at 309-310.
[17]
Rollo (G.R. No.167401), pp. 269-270.
[18]
Rollo (G.R. No.167407), p. 346.
[19]
Id. at 299-300.
[20]
Id. at 367-383.
[21]
Id. at 486-784.
[22]
Id. at 785-824; dated May 11, 2000.
[23]
Rollo (G.R. No. 167401), pp. 584-662.
[24]
On May 31, 2000.
[25]
Rollo (G.R. No. 167401), pp. 274-282.
[26]
Id. at 664-738.
[27]
Id. at 740-743.
[28]
Id. at 284-289.
[29]
CA-G.R. SP No. 60516.
[30]
Rollo (G.R. No. 167407), pp. 1117-1142.
[31]
Rollo (G.R. No. 167401), p. 53.
[32]
Rollo (G.R. No. 167407), pp. 1143-1146.
[33]
Supra note 4.
[34]
G.R. No. 142824, December 19, 2001, 372 SCRA 658.
[35]
G.R. Nos. 92981-83, January 9, 1992, 205 SCRA 59.
[36]
Supra note 9, at 3.
[37]
Supra note 16, at 5.
[38]
Rollo (G.R. No. 167407), pp. 465-478.
[39]
Id. at 69; CA decision, p. 34, last paragraph.
[40]
Id. at 467-468.
[41]
Supra note 24.
[42]
Supra note 28.
[43]
Supra note 5.
[44]
Philippine Airlines v. Secretary of Labor and Employment, G.R. No. 88210, 193 SCRA 223.
[45]
Supra note 35.
[46]
Rollo (G.R. No. 167407), pp. 347-354.
[47]
Id. at 302-305.
[48]
Supra note 27.
[49]
Rollo (G.R. No. 167407), p. 1103.
[50]
Supra note 24.
[51]
311 Phil. 311 (1995).
[52]
Rollo (G.R. No. 167401), p. 287.
[53]
Id. at 794-815.
[54]
Supra note 34.
[55]
Rollo (G.R. No. 167401), p. 77.
[56]
G.R. No. 154096, August 22, 2008; see also Silverio v. CA, G.R. No. L-39861, March 17, 1986, 141 SCRA 527.
[57]
G.R. No. 77425, June 19, 1991, 198 SCRA 300.
[58]
Id. at 303.
[59]
Supra note 30.
[60]
Supra note 20, at 5.
[61]
Supra note 15, at 4.
[62]
Supra note 16, at 5.
[63]
Supra note 39.
[64]
Rollo (G.R. No. 167407), p. 248, par. 2.
[65]
LABOR CODE, Article 263(g) When, in his opinion, there exists a labor dispute causing or likely to cause a
strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may
assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory
arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or
impending strike or lockout as specified in the assumption or certification order. If one has already taken place at
the time of assumption or certification, all striking or locked out employees shall immediately return to work and
the employer shall immediately resume operations and readmit all workers under the same terms and conditions
prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the
assistance of law enforcement agencies to ensure the compliance with this provision as well as with such orders as
he may issue to enforce the same.
[66]
LABOR CODE, Article 264.
[67]
University of San Agustin Employees Union-FFW v. Court of Appeals, G.R. No. 169632, March 28, 2006, 485
SCRA 526.
[68]
Philcom Employees Union v. Philippine Global Communications, G.R. No. 141667, July 17, 2006, 495 SCRA
214.
[69]
Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. NLRC, G.R. Nos. 158786 & 158789, October 19,
2007, 537 SCRA 171.
[70]
Supra note 64.
[71]
Rollo (G.R. No. 167407), pp. 314-316.
[72]
Supra note 38.
[73]
Supra note 69.
[74]
Rollo (G.R. No. 167407), pp. 477-478.
[75]
Id. at 479-480.
[76]
One of the six union officers who pursued the union petition.
[77]
Id. at 467-468, Bayons affidavit.
[78]
Supra note 11.
[79]
Supra note 12.
[80]
Supra note 13.
[81]
Supra note 14.
[82]
G.R. No. 103560, July 6, 1995, 245 SCRA 627, 630.
[83]
G.R. No. 143341, May 28, 2004, 430 SCRA 193, 207.
[84]
Rollo (G.R. No. 167407), p. 1204; Union Comment, par. 10.
[85]
Supra note 11.
[86]
Rollo (G.R. No. 167407), p. 307.
[87]
Id. at 70; CA Decision, p. 35, par. 4.
[88]
Id. at 319.
[89]
Supra note 17.

17) San Miguel vs. NLRC GR No.99266 March 2,1999

THIRD DIVISION

[G.R. No. 99266. March 2, 1999]

SAN MIGUEL CORPORATION, petitioner, vs. NATIONAL LABOR

RELATIONS COMMISSION, SECOND DIVISION, AND SAN
MIGUEL CORPORATION EMPLOYEES UNION (SMCEU) -
PTGWO, respondents.

DECISION
PURISIMA, J.:

At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court, assailing the
Resolution[1] of the National Labor Relations Commission in NLRC NCR CASE NO. 00094-90,
which dismissed the complaint of San Miguel Corporation (SMC), seeking to dismiss the notice
of strike given by the private respondent union and to compel the latter to comply with the
provisions of the Collective Bargaining Agreement (CBA)[2] on grievance machinery, arbitration,
and the no-strike clause, with prayer for the issuance of a temporary restraining order.
The antecedent facts are as follows:

In July 1990, San Miguel Corporation, alleging the need to streamline its operations due to
financial losses, shut down some of its plants and declared 55 positions as redundant, listed as
follows: seventeen (17) employees in the Business Logistics Division (BLD), seventeen (17) in
the Ayala Operations Center (AOC), and eighteen (18) in the Magnolia-Manila Buying
Station (Magnolia-MBS).[3] Consequently, the private respondent union filed several grievance
cases for the said retrenched employees, praying for the redeployment of the said employees to
the other divisions of the company.

The grievance proceedings were conducted pursuant to Sections 5 and 8, Article VIII of the
parties 1990 Collective Bargaining Agreement providing for the following procedures, to wit:
Sec.5. Processing of Grievance. - Should a grievance arise, an earnest effort shall be
made to settle the grievance expeditiously in accordance with the following
procedures:

Step 1. - The individual employee concerned and the Union Directors, or the Union
Steward shall, first take up the employees grievance orally with his immediate
superior. If no satisfactory agreement or adjustment of the grievance is reached, the
grievance shall, within twenty (20) working days from the occurrence of the cause or
event which gave rise to the grievance, be filed in writing with the Department
Manager or the next level superior who shall render his decision within ten (10)
working days from the receipt of the written grievance. A copy of the decision shall be
furnished the Plant Personnel Officer.

Step 2. - If the decision in Step 1 is rejected, the employee concerned may elevate or
appeal this in writing to the Plant Manager/Director or his duly authorized
representative within twenty (20) working days from the receipt of the Decision of the
Department Manager. Otherwise, the decision in Step 1 shall be deemed accepted by
the employee.

The Plant Manager/Director assisted by the Plant Personnel Officer shall determine
the necessity of conducting grievance meetings. If necessary, the Plant
Manager/Director and the Plant Personnel Officer shall meet the employee concerned
and the Union Director/Steward on such date(s) as may be designated by the Plant
Manager. In every plant/office, Grievance Meetings shall be scheduled at least twice
a month.

The Plant Manager shall give his written comments and decision within ten (10)
working days after his receipt of such grievance or the date of submission of the
grievance for resolution, as the case may be. A copy of his Decision shall be furnished
the Employee Relations Directorate.

Step 3. - If no satisfactory adjustment is arrived at Step 2, the employee may appeal

the Decision to the Conciliation Board as provided under Section 6 hereof, within
fifteen (15) working days from the date of receipt of the decision of the Plant
Manager/Director or his designate. Otherwise, the decision in Step 2 shall be deemed
accepted by the employee.

The Conciliation Board shall meet on the grievance in such dates as shall be
designated by the Division/Business Unit Manager or his representative. In every
Division/Business Unit, Grievance Meetings of the Conciliation Board shall be
scheduled at least once a month.
The Conciliation Board shall have fifteen (15) working days from the date of
submission of the grievance for resolution within which to decide on the grievance.

SEC. 6. Conciliation Board. - There shall be a conciliation Board per Business Unit
or Division. Every Conciliation Board shall be composed of not more than five (5)
representatives each from the Company and the Union. Management and the Union
may be assisted by their respective legal counsels.

In every Division/Business Unit, the names of the Company and Union representatives
to the Conciliation Board shall be submitted to the Division/Business Unit Manager
not later than January of every year. The Conciliation Board members shall act as
such for one (1) year until removed by the Company or the Union, as the case may be.

xxx

Sec. 8. Submission to Arbitration. - If the employee or Union is not satisfied with the
Decision of the Conciliation Board and desires to submit the grievance to arbitration,
the employee or the Union shall serve notice of such intention to the Company within
fifteen (15) working days after receipt of the Boards decision. If no such written notice
is received by the Company within fifteen (15) working days, the grievance shall be
considered settled on the basis of the companys position and shall no longer be
available for arbitration.[4]

During the grievance proceedings, however, most of the employees were redeployed, while
others accepted early retirement. As a result only 17 employees remained when the parties
proceeded to the third level (Step 3) of the grievance procedure. In a meeting on October 26,
1990, petitioner informed private respondent union that if by October 30, 1990, the remaining 17
employees could not yet be redeployed, their services would be terminated on November 2,
1990. The said meeting adjourned when Mr. Daniel S. L. Borbon II, a representative of the
union, declared that there was nothing more to discuss in view of the deadlock.[5]
On November 7, 1990, the private respondent filed with the National Conciliation and
Mediation Board (NCMB) of the Department of Labor and Employment (DOLE) a notice of
strike on the following grounds: a) bargaining deadlock; b) union busting; c) gross violation of
the Collective Bargaining Agreement (CBA), such as non-compliance with the grievance
procedure; d)failure to provide private respondent with a list of vacant positions pursuant to the
parties side agreement that was appended to the 1990 CBA; and e) defiance of voluntary
arbitration award.Petitioner on the other hand, moved to dismiss the notice of strike but the
NCMB failed to act on the motion.
On December 21, 1990, petitioner SMC filed a complaint[6] with the respondent NLRC,
praying for: (1) the dismissal the notice of strike; (2) an order compelling the respondent union to
submit to grievance and arbitration the issue listed in the notice of strike; (3) the recovery of the
expenses of litigation.
 On April 16, 1991, respondent NLRC came out with a minute resolution dismissing the
complaint; holding, thus:

NLRC NCR IC NO. 000094-90, entitled San Miguel Corporation, Complainant -

versus- San Miguel Corporation Employees Union-PTWO (SMCEU), Respondent. -
Considering the allegations in the complaint to restrain Respondent Union from
declaring a strike and to enforce mutual compliance with the provisions of the
collective bargaining agreement on grievance machinery, and the no-strike clause,
with prayer for issuance of temporary restraining order, and the evidence adduced
therein, the Answer filed by the respondent and the memorandum filed by the
complainant in support of its application for the issuance of an injunction, the Second
Division, after due deliberation, Resolved to dismiss the complaint for lack of merit.[7]
Aggrieved by the said resolution, petitioner found its way to this court via the present
petition, contending that:

IT IS THE POSITIVE LEGAL DUTY OF RESPONDENT NLRC TO COMPEL

ARBITRATION AND TO ENJOIN A STRIKE IN VIOLATION OF A NO
STRIKE CLAUSE.

II

INJUNCTION IS THE ONLY IMMEDIATE, EFFECTIVE SUBSTITUTE FOR THE

DISASTROUS ECONOMIC WARFARE THAT ARBITRATION IS DESIGNED TO
AVOID.[8]

On June 3, 1991, to preserve the status quo, the Court issued a Resolution[9] granting
petitioners prayer for the issuance of a Temporary Restraining Order.
The Petition is impressed with merit.
Rule XXII, Section I, of the Rules and Regulations Implementing Book V the Labor
Code[10], reads:

Section 1. Grounds for strike and lockout. -- A strike or lockout may be declared in
cases of bargaining deadlocks and unfair labor practices. Violations of the collective
bargaining agreements, except flagrant and/or malicious refusal to comply with its
economic provisions, shall not be considered unfair labor practice and shall not be
strikeable. No strike or lockout may be declared on grounds involving inter-union and
intra-union disputes or on issues brought to voluntary or compulsory arbitration.

In the case under consideration, the grounds relied upon by the private respondent union are
non-strikeable. The issues which may lend substance to the notice of strike filed by the private
respondent union are: collective bargaining deadlock and petitioners alleged violation of the
collective bargaining agreement. These grounds, however, appear more illusory than real.
Collective Bargaining Deadlock is defined as the situation between the labor and the
management of the company where there is failure in the collective bargaining negotiations
resulting in a stalemate[11] This situation, is non-existent in the present case since there is a Board
assigned on the third level (Step 3) of the grievance machinery to resolve the conflicting views of
the parties.Instead of asking the Conciliation Board composed of five representatives each from
the company and the union, to decide the conflict, petitioner declared a deadlock, and thereafter,
filed a notice of strike. For failing to exhaust all the steps in the grievance machinery and
arbitration proceedings provided in the Collective Bargaining Agreement, the notice of strike
should have been dismissed by the NLRC and private respondent union ordered to proceed with
the grievance and arbitration proceedings. In the case of Liberal Labor Union vs. Phil. Can
Co.,[12] the court declared as illegal the strike staged by the union for not complying with the
grievance procedure provided in the collective bargaining agreement, ruling that:

x x x the main purpose of the parties in adopting a procedure in the settlement of

their disputes is to prevent a strike. This procedure must be followed in its entirety
if it is to achieve its objective. x x x strikes held in violation of the terms contained
in the collective bargaining agreement are illegal, specially when they provide for
conclusive arbitration clauses. These agreements must be strictly adhered to and
respected if their ends have to be achieved. x x x[13]

As regards the alleged violation of the CBA, we hold that such a violation is chargeable
against the private respondent union. In abandoning the grievance proceedings and stubbornly
refusing to avail of the remedies under the CBA, private respondent violated the mandatory
provisions of the collective bargaining agreement.
Abolition of departments or positions in the company is one of the recognized management
prerogatives.[14] Noteworthy is the fact that the private respondent does not question the validity
of the business move of petitioner. In the absence of proof that the act of petitioner was ill-
motivated, it is presumed that petitioner San Miguel Corporation acted in good faith. In fact,
petitioner acceded to the demands of the private respondent union by redeploying most of the
employees involved; such that from an original 17 excess employees in BLD, 15 were
successfully redeployed. In AOC, out of the 17 original excess, 15 were redeployed. In the
Magnolia - Manila Buying Station, out of 18 employees, 6 were redeployed and only 12 were
terminated.[15]
So also, in filing complaint with the NLRC, petitioner prayed that the private respondent
union be compelled to proceed with the grievance and arbitration proceedings. Petitioner having
evinced its willingness to negotiate the fate of the remaining employees affected, there is no
ground to sustain the notice of strike of the private respondent union.
All things studiedly considered, we are of the ineluctable conclusion, and so hold, that the
NLRC gravely abused its discretion in dismissing the complaint of petitioner SMC for the
dismissal of the notice of strike, issuance of a temporary restraining order, and an order
compelling the respondent union to settle the dispute under the grievance machinery of their
CBA.
 WHEREFORE, the instant petition is hereby GRANTED. Petitioner San Miguel
Corporation and private respondent San Miguel Corporation Employees Union - PTGWO are
hereby directed to complete the third level (Step 3) of the Grievance Procedure and proceed with
the Arbitration proceedings if necessary. No pronouncement as to costs.
SO ORDERED.
Romero, (Chairman), and Gonzaga-Reyes, JJ., concur.
Vitug, J., abroad on official business.
Panganiban, J., on leave.

[1]
Dated April 16, 1991; Rollo, pp. 183-184.
[2]
Annex A of Petition.
[3]
Complaint Annex F; Rollo, p. 53.
[4]
Annex A, Petition; Collective Bargaining Agreement, pp. 18-19.
[5]
Annex B-3, Petition; Rollo, p. 31.
[6]
Annex F, Petition; Rollo, pp. 48-65.
[7]
Annex "J", Petition; Rollo, p. 183.
[8]
Rollo, p. 14.
[9]
Rollo, p. 185.
[10]
As amended by D.O. No. 09 which took effect on June 21, 1997.
[11]
Tayag & P. F. Jardiniano, Dictionary of Philippine Labor Terms, p. 36.
[12]
91 Phil. 72.
[13]
Id. p. 77 - 78, citing: Shop N. Save vs. Retail Food Clerks Union (1940) Cal. Super. Ct. CCT. Tab. Case 91 -
18675; 2 A. L. R. Ann., 2nd Series, pp. 1278 - 1282.
[14]
Dangan vs. NLRC, et al., 127 SCRA 706, p. 713.
[15]
Complaint; Annex A; Rollo, p. 54.

18) Union vs. Nestle GR No. 88710-13 Dec.19,1990 (pdf DOWNLOAD)

270 Phil. 511

MEDIALDEA, J.:
This petition assails the decision of the NLRC, dated November 2, 1988 on
the consolidated appeals of petitioners, the dispositive portion of which
provides as follows:
"1. In NLRC Case No. NCR-12-4007-85 and NLRC Case No. NCR-1-295-
86 -
a. Declaring the strike illegal;
b. Declaring the following respondent union officers, namely:
M.L. Sarmiento, B.M. Altarejos, R.D. Paglinawan, C.G. Nuqui, C.Y. Sazon,
R. Armas, E. Abel la, A. A. Cañete, A.B. Mira, P.C. Caringal, E. Leonardo,
E.C. Nuñez, P.D. San Jose, E. Villena, A. Ricafrente, M. Lantin, A. Montojo,
R. Mansud, R. Diaz, R. Urqelles, C. San Jose, E. Bunyi, N. Centeno,
R. Gacutan, G. de Borja, N. Nipales, E. San Pedro, C. Ponce, J. Castro,
R. Beo, E. Quino, M. Roxas, R. Arandela, W. Ramirez, I. Natividad,
S. Pampang, D. Canlobo, R. Calong-Calong, G. Noble, E. Sayao, C. Cenido,
P. Mijares, P. Quitlong, A. Avelino, L. Payabyab, I. Rieza, G. Pre,
D. Belarmino, to have lost their employment status;
c. Ordering the reinstatement of the following respondents-
appellants: Juanito Capili, Carlo Medina, Rodrigo Lucas, Adolfo Castillo
Jr., Venusito Solis, Ricardo Arevalo, Quezon G. Mateo,
Jr., Dionisio Completo, Felix Esquerra,
Manuel dela Fuente and Reymundo Almenanza, to their former or
equivalent positions without loss of seniority rights but without backwages;
d. Declaring the union (UFE) guilty of unfair labor practice; and
e. Dismissing the union complaint for unfair labor practice.
2. In RAB-X-2-0047-86, the decision sought to be set aside is
AFFIRMED and the individual respondents-appellants namely:
Roy Baconguis, Jerome T. Fiel, Efren P. Dinsay, Anastacio G. Caballero,
Susan E. Berro, Jose T. Isidto, Wilson C. Barros, Rogelio E. Raiz, Manuel
A. Lavin, Cipriano P. Lupeba, are hereby declared to have lost their
employment status;
3. In NLRC-00-09-0385-87, the challenged decision is likewise
AFFIRMED, except as it affects Cesar S. Cruz, who is ordered reinstated to
his former or equivalent position without backwages." (pp. 417-418, Rollo)
and the resolution dated March 7, 1989, quoted as follows:
"NLRC CASE No. NCR-12-4007-85 entitled Union of Filipro Employees
(UFE). Petitioner-Appellants, versus, Filipro, Inc., et al., Respondents-
Appellees, NLRC CASE No. NCR-1-295-86 entitled Nestle Phils., Inc.,
Petitioner-Appellee, versus, Union of FiliproEmployees, et al.,
Respondents-Appellants, NLRC CASE No. RAB-X-2-0047-86 entitled
Nestle Phils., Inc., Petitioner-Appellee,
versus, Cagayan de Oro Filipro Workers Union-WATU, et al., Respondents-
Appellants, NCR-00-09-0385-87 entitled Union of Filipro Employees
(UFE) and its officers, Complainants-Appellants, versus, Nestle Phils., et
al., Respondents-Appellees. The Commission sitting en banc, after
deliberation, resolved to rectify par. 3 of the dispositive portion of our
November 2, 1988 resolution by ordering the reinstatement of Quezon G.
Mateo, Jr. and Dionisio Completo to their former or equivalent position
without backwages and to deny the motion for reconsideration filed by
appellants UFE and its Officials adversely affected by said resolution." (p.
429, Rollo)
In a lengthy and voluminous petition, dwelling largely on facts, petitioner
Union of Filipro Employees and 70 union officers and a member
(henceforth "UFE") maintain that public respondent NLRC had acted with
grave abuse of discretion in its affirmance of the decisions of the Labor
Arbiters a quo, declaring illegal the strikes staged by UFE.
Respondent NLRC premised its decision on the following sets of facts:
1. InNCR 12-4007-85 and NCR 1-295-86:
UFE filed a notice of strike on November 14, 1985 (BLR-NS-11-344-85)
with the Bureau of Labor Relations against Filipro (now Nestle Philippines,
Inc., ["Nestle"]). On December 4, 1988, UFE filed a complaint for Unfair
Labor Practice (ULP) against Nestle and its officials for violation of the
Labor Code (Art. 94) on Holiday Pay, non-implementation of the CBA
provisions (Labor Management Corporation scheme). Financial Assistance
and other unfair labor practice (p. 381, Rollo).
Acting on Nestle's petition seeking assumption of jurisdiction over the
labor dispute or its certification to the NLRC for compulsory arbitration,
then Minister of Labor and Employment Blas F. Ople assumed .jurisdiction
over the dispute and issued the following order on December 11, 1985:
"WHEREFORE, this Office hereby assumes jurisdiction over the labor
dispute at Filipro, Inc. pursuant to Article 264(g) of the Labor Code of the
Philippines, as amended. In line with this assumption a strike, lockout, or
any other form of concerted action such as slowdowns, sitdowns, noise
barrages during office hours, which tend to disrupt company operations,
are strictly enjoined.
Let a copy of this Order be published in three (3) conspicuous places inside
company premises for strict compliance of all concerned." (p. 381-
382, Rollo)
On December 20, 1985, UFE filed a petition for certiorari with prayer for
issuance of temporary restraining order, with this Court (G.R. No. 73129)
assailing the assumption of jurisdiction by the Minister. Notwithstanding
the automatic injunction against any concerted activity, and an absence of a
restraining order, the union members, at the instigation of its leaders, and
in clear defiance of Minister Ople'sOrder of December 11, 1985, staged a
strike and continued to man picket lines at the Makati Administrative
Office and all of Nestle'sfactories and warehouses
at Alabang, Muntinlupa, Cabuyao, Laguna,
and Cagayan de Oro City. Likewise, the union officers and members
distributed leaflets to employees and passersby advocating a boycott of
company products (p. 383, Rollo).
On January 23, 1986, Nestle filed a petition to declare the strike illegal
(NCR-1-295-86) premised on violation of the CBA provisions on "no
strike/no lockout" clause and the grievance machinery provisions on
settlement of disputes.
On January 30, 1986, then Labor Minister Ople issued another Order, with
this disposition:
"WHEREFORE, in line with the Order of December 11, 1985, this Office
hereby orders all the striking workers to report for work and the company
to accept them under the same terms and conditions prevailing before the
work stoppage within forty eight (48) hours from notice of this Order.
The Director of Labor Relations is designated to immediately conduct
appropriate hearings and meetings and submit his recommendations to
enable this Office to decide the issues within thirty (30) days." (p.
383, Rollo)
Despite receipt of the second order dated January 30, 1986, and knowledge
of a notice caused to be published by Nestle in the Bulletin on February 1,
1986, advising all workers to report to work not later than February 3,
1986, the officers and members of UFE continued with the strike.
On February 4, 1986, the Minister B. Ople denied their motion for
reconsideration of the return-to-work order portion as follows:
"WHEREFORE, the motion for reconsideration is hereby denied and no
further motion of similar nature shall be entertained.
"The parties are further enjoined from committing acts that will disrupt the
peaceful and productive relations between the parties while the dispute is
under arbitration as well as acts considered illegal by law for the orderly
implementation of this Order like acts of coercion, harassment, blacking of
public thoroughfares, ingress and egress to company premises for lawful
purposes or those undertaken without regard to the rights of the other
party.
"Police and military authorities site requested to assist in the proper and
effective implementation of this Order." (p. 384, Rollo)
UFE defied the Minister and continued with their strike. Nestle filed
criminal charges against those involved.
On March 13, 1986, the new Minister of Labor and
Employment, Augusto B. Sanchez, issued a Resolution, the relevant
portions of which stated thus:
"This Office hereby enjoins all striking workers to return-to-work
immediately and management to accept them under the same terms and
conditions prevailing previous to the work stoppage except as qualified in
this resolution. the management of Nestle Philippines is further directed to
grant a special assistance as suggested by this Ministry in an order dated 30
January 1986 to all striking employees covered by the bargaining units
at Makati, Alabang, Cabuyao and Cagayan de Oro, City in an amount
equivalent to their weighted average monthly basic salary, plus the cash
conversion value of the vacation leave credits for the year 1986, payable not
later than five (5) days from the date of the actual return to work by the
striking workers." (p. 385, Rollo)
On March 17, 1986, the strikers returned to work.
On March 31, 1986, we granted UFE's Motion to Withdraw its Petition for
Certiorari (G.R. No. 73129) (p. 385, Rollo).
On April 23, 1986, Minister Sanchez rendered a Decision,
the dispositive portion of which reads:
"WHEREFORE, the Union charge for unfair labor practices is hereby
dismissed for want of merit. Nestle Philippines is hereby directed to make
good its promise to grant an additional benefit in the form of bonus
equivalent to one (1) month's gross compensation to all employees entitled
to the same in addition to the one-month weighted average pay granted by
this office in the return-to-work Order." (p. 786, Rollo)
On June 6, .1986, Minister Sanchez modified the foregoing decision as
follows:
"WHEREFORE, our 23 April 1986 Decision is hereby modified as fallows:
"1. NestIe Philippines is directed to pay the Anniversary bonus equivalent
to one month basic salary to all its employees in lieu of the one month gross
compensation previously ordered by this office." (p. 787, Rollo)
On November 13, 1987, after, trial on the merits, Labor Arbiter Eduardo
G. Magno issued his decision, disposing as follows:
"WHEREFORE, judgment is hereby, rendered:
"1. Declaring the strike illegal.
"2. Declaring all the respondent union officers, namely: M.L. Sarmiento,
R.M. Alterejos, R.D. Paglinawan, C.G. Nuqui, C.Y. Sazon, R. Lucas,
R. Armas, E. Abella, A.A. Cañete, J.T. Capili, A.S. Castillo, Jr., P.C. Caringal,
E. Leonardo, E.B. Mira, E.C. Nuñez, P.D. San Jose, V. Solis, E. Villena,
A. Ricafrente, M. Lantin, A. Mortojo, R. Munsod, R. Diaz, R. Urgelles, C.
San Jose, E. Bunyi, N. Centeno, R. Gacutan, G. de Borja, N. Nipales, E. San
Pedro, M. de la Fuente, C. Medina, C. Ponce, J. Castro Jr., R. Arevalo,
R. Beo, F. Esguerra, R. Almenanza, E. Quino, M. Roxas, R. Arandela, W.
Ramirez, I. Natividad, S. Pampang, D. Ganlobo, G. Noble, E. Sayao,
C. Cenido, F. Mijares, R. Calong-Calong, P. Quitlong, D. Completo,
A. Avelino, L. Payabyab, I. Rieza, D. Belarmino, Q. Mateo, and C. Pre to
have lost their employment status.
"3. Declaring the union guilty of unfair labor practice; and
"4. Dismissing the Union complaint for unfair labor practice." (pp. 380-
381, Rollo)
2. InRAB-X-2-00-47-86:
Filipro (Nestle) and the Cagayan de Oro Filipro Workers Union - WATU,
renewed a 3-year contract, made effective, from December 1, 1984 up to
June 30, 1987. Petitioners signed the CBA as the duly-elected officers of
the Union.
On January 19, 1985, the union officers, together with other members of the
union sent a letter to Workers Alliance Trade Unions (WATU), advising
them "that henceforth we shall administer the CBA by ourselves and with
the help of the Union of Filipro Employees (UFE) to where we have allied
ourselves." WATU disregarded the union's advice, claiming to be the
contracting party of the CBA, UFE -filed a petition (Case No. CRD-M-88-
326-85) for administration of the
existing CBAs at Cebu, Davao and Cagayan de Oro bargaining units against
TUPAS and WATU.
From January 22, 1986 to March 14, 1986, the rank and file employees of
the company staged a strike at the instigation of the UFE officers, who had,
represented themselves as officers.
Nestle filed a petition to declare the strike illegal. The strikers countered
that their strike was legal because the same was staged pursuant to the
notice of strike filed by UFE On November 14, 1985 (BLR-NS-11-344-85), of
which they claim to be members, having disaffiliated themselves from
CDO-FWU-WATU.
On November 24, 1987, Executive Labor Arbiter Zosimo Vasallo issued his
decision, disposing as follows:
"WHEREFORE, in view of the foregoing, judgment is hereby rendered:
"1. Declaring the strike illegal;
"2. Declaring respondent union guilty of unfair labor practice; and
"3. Declaring the following individual respondent Union officers namely:
Roy Y. Baconguis, Jerome T. .Fiel, Efren P. Dinsay, Anastacio G. Caballero,
Susan E. Berro, Jose T. Isidro, Wilson C. Barros, Rogelio E. Raiz, Manuel
A. Lavin and Cipriano P. Lupeba to have lost their employment status." (p.
388, Rollo)
3. InNCR-00-09-`03285-87
(a) On August 13, 1986, UFE, its officers and members staged e walkout
from their jobs, and participated in the Welga ng Bayan. Nestle filed a
petition to declare the walkout illegal (NLRC Case No. SRB-lV-1831-87), (p.
392, Rollo);
(b) On September 21, 1986, complainants (UFE) again did not proceed to
their work, but joined the picket line in sympathy with the striking workers
of Southern Textile Mills, which became the subject of an Illegal Strike
Petition (NLRC Case ,SRB-IV-I-1831-87) (p. 392, Rollo);
(c) On November 12, 1986, UFE its officers and members just left their
work premises and marched towards Calamba in a demonstration over the
slaying of a labor leader, x x x hence a complaint for Illegal Walkout (NLRC
Case No. SRB-IV-1833-87) was filed by Nestle (p. 392, Rollo);
(d) On December 4, 1986, UFE filed a Notice of Strike with the Bureau of
Labor Relations (BLR-NS-12-531-86) (to protest the unfair labor practices
of Nestle, such as hiring of contractual workers to perform regular jobs and
wage discrimination) (p. 392, Rollo);
(e) On December 23, 1986, then Minister Augusto S. Sanchez certified the
labor dispute to the Commission for compulsory arbitration, strictly
enjoining any intended or actual strike or lockout (p. 392, Rollo)
(f) On August 18, 1987, UFE union officers and members at
the Cabuyao factory again abandoned their jobs and just walked out,
leaving unfinished products on line and raw materials, leading to their
spoilage. The walk-out resulted in economic losses to the company. Nestle
filed a Petition to Declare the Walkout Illegal. (NLRC Case No. SRB-IV-3-
1898-87) (p. 407, Rollo);
(g) On August 21, 1987, UFE union officers and members at
the Alabanq factory also left their jobs in sympathy with the walkout staged
by their Cabuyao counterparts. Nestle filed again a Petition to Declare the
Strike Illegal (NLRC-NCR-Case No. 00-08-03003-87) (p. 407, Rollo);
(h) On August 27, 1987, UFE union members at
the Alabang and Cabuyao factories, in disregard of the Memorandum of
Agreement entered into by the Union and Management on August 21, 1987,
(to exert their best efforts for the normalization of production targets and
standards and to consult each other on any matter that may tend to disrupt
production to attain industrial peace) participated in an indignation rally
in Cabuyao because of the death of two (2) members of PAMANTIC, and
in Alabang because one of their members was allegedly mauled by a
policeman during the nationwide strike on August 26, 1987 (p. 408, Rollo);
(i) On September 4, 1987, around 6:00 P.M. all sections at
the Alabang factory went on a 20-minute meal break simultaneously,
contrary to the agreement and despite admonition of supervisors, resulting
in complete stoppage of their production lines. Responsible officials
namely: Eugenic San Pedro, Carlos Jose, and Cesar Ponce, were suspended
from work for six (6) days without pay (p. 408, Rollo).
(j) From September 5 to 8,. 1987, at the instigation of UFE union officers,
all workers staged a sitdown strike; and
(k) On September 7, 1987, Cabuyao's culinary section's union members
sympathized with the sitdown strike at Alabang, followed at 12:30 P.M. by
the whole personnel of the production line and certain areas in the
Engineering Department. These sitdown strikes at
the Alabangand Cabuyao factories became the subject of two separate
petitions to declare the strike illegal (NCR-Case No. 00-09-03168-87 and
SRB-IB-9-1903-87, respectively) (p. 408, Rollo);
(1) On September 8, 1987, Hon. F. Drilon issued the following order:
"All the workers are hereby directed to return to work immediately, refrain
from resorting to any further slowdown, sitdown strike, walkout and any
other kind of activities that may tend to disrupt the normal operations of
the company. The company is directed to accept all employees and to
resume normal operations.
Parties are likewise directed to cease and desist from committing any and
all acts that would aggravate the situation." (p. 394, Rollo)
(m) Despite the order, UFE staged a strike on September 11, 1987 without
notice of strike, strike vote and in blatant defiance of a then Labor Minister
Sanchez's certification order dated November 23, 1986 and
Secretary Drilon's return-to-work order dated September 8, 1987." (p.
409, Rollo);
(n) Nestle sent, individual letter of termination dated September 14, 1987
dismissing them from the service effective immediately for knowingly
instigating and participating in an illegal strike, defying the order of the
Secretary of Labor, dated September. 8, 1987, and other illegal acts (pp.
394-395, Rollo)
On September 22, 1987, UFE filed a complaint for Illegal Dismissal, ULP
and damages (NLRC NCR-"00-03285-87). Labor Arbiter
Evangeline Lubaton ruled on both issues of dismissal and strike legality,
upon the premise that the issue on validity of the dismissal of the individual
complainants from employment "depends on the, resolution of the issue on
whether or not the strike declared by complainants was illegal."
The decision dated January 12, 1988, disposed as follows;
"WHEREFORE, in view of the foregoing, judgment is hereby rendered:
1. Dismissing the instant complaint for lack of merit; and
2. Confirming the dismissal of all individual complainants herein as
valid and legally justified." (p. 376, Rollo)
UFE appealed, assailing the three decisions, except that rendered in Case
No. NLRC-NCR-12-4007-85 (Complaint for Unfair Labor Practice Against
UFE) "because it was already rendered moot and academic by the return to
work agreement and order dated March 10 and 13, 1986, respectively." (p.
49, Rollo)
Upon UFE's subsequent motion, the three appeals were ordered
consolidated and elevated to the NLRC en banc (p. 95, Rollo).
The NLRC affirmed the unanimous decisions of the three labor arbiters
which declared the strikes illegal, premised on the view that "the core of the
controversy rests upon the legality of the strikes."

In the petition before Us, UFE assigns several errors (pp. 63-321, Rollo),
which We have summarized as follows:
1. that Articles 263 and 264 are no longer good laws, since compulsory
arbitration has been curtailed under the present Constitution.
2. that the Question on the legality of the strike was rendered moot and
academic when Nestle management accepted, the striking workers in
compliance with the return-to-work order of then Minister of
Labor Augusto Sanchez dated March 13, 1986, (citing the case
of Bisayan Land Transportation Co. v. CIR (102 Phil. 439) and affirmed in
the case of Feati University Faculty Club (PAFLU) v. Feati University,
G.R. No, L-31503, August 15, 1974, 58 SCRA 395).
3. that the union did not violate the no-strike/no lockout clause,
considering that the probition applies to economic strikes, pursuant to
Philippine Metal Foundries v. CIR, G.R. No. L-34948-49, May 15, 1979, 90
SCRA 135. UFE, it is claimed, premised their strike on a violation of the
labor standard laws or non payment of holiday pay, which is, in effect, a
violation of the CBA.
4. on the commission of illegal and prohibited acts which automatically
rendered the strike illegal, UFE claimed that there were no findings of
specific acts and identities of those participating as to render them liable
(ESSO Phils, v. Malayang Manggagawa sa ESSO, G.R. No. L-
36545, January 26, 1977, 75 SCRA 72; Shell Oil Workers Union v. CIR, G.R.
No. L-28607, February 12, 1972, 43 SCRA 224). By holding the officers
liable for the illegal-acts of coercion, or denial of free ingress and egress,"
without specifying and finding out their specific participation therein, the
Labor Arbiter resorted to the principle of vicarious liability which has since
been discarded in the case of Benguet Consolidated v. CIR, G.R. No. L-
24711, April 30, 1968, 23 SCRA 465.
We agree with the Solicitor General that the petition failed to show that the
NLRC committed grave abuse of discretion in its affirmance of the
decisions of the Labor Arbiters a quo.
At the outset, UFE Questions the power of the Secretary of Labor under Art.
263(g) of the Labor Code to assume jurisdiction over a labor dispute tainted
with national interests, or to certify the same for compulsory
.arbitration. UFE contends that Arts. 263 and 264 are based on the 1973
Constitution, specifically Sec. 9 of Art. II thereof, the pertinent portion of
which reads:
"Sec. 9. x x x. The State may provide for compulsory arbitration." (p.
801, Rollo)
UFF argues that since the aforecited provision of Sec. 9 is no longer found
in the 1987 Constitution, Arts. 263 (g) and 264 of the Labor Code are now
unconstitutional and must be ignored."
We are not persuaded. We agree with the Solicitor General that on the
contrary, both provisions are still applicable.
We quote:
"Article 7 of the New Civil Code declares that:
'Article 7. Laws &re repealed only by subsequent ones, and their violation
or non-observance shall not be excused by disuse or custom or practice to
the contrary.
x x x.''
"In the case at bar, no law has ever been passed by Congress expressly
repealing Articles 263 and 264 of the Labor Code. Neither may the 1987
Constitution be considered to have impliedly repealed the said Articles,
considering that there is no showing that said articles are inconsistent with
the said Constitution. Moreover, no court has ever declared that the .said
articles are inconsistent with, the 1987 Constitution.
"On the contrary, the continued validity and operation of Articles 263 and
264 of the Labor Code has been recognized by no less than the Congress of
the Philippines when the latter enacted into law R.A. 6715, otherwise
known as Herrera Law, Section 27 of which-amended paragraphs (g) and
(i) of Articles 263 of the Labor Code.
"At any rate, it must be noted that Articles 263 (q) and 264 of the Labor
Code have been enacted pursuant to the police power of the State, which
has been defined as the power inherent in a Government to enact laws,
within constitutional limits, to promote the order, safety, health, morals
and general welfare of society (People vs. Vera Reyes, 67 Phil. 190). The
police power, together with the power of eminent domain and the power of
taxation, is an inherent power of government and does not need to ' be
expressly conferred by the Constitution. Thus, it is submitted that the
argument of petitioners that Articles 263 (g) and 264 of the Labor Code do
not have any constitutional foundation is legally inconsequential." (pp. 801-
803, Rollo)

2) WON the strike committed is illegal.

On the issue of the legality of the strike committed, UFE seeks to absolve
itself by pointing out qualifying factors such as motives, good faith, absence
of findings on specific participation and/or liability, and limiting the no-
strike provision to economic strikes.
UFE completely misses the underlying principle embodied in Art. 264(g) on
the settlement of labor disputes and this is, that assumption and
certification orders are executor in character and are to be strictly
complied with by the parties even during the pendency of any petition
questioning their validity. This extraordinary authority given to the
Secretary of Labor is aimed at arriving at a peaceful and speedy solution to
labor disputes, without jeopardizing national interests.
Regardless therefore of their motives, or the validity of their claims, the
striking workers must cease and/or desist from any and all acts that tend
to, or undermine this authority of the Secretary of Labor, once an
assumption and/or certification order is issued. They cannot, for instance,
ignore return-to-work orders, citing unfair labor practices on the part of the
company, to justify their actions. Thus, the NLRC, in its decision, re-
emphasized the nature of a return-to work order within the context of Art.
264(g) as amended by BP Nos. 130 and 227:
"x x x
"One other point that must be underscored is that the return-to-work order
is issued pending the determination of the legality or illegality of the
strike. It is not correct to say that it may be enforced only if the strike is
legal and may be disregarded if the strike is illegal, for the purpose precisely
is to maintain the status quo while the determination is being
made. Otherwise, the workers who contend that their strike is legal can
refuse to return to work to their work and cause a standstill on the company
operations while retaining the positions they refuse to discharge or allow
the management to fill. Worse, they will also claim payment for work not
done, on the ground that they are still legally employed although actually
engaged in activities inimical to their employer's interest. (Underscoring
supplied)
"This is like eating one's cake and having it too, and at the expense of the
management. Such an unfair situation surely was not contemplated by our
labor laws and cannot be justified under the social justice policy, which is a
policy of fairness to both labor and management. Neither can this
unseemly arrangement be sustained under the due process clause as the
order, if thus interpreted, would be plainly oppressive and arbitrary.
"x x x" (p. 415, Rollo)
Also, in the cases of Sarmiento v. Judge Tuico, G.R. No. 75271-73; Asian
Transmission Corporation v. National Labor Relations Commission, G.R.
77567, 27 June 88, 162 SCRA 676). We stated:
"The return to work order does not so much confer a right as it imposes a
duty; and while as a right, it may be waived, it must be discharged as a duty
even against the worker's will. Returning to work in this situation is not a
matter of option or voluntariness but of obligation. The worker must
return to his job together with his co-workers so the operations of the
company can be resumed and it can continue serving the public and
promoting its interest."
We also wish to point out that an assumption and/or certification order of
the Secretary of Labor automatically results in a return-to-work of all
striking workers, whether or not a corresponding order has been issued by
the Secretary of Labor. Thus, the striking workers erred when they
continued with their strike alleging absence of a return-to-work
order. Article 264(g) is clear. Once an assumption/certification order is
issued, strikes are enjoined, or if one has already taken place, all
strikers shall immediately return to work.
A strike that is undertaken despite the issuance by the Secretary of Labor of
an assumption or certification order becomes a prohibitedactivity and thus
illegal, pursuant to the second paragraph of Art. 264 of the Labor Code as
amended (Zamboanga Wood Products, Inc. v. NLRC, G.R. 82088, October
13, 1989; 178 SCRA 482). The Union officers and members, as a result, are
deemed to have lost their employment status for having knowingly
participated in an illegal act.
The NLRC also gave the following reasons:
1. The strike was staged in violation of the existing CBA provisions on "No
Strike/No Lockout Clause" stating that a strike, which is in violation of the
terms of the collective bargaining agreement, is illegal, especially when
such terms provide for conclusive arbitration clause (Liberal Labor Union
vs. Phil. Can Co., 91 Phil. 72; Phil. Airlines vs. PAL Employees Association,
L-8197, October 31, 1988). The main purpose of such an agreement is to
prevent a strike and it must, therefore, be adhered to strictly and respected
if their ends are to be achieved (pp. 397-398, Rollo).
2. Instead of exhausting all the steps provided for in the grievance
machinery provided for in the collective bargaining agreement to resolve
the dispute amicably and harmoniously within the plant level, UFE went on
strike (p. 398, Rollo).
3. The prescribed mandatory cooling-off period and then 7-day strike and
after submission of the report of strike vote at Nestle'sMakati Offices
and Muntinlupa and Cabuyao Plants were not complied with (NLRC-NCR-
12-4007-85 & NCR-1-295-86), while no notice of strike was filed by
respondents when they staged the strike at Nestle's Cagayan de Oro Plant
(RABX-2-0047-86) contrary to the pertinent provision of Articles 263 and
264 of the Labor Code, emphasizing that "the mandatory character of these
cooling-off periods has already, been categorically ruled upon by the
Supreme Court" (National Federation of Sugar Workers (NFSW)
vs. Ovejera, et al., 114 SCRA 354) (p. 402, Rollo).
4. In carrying out the strike, coercion, force, intimidation, violence with
physical injuries, sabotage, and the use of unnecessary and obscene,
language or epithets were committed by the respondent officials and
members of either UFE or WATU. It is well-settled that a strike conducted
in this manner is illegal (United Seamen's Union
vs. Davao Shipowners Association, 20 SCRA 1226). In fact, criminal cases
were filed with the Makati Fiscal's Office (p. 402, Rollo)
Thus, the NLRC correctly upheld the illegality of the strikes and the
corresponding dismissal of the individual complainants because of their
"brazen disregard of successive lawful orders of then Labor Ministers Blas
F. Ople, Augusto Sanchez and Labor Secretary Franklin Drilon dated
December 11, 1985, January 30, 1986 and February 4, 1986, respectively,
and the cavalier treatment of the provisions of the Labor Code and the
return-to-work orders of the Minister (now Secretary) of Labor and
Employment, or Articles 264 and 265 (now renumbered Arts. 263 and
264), providing in part as follows:
"ART. 263. Strikes, picketing and lockouts. -
xxx xxx xxx
"(g) When in his opinion there exists a labor dispute causing or likely to
cause strikes or lockouts adversely affecting the national interest, such as
may occur in but not limited to public utilities, companies engaged in the
generation or distribution of energy, banks, hospitals, and export-oriented
industries including those within export processing zones, the Minister of
Labor and Employment shall assume .jurisdiction over the dispute and
decide it or certify the same to the Commission for compulsory
arbitration. Such assumption or certification shall have the effect of
automatically enjoining the intended or impending strike or lockout as
specified in the assumption or certification order. If one has already taken
place at the time of assumption, or certification, all striking or locked
employee shall immediately return to work and the employer shall
immediately resume operations and readmit all workers under the same
terms and conditions prevailing before the strike or lockout. The Minister
may seek the assistance of law enforcement agencies to ensure compliance
with this provision as well as with such orders as he may issue to enforce
the same. (Underlining supplied)
"The foregoing notwithstanding, the President of the Philippines shall not
be precluded from determining the industries wherein (sic) his opinion
labor disputes may adversely affect the national interest, and from
intervening at any time and assuming jurisdiction over any labor dispute
adversely affecting the national interest in order to settle or terminate the
same.
xxx xxx xxx
ART. 264. Prohibited activities. -
(a) No labor organization or employer shall declare a strike or lockout
without first having bargained collectively in accordance with Title VII of
this Book or without first having filed the notice required in the preceding
Article or without the necessary strike or lockout .vote first having been
obtained and reported to the Ministry.
No strike or lockout shall be declared a strike assumption of jurisdiction by
the President or the Minister or alter certification or submission of the
dispute, to compulsory or voluntary arbitration or during the pendency at
cases involving the same grounds for the strike or lockout." ([pp. 399-
401, Rollo]) (Underlining supplied)
On the alleged lack of jurisdiction of Labor Arbiter lubaton, NLRC has
clarified that the question on the legality of strike was properly resolved by
the Labor Arbiter, not only because the question is perfectly within the
original and exclusive jurisdiction of the Labor Arbiter to adjudicate, but
also because the issue was not subsumed by the Order o-f Labor Minister
Sanchez, dated December 23, 1986, certifying the Notice of Strike dated
December 4, 1986 for compulsory arbitration, further clarifying that the
issue of whether or not the strike staged on September 11, 1987 by UFE and
its officials and members was illegal is a prejudicial question to the issue of
whether or not the complainants were illegally dismissed. We shall not
belabor the issue any further.
ACCORDINGLY, the petition is DISMISSED, and the decision of public
respondent-NLRC, dated November 2, 1988, and its Resolution, dated
March 7, 1989, are both AFFIRMED, in their entirety. No costs.
SO ORDERED.
Narvasa, Gancayco, and Griño-Aquino, JJ., concur.
Cruz, J., no part, related to one of the accused.
19) National vs. Ovejera GR No. L-59743 May 31,1982

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-59743 May 31 1982

NATIONAL FEDERATION OF SUGAR WORKERS (NFSW), petitioner,

vs.
ETHELWOLDO R. OVEJERA, CENTRAL AZUCARERA DE LA CARLOTA (CAC), COL.
ROGELIO DEINLA, as Provincial Commander, 3311st P.C. Command, Negros
Occidental, respondents.

PLANA, J:

This is a petition for prohibition seeking to annul the decision dated February 20, 1982 of Labor
Arbiter Ethelwoldo R. Ovejera of the National Labor Relations Commission (NLRC) with station at
the Regional Arbitration Branch No. VI-A, Bacolod City, which, among others, declared illegal the
ongoing strike of the National Federation of Sugar Workers (NFSW) at the Central Azucarera de la
Carlota (CAC), and to restrain the implementation thereof.

I. FACTS —

1. NFSW has been the bargaining agent of CAC rank and file employees (about 1200 of more than
2000 personnel) and has concluded with CAC a collective bargaining agreement effective February
16, 1981 — February 15, 1984. Under Art. VII, Sec. 5 of the said CBA —

Bonuses — The parties also agree to maintain the present practice on the grant of
Christmas bonus, milling bonus, and amelioration bonus to the extent as the latter is
required by law.

The Christmas and milling bonuses amount to 1-½ months' salary.

2. On November 28, 1981, NFSW struck allegedly to compel the payment of the 13th month pay
under PD 851, in addition to the Christmas, milling and amelioration bonuses being enjoyed by CAC
workers.

3. To settle the strike, a compromise agreement was concluded between CAC and NFSW on
November 30,1981. Under paragraph 4 thereof —

The parties agree to abide by the final decision of the Supreme Court in any case
involving the 13th Month Pay Law if it is clearly held that the employer is liable to pay
a 13th month pay separate and distinct from the bonuses already given.
4. As of November 30, 1981, G.R. No. 51254 (Marcopper Mining Corp. vs. Blas Ople and Amado
Inciong, Minister and Deputy Minister of Labor, respectively, and Marcopper Employees Labor
Union, Petition for certiorari and Prohibition) was still pending in the Supreme Court. The Petition
had been dismissed on June 11, 1981 on the vote of seven Justices. 1 A motion for reconsideration
thereafter filed was denied in a resolution dated December 15, 1981, with only five Justices voting for
denial. (3 dissented; 2 reserved their votes: 4 did not take part.)

On December 18, 1981 — the decision of June 11, 1981 having become final and executory — entry
of judgment was made.

5. After the Marcopper decision had become final, NFSW renewed its demand that CAC give the
13th month pay. CAC refused.

6. On January 22, 1982, NFSW filed with the Ministry of Labor and Employment (MOLE) Regional
Office in Bacolod City a notice to strike based on non-payment of the 13th month pay. Six days after,
NFSW struck.

7. One day after the commencement of the strike, or on January 29, 1982, a report of the strike-vote
was filed by NFSW with MOLE.

8. On February 8, 1982, CAC filed a petition (R.A.B. Case No. 0110-82) with the Regional Arbitration
Branch VI-A, MOLE, at Bacolod City to declare the strike illegal, principally for being violative of
Batas Pambansa Blg. 130, that is, the strike was declared before the expiration of the 15-day
cooling-off period for unfair labor practice (ULP) strikes, and the strike was staged before the lapse
of seven days from the submission to MOLE of the result of the strike-vote.

9. After the submission of position papers and hearing, Labor Arbiter Ovejera declared the NFSW
strike illegal. The dispositive part of his decision dated February 20, 1982 reads:

Wherefore, premises considered, judgment is hereby rendered:

1. Declaring the strike commenced by NFSW on January 28, 1982, illegal,

2. Directing the Central to resume operations immediately upon receipt hereof;

3. Directing the Central to accept back to work all employees appearing in its payroll
as of January 28, 1982 except those covered by the February 1, 1982 memorandum
on preventive suspension but without prejudice to the said employees' instituting
appropriate actions before this Ministry relative to whatever causes of action they
may have obtained proceeding from said memorandum;

4. Directing the Central to pay effective from the date of resumption of operations the
salaries of those to be placed on preventive suspension as per February 1, 1982
memorandum during their period of preventive suspension; and

5. Directing, in view of the finding that the subject strike is illegal, NFSW, its officers,
members, as well as sympathizers to immediately desist from committing acts that
may impair or impede the milling operations of the Central

The law enforcement authorities are hereby requested to assist in the peaceful
enforcement and implementation of this Decision.
 SO ORDERED.

10. On February 26, 1982, the NFSW — by passing the NLRC — filed the instant Petition for
prohibition alleging that Labor Arbiter Ovejera, CAC and the PC Provincial Commander of Negros
Occidental were threatening to immediately enforce the February 20, 1982 decision which would
violate fundamental rights of the petitioner, and praying that —

WHEREFORE, on the foregoing considerations, it is prayed of the Honorable Court

that on the Petition for Preliminary Injunction, an order, after hearing, issue:

1. Restraining implementation or enforcement of the Decision of February 20, 1982;

2. Enjoining respondents to refrain from the threatened acts violative of the rights of
strikers and peaceful picketers;

3. Requiring maintenance of the status quo as of February 20, 1982, until further
orders of the Court;

and on the Main Petition, judgment be rendered after hearing.

1. Declaring the Decision of February 2O, l982 null and void;

2. Making the preliminary injunction permanent;

3. Awarding such other relief as may be just in the premises.

11. Hearing was held, after which the parties submitted their memoranda. No restraining order was
issued.

II ISSUES —

The parties have raised a number of issues, including some procedural points. However, considering
their relative importance and the impact of their resolution on ongoing labor disputes in a number of
industry sectors, we have decided — in the interest of expediency and dispatch — to brush aside
non-substantial items and reduce the remaining issues to but two fundamental ones:

1. Whether the strike declared by NFSW is illegal, the resolution of which mainly depends on the
mandatory or directory character of the cooling-off period and the 7-day strike ban after report to
MOLE of the result of a strike-vote, as prescribed in the Labor Code.

2. Whether under Presidential Decree 851 (13th Month Pay Law), CAC is obliged to give its workers
a 13th month salary in addition to Christmas, milling and amelioration bonuses, the aggregate of
which admittedly exceeds by far the disputed 13th month pay. (See petitioner's memorandum of
April 12, 1982, p. 2; CAC memorandum of April 2, 1982, pp. 3-4.) Resolution of this issue requires
an examination of the thrusts and application of PD 851.

III. DISCUSSION —

1. Articles 264 and 265 of the Labor Code, insofar as pertinent, read:
 Art. 264, Strikes, picketing and lockouts. — ...

(c) In cases of bargaining deadlocks, the certified or duly recognized bargaining

representative may file a notice of strike with the Ministry (of Labor and Employment)
at least thirty (30) days before the intended date thereof. In cases of unfair labor
practices, the period of notice shall be shortened to fifteen (15) days; ...

(d) During the cooling-off period, it shall be the duty of the voluntary
sttlement. Should the dispute remain unsettled until the lapse of the requisite number
of days from the mandatory filing of the notice, the labor union may strike or the
employer may declare a lockout.

(f) A decision to declae a strike must be approved by at least two-thirds (2/3) of the
total union membership in the bargaining unit concerened by secret ballots in
meetings or referenda. A decision to declae a lockout must be approved by at least
two-thirds (2/3) of the board of direcotrs of the employer corporation or association or
of the partners in a partnership obtained by secret ballot in a meeting called for the
purpose. the decision shall be valid for the duration of the dispute based on
substantially the same grounds considered when the strike or lockout vote was taken
. The Ministry, may at its own intitiative or upon the request of any affected party,
supervise the conduct of the secret balloting. In every case, the union of the
employer shall furnish the Ministry the results of the voting at least seven (7) days
before the intended strike or lockout, subject to the cooling-off period herein
provided. (Emphasis supplied).

ART. 265. Prohibited activities. — It shall be unlawful for any labor organization or
employer to declare a strike or lockout without first having bargained collectively in
accordance with Title VII of this Book or without first having filed the notice required
in the preceding Article or without the necessary strike or lockout vote first having
been obtained and reported to the Ministry.

It shall likewise be unlawful to declare a strike or lockout after assumption of

jurisdiction by the President or the Minister or after certification or submission of the
dispute to compulsory or voluntary arbitration or during the pendency of cases
involving the same grounds for the strike or lockout. (Emphasis supplied.)

(a) Language of the law. — The foregoing provisions hardly leave any room for doubt that the
cooling-off period in Art. 264(c) and the 7-day strike ban after the strike-vote report prescribed in Art.
264(f) were meant to be, and should be deemed, mandatory.

When the law says "the labor union may strike" should the dispute "remain unsettled until the
lapse of the requisite number of days (cooling-off period) from the filing of the notice," the
unmistakable implication is that the union may not strike before the lapse of the cooling-off period.
Similarly, the mandatory character of the 7-day strike ban after the report on the strike-vote is
manifest in the provision that "in every case," the union shall furnish the MOLE with the results of the
voting "at least seven (7) days before the intended strike, subject to the (prescribed) cooling-off
period." It must be stressed that the requirements of cooling-off period and 7-day strike ban must
both be complied with, although the labor union may take a strike vote and report the same within
the statutory cooling-off period.

If only the filing of the strike notice and the strike-vote report would be deemed mandatory, but not
the waiting periods so specifically and emphatically prescribed by law, the purposes (hereafter
discussed) for which the filing of the strike notice and strike-vote report is required would not be
achieved, as when a strike is declared immediately after a strike notice is served, or when — as in
the instant case — the strike-vote report is filed with MOLE after the strike had actually commenced
Such interpretation of the law ought not and cannot be countenanced. It would indeed be self-
defeating for the law to imperatively require the filing on a strike notice and strike-vote report without
at the same time making the prescribed waiting periods mandatory.

(b) Purposes of strike notice and strike-vote report.— In requiring a strike notice and a cooling-off
period, the avowed intent of the law is to provide an opportunity for mediation and conciliation. It thus
directs the MOLE "to exert all efforts at mediation and conciliation to effect a voluntary settlement"
during the cooling-off period . As applied to the CAC-NFSW dispute regarding the 13th month pay,
MOLE intervention could have possibly induced CAC to provisionally give the 13th month pay in
order to avert great business loss arising from the project strike, without prejudice to the subsequent
resolution of the legal dispute by competent authorities; or mediation/conciliation could have
convinced NFSW to at least postpone the intended strike so as to avoid great waste and loss to the
sugar central, the sugar planters and the sugar workers themselves, if the strike would coincide with
the mining season.

So, too, the 7-day strike-vote report is not without a purpose. As pointed out by the Solicitor General
—

Many disastrous strikes have been staged in the past based merely on the insistence
of minority groups within the union. The submission of the report gives assurance
that a strike vote has been taken and that, if the report concerning it is false, the
majority of the members can take appropriate remedy before it is too late. (Answer of
public respondents, pp. 17-18.)

If the purpose of the required strike notice and strike-vote report are to be achieved, the periods
prescribed for their attainment must, as aforesaid, be deemed mandatory., —

... when a fair interpretation of the statute, which directs acts or proceedings to be
done in a certain way, shows the legislature intended a compliance with such
provision to be essential to the validity of the act or proceeding, or when some
antecedent and prerequisite conditions must exist prior to the exercise of power or
must be performed before certain other powers can be exercised, the statute must
be regarded as mandatory. So it has been held that, when a statute is founded on
public policy [such as the policy to encourage voluntary settlement of disputes
without resorting to strikes], those to whom it applies should not be permitted to
period after strike notice and strike-vote report, valid regulation of right to strike. —
To quote Justice Jackson in International Union vs. Wisconsin Employment Relations
Board, 336 U.S. 245, at 259 —

The right to strike, because of its more serious impact upon the public interest, is
more vulnerable to regulation than the right to organize and select representatives for
lawful purposes of collective bargaining ...

The cooling-off period and the 7-day strike ban after the filing of a strike- vote report, as prescribed
in Art. 264 of the Labor Code, are reasonable restrictions and their imposition is essential to attain
the legitimate policy objectives embodied in the law. We hold that they constitute a valid exercise of
the police power of the state.
(d) State policy on amicable settlement of criminal liability. — Petitioner contends that since the non-
compliance (with PD 851) imputed to CAC is an unfair labor practice which is an offense against the
state, the cooling-off period provided in the Labor Code would not apply, as it does not apply to ULP
strikes. It is argued that mediation or conciliation in order to settle a criminal offense is not allowed.

In the first place, it is at best unclear whether the refusal of CAC to give a 13th month pay to NFSW
constitutes a criminal act. Under Sec. 9 of the Rules and regulations Implementing Presidential
Decree No. 851 —

Non-payment of the thirteenth-month pay provided by the Decree and these rules
shall be treated as money claims cases and shall be processed in accordance with
the Rules Implementing the Labor Code of the Philippines and the Rules of the
National Labor Relations Commission.

Secondly, the possible dispute settlement, either permanent or temporary, could very
well be along legally permissible lines, as indicated in (b) above or assume the form
of measures designed to abort the intended strike, rather than compromise criminal
liability, if any. Finally, amicable settlement of criminal liability is not inexorably
forbidden by law. Such settlement is valid when the law itself clearly authorizes it. In
the case of a dispute on the payment of the 13th month pay, we are not prepared to
say that its voluntary settlement is not authorized by the terms of Art. 264(e) of the
Labor Code, which makes it the duty of the MOLE to exert all efforts at mediation and
conciliation to effect a voluntary settlement of labor disputes.

(e) NFSW strike is illegal. — The NFSW declared the strike six (6) days after filing a
strike notice, i.e., before the lapse of the mandatory cooling-off period. It also failed to
file with the MOLE beforelaunching the strike a report on the strike-vote, when it
should have filed such report "at least seven (7) days before the intended strike."
Under the circumstances, we are perforce constrained to conclude that the strike
staged by petitioner is not in conformity with law. This conclusion makes it
unnecessary for us to determine whether the pendency of an arbitration case against
CAC on the same issue of payment of 13th month pay [R.A.B No. 512-81, Regional
Arbitration Branch No. VI-A, NLRC, Bacolod City, in which the National Congress of
Unions in the Sugar Industry of the Philippines (NACUSIP) and a number of CAC
workers are the complainants, with NFSW as Intervenor seeking the dismissal of the
arbitration case as regards unnamed CAC rank and file employees] has rendered
illegal the above strike under Art. 265 of the Labor Code which provides:

It shall likewise be unlawful to declare a strike or lockout after assumption of

jurisdiction by the President or the Minister, or after certification or submission of the
dispute to compulsory or voluntary arbitration or during the pendency of cases
involving the same grounds for the strike or lockout. (Emphasis supplied.)

(2) The Second Issue. — At bottom, the NFSW strike arose from a dispute on the meaning and
application of PD 851, with NFSW claiming entitlement to a 13th month pay on top of bonuses given
by CAC to its workers, as against the diametrically opposite stance of CAC. Since the strike was just
an offshoot of the said dispute, a simple decision on the legality or illegality of the strike would not
spell the end of the NFSW-CAC labor dispute. And considering further that there are other disputes
and strikes — actual and impending — involving the interpretation and application of PD 851, it is
important for this Court to definitively resolve the problem: whether under PD 851, CAC is obliged to
give its workers a 13th month salary in addition to Christmas, milling and amelioration bonuses
stipulated in a collective bargaining agreement amounting to more than a month's pay.
Keenly sensitive to the needs of the workingmen, yet mindful of the mounting production cost that
are the woe of capital which provides employment to labor, President Ferdinand E. Marcos issued
Presidential Decree No. 851 on 16 December 1975. Thereunder, "all employers are hereby required
to pay salary of not more than all their employees receiving a basic P1,000 a month, regardless of
the nature of their employment, a 13th month pay not later than December 24 of every year."
Exempted from the obligation however are:

Employers already paying their employees a 13th month pay or its equivalent ...
(Section 2.)

The evident intention of the law, as revealed by the law itself, was to grant an additional income in
the form of a 13th month pay to employees not already receiving the same. Otherwise put, the
intention was to grant some relief — not to all workers — but only to the unfortunate ones not
actually paid a 13th month salary or what amounts to it, by whatever name called; but

it was not envisioned that a double burden would be imposed on the employer already paying his
employees a 13th month pay or its equivalent — whether out of pure generosity or on the basis of a
binding agreement and, in the latter ease, regardless of the conditional character of the grant (such
as making the payment dependent on profit), so long as there is actual payment. Otherwise, what
was conceived to be a 13th month salary would in effect become a 14th or possibly 15th month pay.

This view is justified by the law itself which makes no distinction in the grant of exemption:
"Employers already paying their employees a 13th month pay or its equivalent are not covered by
this Decree." (P.D. 851.)

The Rules Implementing P.D. 851 issued by MOLE immediately after the adoption of said law
reinforce this stand. Under Section 3(e) thereof —

The term "its equivalent" ... shall include Christmas bonus, mid-year bonus, profit-
sharing payments and other cash bonuses amounting to not less than 1/12th of the
basic salary but shall not include cash and stock dividends, cost of living allowances
and all other allowances regularly enjoyed by the employee, as well as non-monetary
benefits. Where an employer pays less than 1/12th of the employee's basic salary,
the employer shall pay the difference." (Italics supplied.)

Having been issued by the agency charged with the implementation of PD 851 as its
contemporaneous interpretation of the law, the quoted rule should be accorded great weight.

Pragmatic considerations also weigh heavily in favor of crediting both voluntary and contractual
bonuses for the purpose of determining liability for the 13th month pay. To require employers
(already giving their employees a 13th month salary or its equivalent) to give a second 13th month
pay would be unfair and productive of undesirable results. To the employer who had acceded and is
already bound to give bonuses to his employees, the additional burden of a 13th month pay would
amount to a penalty for his munificence or liberality. The probable reaction of one so circumstance
would be to withdraw the bonuses or resist further voluntary grants for fear that if and when a law is
passed giving the same benefits, his prior concessions might not be given due credit; and this
negative attitude would have an adverse impact on the employees.

In the case at bar, the NFSW-CAC collective bargaining agreement provides for the grant to CAC
workers of Christmas bonus, milling bonus and amelioration bonus, the aggregate of which is very
much more than a worker's monthly pay. When a dispute arose last year as to whether CAC workers
receiving the stipulated bonuses would additionally be entitled to a 13th month pay, NFSW and CAC
concluded a compromise agreement by which they —

agree(d) to abide by the final decision of the Supreme Court in any case involving the
13th Month Pay Law if it is clearly held that the employer is liable to pay a 13th
month pay separate and distinct from the bonuses already given.

When this agreement was forged on November 30,1981, the original decision dismissing the petition
in the aforecited Marcopper case had already been promulgated by this Court. On the votes of only
7 Justices, including the distinguished Chief Justice, the petition of Marcopper Mining Corp. seeking
to annul the decision of Labor Deputy Minister Amado Inciong granting a 13th month pay to
Marcopper employees (in addition to mid- year and Christmas bonuses under a CBA) had
been dismissed. But a motion for reconsideration filed by Marcopper was pending as of November
30, 1981. In December 1981, the original decision was affirmed when this Court finally denied the
motion for reconsideration. But the resolution of denial was supported by the votes of only 5
Justices. The Marcopper decision is therefore a Court decision but without the necessary eight votes
to be doctrinal. This being so, it cannot be said that the Marcopper decision "clearly held" that "the
employer is liable to pay a 13th month pay separate and distinct from the bonuses already given,"
within the meaning of the NFSW-CAC compromise agreement. At any rate, in view of the rulings
made herein, NFSW cannot insist on its claim that its members are entitled to a 13th month pay in
addition to the bonuses already paid by CAC.

WHEREFORE, the petition is dismissed for lack of merit. No costs.

SO ORDERED.

Aquino, Guerrero, Escolin, Vasquez, Relova and Gutierrez, JJ., concur.

Concepcion, J., is on leave.

Teehankee, J., concurs in the result.

Separate Opinions

MAKASIAR, J., concurring:

Concurs in the separate opinion of qualified concurrence as to the illegality of the strike and of
dissent as to the interpretation of Presidential Decree No. 851 submitted by the Chief Justice.

FERNANDO, CJ., concurring:

With qualifications on the questions of the legality of the strike and dissenting on the interpretation to
be accorded Presidential Decree No. 851 on the thirteenth-month additional pay.,
There is at the outset due acknowledgmen t on my part of the high quality of craftsmanship in the
opinion of the Court penned by Justice Efren Plana. It is distinguished by its lucidity. There is the
imprint of inevitability in the conclusion approached based on the basic premise that underlies it. So
it should be if the decisive consideration is the language used both of the applicable provisions of the
Labor Code, Article 264 (c), (e), and (f) and Article 265, as well as of Presidential Decree No. 851. In
that sense, the decision of the Court can stand the test of scrutiny based on sheer logic.

That for me would not suffice. Such an approach, to my mind, is quite limited. The standard that
should govern is the one supplied by the Constitution. That is the clear implication of
constitutionalism. Anything less would deprive it of its quality as the fundamental law. It is my
submission, therefore, that statutes, codes, decrees, administrative rules, municipal ordinances and
any other jural norms must be construed in the light of and in accordance with the Constitution.
There is this explicit affirmation in the recently decided case of De la Llana v. Alba sustaining the
validity of Batas Pambansa Blg. 129 reorganizing the judiciary: "The principle that the Constitution
enters into and forms part of every act to avoid any unconstitutional taint must be applied. Nunez v.
Sandiganbayan, promulgated last January, has this relevant excerpt: 'It is true that the other
Sections of the Decree could have been so worded as to avoid any constitutional objection. As of
now, however, no ruling is called for. The view is given expression in the concurring and dissenting
opinion of Justice Makasiar that in such a case to save the Decree from the dire fate of invalidity,
they must be construed in such a way as to preclude any possible erosion on the powers vested in
this Court by the Constitution. That is a proposition too plain to be contested. It commends itself for
approval.'" 1

1. It may not be amiss to start with the dissenting portion of this separate opinion. It is worthwhile to
recall the decision in Marcopper Mining Corporation v. Hon. Blas Ople. 2 It came from a unanimous
Court. It is true that only seven Justices signed the opinion, two of the members of this Tribunal, who
participated in the deliberation, Justices Teehankee and Melencio-Herrera having reserved their votes.
Justice Concepcion Jr. was on leave. It is accurate, therefore, to state that Marcopper as stated in Justice
Plana's opinion, is not doctrinal in character, the necessary eight votes not having been obtained. It is a
plurality as distinguished from a majority opinion. It is quite apparent, however, that there was not a single
dissenting vote. There was subsequently a motion for reconsideration. This Court duly weighed the
arguments for and against the merit of the unanimous opinion rendered. The resolution denying the
motion for reconsideration was not issued until December 15, 1981 on which occasion three Justices
dissented. 3 In the brief resolution denying the option for reconsideration, with five Justices adhering to
their original stand 4 it was set forth that such denial was based: "primarily [on] the reason that the
arguments advanced had been duly considered and found insufficient to call for a decision other than that
promulgated on June 11, 1981, which stands unreversed and unmodified. This is a case involving the
social justice concept, which, as pointed out in Carillo v. Allied Workers Association of the
Philippines involves 'the effectiveness of the community's effort to assist the economically under-
privileged. For under existing conditions, without such succor and support, they might not, unaided, be
able to secure justice for themselves.' In an earlier decision, Del Rosario v. De los Santos, it was
categorically stated that the social justice principle 'is the translation into reality of its significance as
popularized by the late President Magsaysay: He who has less in life should have more in law.'" 5 In his
dissent, Justice Fernandez took issue on the interpretation of social justice by relying on the well- known
opinion of Justice Laurel in Calalang v. William 6 and concluded: "It is as much to the benefit of labor that
the petitioner be accorded social justice. For if the mining companies, like the petitioner, can no longer
operate, all the laborers employed by aid company shall be laid-off." 7 To reinforce such a conclusion, it
was further stated: "The decision in this case is far reaching. It affects all employers similarly situated as
the petitioner. The natural reaction of employers similarly situated as the petitioner will be to withdraw
gratuities that they have been giving employees voluntarily. In the long run, the laborers will suffer. In the
higher interest of all concerned the contention of the petitioner that the mid-year bonus and Christmas
bonus that it is giving to the laborers shall be applied to the 13th month pay should be sustained." 8 Such
pragmatic consideration is likewise evident in the opinion of the Court in this case. It is quite obvious from
the above resolution of denial that the approach based on the Constitution, compelling in its character set
forth in the opinion of the Court of June 11, 1981, is the one followed by the members of this Court either
adhering to or departing from the previous unanimous conclusion reached. The main reliance to repeat, is
on the social justice provision 9 as reinforced by the protection to labor provision. 10 As noted, such
concepts were enshrined in the 1935 Constitution. 11 The opinion pursued the matter further: "Even then,
there was a realization of their importance in vitalizing a regime of liberty not just as immunity from
government restraint but as the assumption by the State of an obligation to assure a life of dignity for all,
especially the poor and the needy. The expanded social justice and protection to labor provisions of the
present Constitution lend added emphasis to the concern for social and economic rights. ... That was so under
the 1935 Constitution. Such an approach is even more valid now. As a matter of fact, in the first case after the applicability of the 1973
constitution where social and economic rights were involved, this Court in Alfanta v. Noe, through Justice Antonio, stated: 'In the environment
of a new social order We can do no less. Thus, under the new Constitution, property ownership has been impressed with a social function.
This implies that the owner has the obligation to use his property not only to benefit himself but society as well. Hence, it provides under
Section 6 of Article II thereof, that in the promotion of social justice, the State "shall regulate the acquisition, ownership, use, enjoyment, and
disposition of private property, and equitably diffuse property ownership and profits." The Constitution also ensures that the worker shall have
a just and living wage which should assure for himself and his family an existence worthy of human dignity and give him opportunity for a
better life.' Such a sentiment finds expression in subsequent opinions. 12

2. It thus becomes apparent, therefore, why predicated on what for me is the significance of the
social justice and the protection to labor mandates of the Constitution, I cannot, with due respect,
concur with my brethren. The stand taken by this Court, I submit, cannot be justified by the hitherto
hospitable scope accorded such provisions. It is to the credit of this Administration that even during
the period of crisis government, the social and economic rights were fully implemented. As a matter
of fact, some critics, not fully informed of the actual state of affairs, would predicate their assessment
of its accomplishments in this sphere on their inaccurate and unsympathetic appraisal of how much
success had been achieved. It is a matter of pride for the Philippines that as far back as her 1935
Constitution, provisions assuring liberty in its positive sense, enabling her citizens to live a life of
humanity and dignity, were already incorporated. The social and economic rights found therein
antedated by thirteen years the Universal Declaration of Human Rights. When it is considered that,
as pointed out in the opinion of Justice Antonio in Alfanta, rendered in the first year of the present
Constitution, the social justice principle now lends itself to the equitable diffusion of property
ownership and profits, it becomes difficult for me to justify why any lurking ambiguity in Presidential
Decree No. 851 could be construed against the rights of labor. This Court is not acting unjustly if it
promotes social justice. This Court is not acting unjustly if it protects labor. This Court is just being
true to its mission of fealty to the Constitution. Under the concept of separation of powers, while the
political branches enact the laws and thereafter enforce them, any question as to their interpretation,
justiciable in character, is for the courts, ultimately this Tribunal, to decide. That is its sworn duty. It
cannot be recreant to such a trust. Its role, therefore, is far from passive. It may be said further that if
the object Of statutory construction is in the well-known language of Learned Hand "proliferation of
purpose," there is warrant for the view that I espouse. That is to attain its basic objective, namely, to
cope with the ravages of inflation. Moreover, the Decree only benefits the low-salaried employees.
There is thus ample warrant for a more liberal approach. It only remains to be added that there was
in Marcopper not only a recognition of the administrative determination by the Minister of Labor as
well as the then Deputy Minister of Labor but also an acceptance of the ably-written memorandum of
Solicitor General Mendoza. Hence, to repeat, my inability to concur on this point with my brethren
whose views, as I stated earlier, are deserving of the fullest respect.

3. There is, however — and it must be so recognized an obstacle to the approach above followed.
There is an agreement both on the part of management and labor in this case quoted in the main
opinion to this effect, "to abide by the final decision of the Supreme Court in any case involving the
13th Month Pay Law if it is clearly held that the employer is liable to pay a 13th month pay separate
and distinct from the bonuses already given." Such an obstacle, on further reflection, is not, for me,
insurmountable. The only case then within the contemplation of the parties is Marcopper. With the
unanimous opinion rendered and a subsequent denial of a motion for reconsideration, it would
appear that while it lacked doctrinal force, this Court "clearly held" that there is liability on the part of
the employer to pay a 13-month pay separate and distinct from the bonuses already given. Perhaps
the parties, especially labor, could have been more accurate and more precise. It take comfort from
the view expressed by Justice Cardozo in Wood v. Duff-Gordon: 13 "The law has outgrown its primitive
stage of formalism when the precise word was the sovereign talisman, and every slip was fatal. It takes a
broader view today. A promise may be lacking, and yet the whole writing may be 'instinct with an
obligation,' imperfectly expressed." 14

4. Now as to the qualified concurrence. Based on the codal provisions the finding of the illegality of
strike is warranted. That for me does not fully resolve the questions raised by such a declaration.
From my reading of the opinion of the Court, it does not go as far as defining the consequences of
such illegal strike. Again the approach I propose to follow is premised on the two basic mandates of
social justice and protection to labor, for while they are obligations imposed on the government by
the fundamental law, compulsory arbitration as a result of which there could be a finding of illegality
is worded in permissive not in mandatory language. It would be, for me, a departure from principles
to which this Court has long remained committed, if thereby loss of employment, even loss of
seniority rights or other privileges is ultimately incurred. That is still an open question. The decision
has not touched on that basic aspect of this litigation. The issue is not foreclosed. It seems fitting
that this brief concurrence and dissent should end with a relevant excerpt from Free Telephone
Workers Union v. The Minister of Labor: 15 "It must be stressed anew, however, that the power of
compulsory arbitration, while allowable under the Constitution and quite understandable in labor disputes
affected with a national interest, to be free from the taint of unconstitutionality, must be exercised in
accordance with the constitutional mandate of protection to labor. The arbiter then is called upon to take
due care that in the decision to be reached, there is no violation of 'the rights of workers to self-
organization, collective bargaining, security of tenure, and just and humane conditions of work.' It is of
course manifest that there is such unconstitutional application if a law 'fair on its face and impartial in
appearance [is] applied and administered by public authority with an evil eye and an unequal hand.' It
does not even have to go that far. An instance of unconstitutional application would be discernible if what
is ordained by the fundamental law, the protection of labor, is ignored or disregarded. 16

I am authorized to state that Justice Makasiar joins me in this separate opinion.

BARREDO, J., concurring:

At this stage of my tenure in the Supreme Court which is to end in about four months from now, I feel
it is but fitting and proper that I make my position clear and unmistakable in regard to certain
principles that have to be applied to this labor case now before Us. Few perhaps may have noticed
it, but the fact is that in most cases of this nature I have endeavored my very best to fully abide by
the part that pertains to the judiciary in the social justice and protection to labor clauses of the
Constitution, not alone because. I consider it as an obligation imposed by the fundamental law of the
land but by natural inclination, perhaps because I began to work as a common worker at the age of
thirteen, and I cannot in any sense be considered as a capitalist or management-inclined just
because I happen to have joined, within the legal bounds of the position I occupy, some business
ventures with the more affluent members of my family and with some good and faithful old time
friends. I need not say that I am pro-labor; I only wish to deny most vehemently that I am anti-labor

Having been one of the seven members of the Court who co-signed with our learned Chief Justice
the Marcopper "decision" and later on reserved my vote when a motion for reconsideration thereof
was filed for me to concur now by merely cosigning the brilliant opinion of our distinguished
colleague, Mr. Justice Plana, is to my mind short of what all concerned might expect from me. For
me to merely vote in support of the judgment herein without any explanation of my peculiar situation
does not satisfy my conscience, not to mention that I owe such explanation to those who would all
probably be raising their eyebrows since they must come to feel they could depend on me to always
vote in favor of labor.
The Supreme Court is a court of law and of equity at the same time but, understandably, equity
comes in only when law is inadequate to afford the parties concerned the essence of justice,
fairness and square dealing. It is to this basic tenet that I am bound by my oath of office before God
and our people Having this Ideal in mind, the paramount thought that should dominate my actuations
is complete and absolute impartiality in the best light God has given me. Hence, when the aid of the
Court is sought on legal grounds, We can resort to equity only when there is no law that can be
properly applied. My view of the instant case is that it is one of law, not of equity. It is on this
fundamental basis that I have ventured to write this concurrence.

Looking back at my concurrence in Marcopper, and guided by the observations in the main opinion
herein, as to the doctrinal value of Our decision therein, I have come to the realization, after mature
deliberation, that the conclusion reached in the opinion of the Chief Justice may not always be
consistent with the evident intent and purpose of Section 2 of P.D. No. 851 which, indeed,
unequivocally provides that "(E)mployers already paying their employees a 13th month pay or its
equivalent are not covered by this decree", albeit it does not clarify what it means by the "equivalent"
of the 13th month pay. Such being the case, nothing can be more proper than for everyone to abide
by or at least give due respect to the meaning thereof as has been officially expressed by the usual
executive authority called upon to implement the same, none other than the Ministry of Labor
(MOLE, for short), unless, of course, the understanding of MOLE appears to be manifestly and
palpably erroneous and completely alien to the evident intent of the decree. And Section 3(e) of the
Rules Implementing P.D. 851 issued by MOLE reads thus:

The term "its equivalent" as used in paragraph (c) hereof shall include Christmas
bonus, midyear bonus, profit-sharing payments and other cash bonuses amounting
to not less than 1/12th of the basic but shall not include cash and stock dividends,
cost of living allowances and all other allowances regularly enjoyed by the employee,
as well as non-monetary benefits. Where an employer pays less than 1/12th of the
employee's basic salary the employer shall pay the difference.

Petitioner National Federation of Sugar Workers (NFSW, for short) is now before Us with the plea
that because in its agreement with respondent Central Azucarera de la Carlota (CAC, for short) of
November 30, 1981 to the effect that:

The parties agree to abide by the final decision of the Supreme Court in any case
involving the 13th Month Pay Law if it is clearly held that the employer is liable to pay
a 13th month pay separate and distinct from the bonuses already given. (Par. 4)

and because this Court dismissed, in legal effect, for lack of necessary votes, the petition in the
Marcopper case seeking the setting aside of Deputy Minister Inciong's decision which considered
the midyear and Christmas bonuses being given to the Marcopper workers as not the equivalent of
the 13th month pay enjoined by P.D. 851, We should now order CAC to pay NFSW members in the
same way as stated in the opinion of the Chief Justice in the Marcopper case.

At first glance, such a pause does appear tenable and plausible. But looking deeper at the precise
wording of the November 30, 1981 agreement between NFSW and CAC abovequoted, the
proposition in the main opinion herein that what must be deemed contemplated in said agreement is
that the final decision of the Supreme Court therein referred to must be one wherein it would be
"clearly held that the employer is liable to pay 13th month pay separate and distinct from the
bonuses already given", compels concurrence on my part. I find said agreement to be definitely
worded. There is no room at all for doubt as to the meaning thereof. And tested in the light of such
unambiguous terminology of the said agreement, the Marcopper opinion signed by only seven
members of this Court, cannot, under the Constitution and prevailing binding legal norms,
unfortunately, have doctrinal worth and cannot be considered as stare decisis. Hence, it cannot be
said to be the "definite" decision of the Supreme Court the parties (CAC and NFSW) had in mind.
Accordingly, it is my considered opinion that NFSW's plea in this case is premature and rather off
tangent.

I am not unmindful of the possibility or even probability that labor may argue that in signing the
November 30, 1981 agreement, NFSW little cared, for it was not fully informed about what doctrinal
and what is not doctrinal signify in law. Labor may argue that it is enough that Marcopper workers
got their 13th month pay in addition to their bonuses by virtue of the denial by this Supreme Court of
Marcopper Company's appeal to US, and NFSW members should not be left getting less. And it
would only be rational to expect labor to invoke in support of their plea no less than the social justice
and protection to labor provisions of the Constitution.

As I have said at the outset, I am about to leave this Court. Nothing could warm my heart and lift my
spirit more than to part with the noble thought that during my tenure of fourteen years in this
Supreme Court, I have given labor the most that it has been within my power to give. But again I
must emphasize that what is constitutionally ordained, and by that I mean also by God and by our
country and people, is for me to jealously guard that the scales of justice are in perfect balance. No
fondness for any sector of society, no love for any man or woman, no adherence to any political
party, no feeling for any relative or friend nor religious consideration or belief should ever induce me
to allow it to tilt in the slightest degree in favor of anyone.

The concept of social justice has been variously explained in previous decisions of this Court. In
Talisay Silay, 1penned by this writer, We went as far as to hold that when it comes to labor-management
relationship, the social justice principle is more pervasive and imperious than police power. It is indeed
consecrated as one of the most valued principles of national policy in the Constitution. (Sec. 6, Art. II) So
also is protection to labor. (See. 9, Id.) I am of the firm conviction, however, that these constitutional
injunctions are primarily directed to and are responsibilities of the policy-determining departments of the
government. In the enforcement of said principles, the role of the judiciary is to a certain degree less
active. The courts are supposed to be called upon only to strike down any act or actuation of anyone
violative thereof, and, of course 6 in case of doubt in any given situation, to resolve the same in favor of
labor. Verily, neither the Supreme Court nor any other court is enjoined to favor labor merely for labor's
sake, even as the judiciary is duty bound never to place labor at a disadvantage, for that would not be
only unconstitutional but inhuman, contrary to the Universal Declaration of Human Rights and
unpardonably degrading to the dignity of man who has been precisely created in the image of God. At
bottom the Ideal in social justice is precisely to maintain the forces of all the economic segments of
society in undisturbed and undisturbable equilibrium, as otherwise there would be no justice for anyone of
them at all.

In the case at bar, I do not feel at liberty to disregard what the parties have freely agreed upon,
assuming, as I must, that in entering into such agreement both parties were fully aware of their legal
rights and responsibilities. In this connection, I take particular note of the fact that if CAC is a big
financially well conditioned concern, NFSW is not just one ignorant laborer or group of laborers, but
a federation with leaders and lawyers of adequate if not expert knowledge-ability in regard to their
rights and other relevant matters affecting labor. I am satisfied that there is here no occasion to
apply the Civil Code rule regarding vigilance whenever there is inequality in the situations of the
parties to an agreement or transaction.

In conclusion, I concur fully in the main opinion of Justice Plana as regards both issues of illegality of
the strike here in question and the non- applicability hereto of whatever has been said in Marcopper.
I have added the above remarks only to make myself clear on labor-management issues before I
leave this Court, lest there be no other appropriate occasion for me to do so.
ABAD SANTOS, J., concurring:

I concur but lest I be accused of inconsistency because in Marcopper Mining Corporation vs. Ople,
et al., No. 51254, June 11, 1981, 105 SCRA 75, I voted to dismiss the petition for lack of merit and
as a result Marcopper had to give the 13th-month pay provided in P.D. No. 851 even as its
employees under the CBA had mid-year and end-of-year bonuses, I have to state that Marcopper
and La Carlota have different factual situations as follows: 1. In Marcopper, the CBA clearly stated
that the company was obligated to "grant midyear and end-of-year bonuses to employees following
years in which it had profitable operations." Thus the payment of the bonuses was contingent upon
the realization of profits. If there were no profits, there were to be no bonuses. Accordingly, it was
fair and proper to conclude that Marcopper had not shown that it was already paying its employees
the 13th-month pay or its equivalent as provided in Sec. 2 of P.D. No. 851. However, in the instant
case of La Carlota the obligation of the employer to pay bonuses is not contingent on the realization
of profits. The CBA stipulates that the "parties also agree to maintain the present practice on the
grant of Christmas bonus, milling bonus, and amelioration bonus to the extent as the latter is
required by law." It can thus be said that La Carlota is already paying the equivalent of the 13th-
month pay. 2. In Marcopper, the company's liability for the 13th month pay was determined by no
less than the Deputy Minister of Labor, Amado G. Inciong. I have always given much weight to the
determination of officers who are tasked with implementing legislation because their expertise
qualifies them in making authoritative decisions. In the present case of La Carlota, there has been
no determination that the employees are entitled to the 13th-month pay. In fact, a negative
conclusion can be implied from the declaration of Labor Arbiter Ovejera that the labor union's strike
against La Carlota was illegal.

MELENCIO-HERRERA, J., concurring.

A. The question of law involved in this Petition for Prohibition with Preliminary Injunction is based on
the following relevant facts which are indicated in the record:

1. Prior to December 16, 1975, Central Azucarera de la Carlota (LA CARLOTA, for short), which
operates a sugar mill in La Carlota, Negros Occidental, may be deemed as paying to its employees
milling bonus, amelioration bonus, and Christmas bonus equal at least to a months' salary.

2. PD 851, effective on the aforementioned date of December 16, 1975, required employers to pay
their employees a 13the month pay, provided the employer was not already paying the said 13th
month pay or its equivalent.

3. On December 22, 1975, the then Department of Labor promulgated a regulation stating that
"Christmas bonus" is an equivalent of the 13th month pay,

4. From 1975 to 1981, LA CARLOTA was not paying 13th month pay on the assumption that the
"Christmas bonus" it was paying was an "equivalent" of the 13th month pay. The employees of LA
CARLOTA and their labor unions had not protested the non-payment of the 13th month pay in
addition to the Christmas bonus.

5. On June 11, 1981, this Court promulgated its Decision in the "Marcopper" case, which involved a
relationship between the " 13th month pay" and the "Christmas bonus" being paid by an employer. A
Motion for reconsideration of the Decision was subsequently filed in said case, which was denied
only on December 15,1981.

6. In the meantime, on November 29, 1981, the National Federation of Sugar Workers (NFSW), as
the labor union representing the majority of employees at LA CARLOTA, staged a strike because LA
CARLOTA had refused to pay the 13th month pay in addition to Christmas bonus. The strike lasted
one day on November 30, 1981, LA CARLOTA and NFSW entered into a settlement agreement,
paragraph 4 whereof provided as follows:

4. The parties agree to abide by the final decision of the Supreme Court in any case
involving the 13th Month Pay Law if it is clearly held that the employer is liable to pay
a 13th Month Pay separate and distinct from the bonuses already given;

7. On January 28, 1982, NFSW declared a strike on the ground that, despite the finality of the
Marcopper Decision, LA CARLOTA had refused to grant 13th month pay to its employees, in
addition to Christmas bonus, as agreed upon in the settlement agreement of November 30, 1981.

B. The legal controversy in the matter may be explained as follows:

1. NFSW filed a notice of strike on January 22, 1982, claiming that the contemplated strike was
based on an unfair labor practice, and that it could declare the strike even before the expiration of
fifteen (15) days thereafter. The unfair labor practice relied upon was management's alleged
renegation of the November 30, 1981 agreement, considering that the finality of the Marcopper
Decision had "clearly held that the employer is liable to pay a 13th month pay separate and distinct
from "the Christmas bonus".

2. On the other hand, LA CARLOTA took the position that the strike was not a ULP strike but an
economic strike subject to a cooling period of thirty (30) days with its attendant requirements.

3. It is clear that the controversy between NFSW and LA CARLOTA substantially hinges on the
question of whether or not the Marcopper Decision has clearly held that a Christmas bonus, in
whatsoever form, should not deter the employer's obligation to the payment of the 13th month pay.

C. The proceedings in the case below were as follows:

1. On February 4, 1982, LA CARLOTA filed a petition to declare the strike of January 28, 1982 as
illegal in R. A. B. Case No. 110- 82 of the Regional Arbitration Branch No. VI-A of the National Labor
Commission in Bacolod City (the CASE BELOW).

2. After relatively protracted hearings, respondent Labor Arbiter rendered a Decision declaring illegal
the strike of January 28, 1982. That is the Decision assailed by NFSW in this instance claiming it to
be null and void.

D. Reference to a collateral proceeding may be made at this juncture:

1. It appears that, in LA CARLOTA, there is another labor union under the name of National
Congress of Unions in the Sugar Industry in the Philippines (NACUSIP).

2. On July 30, 1981, NACUSIP filed a complaint in FSD Case No. 1192-81 before R. A. B. No. VI-A
in Bacolod City praying that an Order be issued directing LA CARLOTA to pay 13th month pay to its
employees from the effective date of PD 851 (the COLLATERAL PROCEEDING).

3. On December 4, 1981, NFSW filed a notice to intervene in the COLLATERAL PROCEEDING.

4. On January 26, 1982, a Decision was rendered in the COLLATERAL PROCEEDING which, in
part, said:
 On the contrary, what this Labor Arbiter is aware of, with which he can take notice, is
the policy declaration of the Honorable Minister of Labor and Employment contained
in a telegram addressed to Asst. Director Dante G. Ardivilla Bacolod District Office,
this Ministry, and disseminated for the information of this Branch which states,
among other things, that where bonuses in CBAs are not contingent on realization of
profit as in the Marcopper case, the decision (of the Supreme Court, re: Marcopper
case), does not apply, and cases thereon should be resolved under the provisions of
PD 851 and its implementing rules.

5. On February 15, 1982, NFSW filed a Motion for Reconsideration of the Decision.

Upon the foregoing exposition, there is justification for an outright dismissal of the Petition for
Prohibition for the simple reason that the strike of January 28, 1982 may not be considered a ULP
strike. When the strike was declared, it could not be validly claimed that there was already a final
decision made by this Court which "clearly held that the employer is liable to pay a 13th month pay
separate and distinct from" the Christmas bonus being paid by LA CARLOTA. However, since the
Marcopper Decision has engendered controversies in labor-management relations in several
industrial/commercial firms, the Court has resolved to rule on the merits of the substantial question
between LA CARLOTA and NFSW for the public benefit with a clarification of the Marcopper
judgment.

I agree with the proposition taken by the Ministry of Labor and Employment that Christmas bonus,
not contingent on realization of profit as in the Marcoper case, is the equivalent of the 13th month
pay. In regards to the juxtaposition of the terms "13th month pay" and "Christmas bonus" in an
amount not less than a month's salary, the following may be explained:

Within recent time, it has been usual for an industrial or commercial firm, which has had a successful
year, to grant a bonus to its employees generally denominated before as year-end bonus. A firm
usually knows whether or not it has had a successful year by the middle of December. In case of
profitability, payment of the year-end bonus does not have to await the end of the year, but it is often
times given some days before New Year, generally about Christmas day. Before long, the year-end
bonus became also known as Christmas bonus, following the change of the Christmas gift-giving
day from January 6th to December 25th. Thus, it has been stated: "a less formal use of the bonus
concept, which is designed to reward workers for a successful business year, is the annual or
Christmas bonus" (3 Ency. Brit., 918).

Although the original concept of a year-end bonus or Christmas bonus, was that it depended on a
successful year, the bonus, in many instances, has been developed into an obligatory payment as
part of wages and not related to profitability of operations. As part of wages, they are subject to CBA
negotiation. That has been the general trend in the United States and in our country.

... But where so-called gifts are so tied to the remuneration which employees receive
for their work that they are in fact a part of it, they are in reality wages within the
meaning of the Act.

xxx xxx xxx

In a number of cases an employer has been held required to bargain concerning

bonuses, including regularly given Christmas bonuses. (48 Am Jur 2d., p. 455).

Moreover, once a Christmas bonus becomes institutionalized, it has to be non-discriminatory. "An

employer violates 29 USC (Sec.) 158(a) (3) where, to discourage union membership, he ceases
giving a Christmas bonus to all employees and gives the bonus only to office and supervisory
employees after unionization of his production and maintenance employees." (48 Am Jur 2d., p.
420).

The Christmas bonus, as it clearly denotes, has a literal religious connection, "Christmas" being a
term within the Christian religion. Considering that the Christmas bonus has become obligatory and
non- discriminatory in many jurisdictions, a tendency arose to disassociate that bonus from its
religious connotation. Some countries, with non-christian or "liberal" christian segments, have opted
to make the year-end or Christmas bonus obligatory, and they called it the 13th month pay. It is,
perhaps, having our Moslem brothers in mind that the Government had decided to set up in our
country the obligatory payment of the 13th month pay Thereby, the orthodox non-christian employee
is not subjected to "discrimination" due to his inability to accept the Christmas bonus because of
strict allegiance to this own faith. It should, therefore, be apparent that "christmas bonus" and "13th
month pay" should be equated one with the other.

PD 851 does not contain a provision for rules and regulations to be promulgated by the Department
of Labor for implementation of the Decree. Notwithstanding, on December 22, 1975, the Department
of Labor issued "Rules and Regulations Implementing Presidential Decree 851 ", with the following
relevant provision:

The term "its equivalent" as used in paragraph (c) hereof shall include Christmas
bonus, mid-year bonus, profit-sharing payments and other cash bonuses amounting
to not less than 1/12th of the basic salary but shall not include cash and stock
dividends cost of living allowances and all other allowances regularly enjoyed by the
employee, as well as non-monetary benefits. Where an employer pays less than
1/12th of the employees basic salary, the employer shall pay the difference.

When administrative rules and regulations are not properly "delegated", they cannot have the force
and effect of law. It has been stated that:

Administrative rules and regulations. As discussed in Public Administrative Bodies

and Procedure (Sec.) 108, rules and regulations duly promulgated and adopted in
pursuance of properly delegated authority have the force and effect of law where
they are legislative in character, but rules and regulations which are merely executive
or administrative views as to the meaning and construction of the statute are not
controlling on the courts, and cannot alter or extend the plain meaning of a statute,
although they are entitled to great weight where the statute is ambiguous. (82 C.J.S.,
pp. 770, 771).

Although the rule defining the term "equivalent" as used in PD 851 does not have the force and
effect of law, it can and should be considered as an administrative view entitled to great weight as it
is an interpretation of "equivalent" made by the administrative agency which has the duty to enforce
the Decree.

In the light of the foregoing views, I concur with the dismissal of the Petition for Prohibition with the
express statements that LA CARLOTA's Christmas bonus and other bonuses exempts it from giving
13th month pay to its employees, and that the strike of January 28, 1982 was not a ULP strike and
should be considered illegal even if NFSW had complied with all statutory requirements for the
strike.
Separate Opinions

MAKASIAR, J., concurring:

Concurs in the separate opinion of qualified concurrence as to the illegality of the strike and of
dissent as to the interpretation of Presidential Decree No. 851 submitted by the Chief Justice.

FERNANDO, CJ., concurring:

With qualifications on the questions of the legality of the strike and dissenting on the interpretation to
be accorded Presidential Decree No. 851 on the thirteenth-month additional pay.,

There is at the outset due acknowledgmen t on my part of the high quality of craftsmanship in the
opinion of the Court penned by Justice Efren Plana. It is distinguished by its lucidity. There is the
imprint of inevitability in the conclusion approached based on the basic premise that underlies it. So
it should be if the decisive consideration is the language used both of the applicable provisions of the
Labor Code, Article 264 (c), (e), and (f) and Article 265, as well as of Presidential Decree No. 851. In
that sense, the decision of the Court can stand the test of scrutiny based on sheer logic.

That for me would not suffice. Such an approach, to my mind, is quite limited. The standard that
should govern is the one supplied by the Constitution. That is the clear implication of
constitutionalism. Anything less would deprive it of its quality as the fundamental law. It is my
submission, therefore, that statutes, codes, decrees, administrative rules, municipal ordinances and
any other jural norms must be construed in the light of and in accordance with the Constitution.
There is this explicit affirmation in the recently decided case of De la Llana v. Alba sustaining the
validity of Batas Pambansa Blg. 129 reorganizing the judiciary: "The principle that the Constitution
enters into and forms part of every act to avoid any unconstitutional taint must be applied. Nunez v.
Sandiganbayan, promulgated last January, has this relevant excerpt: 'It is true that the other
Sections of the Decree could have been so worded as to avoid any constitutional objection. As of
now, however, no ruling is called for. The view is given expression in the concurring and dissenting
opinion of Justice Makasiar that in such a case to save the Decree from the dire fate of invalidity,
they must be construed in such a way as to preclude any possible erosion on the powers vested in
this Court by the Constitution. That is a proposition too plain to be contested. It commends itself for
approval.'" 1

1. It may not be amiss to start with the dissenting portion of this separate opinion. It is worthwhile to
recall the decision in Marcopper Mining Corporation v. Hon. Blas Ople. 2 It came from a unanimous
Court. It is true that only seven Justices signed the opinion, two of the members of this Tribunal, who
participated in the deliberation, Justices Teehankee and Melencio-Herrera having reserved their votes.
Justice Concepcion Jr. was on leave. It is accurate, therefore, to state that Marcopper as stated in Justice
Plana's opinion, is not doctrinal in character, the necessary eight votes not having been obtained. It is a
plurality as distinguished from a majority opinion. It is quite apparent, however, that there was not a single
dissenting vote. There was subsequently a motion for reconsideration. This Court duly weighed the
arguments for and against the merit of the unanimous opinion rendered. The resolution denying the
motion for reconsideration was not issued until December 15, 1981 on which occasion three Justices
dissented. 3 In the brief resolution denying the option for reconsideration, with five Justices adhering to
their original stand 4 it was set forth that such denial was based: "primarily [on] the reason that the
arguments advanced had been duly considered and found insufficient to call for a decision other than that
promulgated on June 11, 1981, which stands unreversed and unmodified. This is a case involving the
social justice concept, which, as pointed out in Carillo v. Allied Workers Association of the
Philippines involves 'the effectiveness of the community's effort to assist the economically under-
privileged. For under existing conditions, without such succor and support, they might not, unaided, be
able to secure justice for themselves.' In an earlier decision, Del Rosario v. De los Santos, it was
categorically stated that the social justice principle 'is the translation into reality of its significance as
popularized by the late President Magsaysay: He who has less in life should have more in law.'" 5 In his
dissent, Justice Fernandez took issue on the interpretation of social justice by relying on the well- known
opinion of Justice Laurel in Calalang v. William 6 and concluded: "It is as much to the benefit of labor that
the petitioner be accorded social justice. For if the mining companies, like the petitioner, can no longer
operate, all the laborers employed by aid company shall be laid-off." 7 To reinforce such a conclusion, it
was further stated: "The decision in this case is far reaching. It affects all employers similarly situated as
the petitioner. The natural reaction of employers similarly situated as the petitioner will be to withdraw
gratuities that they have been giving employees voluntarily. In the long run, the laborers will suffer. In the
higher interest of all concerned the contention of the petitioner that the mid-year bonus and Christmas
bonus that it is giving to the laborers shall be applied to the 13th month pay should be sustained." 8 Such
pragmatic consideration is likewise evident in the opinion of the Court in this case. It is quite obvious from
the above resolution of denial that the approach based on the Constitution, compelling in its character set
forth in the opinion of the Court of June 11, 1981, is the one followed by the members of this Court either
adhering to or departing from the previous unanimous conclusion reached. The main reliance to repeat, is
on the social justice provision 9 as reinforced by the protection to labor provision. 10 As noted, such
concepts were enshrined in the 1935 Constitution. 11 The opinion pursued the matter further: "Even then,
there was a realization of their importance in vitalizing a regime of liberty not just as immunity from
government restraint but as the assumption by the State of an obligation to assure a life of dignity for all,
especially the poor and the needy. The expanded social justice and protection to labor provisions of the
present Constitution lend added emphasis to the concern for social and economic rights.** That was so under
the 1935 Constitution. Such an approach is even more valid now. As a matter of fact, in the first case after the applicability of the 1973
constitution where social and economic rights were involved, this Court in Alfanta v. Noe, through Justice Antonio, stated: 'In the environment
of a new social order We can do no less. Thus, under the new Constitution, property ownership has been impressed with a social function.
This implies that the owner has the obligation to use his property not only to benefit himself but society as well. Hence, it provides under
Section 6 of Article II thereof, that in the promotion of social justice, the State "shall regulate the acquisition, ownership, use, enjoyment, and
disposition of private property, and equitably diffuse property ownership and profits." The Constitution also ensures that the worker shall have
a just and living wage which should assure for himself and his family an existence worthy of human dignity and give him opportunity for a
better life.' Such a sentiment finds expression in subsequent opinions. 12

2. It thus becomes apparent, therefore, why predicated on what for me is the significance of the
social justice and the protection to labor mandates of the Constitution, I cannot, with due respect,
concur with my brethren. The stand taken by this Court, I submit, cannot be justified by the hitherto
hospitable scope accorded such provisions. It is to the credit of this Administration that even during
the period of crisis government, the social and economic rights were fully implemented. As a matter
of fact, some critics, not fully informed of the actual state of affairs, would predicate their assessment
of its accomplishments in this sphere on their inaccurate and unsympathetic appraisal of how much
success had been achieved. It is a matter of pride for the Philippines that as far back as her 1935
Constitution, provisions assuring liberty in its positive sense, enabling her citizens to live a life of
humanity and dignity, were already incorporated. The social and economic rights found therein
antedated by thirteen years the Universal Declaration of Human Rights. When it is considered that,
as pointed out in the opinion of Justice Antonio in Alfanta, rendered in the first year of the present
Constitution, the social justice principle now lends itself to the equitable diffusion of property
ownership and profits, it becomes difficult for me to justify why any lurking ambiguity in Presidential
Decree No. 851 could be construed against the rights of labor. This Court is not acting unjustly if it
promotes social justice. This Court is not acting unjustly if it protects labor. This Court is just being
true to its mission of fealty to the Constitution. Under the concept of separation of powers, while the
political branches enact the laws and thereafter enforce them, any question as to their interpretation,
justiciable in character, is for the courts, ultimately this Tribunal, to decide. That is its sworn duty. It
cannot be recreant to such a trust. Its role, therefore, is far from passive. It may be said further that if
the object Of statutory construction is in the well-known language of Learned Hand "proliferation of
purpose," there is warrant for the view that I espouse. That is to attain its basic objective, namely, to
cope with the ravages of inflation. Moreover, the Decree only benefits the low-salaried employees.
There is thus ample warrant for a more liberal approach. It only remains to be added that there was
in Marcopper not only a recognition of the administrative determination by the Minister of Labor as
well as the then Deputy Minister of Labor but also an acceptance of the ably-written memorandum of
Solicitor General Mendoza. Hence, to repeat, my inability to concur on this point with my brethren
whose views, as I stated earlier, are deserving of the fullest respect.

3. There is, however — and it must be so recognized an obstacle to the approach above followed.
There is an agreement both on the part of management and labor in this case quoted in the main
opinion to this effect, "to abide by the final decision of the Supreme Court in any case involving the
13th Month Pay Law if it is clearly held that the employer is liable to pay a 13th month pay separate
and distinct from the bonuses already given." Such an obstacle, on further reflection, is not, for me,
insurmountable. The only case then within the contemplation of the parties is Marcopper. With the
unanimous opinion rendered and a subsequent denial of a motion for reconsideration, it would
appear that while it lacked doctrinal force, this Court "clearly held" that there is liability on the part of
the employer to pay a 13-month pay separate and distinct from the bonuses already given. Perhaps
the parties, especially labor, could have been more accurate and more precise. It take comfort from
the view expressed by Justice Cardozo in Wood v. Duff-Gordon: 13 "The law has outgrown its primitive
stage of formalism when the precise word was the sovereign talisman, and every slip was fatal. It takes a
broader view today. A promise may be lacking, and yet the whole writing may be 'instinct with an
obligation,' imperfectly expressed." 14

4. Now as to the qualified concurrence. Based on the codal provisions the finding of the illegality of
strike is warranted. That for me does not fully resolve the questions raised by such a declaration.
From my reading of the opinion of the Court, it does not go as far as defining the consequences of
such illegal strike. Again the approach I propose to follow is premised on the two basic mandates of
social justice and protection to labor, for while they are obligations imposed on the government by
the fundamental law, compulsory arbitration as a result of which there could be a finding of illegality
is worded in permissive not in mandatory language. It would be, for me, a departure from principles
to which this Court has long remained committed, if thereby loss of employment, even loss of
seniority rights or other privileges is ultimately incurred. That is still an open question. The decision
has not touched on that basic aspect of this litigation. The issue is not foreclosed. It seems fitting
that this brief concurrence and dissent should end with a relevant excerpt from Free Telephone
Workers Union v. The Minister of Labor: 15 "It must be stressed anew, however, that the power of
compulsory arbitration, while allowable under the Constitution and quite understandable in labor disputes
affected with a national interest, to be free from the taint of unconstitutionality, must be exercised in
accordance with the constitutional mandate of protection to labor. The arbiter then is called upon to take
due care that in the decision to be reached, there is no violation of 'the rights of workers to self-
organization, collective bargaining, security of tenure, and just and humane conditions of work.' It is of
course manifest that there is such unconstitutional application if a law 'fair on its face and impartial in
appearance [is] applied and administered by public authority with an evil eye and an unequal hand.' It
does not even have to go that far. An instance of unconstitutional application would be discernible if what
is ordained by the fundamental law, the protection of labor, is ignored or disregarded . 16

I am authorized to state that Justice Makasiar joins me in this separate opinion.

BARREDO, J., concurring:

At this stage of my tenure in the Supreme Court which is to end in about four months from now, I feel
it is but fitting and proper that I make my position clear and unmistakable in regard to certain
principles that have to be applied to this labor case now before Us. Few perhaps may have noticed
it, but the fact is that in most cases of this nature I have endeavored my very best to fully abide by
the part that pertains to the judiciary in the social justice and protection to labor clauses of the
Constitution, not alone because. I consider it as an obligation imposed by the fundamental law of the
land but by natural inclination, perhaps because I began to work as a common worker at the age of
thirteen, and I cannot in any sense be considered as a capitalist or management-inclined just
because I happen to have joined, within the legal bounds of the position I occupy, some business
ventures with the more affluent members of my family and with some good and faithful old time
friends. I need not say that I am pro-labor; I only wish to deny most vehemently that I am anti-labor

Having been one of the seven members of the Court who co-signed with our learned Chief Justice
the Marcopper "decision" and later on reserved my vote when a motion for reconsideration thereof
was filed for me to concur now by merely cosigning the brilliant opinion of our distinguished
colleague, Mr. Justice Plana, is to my mind short of what all concerned might expect from me. For
me to merely vote in support of the judgment herein without any explanation of my peculiar situation
does not satisfy my conscience, not to mention that I owe such explanation to those who would all
probably be raising their eyebrows since they must come to feel they could depend on me to always
vote in favor of labor.

The Supreme Court is a court of law and of equity at the same time but, understandably, equity
comes in only when law is inadequate to afford the parties concerned the essence of justice,
fairness and square dealing. It is to this basic tenet that I am bound by my oath of office before God
and our people Having this Ideal in mind, the paramount thought that should dominate my actuations
is complete and absolute impartiality in the best light God has given me. Hence, when the aid of the
Court is sought on legal grounds, We can resort to equity only when there is no law that can be
properly applied. My view of the instant case is that it is one of law, not of equity. It is on this
fundamental basis that I have ventured to write this concurrence.

Looking back at my concurrence in Marcopper, and guided by the observations in the main opinion
herein, as to the doctrinal value of Our decision therein, I have come to the realization, after mature
deliberation, that the conclusion reached in the opinion of the Chief Justice may not always be
consistent with the evident intent and purpose of Section 2 of P.D. No. 851 which, indeed,
unequivocally provides that "(E)mployers already paying their employees a 13th month pay or its
equivalent are not covered by this decree", albeit it does not clarify what it means by the "equivalent"
of the 13th month pay. Such being the case, nothing can be more proper than for everyone to abide
by or at least give due respect to the meaning thereof as has been officially expressed by the usual
executive authority called upon to implement the same, none other than the Ministry of Labor
(MOLE, for short), unless, of course, the understanding of MOLE appears to be manifestly and
palpably erroneous and completely alien to the evident intent of the decree. And Section 3(e) of the
Rules Implementing P.D. 851 issued by MOLE reads thus:

The term "its equivalent" as used in paragraph (c) hereof shall include Christmas
bonus, midyear bonus, profit-sharing payments and other cash bonuses amounting
to not less than 1/12th of the basic but shall not include cash and stock dividends,
cost of living allowances and all other allowances regularly enjoyed by the employee,
as well as non-monetary benefits. Where an employer pays less than 1/12th of the
employee's basic salary the employer shall pay the difference.

Petitioner National Federation of Sugar Workers (NFSW, for short) is now before Us with the plea
that because in its agreement with respondent Central Azucarera de la Carlota (CAC, for short) of
November 30, 1981 to the effect that:

The parties agree to abide by the final decision of the Supreme Court in any case
involving the 13th Month Pay Law if it is clearly held that the employer is liable to pay
a 13th month pay separate and distinct from the bonuses already given. (Par. 4)

and because this Court dismissed, in legal effect, for lack of necessary votes, the petition in the
Marcopper case seeking the setting aside of Deputy Minister Inciong's decision which considered
the midyear and Christmas bonuses being given to the Marcopper workers as not the equivalent of
the 13th month pay enjoined by P.D. 851, We should now order CAC to pay NFSW members in the
same way as stated in the opinion of the Chief Justice in the Marcopper case.

At first glance, such a pause does appear tenable and plausible. But looking deeper at the precise
wording of the November 30, 1981 agreement between NFSW and CAC abovequoted, the
proposition in the main opinion herein that what must be deemed contemplated in said agreement is
that the final decision of the Supreme Court therein referred to must be one wherein it would be
"clearly held that the employer is liable to pay 13th month pay separate and distinct from the
bonuses already given", compels concurrence on my part. I find said agreement to be definitely
worded. There is no room at all for doubt as to the meaning thereof. And tested in the light of such
unambiguous terminology of the said agreement, the Marcopper opinion signed by only seven
members of this Court, cannot, under the Constitution and prevailing binding legal norms,
unfortunately, have doctrinal worth and cannot be considered as stare decisis. Hence, it cannot be
said to be the "definite" decision of the Supreme Court the parties (CAC and NFSW) had in mind.
Accordingly, it is my considered opinion that NFSW's plea in this case is premature and rather off
tangent.

I am not unmindful of the possibility or even probability that labor may argue that in signing the
November 30, 1981 agreement, NFSW little cared, for it was not fully informed about what doctrinal
and what is not doctrinal signify in law. Labor may argue that it is enough that Marcopper workers
got their 13th month pay in addition to their bonuses by virtue of the denial by this Supreme Court of
Marcopper Company's appeal to US, and NFSW members should not be left getting less. And it
would only be rational to expect labor to invoke in support of their plea no less than the social justice
and protection to labor provisions of the Constitution.

As I have said at the outset, I am about to leave this Court. Nothing could warm my heart and lift my
spirit more than to part with the noble thought that during my tenure of fourteen years in this
Supreme Court, I have given labor the most that it has been within my power to give. But again I
must emphasize that what is constitutionally ordained, and by that I mean also by God and by our
country and people, is for me to jealously guard that the scales of justice are in perfect balance. No
fondness for any sector of society, no love for any man or woman, no adherence to any political
party, no feeling for any relative or friend nor religious consideration or belief should ever induce me
to allow it to tilt in the slightest degree in favor of anyone.

The concept of social justice has been variously explained in previous decisions of this Court. In
Talisay Silay, 1penned by this writer, We went as far as to hold that when it comes to labor-management
relationship, the social justice principle is more pervasive and imperious than police power. It is indeed
consecrated as one of the most valued principles of national policy in the Constitution. (Sec. 6, Art. II) So
also is protection to labor. (See. 9, Id.) I am of the firm conviction, however, that these constitutional
injunctions are primarily directed to and are responsibilities of the policy-determining departments of the
government. In the enforcement of said principles, the role of the judiciary is to a certain degree less
active. The courts are supposed to be called upon only to strike down any act or actuation of anyone
violative thereof, and, of course 6 in case of doubt in any given situation, to resolve the same in favor of
labor. Verily, neither the Supreme Court nor any other court is enjoined to favor labor merely for labor's
sake, even as the judiciary is duty bound never to place labor at a disadvantage, for that would not be
only unconstitutional but inhuman, contrary to the Universal Declaration of Human Rights and
unpardonably degrading to the dignity of man who has been precisely created in the image of God. At
bottom the Ideal in social justice is precisely to maintain the forces of all the economic segments of
society in undisturbed and undisturbable equilibrium, as otherwise there would be no justice for anyone of
them at all.

In the case at bar, I do not feel at liberty to disregard what the parties have freely agreed upon,
assuming, as I must, that in entering into such agreement both parties were fully aware of their legal
rights and responsibilities. In this connection, I take particular note of the fact that if CAC is a big
financially well conditioned concern, NFSW is not just one ignorant laborer or group of laborers, but
a federation with leaders and lawyers of adequate if not expert knowledge-ability in regard to their
rights and other relevant matters affecting labor. I am satisfied that there is here no occasion to
apply the Civil Code rule regarding vigilance whenever there is inequality in the situations of the
parties to an agreement or transaction.

In conclusion, I concur fully in the main opinion of Justice Plana as regards both issues of illegality of
the strike here in question and the non- applicability hereto of whatever has been said in Marcopper.
I have added the above remarks only to make myself clear on labor-management issues before I
leave this Court, lest there be no other appropriate occasion for me to do so.

ABAD SANTOS, J., concurring:

I concur but lest I be accused of inconsistency because in Marcopper Mining Corporation vs. Ople,
et al., No. 51254, June 11, 1981, 105 SCRA 75, I voted to dismiss the petition for lack of merit and
as a result Marcopper had to give the 13th-month pay provided in P.D. No. 851 even as its
employees under the CBA had mid-year and end-of-year bonuses, I have to state that Marcopper
and La Carlota have different factual situations as follows: 1. In Marcopper, the CBA clearly stated
that the company was obligated to "grant midyear and end-of-year bonuses to employees following
years in which it had profitable operations." Thus the payment of the bonuses was contingent upon
the realization of profits. If there were no profits, there were to be no bonuses. Accordingly, it was
fair and proper to conclude that Marcopper had not shown that it was already paying its employees
the 13th-month pay or its equivalent as provided in Sec. 2 of P.D. No. 851. However, in the instant
case of La Carlota the obligation of the employer to pay bonuses is not contingent on the realization
of profits. The CBA stipulates that the "parties also agree to maintain the present practice on the
grant of Christmas bonus, milling bonus, and amelioration bonus to the extent as the latter is
required by law." It can thus be said that La Carlota is already paying the equivalent of the 13th-
month pay. 2. In Marcopper, the company's liability for the 13th month pay was determined by no
less than the Deputy Minister of Labor, Amado G. Inciong. I have always given much weight to the
determination of officers who are tasked with implementing legislation because their expertise
qualifies them in making authoritative decisions. In the present case of La Carlota, there has been
no determination that the employees are entitled to the 13th-month pay. In fact, a negative
conclusion can be implied from the declaration of Labor Arbiter Ovejera that the labor union's strike
against La Carlota was illegal.

MELENCIO-HERRERA, J., concurring.

A. The question of law involved in this Petition for Prohibition with Preliminary Injunction is based on
the following relevant facts which are indicated in the record:

1. Prior to December 16, 1975, Central Azucarera de la Carlota (LA CARLOTA, for short), which
operates a sugar mill in La Carlota, Negros Occidental, may be deemed as paying to its employees
milling bonus, amelioration bonus, and Christmas bonus equal at least to a months' salary.

2. PD 851, effective on the aforementioned date of December 16, 1975, required employers to pay
their employees a 13the month pay, provided the employer was not already paying the said 13th
month pay or its equivalent.

3. On December 22, 1975, the then Department of Labor promulgated a regulation stating that
"Christmas bonus" is an equivalent of the 13th month pay,
4. From 1975 to 1981, LA CARLOTA was not paying 13th month pay on the assumption that the
"Christmas bonus" it was paying was an "equivalent" of the 13th month pay. The employees of LA
CARLOTA and their labor unions had not protested the non-payment of the 13th month pay in
addition to the Christmas bonus.

5. On June 11, 1981, this Court promulgated its Decision in the "Marcopper" case, which involved a
relationship between the " 13th month pay" and the "Christmas bonus" being paid by an employer. A
Motion for reconsideration of the Decision was subsequently filed in said case, which was denied
only on December 15,1981.

6. In the meantime, on November 29, 1981, the National Federation of Sugar Workers (NFSW), as
the labor union representing the majority of employees at LA CARLOTA, staged a strike because LA
CARLOTA had refused to pay the 13th month pay in addition to Christmas bonus. The strike lasted
one day on November 30, 1981, LA CARLOTA and NFSW entered into a settlement agreement,
paragraph 4 whereof provided as follows:

4. The parties agree to abide by the final decision of the Supreme Court in any case
involving the 13th Month Pay Law if it is clearly held that the employer is liable to pay
a 13th Month Pay separate and distinct from the bonuses already given;

7. On January 28, 1982, NFSW declared a strike on the ground that, despite the finality of the
Marcopper Decision, LA CARLOTA had refused to grant 13th month pay to its employees, in
addition to Christmas bonus, as agreed upon in the settlement agreement of November 30, 1981.

B. The legal controversy in the matter may be explained as follows:

1. NFSW filed a notice of strike on January 22, 1982, claiming that the contemplated strike was
based on an unfair labor practice, and that it could declare the strike even before the expiration of
fifteen (15) days thereafter. The unfair labor practice relied upon was management's alleged
renegation of the November 30, 1981 agreement, considering that the finality of the Marcopper
Decision had "clearly held that the employer is liable to pay a 13th month pay separate and distinct
from "the Christmas bonus".

2. On the other hand, LA CARLOTA took the position that the strike was not a ULP strike but an
economic strike subject to a cooling period of thirty (30) days with its attendant requirements.

3. It is clear that the controversy between NFSW and LA CARLOTA substantially hinges on the
question of whether or not the Marcopper Decision has clearly held that a Christmas bonus, in
whatsoever form, should not deter the employer's obligation to the payment of the 13th month pay.

C. The proceedings in the case below were as follows:

1. On February 4, 1982, LA CARLOTA filed a petition to declare the strike of January 28, 1982 as
illegal in R. A. B. Case No. 110- 82 of the Regional Arbitration Branch No. VI-A of the National Labor
Commission in Bacolod City (the CASE BELOW).

2. After relatively protracted hearings, respondent Labor Arbiter rendered a Decision declaring illegal
the strike of January 28, 1982. That is the Decision assailed by NFSW in this instance claiming it to
be null and void.

D. Reference to a collateral proceeding may be made at this juncture:

1. It appears that, in LA CARLOTA, there is another labor union under the name of National
Congress of Unions in the Sugar Industry in the Philippines (NACUSIP).

2. On July 30, 1981, NACUSIP filed a complaint in FSD Case No. 1192-81 before R. A. B. No. VI-A
in Bacolod City praying that an Order be issued directing LA CARLOTA to pay 13th month pay to its
employees from the effective date of PD 851 (the COLLATERAL PROCEEDING).

3. On December 4, 1981, NFSW filed a notice to intervene in the COLLATERAL PROCEEDING.

4. On January 26, 1982, a Decision was rendered in the COLLATERAL PROCEEDING which, in
part, said:

On the contrary, what this Labor Arbiter is aware of, with which he can take notice, is
the policy declaration of the Honorable Minister of Labor and Employment contained
in a telegram addressed to Asst. Director Dante G. Ardivilla Bacolod District Office,
this Ministry, and disseminated for the information of this Branch which states,
among other things, that where bonuses in CBAs are not contingent on realization of
profit as in the Marcopper case, the decision (of the Supreme Court, re: Marcopper
case), does not apply, and cases thereon should be resolved under the provisions of
PD 851 and its implementing rules.

5. On February 15, 1982, NFSW filed a Motion for Reconsideration of the Decision.

Upon the foregoing exposition, there is justification for an outright dismissal of the Petition for
Prohibition for the simple reason that the strike of January 28, 1982 may not be considered a ULP
strike. When the strike was declared, it could not be validly claimed that there was already a final
decision made by this Court which "clearly held that the employer is liable to pay a 13th month pay
separate and distinct from" the Christmas bonus being paid by LA CARLOTA. However, since the
Marcopper Decision has engendered controversies in labor-management relations in several
industrial/commercial firms, the Court has resolved to rule on the merits of the substantial question
between LA CARLOTA and NFSW for the public benefit with a clarification of the Marcopper
judgment.

I agree with the proposition taken by the Ministry of Labor and Employment that Christmas bonus,
not contingent on realization of profit as in the Marcoper case, is the equivalent of the 13th month
pay. In regards to the juxtaposition of the terms "13th month pay" and "Christmas bonus" in an
amount not less than a month's salary, the following may be explained:

Within recent time, it has been usual for an industrial or commercial firm, which has had a successful
year, to grant a bonus to its employees generally denominated before as year-end bonus. A firm
usually knows whether or not it has had a successful year by the middle of December. In case of
profitability, payment of the year-end bonus does not have to await the end of the year, but it is often
times given some days before New Year, generally about Christmas day. Before long, the year-end
bonus became also known as Christmas bonus, following the change of the Christmas gift-giving
day from January 6th to December 25th. Thus, it has been stated: "a less formal use of the bonus
concept, which is designed to reward workers for a successful business year, is the annual or
Christmas bonus" (3 Ency. Brit., 918).

Although the original concept of a year-end bonus or Christmas bonus, was that it depended on a
successful year, the bonus, in many instances, has been developed into an obligatory payment as
part of wages and not related to profitability of operations. As part of wages, they are subject to CBA
negotiation. That has been the general trend in the United States and in our country.
 ... But where so-called gifts are so tied to the remuneration which employees receive
for their work that they are in fact a part of it, they are in reality wages within the
meaning of the Act.

xxx xxx xxx

In a number of cases an employer has been held required to bargain concerning

bonuses, including regularly given Christmas bonuses. (48 Am Jur 2d., p. 455).

Moreover, once a Christmas bonus becomes institutionalized, it has to be non-discriminatory. "An

employer violates 29 USC (Sec.) 158(a) (3) where, to discourage union membership, he ceases
giving a Christmas bonus to all employees and gives the bonus only to office and supervisory
employees after unionization of his production and maintenance employees." (48 Am Jur 2d., p.
420).

The Christmas bonus, as it clearly denotes, has a literal religious connection, "Christmas" being a
term within the Christian religion. Considering that the Christmas bonus has become obligatory and
non- discriminatory in many jurisdictions, a tendency arose to disassociate that bonus from its
religious connotation. Some countries, with non-christian or "liberal" christian segments, have opted
to make the year-end or Christmas bonus obligatory, and they called it the 13th month pay. It is,
perhaps, having our Moslem brothers in mind that the Government had decided to set up in our
country the obligatory payment of the 13th month pay Thereby, the orthodox non-christian employee
is not subjected to "discrimination" due to his inability to accept the Christmas bonus because of
strict allegiance to this own faith. It should, therefore, be apparent that "christmas bonus" and "13th
month pay" should be equated one with the other.

PD 851 does not contain a provision for rules and regulations to be promulgated by the Department
of Labor for implementation of the Decree. Notwithstanding, on December 22, 1975, the Department
of Labor issued "Rules and Regulations Implementing Presidential Decree 851 ", with the following
relevant provision:

The term "its equivalent" as used in paragraph (c) hereof shall include Christmas
bonus, mid-year bonus, profit-sharing payments and other cash bonuses amounting
to not less than 1/12th of the basic salary but shall not include cash and stock
dividends cost of living allowances and all other allowances regularly enjoyed by the
employee, as well as non-monetary benefits. Where an employer pays less than
1/12th of the employees basic salary, the employer shall pay the difference.

When administrative rules and regulations are not properly "delegated", they cannot have the force
and effect of law. It has been stated that:

Administrative rules and regulations. As discussed in Public Administrative Bodies

and Procedure (Sec.) 108, rules and regulations duly promulgated and adopted in
pursuance of properly delegated authority have the force and effect of law where
they are legislative in character, but rules and regulations which are merely executive
or administrative views as to the meaning and construction of the statute are not
controlling on the courts, and cannot alter or extend the plain meaning of a statute,
although they are entitled to great weight where the statute is ambiguous. (82 C.J.S.,
pp. 770, 771).

Although the rule defining the term "equivalent" as used in PD 851 does not have the force and
effect of law, it can and should be considered as an administrative view entitled to great weight as it
is an interpretation of "equivalent" made by the administrative agency which has the duty to enforce
the Decree.

In the light of the foregoing views, I concur with the dismissal of the Petition for Prohibition with the
express statements that LA CARLOTA's Christmas bonus and other bonuses exempts it from giving
13th month pay to its employees, and that the strike of January 28, 1982 was not a ULP strike and
should be considered illegal even if NFSW had complied with all statutory requirements for the
strike.

Footnotes

1 De La Llana, G. R. No. 57883, was promulgated on March 12, 1982 and Nuñez v.
Sandiganbayan, G. R. Nos. 50581-50617, was promulgated on January 30, 1982.

2 G. R. No. 51254 promulgated on June 11, 1981 is reported in 105 SCRA 75.

3 Justice Fernandez, concurred in by Justices Concepcion Jr. and Guerrero. At that

time, of the fourteen Justices, Justices Teehankee and Barredo reserved their votes
and Justices Melencio-Herrera, Ericta, Plana and Escolin took no part,

4 Fernando, CJ, Makasiar, Aquino, Abad Santos and de Castro, JJ.

5 Resolution dated December 15,1981, 1.

6 70 Phil 726 (1940).

7 Resolution dated December 15, 1981, 3.

8 Ibid.

9 According to Article 11, Sec. 6 of the present Constitution: "The State shall promote
social justice to ensure the dignity, welfare, and security of all the people. Towards
this end, the State shall regulate the acquisition, ownership, use, enjoyment, and
disposition of private property, and equitably diffuse property ownership and profits. "

10 According to Article II, Sec. 9 of the present Constitution: "The State shall afford
protection to labor, promote full employment and equality in employment, ensure
equal work opportunities regardless of sex, race, or creed, and regulate the relations
between workers and employers. The state shall assure the rights of workers to self-
organization, collective bargaining, security of tenure, and just and humane
conditions of work. The State may provide for compulsory arbitration."

11 According to Article II, Sec. 5 of the 1935 Constitution: "The promotion of social
justice to insure the well-being and economic security of all the people should be the
concern of the State." According to Article XIV, Sec. 6 of the 1935 Constitution: "The
State shall afford protection to labor, especially to working women and minors, and
shall regulate the relation between landowner and tenant, and between labor and
capital in industry and in agriculture. The State may provide for compulsory
arbitration."
 12 105 SCRA 75, 84-85. Alfanta v. Noe, L-32362, promulgated on September 19,
1973 is reported in 53 SCRA 76. That portion of the opinion cited appears in page
85. La Mallorca v. Workmen's Compensation Commission, L-29315, promulgated on
November 28, 1969, a decision under the 1935 Constitution is reported in 30 SCRA
613. Seven other opinions were cited starting from Chavez v. Zobel, L-25009,
January 17, 1974, 55 SCRA 26; Herald Delivery Carriers Union v. Herald
Publications, L-29966, February 28, 1974, 55 SCRA 713; Philippine Air Lines Inc. v.
Philippine Airlines Employees Association, L-24626, June 28, 1974, 57 SCRA 489;
Almira v. B. F. Goodrich Philippines Inc., L- 34974, July 25, 1974, 58 SCRA 120;
Radio Communications of the Philippines v. Philippine Communications Workers
Federation, L-37662, August 30, 1974, 58 SCRA 762; Firestone Employees Asso. v.
Firestone Tire and Rubber Co. of the

Philippines, L-37952, December 10, 1974, 61 SCRA 338 to E. Lim and Sons
Manufacturing Co. v. Court of Industrial Relations, L-39117, September 25, 1975, 67
SCRA 124.

13 222 Wy. 88, 118 NE 214 (1917).

14 Ibid, 214.

15 G.R. No. 58184, October 3O, 1981,108 SCRA 757.

16 Ibid, 773.

BARREDO, J., concurring Footnotes:

1 G. R. No, L-21304, February 19,1979.

20) Sta. Rosa vs. Coca-cola GR Nos. 164302-03 Jan.24, 2007

THIRD DIVISION

SANTA ROSA COCA-COLA G.R. Nos. 164302-03

PLANT EMPLOYEES
UNION, Donrico V. Sebastian,
Eulogio G. Batino, Samuel A. Present:
Atanque, Manolo C.
Zabaljauregui, Dionisio Tenorio,
Edwin P. Rellores, Luis B. YNARES-SANTIAGO, J.
Natividad, Myrna Petingco, Chairperson,
Feliciano Tolentino, Rodolfo A. AUSTRIA-MARTINEZ,
Amante, Jr., Cipriano C. Bello, CALLEJO, SR., and
Ronaldo T. Espino, Efren Galan, CHICO-NAZARIO, JJ.
and Jun Carmelito Santos,
Petitioners,
 Promulgated:

- versus -

January 24, 2007

COCA-COLA BOTTLERS

PHILS., INC.,

Respondent.

x-----------------------------------------------------------------------------------------x

DECISION
CALLEJO, SR., J.:

This is a petition for review on certiorari of the Decision[1] of the Court of

Appeals (CA) in CA-G.R. SP Nos. 74174 and 74860, which affirmed the ruling of the
National Labor Relations Commission (NLRC) in NLRC CA No. 030424-02, and the
Labor Arbiter in NLRC Case No. RAB-IV-10-11579-99-L.

The Antecedents

The Sta. Rosa Coca-Cola Plant Employees Union (Union) is the sole and exclusive
bargaining representative of the regular daily paid workers and the monthly paid
non-commission-earning employees of the Coca-Cola Bottlers Philippines, Inc.
(Company) in its Sta. Rosa, Laguna plant. The individual petitioners are Union
officers, directors, and shop stewards.

The Union and the Company had entered into a three-year Collective
Bargaining Agreement (CBA) effective July 1, 1996 to expire on June 30, 1999.
Upon the expiration of the CBA, the Union informed the Company of its desire to
renegotiate its terms. The CBA meetings commenced on July 26, 1999, where
the Union and the Company discussed the ground rules of the negotiations.
The Union insisted that representatives from the Alyansa ng mga Unyon sa Coca-
Cola be allowed to sit down as observers in the CBA meetings. The Union officers
and members also insisted that their wages be based on their work shift rates. For
its part, the Company was of the view that the members of the Alyansa were not
members of the bargaining unit. The Alyansa was a mere aggregate of employees
of the Company in its various plants; and is not a registered labor
organization. Thus, an impasse ensued.[2]

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

The Company filed a Motion to Dismiss[4] alleging that the reasons cited by
the Union were not valid grounds for a strike. The Union then filed an Amended
Notice of Strike on September 17, 1999 on the following grounds: (a) unfair labor
practice for the companys refusal to bargain in good faith; and (b) interference
with the exercise of their right to self-organization.[5]
 Meanwhile, on September 15, 1999, the Union decided to participate in a
mass action organized by the Alyansa ng mga Unyon sa Coca-Cola in front of the
Companys premises set for September 21, 1999. 106 Union members, officers
and members of the Board of Directors, and shop stewards, individually filed
applications for leave of absence for September 21, 1999. Certain that its
operations in the plant would come to a complete stop since there were no
sufficient trained contractual employees who would take over, the Company
disapproved all leave applications and notified the applicants accordingly.[6] A day
before the mass action, some Union members wore gears, red tag cloths stating
YES KAMI SA STRIKE as headgears and on the different parts of their uniform,
shoulders and chests.

The Office of the Mayor issued a permit to the Union, allowing it to conduct
a mass protest action within the perimeter of the Coca-Cola plant on September
21, 1999 from 9:00 a.m. to 12:00 noon.[7] Thus, the Union officers and members
held a picket along the front perimeter of the plant on September 21, 1999. All of
the 14 personnel of the Engineering Section of the Company did not report for
work, and 71 production personnel were also absent. As a result, only one of the
three bottling lines operated during the day shift. All the three lines were
operated during the night shift with cumulative downtime of five (5) hours due to
lack of manning, complement and skills requirement. The volume of production
for the day was short by 60,000 physical case[s] versus budget.[8]

On October 13, 1999, the Company filed a Petition to Declare Strike

Illegal[9] alleging, inter alia, the following: there was a deadlock in the CBA
negotiations between the Union and Company, as a result of which a Notice of
Strike was filed by the Union; pending resolution of the Notice of Strike, the Union
members filed applications for leave on September 21, 1999 which were
disapproved because operations in the plant may be disrupted; on September 20,
1999, one day prior to the mass leave, the Union staged a protest action by
wearing red arm bands denouncing the alleged anti-labor practices of the
company; on September 21, 1999, without observing the requirements mandated
by law, the Union picketed the premises of the Company in clear violation of
Article 262 of the Labor Code; because of the slowdown in the work, the
Company suffered losses amounting to P2,733,366.29; the mass/protest action
conducted on September 21, 1999 was clearly a strike; since the Union did not
observe the requirements mandated by law, i.e., strike vote, cooling-off period
and reporting requirements, the strike was therefore illegal; the Union also
violated the provision of the CBA on the grievance machinery; there being a direct
violation of the CBA, the Unions action constituted an unfair labor practice; and
the officers who knowingly participated in the commission of illegal acts during
the strike should be declared to have lost their employment status. The Company
prayed that judgment be rendered as follows:
1. Declaring the strike illegal;

2. Declaring the officers of respondent Union or the individual respondents to

have lost their employment status;

3. Declaring respondent Union, its officers and members guilty of unfair labor
practice for violation of the CBA; and

4. Ordering the respondents to pay petitioner the following claims for damages:

a. Actual Damages in the amount of P 4,733,366.29

b. Moral Damages in the amount of Five (5) Million Pesos; and

c. Exemplary Damages in the amount of Two (2) Million Pesos.[10]

 The Union filed an Answer with a Motion to Dismiss and/or to Suspend
Proceedings[11] alleging therein that the mass action conducted by its officers
and members on September 21, 1999 was not a strike but just a valid exercise
of their right to picket, which is part of the right of free expression as
guaranteed by the Constitution; several thousands of workers nationwide had
launched similar mass protest actions to demonstrate their continuing
indignation over the ill effects of martial rule in the Philippines.[12] It pointed
out that even the officers and members of the Alyansa ng mga Unyon sa Coca-
Cola had similarly organized mass protest actions. The Union insisted that
officers and members filed their applications for leave for September 21,
1999 knowing fully well that there were no bottling operations scheduled on
September 21 and 22, 1999; they even secured a Mayors permit for the
purpose. The workers, including the petitioners, merely marched to and fro at
the side of the highway near one of the gates of the Sta. Rosa Plant, the
loading bay for public vehicles. After 3 hours, everyone returned to work
according to their respective shifting schedules. The Union averred that the
petition filed by the Company was designed to harass and its officers and
members in order to weaken the Unions position in the on-going collective
bargaining negotiations.

In a letter to the Union President dated October 26, 1999, the NCMB
stated that based on their allegations, the real issue between the parties was
not the proper subject of a strike, and should be the subject of peaceful and
reasonable dialogue. The NCMB recommended that the Notice of Strike of
the Union be converted into a preventive mediation case. After conciliation
proceedings failed, the parties were required to submit their respective
position papers.[13] In the meantime, the officers and directors of
the Union remained absent without the requisite approved leaves. On October
 11, 1999, they were required to submit their explanations why they should not
be declared AWOL.[14]

On November 26, 1999, the Labor Arbiter rendered a Decision[15] granting

the petition of the Company. He declared that the September 21, 1999 mass
leave was actually a strike under Article 212 of the Labor Code for the following
reasons: based on the reports submitted by the Production and Engineering
Department of the Company, there was a temporary work stoppage/slowdown in
the company;[16] out of the usual three (3) lines for production for the day shift,
only one line operated by probationary employees was functional and there was a
cumulative downtime of five (5) hours attributed to the lack of manning
complement and skills requirement. The Labor Arbiter further declared:

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

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

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

The Union and its officers, directors and the shop stewards, filed a petition
for certiorari in the CA. The case was docketed as CA-G.R. SP No. 74174. Another
petition was filed by Ricky G. Ganarial and Almira Romo, docketed as CA-G.R. SP
No. 74860. The two cases were consolidated in the 6th Division of the CA.

Petitioners alleged the following in their respective petitions:

 I

THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF

JURISDICTION FOR HAVING DECLARED PETITIONERS TO HAVE LOST THEIR EMPLOYMENT
WHEN FACTS WOULD SHOW PETITIONERS WERE NOT AFFORDED DUE PROCESS

II

THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF

JURISDICTION IN DECLARING THE PEACEFUL PICKETING CONDUCTED BY THE UNION AS
ILLEGAL STRIKE DESPITE ABSENCE OF SUBSTANTIAL EVIDENCE ON THE INTENT TO
CREATE TEMPORARY WORK STOPPAGE

III

THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF

JURISDICTION IN DECLARING THAT PETITIONERS HAVE LOST THEIR EMPLOYMENT FOR
KNOWINGLY PARTICIPATING IN AN ILLEGAL STRIKE DESPITE THE FACT THAT
PETITIONERS ARE NOT ELECTED OFFICERS OF THE UNION AND ARE MERE SHOP
STEWARDS AND DESPITE THE FACT THAT THERE WAS NO PROOF THAT THEY
COMMITTED ILLEGAL ACTS.[20]

The petitioners, likewise, raised the following, to wit:

WHETHER OR NOT PUBLIC RESPONDENT NLRC HAS GRAVELY ABUSED ITS

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

On September 10, 2003, the CA rendered judgment dismissing the

petition for lack of merit. It also declared that petitioners, in CA-G.R. SP No.
74860, were guilty of forum shopping.

Petitioners filed a motion for reconsideration which the appellate court

denied; hence, the instant petition was filed based on the following grounds:
(1) THE HONORABLE COURT OF APPEALS HAS GRAVELY ABUSED ITS DISCRETION
IN DISMISSING THE PETITION BEFORE IT FOR LACK OF MERIT WHEN IT IS CLEAR FROM
THE EVIDENCE ON RECORD THAT THE SUBJECT MASS ACTION WAS A VALID EXERCISE OF
THE WORKERS CONSTITUTIONAL RIGHT TO PICKET WHICH IS PART OF THE RIGHT TO
FREE EXPRESSION.

(2) THE NLRC GRAVELY ABUSED ITS DISCRETION IN AFFIRMING THE

DECISION OF THE LABOR ARBITER A QUO WHEN IT CONCLUDED THAT
AS A CONSEQUENCE OF THE ILLEGALITY OF THE STRIKE, THE DISMISSAL OF THE
OFFICERS OF THE UNION IS JUSTIFIED AND VALID, IS NOT IN ACCORD WITH FACTS AND
EVIDENCE ON RECORD.

(3) EVEN ASSUMING ARGUENDO THAT THE PROTEST MASS ACTION STAGED
BY PETITIONERS ON SEPTEMBER 21, 1999 CONSTITUTES A STRIKE, THE NLRC SERIOUSLY
ERRED WHEN IT AFFIRMED THE LABOR ARBITERS DECISION DECLARING THE
FORFEITURE OF EMPLOYMENT STATUS OF UNION OFFICERS AND SHOP STEWARDS
(WHO HAVE NOT COMMITTED ANY ILLEGAL ACT DURING THE CONDUCT OF THE SAID
MASS ACTION) FOR HAVING KNOWINGLY PARTICIPATED IN AN ILLEGAL STRIKE.[22]

The threshold issues in these cases are: (a) whether the September 21,
1999 mass action staged by the Union was a strike; (b) if, in the affirmative,
whether it was legal; and (c) whether the individual officers and shop stewards
of petitioner Union should be dismissed from their employment.

On the first and second issues, petitioners maintain that the September
21, 1999 mass protest action was not a strike but a picket, a valid exercise of
their constitutional right to free expression and assembly.[23] It was a peaceful
mass protest action to dramatize their legitimate grievances
against respondent. They did not intend to have a work stoppage since they
knew beforehand that no bottling operations were scheduled on September
21, 1999 pursuant to the Logistics Planning Services Mega Manila Production
Plan dated September 15, 1999.[24] Thus, they applied for leaves of absences
for September 21, 1999 which, however, were not approved. They also
obtained a mayors permit to hold the picket near the highway, and they
faithfully complied with the conditions set therein. The protesting workers
were merely marching to and fro at the side of the highway or the loading bay
near one of the gates of the Company plant, certainly not blocking in any way
the ingress or egress from the Companys premises. Their request to hold their
activity was for four (4) hours, which was reduced to three (3)
hours. Thereafter, they all went back to work. The bottling operations of the
Company was not stopped, even temporarily. Since petitioner Union did not
intend to go on strike, there was no need to observe the mandatory legal
requirements for the conduct of a strike.

Petitioners also point out that members belonging to the IBM-KMU at

the San Fernando Coca-Cola bottling plant staged simultaneous walkout from
their work assignments for two consecutive days, on October 7 and 8, 1999.
However, the Secretary of Labor and Employment (SOLE) declared that the
walkout was considered a mass action, not a strike, and the officers of the
IBM-KMU were only meted a three-day suspension. Respondent accepted the
decision of the SOLE and no longer appealed the decision. Petitioners insist
that this should, likewise, apply in the resolution of the issue of whether
petitioners staged a strike or not, and whether the penalty of dismissal from
the employment with the respondent is just and equitable.

Petitioners also insist that they were denied the right to due process
because the decision of the Labor Arbiter was implemented even while their
appeal was pending in the NLRC. The decision of the Labor Arbiter against
them was to become final and executory only until after the NLRC shall have
resolved their appeal with finality.

On the third issue, petitioners aver that even assuming that they had
indeed staged a strike, the penalty of dismissal is too harsh. They insist that
they acted in good faith. Besides, under Article 264 of the Labor Code, the
dismissal of the Union officers who participated in an illegal strike is
discretionary on the employer.Moreover, six (6) of the petitioners were shop
stewards who were mere members of the Union and not officers thereof.

In its comment on the petition, respondent avers that the issues raised
by petitioners are factual; hence, inappropriate in a petition for review
on certiorari. Besides, the findings of the Labor Arbiter had been affirmed by
the NLRC and the CA, and are, thus, conclusive on this Court.

Respondent further avers that the law offers no discretion as to the

proper penalty that should be imposed against a Union official participating in
an illegal strike. Contrary to the contention of petitioners, shop stewards are
also Union officers. To support its claim, respondent cited Samahan ng
Manggagawa sa Moldex Products, Inc. v. National Labor Relations
Commission,[25] International Brotherhood of Teamsters, Chauffeurs,
Warehousemen and Helpers of America v. Hoffa;[26] and Coleman v.
Brotherhood of Railway and Steamship Clerks, etc.[27]
The petition is denied for lack of merit.
 The ruling of the CA that petitioners staged a strike on September 21, 1999,
and not merely a picket is correct.

It bears stressing that this is a finding made by the Labor Arbiter which was
affirmed by the NLRC[28] and the CA.[29] The settled rule is that the factual findings
and conclusions of tribunals, as long as they are based on substantial evidence,
are conclusive on this Court.[30] The raison detre is that quasi-judicial agencies, like
the Labor Arbiter and the NLRC, have acquired a unique expertise since their
jurisdictions are confined to specific matters. Besides, under Rule 45 of the Rules
of Court, the factual issues raised by the petitioner are inappropriate in a petition
for review on certiorari. Whether petitioners staged a strike or not is a factual
issue.

Petitioners failed to establish that the NLRC committed grave abuse of its
discretion amounting to excess or lack of jurisdiction in affirming the findings of
the Labor Arbiter that petitioners had indeed staged a strike.

Article 212(o) of the Labor Code defines strike as a temporary stoppage of

work by the concerted action of employees as a result of an industrial or labor
dispute. In Bangalisan v. Court of Appeals,[31] the Court ruled that the fact that the
conventional term strike was not used by the striking employees to describe their
common course of action is inconsequential, since the substance of the situation,
and not its appearance, will be deemed to be controlling.[32] The term strike
encompasses not only concerted work stoppages, but also slowdowns, mass
leaves, sit-downs, attempts to damage, destroy or sabotage plant equipment and
facilities, and similar activities.[33]

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

A labor dispute includes any controversy or matter concerning terms or

conditions of employment or the association or representation of persons in
negotiating, fixing, maintaining, changing or arranging the terms and conditions of
employment, regardless of whether the disputants stand in the proximate
relation of employer and employee.[36]

That there was a labor dispute between the parties, in this case, is not an
issue. Petitioners notified the respondent of their intention to stage a strike, and
not merely to picket. Petitioners insistence to stage a strike is
evident in the fact that an amended notice to strike was filed even as respondent
moved to dismiss the first notice. The basic elements of a strike are present in this
case: 106 members of petitioner Union, whose respective applications for leave of
absence on September 21, 1999 were disapproved, opted not to report for work
on said date, and gathered in front of the company premises to hold a mass
protest action. Petitioners deliberately absented themselves and instead wore red
ribbons, carried placards with slogans such as: YES KAMI SA STRIKE, PROTESTA
KAMI, SAHOD, KARAPATAN NG MANGGAGAWA IPAGLABAN, CBA-WAG BABOYIN,
STOP UNION BUSTING. They marched to and fro in front of the companys
premises during working hours. Thus, petitioners engaged in a concerted activity
which already affected the companys operations. The mass concerted activity
constituted a strike.

The bare fact that petitioners were given a Mayors permit is not conclusive
evidence that their action/activity did not amount to a strike. The Mayors
description of what activities petitioners were allowed to conduct is
inconsequential. To repeat, what is definitive of whether the action staged by
petitioners is a strike and not merely a picket is the totality of the circumstances
surrounding the situation.

A strike is the most powerful of the economic weapons of workers which

they unsheathe to force management to agree to an equitable sharing of the joint
product of labor and capital. It is a weapon that can either breathe life to or
destroy the Union and its members in their struggle with management for a more
equitable due to their labors.[37] The decision to declare a strike must therefore
rest on a rational basis, free from emotionalism, envisaged by the tempers and
tantrums of a few hot heads, and finally focused on the legitimate interests of
the Union which should not, however, be antithetical to the public welfare, and,
to be valid, a strike must be pursued within legal bounds. The right to strike as a
means of attainment of social justice is never meant to oppress or destroy the
employer.[38]

Since strikes cause disparity effects not only on the relationship between
labor and management but also on the general peace and progress of society, the
law has provided limitations on the right to strike.
 For a strike to be valid, the following procedural requisites provided by Art.
263 of the Labor Code must be observed: (a) a notice of strike filed with the DOLE
30 days before the intended date thereof, or 15 days in case of unfair labor
practice; (b) strike vote approved by a majority of the total union membership in
the bargaining unit concerned obtained by secret ballot in a meeting called for
that purpose, (c) notice given to the DOLE of the results of the voting at least
seven days before the intended strike.

2) ISSSSUE: WON Strike is illegal or not:

These requirements are mandatory and the failure of a union to comply

therewith renders the strike illegal.[39] It is clear in this case that petitioners totally
ignored the statutory requirements and embarked on their illegal strike. We
quote, with approval, the ruling of the CA which affirmed the decisions of the
NLRC and of the Labor Arbiter:
Since it becomes undisputed that the mass action was indeed a strike,
the next issue is to determine whether the same was legal or not. Records
reveal that the said strike did not comply with the requirements of Article 263
(F) in relation to Article 264 of the Labor Code, which specifically provides,
thus:

ART. 263. STRIKES, PICKETING, AND LOCKOUTS

xxx xxx xxx xxx

(f) A decision to declare a strike must be approved by a majority of the

total union membership in the bargaining unit concerned, obtained by secret
ballot in meetings or referenda called for that purpose. A decision to declare a
lockout must be approved by a majority of the board of directors of the
corporation or association or of the partners in a partnership, obtained by
secret ballot in a meeting called for that purpose. The decision shall be valid
for the duration of the dispute based on substantially the same grounds
considered when the strike or lockout vote was taken. The Ministry may at its
own initiative or upon the request of any affected party, supervise the
conduct of the secret balloting. In every case, the union or the employer shall
furnish the Ministry the results of the voting at least seven days before the
intended strike or lockout, subject to the cooling-off period herein provided.

ART. 264. PROHIBITED ACTIVITIES

(a) No labor organization or employer shall declare a strike or lockout

without first having bargained collectively in accordance with Title VII of this
Book or without first having filed the notice required in the preceding article
or without the necessary strike or lockout vote first having been obtained and
reported to the Ministry.

No strike or lockout shall be declared after assumption of jurisdiction by

the President or the Minister or after certification or submission of the
dispute to compulsory or voluntary arbitration or during the pendency of
cases involving the same grounds for the strike or lockout.

Any worker whose employment has been terminated as a consequence

or an unlawful lockout shall be entitled to reinstatement with full backwages.
Any union officer who knowingly participates in an illegal strike and any
worker or union officer who knowingly participates in the commission of
illegal acts during a strike may be declared to have lost his employment
status: Provided, That mere participation of a worker in a lawful strike shall
not constitute sufficient ground for termination of his employment, even if a
replacement had been hired by the employer during such lawful strike.

xxx xxx xxx xxx

Applying the aforecited mandatory requirements to the case at bench,

the Labor Arbiter found, thus:

In the present case, there is no evidence on record to show that

respondents had complied with the above mandatory requirements of law for
a valid strike. Particularly, there is no showing that respondents had observed
the prescribed cooling-off period, conducted a strike vote, much less
submitted a strike vote report to the Department of Labor within the required
time. This being the case, respondents strike on September 21, 1999 is illegal.
In the recent case of CCBPI Postmix Workers Union vs. NLRC, 2999 (sic) SCRA
410, the Supreme Court had said: It bears stressing that the strike
requirements under Article 264 and 265 of the Labor Code are mandatory
requisites, without which, the strike will be considered illegal. The evidence
(sic) intention of the law in requiring the strike notice and strike-vote report as
mandatory requirements is to reasonably regulate the right to strike which is
 essential to the attainment of legitimate policy objectives embodied in the
law. Verily, substantial compliance with a mandatory provision will not suffice.
Strict adherence to the mandate of the law is required.

Aside from the above infirmity, the strike staged by respondents was,
further, in violation of the CBA which stipulated under Section 1, Article VI,
thereof that,

SECTION 1. The UNION agrees that there shall be no strike,

walkout, stoppage or slowdown of work, boycott, secondary boycott,
refusal to handle any merchandise, picketing, sitdown strikes of any
kind, sympathetic or general strike, or any other interference with any
of the operations of the COMPANY during the term of this Agreement,
so long as the grievance procedure for which provision is made herein is
followed by the COMPANY.

Here, it is not disputed that respondents had not referred their issues to
the grievance machinery as a prior step. Instead, they chose to go on strike
right away, thereby bypassing the required grievance procedure dictated by
the CBA.[40]

On the second and third issues, the ruling of the CA affirming the decisions
of the NLRC and the Labor Arbiter ordering the dismissal of the petitioners-
officers, directors and shop stewards of petitioner Union is correct.

It bears stressing, however, that the law makes a distinction between union
members and union officers. A worker merely participating in an illegal strike may
not be terminated from employment. It is only when he commits illegal acts
during a strike that he may be declared to have lost employment status.[41] For
knowingly participating in an illegal strike or participates in the commission of
illegal acts during a strike, the law provides that a union officer may be
terminated from employment.[42] The law grants the employer the option of
declaring a union officer who participated in an illegal strike as having lost his
employment. It possesses the right and prerogative to terminate the union
officers from service.[43]

We quote, with approval, the following ruling of the Court of Appeals:

As to the imposition of the penalty provided for should an illegal strike be

declared as such, We find no legal or factual reason to digress from the following
disquisition of the Labor Arbiter, to wit:

No doubt, the strike conducted by respondents on September 21, 1999 is illegal.

Under Article 264(a) of the Labor Code, it is stated that, Any union officer who
knowingly participates in the commission of illegal acts during a strike may be declared
to have lost his employment status. xxx. In the present case, CCBPI had already
promptly notified respondents and their members of the disapproval of their leave. In
fact, in the company notice (of the disapproval of their leave), CCBPI emphasized that
operations will come to a complete stop on September 21, 1999 if all the applications
are approved. They were further informed that, there are no sufficiently trained
contractual employees who can take over as replacements on that day (Annexes C, C-1
to C-18). In other words, respondents had known beforehand that their planned mass
leave would definitely result in a stoppage of the operations of the company
for September 21, 1999. Still, respondents knowingly and deliberately proceeded with
their mass action, unmindful of the ill effects thereof on the business operations of the
company. In the case of Association of Independent Unions in the Philippines v. NLRC,
305 SCRA 219, the Supreme Court had ruled that,

Union officers are duty-bound to guide their members to

respect the law. If instead of doing so, the officers urge the members to
violate the law and defy the duly constituted authorities, their dismissal
from the service is just penalty or sanction for their unlawful acts. The
officers responsibility is greater than that of the members.
 Here, the law required respondents to follow a set of mandatory procedures
before they could go on with their strike. But obviously, rather than call on their
members to comply therewith, respondents were the first ones to violate the same.[44]

Petitioners cannot find solace in the Order of the Secretary of Labor and
Employment (SOLE) in OS-A-J-0033-99, NCMB-RB 111-NS-10-44-99 and 11-51-99
involving the labor dispute between the Company and the Union therein (the Ilaw
at Buklod ng Manggagawa Local No. 1, representing the daily paid rank and file
members of the respondent, as well as the plant-based route helpers and drivers
at its San Fernando Plant). In said case, the SOLE found that the simultaneous
walkout staged on October 7 and 8, 1999 was indeed a mass action, initiated by
the Union leaders. The acts of the Union leaders were, however, found to be
illegal which warranted their dismissal, were it not for the presence of mitigating
factors,

i.e., the walkout was staged in support of their leaders in the course of the CBA
negotiation which was pending for more than nine (9) months; the Plant was not
fully disrupted as the Company was able to operate despite the severe action of
the Union members, with the employment of casual and contractual workers; the
Union had complied with the requirements of a strike and refrained from staging
an actual strike.[45]

Neither can the petitioners find refuge in the rulings of this Court in Panay
Electric Company v. NLRC[46] or in Lapanday Workers Union v. NLRC.[47] In
the Panay case, the Court meted the suspension of the union officers, instead of
terminating their employment status since the NLRC found no sufficient proof of
bad faith on the part of the union officers who took part in the strike to protest
the dismissal of their fellow worker, Enrique Huyan which was found to be
illegal. In Lapanday, the Court actually affirmed the dismissal of the union officers
who could not claim good faith to exculpate themselves. The officers, in fact,
admitted knowledge of the law on strike, including its procedure in conducting
the same. The Court held that the officers cannot violate the law which was
designed to promote their interests.

Finally, the contention of petitioners Elenette Moises, Almira Romo, Louie

Labayani, Ricky Ganarial, Efren Galan and Jun Carmelito Santos who were
appointed as shop stewards of the Union that they were mere members and not
the officers of petitioner Union is barren of merit.

We agree with the observation of respondent that under Section 501(a)

and (b) of the Landrum Griffin Act of 1959,[48] shop stewards are officers of
the Union:
Sec. 501 (a) The officers, agents, shop stewards, and other representatives of a
labor organization occupy positions of trust in relation to such organization and its
members as a group. It is, therefore, the duty of each such person, taking into account
the special problems and functions of a labor organization, to hold its money and
property solely for the benefit of the organization and its members and to manage,
invest, and expend the same in accordance with its constitution and bylaws and any
resolutions of the governing bodies adopted thereunder, to refrain from dealing with
such organization as an adverse party in any matter connected with his duties and from
holding or acquiring any pecuniary or personal interest which conflicts with the interest
of such organization, and to account to the organization for any profit received by him in
whatever capacity in connection with transactions conducted by him or under his
direction on behalf of the organization. A general exculpatory resolution of a governing
body purporting to relieve any such person of liability for breach of the duties declared
by this section shall be void as against public policy.

(b) When any officer, agent, shop steward, or representative of any labor
organization is alleged to have violated the duties declared in subsection (a) of this
section and the labor organization or its governing board or officers refuse or fail to sue
 or recover damages or secure an accounting or other appropriate relief within a
reasonable time after being requested to do so by any member of the labor
organization, such member may sue such officer, agent, shop steward, or representative
in any district court of the United States or in any State court of competent jurisdiction
to recover damages or secure an accounting or other appropriate relief for the benefit
of the labor organization.[49]

Under said Act, Section 3(q) thereof provides, as follows:

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

Admittedly, there is no similar provision in the Labor Code of

the Philippines; nonetheless, petitioners who are shop stewards are considered
union officers.

Officers normally mean those who hold defined offices. An officer is any person
occupying a position identified as an office. An office may be provided in the
constitution of a labor union or by the union itself in its CBA with the employer.
An office is a word of familiar usage and should be construed according to the
sense of the thing.[51]
Irrefragably, under its Constitution and By-Laws, petitioner Union has principal
officers and subordinate officers, who are either elected by its members, or
appointed by its president, including the standing committees each to be headed
by a member of the Board of Directors. Thus, under Section 1, Article VI of
petitioner Unions Constitution and By-Laws, the principal officers and other
officers, as well as their functions/duties and terms of office, are as follows:

ARTICLE VI

PRINCIPAL OFFICERS

SECTION 1. The governing body of the UNION shall be the following officers who
shall be elected through secret ballot by the general membership:

President Auditor

Vice-President two (2) Public Relations Officer

Secretary Sergeant-at-Arms

Treasurer Board of Directors nine (9)

SECTION 2. The above officers shall administer Unions affairs, formulate policies
and implement programs to effectively carry out the objectives of the UNION and the
Labor Code of the Philippines and manage all the monies and property of the UNION.

SECTION 3. The officers of the UNION and the members of the Board of
Directors shall hold office for a period of five (5) years from the date of their election
until their successors shall have been duly elected and qualified; provided that they
remain members of the UNION in good standing.[52]
 Section 6, Article II of the CBA of petitioner Union and respondent defines
the position of shop steward, thus:

SECTION 6. Shop Stewards. The UNION shall certify a total of eight (8) shop
stewards and shall inform management of the distribution of these stewards among the
departments concerned.

Shop Stewards, union officers and members or employees shall not lose pay for
attending Union-Management Labor dialogues, investigations and grievance meetings
with management.[53]

Section 6, Rule XIX of the Implementing Rules of Book V of the Labor Code
mentions the functions and duties of shop stewards, as follows:

Section 2. Procedures in handling grievances. In the absence of a specific provision in the

collective bargaining agreement prescribing for the procedures in handling grievance,
the following shall apply:

(a) An employee shall present this grievance or complaint orally or in writing to the shop
steward. Upon receipt thereof, the shop steward shall verify the facts and determine
whether or not the grievance is valid.

(b) If the grievance is valid, the shop steward shall immediately bring the complaint to
the employees immediate supervisor. The shop steward, the employee and his
immediate supervisor shall exert efforts to settle the grievance at their level.

(c) If no settlement is reached, the grievance shall be referred to the grievance

committee which shall have ten (10) days to decide the case.
 Where the issue involves or arises from the interpretation or implementation of a
provision in the collective bargaining agreement, or from any order, memorandum,
circular or assignment issued by the appropriate authority in the establishment, and
such issue cannot be resolved at the level of the shop steward or the supervisor, the
same may be referred immediately to the grievance committee.

All grievance unsettled or unresolved within seven (7) calendar days from the date of its
submission to the last step in the grievance machinery shall automatically be referred to
a voluntary arbitrator chosen in accordance with the provisions of the collective
bargaining agreement, or in the absence of such provisions, by mutual agreement of the
parties.[54]

Thus, a shop steward is appointed by the Union in a shop, department, or

plant serves as representative of the Union, charged with negotiating and
adjustment of grievances of employees with the supervisor of the employer.[55] He
is the representative of the Union members in a building or other workplace.
Blacks Law Dictionary defines a shop steward as a union official who represents
members in a particular department. His duties include the conduct of initial
negotiations for settlement of grievances.[56] He

is to help other members when they have concerns with the employer or other
work-related issues. He is the first person that workers turn to for assistance or
information. If someone has a problem at work, the steward will help them sort it
out or, if necessary, help them file a complaint.[57] In the performance of his
duties, he has to take cognizance of and resolve, in the first instance, the
grievances of the members of the Union. He is empowered to decide for himself
whether the grievance or complaint of a member of the petitioner Union is valid,
and if valid, to resolve the same with the supervisor failing which, the matter
would be elevated to the Grievance Committee.
 It is quite clear that the jurisdiction of shop stewards and the supervisors
includes the determination of the issues arising from the interpretation or even
implementation of a provision of the CBA, or from any order or memorandum,
circular or assignments issued by the appropriate authority in the
establishment. In fine, they are part and parcel of the continuous process of
grievance resolution designed to preserve and maintain peace among the
employees and their employer.They occupy positions of trust and laden with
awesome responsibilities.

In this case, instead of playing the role of peacemakers and grievance

solvers, the petitioners-shop stewards participated in the strike. Thus, like the
officers and directors of petitioner Union who joined the strike, petitioners-
shop stewards also deserve the penalty of dismissal from their employment.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of

merit. The Decision of the Court of Appeals is AFFIRMED. No costs.

SO ORDERED.

ROMEO J. CALLEJO, SR.

Associate Justice
WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice

MA. ALICIA AUSTRIA-MARTINEZ MINITA V. CHICO-NAZARIO Associate Justice 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
Courts Division.

CONSULELO YNARES-SANTIAGO

Associate Justice

Chairperson
 CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified

that the conclusions in the above decision were reached in consultation before
the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO

Chief Justice

[1]
Penned by Associate Justice Jose L. Sabio, Jr., with Associate Justices Delilah Vidallon-Magtolis (retired) and
Hakim S. Abdulwahid, concurring; rollo, pp. 53-68.
[2]
Rollo, p. 54.
[3]
Records, p. 15.
[4]
Rollo, pp. 143-148.
[5]
Records, p. 43.
[6]
Id. at 16-34.
[7]
Rollo, pp.141-142.
[8]
Records, pp. 50, 67-69.
[9]
Id. at 1.
[10]
Id. at 11-12.
[11]
Id. at 78
[12]
Id. at 35-36.
[13]
Id. at 113. Position Paper for the Respondents, Records, pp. 121-127; Position Paper for the Complainant
CCBPI, Records, pp. 150-168.
[14]
Records, pp. 131-148.
[15]
Id. at 201-207.
[16]
Annexes K, K-1, and K-2; id. at 70-72.
[17]
Records, pp. 204-205.
[18]
Rollo, p. 97.
[19]
Id. at 83.
[20]
Id. at 59-60.
[21]
Id.
[22]
Id. at 32-33.
[23]
Id. at 34.
[24]
Annex 1, id. at 85.
[25]
381 Phil. 254 (2000).
[26]
242 F. Supp. 246, May 14, 1965.
[27]
340 F.2d 206, January 8, 1965.
[28]
Rollo, pp. 80-82.
[29]
Id. at 66.
[30]
San Miguel Corporation v. MAERC Integrated Services, Inc., 453 Phil. 543, 557 (2003); Cosmos Bottling
Corporation v. NLRC, 453 Phil. 151, 157 (2003).
[31]
G.R. No. 124678, July 31, 1997, 276 SCRA 619, 627.
[32]
Cited also in Acosta v. Court of Appeals, 389 Phil. 829, 836 (2000).
[33]
Samahang Manggagawa sa Sulpicio Lines, Inc.-NAFLU v. Sulpicio Lines, Inc. G.R. No. 140992, March 25,
2004, 426 SCRA 319. Bukluran ng Manggagawa sa Clothman Knitting Corp.-Solidarity of Unions in the Phils. For
Empowerment and Reforms v. Court of Appeals, G.R. No. 158158, January 17, 2005, 448 SCRA 642.
[34]
Ilaw at Buklod ng Manggagawa (IBM) v. NLRC, G.R. No. 91980, June 27, 1995.
[35]
Dache v. Rose, 28 N.Y.S. 2d 303 (1941).
[36]
Article 212 (l) Labor Code.
[37]
Lapanday Workers Union v. NLRC, G.R. Nos. 95494-97, September 7, 1995, 248 SCRA 95, 104-105.
[38]
Association of Independent Unions in the Philippines v. NLRC, G.R. No. 120505, March 25, 1999, 305 SCRA
219.
[39]
Piero v. NLRC, G.R. No. 149610, August 20, 2004, 437 SCRA 112.
[40]
Rollo, pp. 63-65.
[41]
Association of Independent Unions in the Philippines v. National Labor Relations Commission, supra note
38; First City Interlink Transportation, Co. Inc. v. Secretary of Labor and Employment, G.R. No. 106316, May 5,
1997, 272 SCRA 124;
[42]
Gold City Integrated Port Service, Inc. v. NLRC, G.R. No. 103560, July 6, 1995, 245 SCRA 627, 641.
[43]
Id.
[44]
Rollo, pp. 65-66.
[45]
Id. at 102-104.
[46]
G.R. No. 102672, October 4, 1995, 248 SCRA 688.
[47]
Supra note 37.
[48]
The Labor-Management Reporting and Disclosure Act (LMRDA), also known as the Landrum-Griffin
Act deals with the relationship between a union and its members. The LMRDA of 1959 or the Landrum-Griffin Act
of 1959 is an Act to provide for the reporting and disclosure of certain financial transactions and administrative
practices of labor organizations and employers, to prevent abuses in the administration of trusteeships by labor
organizations, to provide standards with respect to the election of officers of labor organizations, and for other
purposes.
[49]
Sections 501(a) and (b) deal on the Fiduciary Responsibility of Officers of Labor Organizations, (29 U.S.C 501).
[50]
29 U.S.C.402.
[51]
National Labor Relations Board v. Coca-Cola Bottling Co. of Louisville, Inc., 100 L.Ed. 285 (1956).
[52]
Rollo, pp. 350-351.
[53]
Id. at 43.
[54]
Id. at 159.
[55]
Websters Third New International Dictionary.
[56] th
5 Edition, 1979.
[57]
The Shop Steward. http://www.seiu32bj.org/cd/stewards.asp, 11/22/06.