G.R. No.

95940 July 24, 1996 substantially equivalent positions without loss of seniority rights with
full backwages and other benefits, computed as follows:
PANTRANCO NORTH EXPRESS, INC., petitioner,
vs. xxx xxx xxx
NATIONAL LABOR RELATIONS COMMISSION and URBANO
SUÑIGA, respondents. 3. Urbano Suñiga

P 27,375.00 — Backwages,
Aug. 16/89 to
PANGANIBAN, J.:p March 31/90 (P3,650.00 x 7.5
mos.)
Is a Collective Bargaining Agreement provision allowing compulsory retirement before
age 60 but after twenty five years of service legal and enforceable? Who has 1,368.75 — 13th month pay for
jurisdiction over a case involving such a question — the labor arbiter or arbitrators 1989
authorized by such CBA? (P16,425.00 over 12)
——————
The foregoing questions are presented in the instant petition for Certiorari seeking the P 28,743.75
nullification of the Resolution1promulgated September 28, 1990 by the National Labor 2,874.37 — 10% attorney's
Relations Commission2 in an illegal dismissal case brought by private respondent. In fees
its assailed Resolution, the public respondent affirmed the decision of the Labor ——————
Arbiter Ricardo N. Olairez dated March 26, 19903 declaring that the compulsory P 31,618.12 — Total as of
retirement of private respondent constituted illegal dismissal, ordering his March 31/90 plus
reinstatement and granting him backwages. additional backwages and
other benefits but not to
exceed 3 years and the
The Antecedent Facts corresponding attorney's fees.

Private respondent was hired by petitioner in 1964 as a bus conductor. He eventually
joined the Pantranco Employees Association-PTGWO. He continued the petitioner's
employ until August 12, 1989, when he was retired at the age of fifty-two (52) after
having rendered twenty five years' service. The basis of his retirement was the
compulsory retirement provision of the collective bargaining agreement between the
petitioner and the aforenamed union. Private respondent received P49,300.00 as
retirement pay.
On February 15, 1990, private respondent filed a complaint 4 for illegal
dismissal against petitioner with the Sub-Regional Arbitration Branch of the
respondent Commission in Dagupan City. The complaint was consolidated
with two other cases of illegal dismissal5 having similar facts and issues, filed
by the other employees, non-union members.
The amounts already received by complainants shall be considered
as advanced payment of their retirement pay which shall be
deducted when they shall actually retire or (be) separated from the
service.
The order of reinstatement is immediately executory even pending
appeal.
Petitioner appealed to public respondent, which issued the questioned Resolution
affirming the labor arbiter's decision in toto. Hence, this petition.
The Issues

After hearings were held and position papers submitted, on March 26, 1990,
Labor Arbiter Olairez rendered his decision, the dispositive portion of which
reads:
WHEREFORE, with all the foregoing considerations, we find the
three complainants illegally and unjustly dismissed and we hereby
order the respondent to reinstate them to their former or
Petitioner raises the following issues for decision:
I. The National Labor Relations Commission gravely abused its
discretion in holding that the Labor Arbiter has jurisdiction over the
case.
II. Assuming that the Labor Arbiter has jurisdiction over the case,
the National Labor Relations Commission gravely abused its
 discretion in affirming the Labor Arbiter's decision that private
respondent Urbano Zuniga (sic) was illegally dismissed.
Of course, it is obvious that the underlying and pivotal issue is whether the CBA
stipulation on compulsory retirement after twenty-five years of service is legal and
enforceable. If it is, private respondent has been validly retired. Otherwise, petitioner
is guilty of illegal dismissal. The answer to said question will settle the issue of the
validity of the questioned resolution of the public respondent.
The Court's Ruling
On the key issue, the Court finds the petition meritorious, thus warranting reversal of
the questioned Resolution.
First Issue: Jurisdiction of Labor Arbiter
Petitioner contends that the labor arbiter had no jurisdiction because the dispute
concerns a provision of the CBA and its interpretation. It claims that the case falls
under the jurisdiction of the voluntary arbitrator or panel of arbitrators under Article
261 of the Labor Code, which provides:
Art. 261. Jurisdiction of Voluntary Arbitrators or Panel of Voluntary
Arbitrators. — The Voluntary Arbitrator or panel of Voluntary
Arbitrators shall have original and exclusive jurisdiction to hear and
decide all unresolved grievances arising from the interpretation or
implementation of the Collective Bargaining Agreement and those
arising from the interpretation or enforcement of company
personnel policies referred to in the immediately preceding Article.
Accordingly, violations of a Collective Bargaining Agreement,
except those which are gross in character, shall no longer be
treated as unfair labor practice and shall be resolved as grievances
under the Collective Bargaining Agreement. For purposes of this
Article, gross violations of a Collective Bargaining Agreement shall
mean flagrant and/or malicious refusal to comply with the economic
provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of
the Department of Labor and Employment shall not entertain
disputes, grievances or matters under the exclusive and original
jurisdiction of the Voluntary Arbitrator or panel of Voluntary
Arbitrators and shall immediately dispose and refer the same to the
Grievance Machinery or Voluntary Arbitration provided in the
Collective Bargaining Agreement.
The Labor Arbiter believed otherwise. In his decision 6 , he stated,:
In our honest opinion we have jurisdiction over the complaint on the
following grounds:
First, this is a complaint of illegal dismissal of which original and
exclusive jurisdiction under Article 217 has been conferred to the
Labor Arbiters. The interpretation has been conferred to the Labor
Arbiters. The interpretation of the CBA or enforcement of the
company policy is only corollary to the complaint of illegal dismissal.
Otherwise, an employee who was on AWOL, or who committed
offenses contrary to the personnel policies (sic) can no longer file a
case of illegal dismissal because the discharge is premised on the
interpretation or enforcement of the company policies (sic).
Second, Respondent voluntarily submitted the case to the
jurisdiction of this labor tribunal. It adduced arguments to the
legality of its act, whether such act may be retirement and/or
dismissal, and prayed for reliefs on the merits of the case. A litigant
cannot pray for reliefs on the merits and at the same time attacks
(sic) the jurisdiction of the tribunal. A person cannot have one's
cake and eat it too. . . .
The Court agrees with the public respondent's affirmance of the arbiter's decision in
respect of the question of jurisdiction.
In Sanyo Philippines Workers Union — psslU vs. Cañizares,7 a case cited by the
petitioner, this Court ruled:
. . . Hence, only disputes involving the union and the company shall
be referred to the grievance machinery or voluntary arbitrators.
In the instant case, both the union and the company are united or
have come to an agreement regarding the dismissal of private
respondents. No grievance between them exists which could be
brought to a grievance machinery. The problem or dispute in the
present case is between the union and the company on the one
hand and some union and non-union members who were
dismissed, on the other hand. The dispute has to be settled before
an impartial body. The grievance machinery with members
designated by the union and the company cannot be expected to
be impartial against the dismissed employees. Due process
demands that the dismissed workers grievances be ventilated
before an impartial body. Since there has already been an actual
termination, the matter falls within the jurisdiction of the Labor
Arbiter.
Applying the same rationale to the case at the bar, it cannot be said that the "dispute"
is between the union and petitioner company because both have previously agreed
upon the provision on "compulsory retirement" as embodied in the CBA. Also, it was
only private respondent on his own who questioned the compulsory retirement. Thus,
the case is properly denominated as a "termination dispute" which comes under the
jurisdiction of labor arbiters.
Therefore, public respondent did not commit a grave abuse of discretion in upholding
the jurisdiction of the labor arbiter over this case.
Second Issue: Private Respondent's
Compulsory Retirement Is
Not Illegal Dismissal
The bone of contention in this case is the provision on compulsory retirement after 25
years of service. Article XI, Section 1(e)(5) of the May 2, 1989 Collective Bargaining
Agreement8 between petitioner company and the union states:
Sec. 1. The COMPANY shall formulate a retirement plan with the
following main features:
xxx xxx xxx
(e) The COMPANY agrees to grant the retirement benefits herein
provided to regular employees who may be separated from the
COMPANY for any of the following reasons:
xxx xxx xxx
(5) Upon reaching the age of sixty (60) years or upon the
completing twenty-five (25) years of service to the COMPANY,
whichever comes first, and the employee shall be compulsorily
retired and paid the retirement benefits herein provided.
Petitioner contends that the aforequoted provision is valid an in consonance with
Article 287 of the Labor Code. The respondent Commission holds otherwise.
The said Code provides:
Art. 287. Retirement — Any employee may be retired upon
reaching the retirement age established in the Collective Bargaining
Agreement or other applicable employment contract.
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 or other agreement.
The Solicitor General, in his Manifestation in Lieu of Comment, 9 agrees with
petitioner's contention that the law leaves to the employer and employees the fixing of
the age of retirement. He cites Section 13, Rule I, Book VI of the Omnibus Rules
Implementing the Labor Code, which reads:
Retirement — In the absence of any collective bargaining
agreement or other applicable agreement concerning terms and
conditions of employment which provides for retirement at an older
age, an employee may be retired upon reaching the age of sixty
(60) years.
Arguing that the law on compulsory retirement age is open-ended, as indicated by the
use of the word "may", the Solicitor General maintains that there is no prohibition
against parties fixing a lower age for retirement. 10
Additionally, the Solicitor General and the petitioner contend that a CBA provision
lowering compulsory retirement age to less than sixty (60) is not contrary to law
because it does not diminish the employee's benefits. Rather, they argue that early
retirement constitutes a reward of employment, and therefore, retirement pursuant to
the CBA provision in question cannot be considered a dismissal following this Court's
ruling in Soberano vs. Clave,10a the relevant portions of which read as follows:
Retirement and dismissal are entirely different from each other.
Retirement is the result of a bilateral act of the parties, a voluntary
agreement between the employer and the employees whereby the
latter after reaching a certain age agrees and/or consents to severe
his employment with the former. On the other hand, dismissal refers
to the unilateral act of the employer in terminating services of an
employee with or without cause. In fine, in the case of dismissal, it
is only the employer who decides when to terminate the services of
an employee. . . . Moreover, concomitant with the provisions on
retirement in a Labor Agreement is a stipulation regarding
retirement benefits pertaining to a retired employee. Here again, the
retirement benefits are subject to stipulation by the parties unlike in
dismissals where separation pay is fixed by law in cases of
dismissals without just cause. Evident, therefore, from the foregoing
is that retirements which are agreed upon by the employer and the
employee in their collective bargaining agreement are not
dismissals. . . . To further fortify the aforesaid conclusion, it is
noteworthy that even the New Labor Code recognizes this
distinction when it treats retirement from service under a separate
title from that of a dismissal or termination of employment, aside
from expressly recognizing the right of the employer to retire any
employee who has reached the retirement age established in the
collective bargaining agreement or other applicable employment
contract and the latter to receive such retirement benefits as he
may have earned under existing laws and any collective bargaining
or other agreement (Art. 277, New Labor Code).
We agree with petitioner and the Solicitor General. Art. 287 of the Labor Code as
worded permits employers and employees to fix the applicable retirement age at
below 60 years. Moreover, providing for early retirement does not constitute
diminution of benefits. In almost all countries today, early retirement, i.e., before age
60, is considered a reward for services rendered since it enables an employee to reap
the fruits of his labor — particularly retirement benefits, whether lump-sum or
otherwise — at an earlier age, when said employee, in presumably better physical
and mental condition, can enjoy them better and longer. As a matter of fact, one of
the advantages of early retirement is that the corresponding retirement benefits,
usually consisting of a substantial cash windfall, can early on be put to productive and
profitable uses by way of income-generating investments, thereby affording a more
significant measure of financial security and independence for the retiree who, up till
then, had to contend with life's vicissitudes within the parameters of his fortnightly or
weekly wages. Thus we are now seeing many CBA's with such early retirement
provisions. And the same cannot be considered a diminution of employment benefits.
It is also further argued that, being a union member, private respondent is bound by
the CBA because its terms and conditions constitute the law between the
parties. 11 The parties are bound not only to the fulfillment of what has been expressly
stipulated but also to all the consequences which, according to their nature, may be in
keeping with good faith, usage and law. 12 It binds not only the union but also its
members. 13 Thus, the Solicitor General 14 said:
Private respondent cannot therefore claim illegal dismissal when he
was compulsorily retired after rendering twenty-five (25) years of
service since his retirement is in accordance with the CBA.
We again concur with the Solicitor General's position. A CBA incorporates the
agreement reached after negotiations between employer and bargaining agent with
respect to terms and conditions of employment. A CBA is not an ordinary contract.
"(A)s a labor contract within the contemplation of Article 1700 of the Civil Code of the
Philippines which governs the relations between labor and capital, (it) is not merely
contractual in nature but impressed with public interest, thus it must yield to the
common good. As such, it must 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. 15
Being a product of negotiation, the CBA between the petitioner and the union
intended the provision on compulsory retirement to be beneficial to the employees-
union members, including herein private respondent. When private respondent ratified
the CBA with the union, he not only agreed to the CBA but also agreed to conform to
and abide by its provisions. Thus, it cannot be said that he was illegally dismissed
when the CBA provision on compulsory retirement was applied to his case.
Incidentally, we call attention to Republic Act No. 7641, known as "The Retirement
Pay Law", which went into effect on January 7, 1993. Although passed many years
after the compulsory retirement of herein private respondent, nevertheless, the said
statute sheds light on the present discussion when it amended Art. 287 of the Labor
Code, to make it read as follows:
Art. 287. Retirement — Any employee may be retired upon
reaching the retirement age established in the collective bargaining
agreement or other applicable employment contract.
xxx xxx xxx
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 (60) 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 . . . .
The aforequoted provision makes clear the intention of spirit of the law to give
employers and employees a free hand to determine and agree upon the terms and
conditions of retirement. Providing in a CBA for compulsory retirement of employees
after twenty-five (25) years of service is legal and enforceable so long as the parties
agree to be governed by such CBA. The law presumes that employees know what
they want and what is good for them absent any showing that fraud or intimidation
was employed to secure their consent thereto.
On this point then, public respondent committed a grave abuse of discretion in
affirming the decision of the labor arbiter. The compulsory retirement of private
respondent effected in accordance with the CBA is legal and binding.
WHEREFORE, premises considered, the petition is granted and the questioned
Resolution is hereby set aside. No costs.
SO ORDERED.
Narvasa, C.J., Davide, Jr., Melo and Francisco, JJ., concur.
Santos vs Servier
Facts:
Petitioner Ma. Isabel T. Santos was the Human Resource Manager of respondent Servier
Philippines, Inc.
While having dinner, petitioner... complained of stomach pain, then vomited. Eventually,
she was brought to the hospital known as Centre Chirurgical de L'Quest where she fell into
coma for 21 days... at the Intensive Care Unit (ICU) for 52 days.
probable cause of her sudden attack was "alimentary allergy," as she had recently ingested a
meal of mussels which resulted in a concomitant uticarial eruption.
Petitioner's hospitalization expenses, as well as those of her husband and son, were paid by
respondent
She was then confined at the St. Luke's Medical Center... for rehabilitation.[8] During the
period of petitioner's rehabilitation, respondent continued to pay the former's salaries; and
to assist her in paying her hospital bills.
Petitioner's... physician concluded that the former had not fully recovered mentally and
physically. Hence, respondent was constrained to terminate petitioner's services effective
August 31, 1999... respondent offered a retirement package
Of the promised retirement benefits amounting to P1,063,841.76, only P701,454.89 was
released to petitioner's husband, the balance[11] thereof was withheld allegedly for taxation
purposes.
Petitioner, represented by her husband, instituted the instant case for unpaid salaries;
unpaid separation pay; unpaid balance of retirement package plus interest; insurance
pension for permanent disability; educational assistance for her son; medical assistance;
reimbursement... of medical and rehabilitation expenses; moral, exemplary, and actual
damages, plus attorney's fees.
only on
Issues:
the only issue proper for determination is the propriety of deducting P362,386.87 from her...
total benefits, for taxation purposes.
whether these benefits are taxable.
whether the retirement benefits are taxable.
Ruling:
On the basis of the above-mentioned retirement plan, respondent offered the petitioner a
retirement package which consists of retirement plan benefits, insurance pension, and
educational assistance.[31] The amount of P1,063,841.76 represented the disability...
retirement benefit provided for in the plan... the receipt of retirement benefits does not bar
the retiree from receiving separation pay. Separation pay is a statutory right designed to
provide the employee with the... wherewithal during the period that he/she is looking for
another employment. On the other hand, retirement benefits are intended to help the
employee enjoy the remaining years of his life, lessening the burden of worrying about his
financial support, and are a form of... reward for his loyalty and service to the employer...
they are not mutually exclusive.
only true if there is no specific prohibition against the payment of both benefits in the
retirement plan and/or in the Collective Bargaining
Agreement (CBA)
In the instant case, the Retirement Plan bars the petitioner from claiming additional benefits
on top of that provided for in the Plan.
Section 2, Article XII of the Retirement Plan provides:
Section 2. NO DUPLICATION OF BENEFITS
There being such a provision,... petitioner is entitled only to either the separation pay under
the law or retirement benefits under the Plan, and not both.
We answer in the affirmative.
Thus, for the retirement benefits to be exempt from the withholding tax, the taxpayer is
burdened to prove the concurrence of the following elements: (1) a reasonable private
benefit plan is maintained by the employer; (2) the retiring official or employee has been in
the... service of the same employer for at least ten (10) years; (3) the retiring official or
employee is not less than fifty (50) years of age at the time of his retirement; and (4) the
benefit had been availed of only once.
petitioner was qualified for disability retirement... petitioner was only 41 years of age; and
had been in the service for more or less eight (8) years.
the above provision is not applicable for failure to... comply with the age and length of
service requirements.
Principles:
SENTINEL INSURANCE COMPANY v. PORFIRIO M. BAUTISTA, GR No. L-55774, 1984-02-20
Facts:
Porfirio M. Bautista was hired as Legal Officer by Sentinel
In the course of his employment, Bautista handled a number of cases for which he was paid
fifteen (15%) per cent on amounts recovered except for the four cases in question which,
according to Bautista, he deferred the billing and collection of his percentage on said cases...
because of his awareness of the tight financial condition of the company
On March 29, 1979, petitioner applied for clearance to... terminate employment with the
Ministry of Labor and Employment but which was opposed by Bautista on May 31, 1979.
Bautista questioned the legality of his dismissal and at the same time asserted his claim for
unpaid legal fee
Dissatisfied with the portion awarding the money claim, petitioner appealed to the National
Labor Relations Commission and argued that the Labor Arbiter erred in assuming that
Bautista was entitled to... the legal fees irrespective of the means by which he effected
recoveries for the company.
Issues:
the money claim is civil in character cognizable only by regular courts and therefore beyond
the jurisdiction and competence of the Labor Arbiter
Ruling:
The Calderon case, however, is no longer controlling because the law upon which said
decision was based, Article 217 of the Labor Code as amended by PD No. 1367, has been
superceded by PD No. 1691 which took effect May 1, 1980 and which restored to the Labor
Arbiters original... and exclusive jurisdiction over claims, monetary or otherwise, provided by
law or by appropriate agreement, arising from employer-employee relations, except those
expressly excluded there... therefrom.[5]

Although the cause of action arose when PD No. 1367 was then the prevailing law and upon
which the Calderon case was premised, said Decree was no longer applicable when the case
was resolved by the National Labor Rela... ions Commission on August 29, 1980. The law then
in force... was PD No. 1691.
Article 217 as amended by PD No. 1367 and PD No. 1691 was again amended by Batas
Pambansa Bilang 130 which took effect August 21, 1981. On June 1, 1982, said Article 217
was amended anew by Batas Pambansa Bilang 227 vesting on Labor Arbiters jurisdiction over
cases that... workers may file involving wages, hours of work and other terms and conditions
of employment and all money claims of workers, except claims for employees'
com-pensation, social security, medicare and maternity benefits.
the claim of 15% legal fees arose out of employer-employee relationship and clearly falls
within the coverage of Article 217 as amended by PD No. 1691 and Batas Pambansa Bilang
227
Principles:
331 Phil. 937
DAVIDE, JR., J.:
This is a petition for certiorari under Rule 65 of the Rules of Court to annul the decision of
the Labor Arbiter dated 12 August 1991 in NLRC Case No. 00-11-06008-90 and the
resolutions of public respondent National Labor Relations Commission (NLRC) promulgated
on 27 October 1994 and 31 May 1995 dismissing the appeal filed by the petitioner and
denying the motion for reconsideration, respectively.
The dispute arose from these antecedents:
On 23 December 1987, private respondent Unicorn Security Services, Inc. (USSI) and
petitioner Philippine Airlines, Inc. (PAL) executed a security service agreement.[1] USSI was
designated therein as the CONTRACTOR. Among the pertinent terms and conditions of the
agreement are as follows:
(4) The CONTRACTOR shall assign to PAL an initial force of EIGHTY ONE (81) bodies - which
may be decreased or increased by agreement in writing - . It is, of course, understood that
the CONTRACTOR undertakes to pay the wages or salaries and cost of living allowance of the
guards in accordance with the provisions of the Labor Code, as amended, the different
Presidential Decrees, Orders and with the rules and regulations promulgated by competent
authorities implementing said acts, assuming all responsibilities therefor - .
xxx
(6) Without any expense on the part of PAL, CONTRACTOR shall see to it that the guards
assigned to PAL - are provided, at the expense of CONTRACTOR, with the necessary firearms,
ammunitions and facilities needed for the rendition of the security services as aforesaid;
(7) CONTRACTOR shall select, engage and discharge the guards, employees, or agents, and
shall otherwise direct and control their services herein provided or heretofore to be set forth
or prescribed. The determination of wages, salaries and compensation of the guards or
employees of the CONTRACTOR shall be within its full control but shall in no way contravene
existing laws on the matter. It is further understood that CONTRACTOR as the employer of
the security guards agrees to comply with all relevant laws and regulations, including
compulsory coverage under the Social Security Act, Labor Code, as amended and the Medical
Care Act, in its operations. Although it is understood and agreed between parties hereto that
CONTRACTOR in the performance of its obligations under this Agreement, is subject to the
control and direction of PAL merely as to the result as to be accomplished by the work or
services herein specified, and not as to the means and methods for accomplishing such
result, CONTRACTOR hereby warrants that it will perform such work or services in such
manner as will achieve the result herein desired by PAL.
(8) Discipline and administration of the security guards shall be the sole responsibility of the
CONTRACTOR to the end that CONTRACTOR shall be able to render the desired security
service requirements of PAL. CONTRACTOR, therefore, shall conform to such rules and
regulations that may be issued by PAL. For this purpose, Annex "A", which forms part of this
Agreement, contains such rules and regulations and CONTRACTOR is expected to comply
with them. At its discretion, PAL may, however, work out with CONTRACTOR such rules and
regulations before their implementation.
(9) Should PAL at any time have any justifiable objection to the presence in its premises of
any of CONTRACTOR's officer, guard or agent under this Agreement, it shall send such
objection in writing to CONTRACTOR and the latter shall immediately take proper action.
(10) The security guards employed by CONTRACTOR in performing this Agreement shall be
paid by the CONTRACTOR and it is distinctly understood that there is no employee-employer
relationship between CONTRACTOR and/or his guards on the one hand, and PAL on the
other. CONTRACTOR shall have entire charge, control and supervision of the work and
services herein agreed upon, and PAL shall in no manner be answerable or accountable for
any accident or injury of any kind which may occur to any guard or guards of the
CONTRACTOR in the course of, or as a consequence of, their performance of work and
services under this Agreement, or for any injury, loss or damage arising from the negligence
of or carelessness of the guards of the CONTRACTOR or of anyone of its employ to any
person or persons or to its or their property whether in the premises of PAL or elsewhere;
and the CONTRACTOR hereby covenants and agrees to assume, as it does hereby assume,
any and all liability or on account of any such injury, loss or damage, and shall indemnify PAL
for any liability or expense it may incur by reason thereof and to hold PAL free and harmless
from any such liability.
xxx
(13) For and in consideration of the services to be rendered by CONTRACTOR under these
presents, PAL shall pay CONTRACTOR the amount of PESOS NINE & 40/100 CTVS (P9.40) PER
HOUR multiplied by 905 hours equivalent to PESOS TWO HUNDRED SEVENTY FIVE
THOUSAND NINE HUNDRED NINE & 58/100 CTVS, Philippine currency, - (P275,909.58) the
basis of eight (8) working hours per office/guard a day, Sundays and Holidays included, the
same to be payable on or before the 15th of each month for services on the first half of the
month and on or before the end of the month for services for the 2nd half of the month.
Nothing herein contained shall prevent the parties from meeting for a review of the rates
should circumstances warrant.
xxx
(20) This Agreement shall take effect on 06 December 1987 an shall be in force for a period
of SIX (6) MONTHS - 05 JUNE 1988 thereafter it shall continue indefinitely unless sooner
terminated upon thirty (30) days notice served upon by one party to the other, except as
provided for in Articles 16, 17 & 18 hereof.
Sometime in August of 1988, PAL requested 16 additional security guards. USSI provided
what was requested; however, PAL insisted that what USSI did was merely to pick out 16
guards from the 86 already assigned by it and directed them to render overtime duty.
On 16 February 1990, PAL terminated the security service agreement with USSI without
giving the latter the 30-day prior notice required in paragraph 20 thereof. Instead, PAL paid
each of the security guards actually assigned at the time of the termination of the agreement
an amount equivalent to their one-month salary to compensate for the lack of notice.
In November 1990, USSI, allegedly "in its capacity as Trustee for Sixteen or so Security
Guards," filed with the NLRC Arbitration Branch, National Capital Region, a complaint[2]
against PAL for the recovery of P75,600.00 representing termination pay benefit due the
alleged 16 additional security guards, which PAL failed and refused to pay despite demands.
It further asked for an award of not less than P15,000.00 for each of the 16 guards as
damages for the delay in the performance of PAL's obligation, and also for attorney's fees in
an amount equivalent to 10% of whatever might be recovered. Pertinent portions of the
complaint read as follows:
3. By virtue of said contract and upon its effectivity, respondent required eighty-six (86)
security guards whom complainant USSI supplied; on or sometime in August 1989,
respondent asked for sixteen (16) security guards to render twelve (12) hours each.
4. In February 1990 and for reasons of its own, respondent caused to terminate not only the
contract but also the services of the security guards; in effecting such termination, said
respondent caused to pay the equivalent of one (1) month's notice unto all the security
guards, except the 16 who, as aforementioned were rendering 12 hours each from date of
assignment up to and until their termination.
5. As computed, the termination pay benefits due the 16 security guards amount to
P75,600.00, more or less, which, despite demands, respondent fails, neglects or refuses to
pay, as it continue refusing, failing or neglecting to so do up to the present time.
6. Respondent has not only incurred in delay in the performance of its obligation but also
contravened the tenor thereof; hence, complainants are, by law, entitled to be indemnified
with damages for no less than P15,000.00 each for all complainants though the correct
amount is left solely to the sound discretion of the Honorable Labor Arbiter.
7. Complainants are now compelled to litigate their plainly valid, just or demandable claim
on account of which services of counsel have been required and thereby obligated
themselves to pay, for and as attorney's fees, the sum equivalent to ten percent (10%) of
whatever sums or sum may be recovered in the case.
The complaint was docketed as NLRC-NCR Case No. 00-11-06008-90 and assigned to Labor
Arbiter Cornelio L. Linsangan.
PAL filed a motion to dismiss the complaint[3] on the grounds that the Labor Arbiter had no
jurisdiction over the subject matter or nature of the complaint and that USSI had no cause of
action against PAL. In amplification thereof, PAL argued that the case involved the
interpretation of the security service agreement, which is purely civil in character and falls
outside of the Labor Arbiter's jurisdiction. It is clear from Article 217 of the Labor Code that
for claims to be within the jurisdiction of Labor Arbiters, they must arise from an employer-
employee relationship. PAL claimed that USSI did not allege the existence of an employer-
employee relationship between PAL and USSI or its guards, and that in fact, paragraph 10 of
the agreement provides that there is no employer-employee relationship between the
CONTRACTOR and/or his guards on the one hand and PAL on the other.
In its Opposition,[4] USSI pointed out that PAL forgot or overlooked the fact that "insofar as
labor standards, benefits, etc. have to be resolved or adjudicated, liability therefor is shifted
to, or assumed by respondent [herein petitioners] which, in law, has been constituted as an
indirect employer."
PAL filed a supplemental motion to dismiss[5] wherein it cites the following reasons for the
dismissal of the complaint: (1) the clear stipulations in the agreement (paragraphs 4 and 10)
that there exists no employer-employee relationship between PAL on the one hand and USSI
and the guards on the other; (2) there were no 16 additional guards, as the 16 guards who
were required to render 12-hour shifts were picked out from the original 86 guards already
assigned and were already given a one-month salary in lieu of the 30-day notice of
termination of the agreement; (3) USSI had no legal personality to file the case as alleged
trustee of the 16 security guards; and (4) the real parties in interest -- the 16 security guards -
- never showed any interest in the case either by attending any hearing or conference, or by
following up the status of the case.
Attached to the supplemental motion dismiss were, among other things, xerox copies of
confirmation letter of USSI to PAL to show that no additional guards were in fact provided.[6]
Labor Arbiter Linsangan did not resolve the motion to dismiss and the supplemental motion
to dismiss. On 12 August 1991, he handed down a decision[7] ordering PAL to pay: (1) the
sum of P75,600.00 representing the equivalent of one-month's separation pay due the 16
individual security guards, plus, 10% interest from the date of filing of the case until the
whole obligations shall have been fully settled; (2) the sum of P5,000.00 by way of exemplary
damages due each of the 16 security guards; and (3) another sum equivalent to 10% of the
total award for and as attorney's fees.
It was in that decision that Labor Arbiter Linsangan mentioned for the first time that the
resolution of the motion to dismiss and supplemental motion to dismiss "was deferred until
[the] case is decided on the merits" considering "the ground not to be indubitable." In
holding that he had jurisdiction over the case, he stated:
As heretofore and invariably held in similar cases, the issue of whether or not Labor Arbiters
have jurisdiction over money claims affecting security guards assigned by security agencies
(like complainant herein) to their client-companies such as PAL is, more or less, settled,
especially since, as the law views such as peculiar relationship, such money claims insofar as
they have to be paid, are the ultimate responsibility of the client-firms. In effect, the security
guards have been constituted as indirect employees of the client just as the client becomes
the indirect employer of the guards. Art. 107 and 109 of the Labor Code expressly provide
that".
To justify the awards, Labor Arbiter Linsangan opined:
Evidence adduced clearly show that sometime in December 1987, aforementioned security
service contract was executed, based on which the required number of security guards were
assigned to, or posted at, the various premises of respondent -- PAL. Said number of security
guards may, as the contract provides, be increased or reduced at respondent's request, such
that the original number of eighty-six (86) guards, an additional sixteen (16) were needed
and, accordingly supplied who, pursuant to PAL's instructions, were required to render
twelve (12) hours each, per day.
In February 1990, and for reasons of its own, PAL caused to terminate, as it did, the contract
of security service. Unequivocably, it caused to pay the separation pay benefits of the 86-
security guards for the equivalent amount of one (1) month's pay. As to the additional 16, it
failed and refused to grant similar equivalent, without any valid reasons therefor.
As earlier stated, respondent opted to rely solely on the ground set forth in its Motion to
Dismiss as well as Supplement thereto. It failed to file, despite directive made thereon, its
position paper. Neither did it submit, nor adduce, evidence (documentary or otherwise) to
rebut or controvert complainant's claims especially since the money equivalent of the one
month separation pay due the 16 guards has been duly quantified as amounting to Seventy
Five Thousand Six Hundred (P75,600.00) Pesos. Thus established, it is clear that there was
absolutely no legal/justifiable reason why said 16 guards applied and who rendered 12 hours
each per day had to be discriminated against.
Following PAL's failure or refusal to pay, demands were made by complainant, asking at the
same time why that was so. Conceivably, respondent has smarted itself on its mistaken
belief that there was, as between the guards and itself, no employer-employee relationship
and, hence, there is no legal basis for it to pay. If that was so, why did it pay separation pay
unto the 86 regular employed guards.
PAL being widely known as a progressively-minded employer, it should be the first to show
good example for emulation. In this instant case, it did not; in fact, its actuations were not
consistent with good faith. It should, therefore, be held liable for exemplary damages and
having required complainant to litigate a plainly valid, just or demandable claim, an award for
attorney's fees must perforce be assessed.
On 3 September 1991, PAL filed its Appeal[8] wherein it indicated that it received a copy of
the decision on 26 August 1991. Attached thereto was a machine copy of the Notice of
Judgment/Final Order, with the date of its receipt, i.e., 26 August 1991,[9] having been
stamped on the upper right hand corner by PAL's Legal Department.
USSI countered this Appeal with a motion for execution of judgment[10] on the ground that
since PAL, received a copy of the decision on the 23rd, not on the 26th, of August 1991 it had
until 2 September 1991 to appeal; hence, the appeal interposed on 3 September was late by
one day. The decision had then become final and executory.
In its opposition[11] to this motion, PAL insisted that it received a copy of the decision on 26
August 1991; thus, it had until 5 September 1991 to file its appeal.
On 30 September 1991, Labor Arbiter Linsangan issued a writ of execution.[12]
On 1 October 1991, PAL filed a motion to quash[13] the writ of execution. It tried to explain
therein why it thought all along that it received a copy of the decision on 26 August 1991,
thus:
4. Upon investigation the undersigned counsel learned that on 23 August 1991 (Friday) a
server-messenger went to PAL Legal Department to serve said decision. The receiving clerks
at that time were all out of the office so that the server persuaded a secretary, Ms. April Rose
del Rosario to receive the same, notwithstanding the fact that Ms. Del Rosario told him
(server) that she was not authorized to receive documents for an in behalf of PAL. Ms. Del
Rosario then stamped the date of receipt on the service's copy without stamping (the date of
receipt) PAL's copy of the decision which was left by the server. Thereafter, Ms. Del Rosario
placed PAL's copy of the Decision on the incoming documents rack of the receiving clerk.
Attached herewith is the affidavit of Ms. Del Rosario and as Annex "A" hereof.
5. On 26 August 1991 (Monday), the receiving clerk/messenger Mr. Greg Soriano upon
finding the Decision among the documents in the incoming documents rack, immediately
stamped "Received 26 August 1991" thereon, on the honest and sincere belief that the same
just arrived that day (26 August 1991). He then forwarded the same to the secretary of the
undersigned counsel.
Attached herewith is the affidavit of Mr. Greg Soriano marked as Annex "B" hereof.
6. The undersigned counsel believing that the said decision was received on 26 August 1991
reckoned/counted the ten (10) day period for appeal from said date.
7. Considering the foregoing circumstances, the undersigned counsel's innocent reliance on
the date of receipt stamped on the copy of the Decision furnished him was clearly due to an
innocent mistake and/or excusable neglect. Hence, justice and equity dictates that
respondent PAL should be considered to have filed its Appeal within the reglementary period
for Appeal.[14]
On 8 October 1991, Labor Arbiter Linsangan issued an order[15] denying the motion to
quash.
On 10 October 1991, PAL appealed[16] to the NLRC the aforesaid order of 8 October 1991 on
the ground that it was issued with grave abuse of discretion.
In its resolution of 27 October 1994,[17] the Second Division of the NLRC dismissed PAL's
appeal for having been filed out if time. It sustained the labor Arbiter's finding that PAL had
received a copy of the decision on 23 August 1991, and hence the last day to appeal was 2
September 1991. It ruled that whether or not the decision was received by an employee
other than the receiving clerk or messenger was of no moment, as the proper performance
of employee's duties was PAL's concern.
On 31 May 1995, the NLRC denied the motion for reconsideration[18] for the reason that it
cannot accept PAL's excuse as it may "open the floodgates to abuse"; and that the lapse of
the period to appeal had already deprived the Commission of jurisdiction over the case.[19]
PAL then filed this special civil action for certiorari under Rule 65 of the Rules of Court
alleging that (1) public respondents committed serious and patent error in failing to declare
that the Labor Arbiter had no jurisdiction over the instant case; (2) The Labor Arbiter gravely
abused its discretion in ordering PAL to pay the separation pay of the 16 security guards
assigned at PAL's premises by USSI; and (3) respondent NLRC committed grave abuse of
discretion in declaring PAL's appeal to have been filed out of time.
PAL argues that since USSI's cause of action was founded on the security service agreement,
and that thereunder no employer-employee relationship existed between PAL and the
security guards who were USSI's employees, the Labor Arbiter had no jurisdiction over the
complaint. Moreover, assuming arguendo that the claims of the security guards were valid,
USSI had no personality to file the complaint, for there is nothing whatsoever to show that it
was expressly authorized by the security guards to act as their "trustee."
As to the second assigned error, PAL asserts that it is not liable to pay separation pay because
(1) it was not the employer of the security guards; (2) even as an indirect employer, as held
by the Labor Arbiter, its liability was limited to violations of labor standards law, and non-
payment of the separation pay is not a violation of the said law; (3) the security service
agreement with USSI did not provide for payment of separation pay; (4) the payment made
to the 86 security guards upon the termination of the agreement without the prior 30-day
notice was not for separation pay but a benefit in lieu of the 30-day notice required under
paragraph 20 of the agreement; and (5) since PAL was not the employer of the security
guards, in no way could it terminate their services.
In its third assigned error, PAL submits that rules of procedure ought not to be applied in a
very rigid technical sense, since they are used only to help secure and not override
substantial justice, especially in this case where the appeal was meritorious. Moreover, the
delay in the perfection of the appeal, reckoned from the finding of the Labor Arbiter, was
only one day; but if reckoned from what its counsel innocently believed to be PAL's date of
receipt of the decision, which was 26 August 1991, the appeal could be said to have been
seasonably filed.
In its Comment, USSI points out that the grounds relied upon by PAL are based on factual a
issue, namely, the discrimination made by PAL in paying the 86 and not the 16 security
guards. It argues that the case touched upon the rights of the 16 security guards as
employees; thus, the same was within the jurisdiction of the Labor Arbiter. As regards PAL's
plea for the relaxation of the rule on perfection of appeals, USSI contends that the negligence
of PAL's counsel should not be deemed "compelling reason to warrant relaxation of the rule."
In its Manifestation and Motion in Lieu of Comment,[20] the Office of the Solicitor General
agrees with PAL that the Labor Arbiter did not have jurisdiction over the complaint because
there was no employer-employee relationship between PAL and the 16 security guards; that
Articles 107 and 109 of the Labor Code which provide for joint and several liability for
payment of wages by the direct and indirect employer find no application in the present case
because the 16 security guards employed by USSI were not after unpaid wages; and that in
the interest of justice and considering that the appeal was filed only one day late, the rule on
perfection of appeals should have been relaxed to prevent a miscarriage of justice.
In view of the stand of the Office of the Solicitor General, we advised public respondents to
file their own comment if they so desired.
In their Comment, the NLRC and Labor Arbiter Linsangan maintain that they had jurisdiction
over the case because of Articles 107 and 109 of the Labor Code which constitute PAL as
indirect employer of the 16 security guards, there being a question involving separation pay
due the latter; that the 16 security guards were entitled to separation pay, because PAL paid
the other 86 security guards when the service agreement was terminated; and that for the
NLRC to excuse the delay of one day in filing the appeal would open the floodgates of abuse.
The instant petition is impressed with merit.
We agree with petitioner PAL that the Labor Arbiter was without jurisdiction over the subject
matter of NLRC-NCR Case No. 00-11-06008-90, because no employer-employee relationship
existed between PAL and the security guards provided by USSI under the security service
agreement, including the alleged 16 additional security guards.
We have pronounced in numerous cases[21] that in determining the existence of an
employer-employee relationship, the following elements are generally considered: (1) the
selection and engagement of the employee; (2) the payment of wages; (3) the power to
dismiss; and (4) the power to control the employee's conduct.
In the instant case, the security service agreement between PAL and USSI provides the key to
such consideration. A careful perusal thereof, especially the terms and conditions embodied
in paragraphs 4, 6, 7, 8, 9, 10, 13 and 20 quoted earlier in this ponencia, demonstrates
beyond doubt that USSI-and not PAL - was the employer of the security guards. It was USSI
which (a) selected, engaged or hired and discharged the security guards; (b) assigned them to
PAL according to the number agreed upon; (c) provided, at its own expense, the security
guards with firearms and ammunitions; (d) discipline and supervised them or controlled their
conduct; and (e) determined their wages, salaries, and compensation; and (f) paid them
salaries or wages. Even if we disregard the explicit covenant in said agreement that "there
exist no employer-employee relationship between CONTRACTOR and/or his guards on the
one hand, and PAL on the other" all other considerations confirm the fact that PAL was not
the security guards' employer. Analogous to the instant case is Canlubang Security Agency
Corp. vs. NLRC.[22]
Considering then that no employer-employee relationship existed between PAL and the
security guards, the Labor Arbiter had no jurisdiction over the claim in NLRC-NCR Case No.
00-11-06008-90. Article 217 of the Labor Code (P.D. No. 442), as amended, vests upon Labor
Arbiter exclusive original jurisdiction only over the following:
1. Unfair labor practice cases;
2. Termination disputes;

3. If accompanied with a claim for reinstatement, those cases that workers may file involving
wages, rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from employer-
employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving
legality of strikes and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and maternity
benefits, all other claims, arising from employer-employee relations, including those of
persons in domestic or house hold service, involving an amount exceeding five thousand
pesos(P5,000.00) regardless of whether accompanied with a claim for reinstatement.
In all these cases, an employer-employee relationship is an indispensable jurisdictional
requisite.
The Labor Arbiter cannot avoid the jurisdictional issue or justify his assumption of jurisdiction
on the pretext that PAL was the indirect employer of the security guards under Article 107 in
relation to Articles 106 and 109 of the Labor Code and, therefore, it is solidarily liable with
USSI. We agree with the Solicitor General that these Articles are inapplicable to PAL under
the facts of this case. Article 107 provides:
ART. 107. Indirect employer. -- The provisions of the immediately preceding Article shall
likewise apply to any person, partnership, association or corporation which, not being an
employer, contracts with an independent contractor for the performance of any work, task,
job or project.
The preceding Article referred to, which is Article 106, partly reads as follows:
ART. 106. Contractor or subcontractor. -- Whenever an employer enters into a contract with
another person for the performance of the former's work, the employees of the contractor
and of the latter's subcontractor, if any, shall be paid in accordance with the provisions of
this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in
accordance with this Code, the employer shall be jointly and severally liable with his
contractor or subcontractor to such employees to the extent of the work performed under
the contract, in the same manner and extent that he is liable to employees directly employed
by him.
While USSI is an independent contractor under the security service agreement and PAL may
be considered an indirect employer, that status did not make PAL the employer of the
security guards in every respect. As correctly posited by the Office of the Solicitor General,
PAL may be considered an indirect employer only for purposes of unpaid wages since Article
106, which is applicable to the situation contemplated in Section 107, speaks of wages. The
concept of indirect employer only relates or refers to the liability for unpaid wages. Read
together, Articles 106 and 109 simply mean that the party with whom an independent
contractor deals is solidarily liable with the latter for unpaid wages, and only to that extent
and for that purpose that the latter is considered a direct employer. The term "wage' is
defined in Article 97(f) of the Labor Code as "the remuneration of earnings, however
designated, capable of being expressed in terms of money, whether fixed or ascertained on a
time, task, piece, or commission basis, or other method of calculating the unwritten contract
of employment for work done or to be done, or for services rendered or to be rendered and
includes the fair and reasonable value, as determined by the Secretary of Labor, of board,
lodging, or other facilities customarily furnished by the employer to the employee."
No valid claim for wages or separation pay can arise from the security service agreement in
question by reason of its termination at the instance of PAL. The agreement contains no
provision for separation pay. A breach thereof could only give rise to damages under the
Civil Code, which is cognizable by the appropriate regular court of justice. Besides, there is
no substantial proof that USSI in fact provided 16 additional guards. On the contrary, PAL
was able to prove in the annexes attached to its supplemental motion to dismiss that the 16
guards were actually picked out from the original group and were just required to render
overtime service.
The Labor Arbiter's lack of jurisdiction was too obvious from the allegations in the complaint
and its annex (the security service agreement) in NLRC-NCR Case No. 00-11-06008-90. The
Labor Arbiter then should have forthwith resolved the motion to dismiss and the
supplemental motion to dismiss. As correctly pointed out by PAL, under Section 15 of Rule V
of the New Rules of Procedure of the NLRC, any motion to dismiss on the ground of lack of
jurisdiction, improper venue, res judicata, or prescription shall be immediately resolved by
the Labor Arbiter by a written order. Yet, the Labor Arbiter did not, and it was only in his
decision that he mentioned that the resolution of the motion to dismiss "was deferred until
this case is decided on the merits" because the ground thereof was not "indubitable." On
this score the Labor Arbiter acted with grave abuse of discretion for disregarding the rules he
was bound to observe.
We shall now turn to the issue of tardiness of the appeal. The record does indeed show that
on the original copy of the Notice of Judgment/Final Order,[23] there is stamped by the PAL
Legal Department the date of its receipt of the decision, viz., "AUG. 23 1991,"
It is not also denied by respondents that on the right upper hand corner of PAL's copy of the
Notice of Judgment/Final Orders,[24] there is stamped the date of receipt thereof by PAL
Legal Department, viz., "AUG. 26 1991." PAL explained how this discrepancy occurred and
how its counsel was misled into believing that PAL received a copy of the decision only on 26
August 1991. This belief in good faith rendered excusable any negligence it might have
committed. Besides, the delay in the perfection of the appeal was only one day. Considering
that the Labor Arbiter had no jurisdiction over the subject matter of NLRC-NCR Case No. 00-
11-06008-90 and that the 16 security guards are not in fact entitled to separation pay under
the security service agreement, the higher interest of justice favors a relaxation of the rule on
perfection of appeals in labor cases.
While it is an established rule that the perfection of an appeal in the manner and within the
period prescribed by law is not only mandatory but jurisdictional, and failure to perfect an
appeal has the effect of rendering the judgment final and executory, it is equally settled that
the NLRC may disregard the procedural lapse where there is an acceptable reason to excuse
tardiness in the taking of the appeal.[25] Among the acceptable reasons recognized by this
Court are (a) counsel's reliance on the footnote of the notice of the decision of the Labor
Arbiter that "the aggrieved party may appeal" within ten (10) working days";[26] (b)
fundamental consideration of substantial justice;[27] (c) prevention of miscarriage of justice
or of unjust enrichment, as where the tardy appeal is from a decision granting separation pay
which was already granted in an earlier final decision;[28] and (d) special circumstances of
the case combined with its legal merits[29] or the amount and the issue involved.[30] A one-
day delay in the perfection of the appeal was excused in Pacific Asia Overseas Shipping Corp.
vs. NLRC,[31] Insular life Assurance Co. vs. NLRC,[32] and City Fair Corp vs. NLRC.[33]
In the instant case, the Labor Arbiter's lack of jurisdiction -- so palpably clear on the face of
the complaint -- and the perpetuation of unjust enrichment if the appeal is disallowed are
enough combination of reasons that warrant a relaxation of the rules on perfection of
appeals in labor cases.
WHEREFORE, the instant petition is hereby GRANTED. The questioned decision of the Labor
Arbiter dated 12 August 1991 and the resolution of the Second Division of the National Labor
Relations Commission promulgated on 27 October 1994 and 31 May 1995 are hereby SET
ASIDE, and NLRC-NCR Case No. 00-11-06008-90 is DISMISSED.
SO ORDERED.
Narvasa, C.J. (Chairman), Melo, Francisco and Panganiban, JJ., concur.
CAGAYAN DE ORO COLISEUM v. OFFICE OF MINISTER OF LABOR, GR No. 71589, 1990-12-17
Facts:
Cagayan de Oro Coliseum, Inc.
is a corporation duly organized and existing under Philippine laws
Angel Chaves, on the other hand, is an incorporator and major stockholder of the corporation
who, for... sometime, served as its director and officer.
Chaves held the position of president until the end of his term in February, 1977
Shortly after Chaves assumed the presidency, or on April 8, 1976, the Board of Directors
passed a resolution fixing the monthly compensation of the president at P500.00 and his
monthly allowance
Claiming that he had not been paid for services rendered, Chaves filed on June 3, 1977 a
letter complaint with the Field Services Division of the then Department of Labor, Regional
Office
1979, the labor arbiter rendered a... decision awarding Chaves P5,500.00 as salary from
March 13, 1976 to February 14, 1977, P462.50 as 13th month pay, P1,700 as monthly
allowance from February 1976 to June 1977, and P3,100 as per diem compensation from
February 1976 to June 19,... 1977
Issues:
which of the two, the MOLE (now DOLE) and the SEC has jurisdiction over the present
controversy.
Ruling:
when a case is between... a stockholder and the corporation of which he holds stocks, the
controversy is intracorporate and well within the jurisdiction of the SEC.[11
These rulings are in consonance with the following provisions of
Presidential Decree No. 902-A which took effect, on March 11, 1976:
"Sec. 5.
The SEC, being clothed with additional adjudicatory powers over intracorporate and...
kindred disputes to promote dispatch arising from expertise enhanced by specialization in
the settlement of said controversies,[13] is the proper agency to settle the controversy in this
case.
Although the reliefs sought by Chaves appear to fall under the jurisdiction of the labor arbiter
as they are claims for unpaid salaries and other remunerations for services rendered, a close
scrutiny thereof shows that said claims are actually part... of the perquisites of his position in,
and therefore interlinked with his relations with the corporation.
Principles:
Facts:
Mainland Construction Co., Inc. is a domestic corporation
Its principal line... of business is the general construction of roads and bridges and the
operation of a service shop for the maintenance of equipment.
Respondents on the other hand, are the surviving heirs of complainant, Ernesto Movilla, who
died during the pendency of the action with the
Labor Arbiter.
Ernesto Movilla, who was a Certified Public Accountant during his lifetime, was hired as such
by Mainland in 1977. Thereafter, he was promoted to the position of Administrative Officer
with a monthly salary of P4,700.00
On April 12, 1987... the Board of Directors elected Ernesto Movilla as Administrative
Manager.[3] He occupied the said position up to the time of his death.
On April 2, 1991, the Department of Labor and Employment (DOLE) conducted a routine
inspection on petitioner corporation and found that it committed such irregularities in the
conduct of its business
On the basis of this finding, petitioner corporation was ordered by DOLE to pay to its thirteen
employees, which included Movilla, the total amount of P309,435.89, representing their
salaries, holiday pay, service incentive leave pay differentials, unpaid wages and 13th
month... pay.
All the employees listed in the DOLE's order were paid by petitioner corporation, except
Ernesto Movilla.
On October 8, 1991, Ernesto Movilla filed a case against petitioner corporation and/or Lucita,
Robert, and Ellen, all surnamed Carabuena, for unpaid wages, separation pay and attorney's
fees, with the Department of Labor and Employment, Regional Arbitration, Branch XI, Davao
City.
Ernesto Movilla died while the case was being tried by the Labor Arbiter and was promptly
substituted by his heirs, private respondents herein, with the consent of the Labor Arbiter.
The Labor Arbiter rendered judgment on June 26, 1992, dismissing the complaint on the
ground of lack of jurisdiction.
The NLRC ruled that the issue in the case was one which involved a labor dispute between an
employee and petitioner corporation and, thus, the NLRC had jurisdiction to... resolve the
case.
Issues:
the controversy presented by complainant is intra-corporate in nature and is within the
jurisdiction of the Securities and Exchange Commission
Ruling:
We find for the respondents
The fact that the parties... involved in the controversy are all stockholders or that the parties
involved are the stockholders and the corporation does not necessarily place the dispute
within the ambit of the jurisdiction of SEC
In the case at bench, the claim for unpaid wages and separation pay filed by the complainant
against petitioner corporation involves a labor dispute. It does not involve an intra-corporate
matter, even when it is between a stockholder and a corporation
Moreover, there was no showing of any change in the duties being performed by
complainant as an Administrative Officer and as an Administrative Manager after his
election... by the Board of Directors.
Principles:
Nestlé Philippines, Inc. vs. NLRC LABOR INJUNCTION (Issuing Agency)
The power of the NLRC to enjoin or restrain the commission of any or all prohibited or
unlawful acts as provided in Art. 218 of the Labor Code, can only be exercised in a labor
dispute.
NESTLÉ PHILIPPINES, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION,
EUGENIA C. NUNEZ, LIZA T. VILLANUEVA, EMMANUEL S. VILLENA, RUDOLPH C. ARMAS,
RODOLFO M. KUA and RODOLFO A. SOLIDUM, respondents.
195 SCRA 340
|
G.R. No. 85197
March 18, 1991 Ponente: GRIÑO-AQUINO,
J.
NATURE OF CASE
PETITION for certiorari to review the resolutions of the National Labor Relations Commission.
BRIEF
This petition for certiorari seeks a review of the resolutions dated May 28, 1988 and
September 1, 1988 of the National Labor Relations Commission (NLRC) in Injunction Case No.
1582 granting the injunction prayed for by the private respondents, to hold in abeyance the
cancellation of their car loans and payments of the monthly amortizations thereon pending
the resolution of their complaints for illegal dismissal.
FACTS
The private respondents were employed by the petitioner either as sales representatives or
medical representatives. By reason of the nature of their work they were each allowed to
avail of the comp
any’s car loan polic
y where the company advances the purchase price of a car to be paid back by the employee
through monthly deductions from his salary, the company retaining the ownership of the
motor vehicle until it shall have been fully paid for. All o
f the private respondents availed of the petitioner’s car loan policy.
Private respondents Nuñez, Villanueva, Villena and Armas were dismissed from the service
for having participated in an illegal strike. Respondents Kua and Solidum were also dismissed
for certain irregularities. All the private respondents filed complaints for illegal dismissal in
the Arbitration Branch of the NLRC. The Labor Arbiter dismissed their complaints and upheld
the legality of their dismissal. They appealed to the NLRC where their appeals are still
pending. In the Notices of Dismissal which they received from Nestlé, the private
respondents had been directed to either settle the remaining balance of the cost of their
respective cars, or return them to the company for proper disposition. As they failed and
refused to avail of either option, the company filed in the Regional Trial Court of Makati a
civil suit to recover possession of the cars. The Court issued an Order directing the Deputy
Sheriff to take the motor vehicles into his custody. The private respondents sought a
temporary restraining order in the NLRC to stop the company from cancelling their car loans
and collecting their monthly amortizations pending the final resolution of their appeals in
the illegal dismissal case which was granted by the NLRC en banc. The company filed a
motion for reconsideration, but it was denied for tardiness. Hence, this petition for certiorari
alleging that the NLRC acted with grave abuse of discretion amounting to lack of jurisdiction
when it issued a labor injunction without legal basis and in the absence of any labor dispute
related to the same. The private respondents, in their comment on the petition, alleged that
there is a labor dispute between the petitioner and the private respondents and that their
default in paying the amortizations for their cars was brought about by their illegal dismissal
from work by the petitioner as punishment for their participation in the illegal strike.
ISSUE/s of the CASE
Whether NLRC gravely abused its discretion and exceeded its jurisdiction by issuing the writ
of injunction
ACTION/S OF THE COURT
NLRC:
Granted the petition for injunction
SC:
The questioned resolution of the NLRC in Injunction is hereby annulled and set aside.
COURT RATIONALE ON THE ABOVE CASE
Nestlé’s demand for payment of the private respondents’ amortizations on their car loans,
or, in the alternative, the return of the cars to the company, is not a labor, but a civil, dispute.
It involves debtor-creditor relations, rather than employee-employer relations. The NLRC
gravely abused its discretion and exceeded its jurisdiction by issuing the writ of injunction to
stop the company from enforcing the civil obligation of the private respondents under the
car loan agreements and from protecting its interest in the cars which, by the terms of those
agreements, belong to it (the company) until their purchase price shall have been fully paid
by the employee. The terms of the car loan agreements are not in iss
ERNESTO M. APODACA, petitioner,vs.NATIONAL LABOR RELATIONS COMMISSION, JOSE M.
MIRASOL andINTRANS PHILS., INC., respondents.G.R. No. 80039 April 18, 1989GANCAYCO,
J.:
FACTS:
Petitioner was employed in respondent corporation. He was persuaded byrespondent
Mirasol to subscribe to 1,500 shares or for a total of P150,000.00. Hepaid P37,500.00. On
September 1, 1975, petitioner was appointed President andGeneral Manager of the
respondent corporation. However, on January 2, 1986, heresigned. petitioner instituted with
the NLRC a complaint against privaterespondents for the payment of his unpaid wages, his
cost of living allowance, thebalance of his gasoline and representation expenses and his
bonus compensationfor 1986. Private respondents admitted that there is due to petitioner
the amount of P17,060.07 but this was applied to the unpaid balance of his subscription in
theamount of P95,439.93. Petitioner questioned the set-off alleging that there was nocall or
notice for the payment of the unpaid subscription and that, accordingly, thealleged
obligation is not enforceable.
ISSUES:
(1) Whether or not NLRC has jurisdiction to resolve a claim for non-payment of stock
subscriptions to a corporation. (2) If so, whether or not anobligation arising therefrom be
offset against a money claim of an employee againstthe employer.
RULING:
(1) NLRC has no jurisdiction to determine such intra-corporate disputebetween the
stockholder and the corporation as in the matter of unpaidsubscriptions. This
controversy is within the exclusive jurisdiction of the Securitiesand Exchange
Commission.(2) No. the unpaid subscriptions are not due and payable until a call is
made by thecorporation for payment. Private respondents have not presented a
resolution of theboard of directors of respondent corporation calling for the
payment of the unpaidsubscriptions. It does not even appear that a notice of such
call has been sent topetitioner by the respondent corporation. As there was no
notice or call for thepayment of unpaid subscriptions, the same is not yet due and
payable.Even if there was a call for payment, the NLRC cannot validly set it off
against thewages and other benefits due petitioner. Article 113 of the Labor Code
allows such adeduction from the wages of the employees by the employer, only in
threeinstance
DOROTEO OCHEDA v. CA, GR No. 85517, 1992-10-16
Facts:
The late Eduardo Santos was, at the time of his death, employed as a painter by the
petitioner who was a sub-contractor for the painting job
The C.E. Construction Corporation, Inc. (CECCI) was... the principal contractor thereof by
virtue of a contract it entered into with M.J. Development Corporation, the owner of the
building.
When the painting job was almost complete,... the petitioner trimmed his work force to two
(2) employees, Hernani Gozun and Eduardo Santos;... he later died.
the spouses Catalino and Ester Santos, together with Wilma Palabasan-Santos, parents and
widow, respectively, of Eduardo, filed a Complaint[1] for damages against Doroteo Ocheda
and CECCI before the then
Court of First Instance (now Regional Trial Court) of Pampanga... the trial court rendered its
decision[7] finding both the petitioner and CECCI liable for the death of Eduardo.
Petitioner and CECCI appealed this adverse decision to the respondent Court of Appeals...
petitioner... submits... that since the monetary award is sought in... connection with the
employer-employee relationship which existed between him and the late Eduardo Santos,
only Labor Arbiters, pursuant to Article 217 of the Labor Code of the Philippines as it was
then worded,[18] have original... and exclusive jurisdiction over them
Issues:
trial court's jurisdiction over an action for damages arising from a quasi-delict which resulted
in the death of an employee while in the performance of his duty
LOWER COURT ERRED IN HOLDING THAT THE REGIONAL TRIAL COURT HAD JURISDICTION
OVER THE COMPLAINT FILED;
Ruling:
We find no merit in the petition.

Under the said provision, "all money claims of workers" and "all other claims arising from
employer-employee relations" are exclusively cognizable by Labor Arbiters
We ruled in Getz Corp. vs. Court of Appeals[19] that pursuant to P.D. No. 1691, such claims
include moral and exemplary damages.
Such damages may not be awarded in accordance with
Section 217 of the Labor Code, as amended, for there is no reasonable causal connection
with the employer-employee relationship. At the time the cause of action accrued, Article
217 of the Labor Code required that in order that the Labor Arbiter may adjudicate claims
not... included in the other paragraphs, the same must arise out of employer-employee
relations.
The Court, therefore, believes and so holds that the 'money claims of workers' referred to in
paragraph 3 of Article 217 embraces money claims which arise out of or in connection with
the employer-employee relationship, or some aspect or incident of such relationship.
In the instant case, the source of the obligation upon which the private respondents' cause of
action is based is a quasi-delict or tort which has no reasonable connection with any of the
claims provided for in the aforesaid Article 217 of the Labor Code.
Principles:
ERNESTO MEDINA v. FLORELIANA CASTRO--BARTOLOME IN HER CAPACITY AS PRESIDING
JUDGE OF COURT OF FIRST INSTANCE OF RIZAL, GR No. 59825, 1982-09-11
Facts:
Civil Case... was filed in May, 1979, by Ernesto Medina and Jose G. Ong against Cosme de
Aboitiz and Pepsi-Cola Bottling Co. of the Philippines, Inc... the defendant corporation, acting
through its President, Cosme de Aboitiz, dismissed and slandered the plaintiffs in the
presence of their subordinate employees although this could have been done in... private;
That because of the anti-social manner by which the plaintiffs were dismissed from their
employment and the embarrassment and degradation they experience in the hands of the
defendants, the plaintiffs have suffered and will continue to suffer wounded feelings,...
sleepless nights, mental torture, besmirched reputation and other similar injuries... for which
the sum of P150,000.00 for each plaintiff, or the total amount of P300,000.00 should be
awarded as moral damages;... a motion to dismiss the complaint on the ground of lack of
jurisdiction was filed by the defendants. The trial court denied the motion... the defendants
filed a second motion to dismiss the complaint dated January 23, 1981, because of
amendments to the Labor Code immediately prior thereto.
the trial court issued on May 23, 1981, the following order:
"The Court agrees with defendants that the complaint alleges unfair labor practices which
under Art. 217 of the Labor Code, as amended by P.D. 1691, has vested original and exclusive
jurisdiction to Labor Arbiters, and Art. 248, thereof . . . 'which may include claims for...
damages and other affirmative reliefs.'... the alleged defamatory remarks made by defendant
Cosme de Aboitiz were said to plaintiffs in the course of their employment, and the latter...
were dismissed from such employment. Hence, the case arose from such employer-
employee relationship which under the new Presidential Decree 1691 are under the
exclusive, original jurisdiction of the labor arbiters.
Issues:
whether or not the Labor Code has any relevance to the reliefs sought by the plaintiffs.
Ruling:
It is obvious from the complaint that the plaintiffs have not alleged any unfair labor practice.
Theirs is a simple action for damages for tortious acts allegedly committed by the
defendants. Such being the case, the governing statute is the Civil Code and not the
Labor Code.
Principles:
Dai Chi v Villarama (1994)
Dai-Chi v Villarama (RTC judge) and Limjuco
On July 29, 1993, the petitioner Daichi electronics filed a complaint for damages with RTC
branch 156 for an employee’s (Limjuco) violation of their contract in 1990 which stipulated
that the termination of service of an employee restricted him from working in a company
which has a similar set of products or ventures for a span of 2 years following the termination
of service.
The petitioner claimed that respondent became an employee of such a company called Angel
Sound with the same position as head of material management control before the 2 years
was up.
The petitioner sought to claim 100k in damages and prevent the former employee from
working in the rival business within the 1 year timespan.
The respondent court under villarama claimed that it had no jurisdiction because the
complaint was for damages from labor-employee relations and should be adjudicated under
the Labor Arbiter under Art 217 s 4 of the LC.
The petitioner asked for reversal because the case was recognizable under the regular courts
and that the cause of action didn’t arise from employee-employer relationships even if the
claim was in the employee’s contract.
Issue: Is the petitioner’s claim for damages one arising from employee-employer relations?
Decision: No, petition granted
1. Art 217 s4 of the LC stipulated that Labor Arbiters have exclusive jurisdiction to hear and
decide cases for workers with claims for actual, moral, exemplary and other forms of
damages arising from employer-employee relations.
The court held that the cuase of action was under Civil Law, not the labor code. Why?
The petitioner sought to recover damages agreed upon in the contract as redress for
respondent’s breach of his contractual obligation to its damage and prejudice. He also didn’t
ask for relief under the Labor Code.
The applicable case law was Singapore airlines v Pano where the employer’s claim for
damages was based on wanton failure and refusal without just cause to report to duty
coupled with the averment that the employee maliciously and with bad faith violated the
contract. The employee didn’t report for duty as a course of convention training- quasi-delict
diba!
There must be a causal connection for claims provided in the RT217 S4 OF THE LC. Only when
there is such a connection with other claims can damages be considered as arising from
employer-employee relations.
2. In SMC v NLRC, the interpretation of Art 217 then was focused on in the phrase “all money
claims of workers” in par 3.
There was no phrase “arising from employer-employee relations at that time” (art 217
amended by bp blg 227, not yet the present labor code)
DOCTRINE: The use of noscitur a sociis wherein the entire universe of family claims asserted
by workers has been observed into the exclusive jurisdiction of labor arbiters.
Nos a soc was also used to limit par 3 (par 4 in the present labor code) of art 217 wherein it
was read in relation to par 1 (unfair labor practices), par 2 (terms and conditions of
employment), par 4 (household services) and par 5 (restrictions on activities of employees
and employers)
There was a unifying element which referred to cases out of employer-employee relations.
Money claims that didn’t arise out of such relations was to be taken in by regular courts. The
claims should have a causal connection with employer-employee relations
In Ocheda, the action based on tort or quasi-delict with no such causal connection was in the
juris of the regular courts.
In pepsi-cola, the action by employees against the malicious filing of the employer of a
criminal complaint against them was with the regular courts.
The rationale for the Dai-chi case was that the complaint for damages wasn’t anchored on
term of employee’s service but the effects of such term.
Cases decided under the earlier version of Art 217 was also consistent in allocating civil
disputes bet employers and employes to the realm of the regular courts. In Medina (1929),
the civil complaint for damagaes against the employer for slanderous remarks against the
employtess were tried in the civil courts. In Laron (1984), the court held that the Labor
Arbiters have no jurisdiction if the labor code wasn’t involved.
Singapore Airlines V. Hon. Ernani Cruz Pano, Et Al. (1983)
G.R. No. L-47739 June 22, 1983
Lessons Applicable: Unjust dismissal (Torts and Damages)
Laws Applicable:
FACTS:
August 21, 1974: Carlos E. Cruz was offered employment Engineer Officer with the
opportunity to undergo a B-707 I conversion training course requiring him to enter into a
bond with Singapore Airlines Limited for 5 years
Claiming that Cruz had applied for "leave without pay" and had gone on leave without
approval of the application during the second year, SIA filed suit for damages against Cruz
and his surety, Villanueva, for violation of the terms and conditions
RTC: dismissed the complaint, counterclaim and cross-claim for lack of jurisdiction
ISSUE: W/N properly cognizable by Courts of justice and not by the Labor Arbiters of the
National Labor Relations Commission
HELD: YES. records are hereby ordered remanded to the proper Branch of the Regional Trial
Court
jurisdiction over the present controversy must be held to belong to the civil Courts
Article 217 of the Labor Code under PD No. 1691 and BP Blg. 130 provides that all other
claims arising from employer-employee relationship are cognizable by Labor Arbiters
petitioner's claim for damages is grounded on the "wanton failure and refusal" without just
cause of private respondent Cruz to report for duty despite repeated notices served upon
him of the disapproval of his application for leave of absence without pay. This, coupled with
the further averment that Cruz "maliciously and with bad faith" violated the terms and
conditions of the conversion training course agreement to the damage of petitioner removes
the present controversy from the coverage of the Labor Code and brings it within the
purview of Civil Law
complaint was anchored not on the abandonment per se but on the manner and consequent
effects of such abandonment of work translated in terms of the damages which petitioner
had to suffer
The primary relief sought is for liquidated damages for breach of a contractual obligation.
The other items demanded are not labor benefits demanded by workers generally taken
cognizance of in labor disputes, such as payment of wages, overtime compensation or
separation pay. The items claimed are the natural consequences flowing from breach of an
obligation, intrinsically a civil dispute.
Additionally, there is a secondary issue involved that is outside the pale of competence of
Labor Arbiters. Is the liability of Villanueva one of suretyship or one of guaranty?
Unquestionably, this question is beyond the field of specialization of Labor Arbiters.
RUSTAN SUPERVISORY UNION v. MOISES
DALISAY +
DECISION
148 Phil. 514
TEEHANKEE, J.:
An original action for certiorari and prohibition challenging the jurisdiction of the Court of
First Instance of Lanao del Norte to issue the injunction orders complained of.
Petitioner union is a legitimate labor organization and individual petitioners are the union's
principal officers. On September 23, 1970, the union wrote respondent company that a great
number of the supervisory personnel of respondent's plant had affiliated with it and
presented a set of proposals for incorporation into a collective bargaining agreement. On
October 25, 1970, after its ultimatum letter of October 12, 1970 for union recognition had
been unheeded by respondent, the union declared a strike and picketed the company
premises. Several conferences were thereafter held at the Iligan City Labor Office between
the parties' representatives to no avail. Petitioner alleges that the company refused to
negotiate with it while respondent claims in its answer that "it is petitioners who refused to
negotiate in good faith."[1]
On November 13, 1970, respondent company as plaintiff filed with respondent court a
complaint for actual, moral and exemplary damages with preliminary injunction against the
union and its principal officers as defendants (petitioners herein) alleging inter alia that
"defendant union, its officers, members and the defendants herein have stationed
themselves in front of the gates of plaintiff's plant in such a coercive, violent and intimidating
manner as to prevent, as they have in fact, prevented, the incoming and outgoing of
plaintiff's trucks and heavy equipment as well as the delivery of some 120 tons of abaca and
trim waste paper at petitioner's plant. On the same date, respondent court issued ex parte
and without hearing any witness in open court, upon a P5,000.00-bond, its order and writ of
November 13, 1970, enjoining "defendants singly and collectively from stationing themselves
in front of the gates of plaintiff's plant and preventing the incoming and outgoing of plaintiff's
truck and heavy equipment, and from preventing plaintiff from delivering to its plant in Baloi,
Lanao del Norte, the goods or materials mentioned above, and such other goods and raw
materials as may be necessary for plaintiff's business which may be delivered to plaintiff from
time to time from the wharf at Iligan City to its plant in Baloi, Lanao del Norte, until further
orders from this Court."
On November 16, 1970, petitioners filed with respondent court an urgent motion to dissolve
or lift the writ of preliminary injunction, informing respondent court that they were engaged
in an industrial dispute with respondent company, which was guilty of unfair labor practice in
refusing to negotiate with them as the duly selected bargaining unit, by virtue of which they
had struck and picketed the company's premises since October 25, 1970, and therefore
impugning respondent court's jurisdiction to issue the injunction which in effect enjoined
their concerted strike and picketing activities. Petitioners further assailed the validity of the
ex-parte injunction issued without their having been given the benefit of due notice and
hearing as required by section 9 of the Industrial Peace Act (Rep. Act 875).[2]
Respondent court, in its order of November 20, 1970, however, denied dissolution of the
injunction, ruling that "(T)he defendant movant maintained that there is an alleged labor
dispute existing between the defendant labor union and the plaintiff corporation but the
lawyer of the movant admitted that he has not filed a case in the Court of Industrial Relations
and neither has he filed a notice of strike in the Department of Labor regarding the matter."
Respondent court further ruled out the industrial court's jurisdiction notwithstanding the
existence of picketing in the premises, stating that "(I)f this is so, then a mere allegation on
the existence of a labor dispute is enough to base jurisdiction on the Court of Industrial
Relations. This view is not shared by this Court for the reason that jurisdiction of the Court
can not be made to depend upon the pleas or defenses by the defendant in his answer or
motion to dismiss. If such were the rule, the question of jurisdiction will depend entirely
upon the defendant."
Hence, this petition filed by the union. Respondent company filed its answer, seeking to
sustain the jurisdiction of respondent court, on the principal grounds that its action was an
ordinary complaint for damages with preliminary injunction and that petitioner union was
"never engaged in legitimate labor activities." Upon the filing of a P200.00-bond by
petitioners, the Court issued its writ of preliminary injunction enjoining the enforcement of
the order and writ of preliminary injunction of November 13, 1970 issued by respondent
court.
The Court finds merit in the petition.
1. On the very face of the complaint, for all its artful wording and meticulous avoidance of
any reference to petitioner union's strike and picketing activities, and carrying of union
placards in front of the company's premises, it is quite clear, particularly from the fact that
the union and its principal officers were impleaded as principal defendants, that there
existed a labor dispute between the parties, which pertains to the exclusive jurisdiction of
the Court of Industrial Relations rather than to respondent court. This is the teaching of Phil.
Communications Workers Federation vs. Nolasco,[3] where the complaint in the regular
court of first instance alleged that the striking union's pickets "prevented non-striking
employees from entering the compound and performing their work therein" - whereas here,
respondent company, evading any reference to the union's pickets, alleged in its complaint
below that "defendant union, its officers, members and defendants named herein have
stationed themselves in front of the gates of plaintiff's plant" to prevent the entry and egress
of the company's trucks and heavy equipment and the delivery of goods and raw materials to
its premises.
2. Respondent court should have placed itself on guard, therefore, in the face of the
complaint's allegations strongly indicating the existence of a labor dispute beyond its
jurisdiction, more so, when it was informed in petitioner's urgent motion for dissolution of
injunction that the union was on strike because of the company's alleged refusal to bargain
collectively which constitutes unfair labor practice under section 4 (a) (6) of the Industrial
Peace Act - and was made known to it precisely to deter its hand from maintaining its
injunction. For while in regular civil actions, the question of jurisdiction is determined by the
allegations of the complaint, the rule differs in labor disputes in that the Court has set the
criterion that "whether the acts complained of in the petition for injunction arose out of, or
are connected or interwoven with, the unfair labor practice case [presents] a question of fact
that should be brought to the attention of the court a quo to enable it to pass upon the issue
whether it has jurisdiction or not over the case,"[4] and "the court is duty bound to find out if
there really is a labor dispute by reception of evidence."[5] And such ex-parte injunctions,
even if proper, should be automatically vacated after five days under section 9 (d) of Republic
Act 875, and the hearing for determination of the existence of a labor dispute that divests
the lower court of jurisdiction, as emphasized by Mr. Justice Reyes in his concurring opinion
in the very case of ALU vs. Ramolete[5] cited by respondent court, should not be deferred
beyond the statutory five-day period thereby "maintaining an injunction beyond the
maximum period authorized by law even if the court had jurisdiction to issue it x x x (and)
nullifying a statutory provision expressly designed to protect labor."
3. The Court stressed the exclusive jurisdiction of the industrial court as against the regular
courts over unfair labor practices in Veterans Security Free Workers Union vs. Cloribel[6]
thus: "(I)t has long been accepted as dogma that cases involving unfair labor practice fall
within the exclusive jurisdiction of the Court of Industrial Relations, by virtue of the explicit
provisions of Section 5(a) of the Industrial Peace Act that said Court 'shall have jurisdiction
over the prevention of unfair labor practices and is empowered to prevent any person from
engaging in any unfair labor practice. This power shall be exclusive and shall not be affected
by any other means of adjustment or prevention that has been or may be established by an
agreement, code, law or otherwise.' The strike and picketing restrained by the questioned
orders of respondent judge arose out of unfair labor practices of respondent company in
allegedly refusing to bargain in good faith and dismissing for union activities the union
officials and members, which are the very subject-matter of the unfair labor charge filed by
the union in the Industrial Court. These were facts expressly alleged by petitioner in its
Urgent Motion for Reconsideration, asking respondent judge to set aside the questioned
orders and raising respondent Court's lack of jurisdiction. The very complaint of respondent
in the case below, for all its artful wording, was sufficient on its face to apprise respondent
Court that the matter presented before it involved an unfair labor practice case falling within
the Industrial Court's exclusive competence and jurisdiction. x x x."
4. Respondent court's stated reasons for denying dissolution of the injunction, to wit, that
petitioner union had not filed a case in the industrial court nor a strike notice with the Labor
Department constituted grave error. As emphasized by the Court in the Veterans Security
Free Workers Union case, supra, "It is settled doctrine that labor disputes arising out of unfair
labor practices committed by any of the parties do not present a question of concurrent
jurisdiction between the Court of First Instance and the Industrial Court, but that jurisdiction
over such matters is vested exclusively in the Court of Industrial Relations. As succinctly
restated by Mr. Justice Sanchez in Phil. Communications Workers vs. Nolasco, supra,
'CIR'sjurisdiction stays even if no unfair labor practice case has been filed with CIR. It is
enough that unfair labor practice is involved.'" As to the lack of strike notice, it is equally
settled doctrine that in strikes arising out of and against a company's unfair labor practice, a
strike notice is not necessary in view of the strike being founded on urgent necessity and
directed against practices condemned by public policy, such notice being legally required
only in cases of economic strikes.
5. Even assuming for the nonce respondent court's jurisdiction over the case below,
however, respondent court failed to heed the controlling statute as embodied in section 9 of
the Industrial Peace Act. The issuance of injunctions in connection with labor disputes is
governed by the statutory restrictions therein provided and not by the Rules of Court.[7] And
injunctions in labor disputes are not favored and may issue only after a strict and rigorous
compliance with the statutory requisites.[8] It will be readily seen that the injunction order
and writ of respondent court must be overturned for the same failure to comply with the
statutory restrictions as in the Philippine Communications Workers case, viz: "For one, there
is the absence of a showing that the court heard the testimony of witnesses required in
Section 9(d) to support the allegations of the complaint and testimony in opposition thereto.
Then, the court did not make any 'finding of fact' as to the existence or non-existence of the
facts required to be shown under the afore-quoted Section 9(d) and also under Section 9(f)
of the Industrial Peace Act. Nor was notice given 'to the chief of those public officials of the x
x x city x x x charged with the duty to protect complainant's property,' also a prerequisite in
said Section 9(d) heretofore mentioned. And finally, the record is barren as to whether or
not complainant exerted 'every reasonable effort to settle such dispute by negotiation or
with the aid of any available governmental machinery of mediation or by voluntary
arbitration,' another condition exacted by law - this time Section 9(e) of the Industrial Peace
Act - before a restraining order or injunction may be granted. Failure to comply with even
one of these requirements will suffice to deny the issuance of the writ."[9]
6. It has likewise long been settled that where the acts complained of by the company are
directly interwoven with the unfair labor practice charged against it by the union, "the main
case does not come under the jurisdiction of the [regular] trial court, even if it involves
violence, intimidation and coercion as averred in the complaint," as in the case below, for the
industrial court's jurisdiction is exclusive.[10] If the purpose of the action is to obtain some
injunctive relief against certain acts of the union members, the same can be obtained from
the Industrial court which is given ample powers to act thereon.[11]
7. The labor dispute between the parties must therefore be settled and any injunctive relief
must be sought at the industrial court, which has exclusive jurisdiction over the subject
matter, and to which the case must properly be brought at the instance of either party. This
jurisdictional question has long received the Court's attention and Mr. Justice Castro,
speaking for the Court in Regal Mfg. Employees Ass'n. vs. Reyes[12] indicated that actions for
damages brought by the company against the union as a result of the union's concerted
activities must await the prior resolution of the industrial court which is vested with exclusive
jurisdiction over the labor dispute. The proper course for regular courts to observe in such
cases was thus stated: "(U)nder the environmental circumstances obtaining, the respondent
court should have dismissed the original petition for injunction outright, or, later, dismissed
the amended petition for injunction, without prejudice, or, in the very least, suspended
action thereon in so far as the question of damages is concerned, until the CIR shall have
finally decided the two labor disputes pending before it." The fact that in the case at bar, the
labor dispute has not yet reached the industrial court at the instance of either party does not
affect the cited ruling. The company may well take the initiative, as already indicated, of
seeking injunctive relief as well as the damages claimed by it in the industrial court - as it
must, if it has basis for its allegations of violence, intimidation and coercion on the union's
part.
ACCORDINGLY, the writ of certiorari and prohibition prayed for is hereby granted, and the
preliminary injunction heretofore issued by the Court is hereby made permanent.
Respondent court is hereby directed to dismiss the case for damages with preliminary
injunction before it, Civil Case No. 1637, without prejudice. With costs against private
respondent.
SO ORDERED.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Castro, Fernando, Barredo,
Villamor, and Makasiar, JJ., concur.
Herminigildo Inguillo and Zenaida Bergante vs. First Philippine Scales, Inc. (FPSI) and/or
Amparo Policarpio, manager .!. "o. #$%&' ( une %, *''+)In #++#, FPSI and First
Philippine Scales Industries a-or nion (FPSI ) entered intoa ollective Bargaining
Agreement ( BA) 0or a period o0 1ve (%) 2ears in a documententitled
RATIPIKASYON NG KASUNDUAN.
Bergante and Inguillo, 3ho 3ere mem-ers o0 FPSI , signed the said document. Bergante,
Inguillo and several FPSI emplo2ees 4oined another union, the
Nagkakaisang Lakas ng Manggagawa
(" 5). 67he latter8 1led 3ith the 9epartment o0 a-or and :mplo2ment (9; :) an
intra<union dispute against FPSI and FPSI. 5ean3hile, on 5arch *+, #++$, the e=ecutive -
oard and mem-ers o0 the FPSI addressed a document dated 5arch #>, #++$
denominated as ?Petis2on@ to FPSI s general manager, Amparo Policarpio (Policarpio),
see ing the termination o0 the services o0 6several emplo2ees, including herein petitioners.
7his 3as granted upon -2 FPSI, 3hich terminated, among others, herein petitioners.8In their
Petition, Bergante and Inguillo assail the legalit2 o0 their termination -ased on the nion
Securit2 lause in the BA -et3een FPSI and FPSI .6(#) Cas there a valid ground 0or
terminationD(*) Cas there compliance 3ith the procedural due process to the terminationD8
(1)
Ees. 7he a-or ode o0 the Philippines has several provisions under 3hich an emplo2ee
ma2 -e validl2 terminated, namel2 (#) 4ust causes under Article *>*G (*) authori ed
causes under Article *> G ( ) termination due to disease under Article *>&G and (&)
termination -2 the emplo2ee or resignation under Article *>%. Chile the said provisions did
not mention as ground the en0orcement o0 the nion Securit2 lause in the BA, the
dismissal 0rom emplo2ment -ased on the same is recogni edand accepted in our
4urisdiction.? nion securit2@ is a generic term, 3hich is applied to and comprehends
?closed shop,@ ?union shop,@ ?maintenance o0 mem-ership@ or an2 other 0orm o0
agreement 3hich imposes upon emplo2ees the o-ligation to acJuire or retain union mem-
ership as a condition aKecting emplo2ment. 7here is union shop 3hen all ne3regular
emplo2ees are reJuired to 4oin the union 3ithin a certain period as a condition 0or their
continued emplo2ment. 7here is maintenance o0 mem-ership shop 3hen emplo2ees, 3ho are
union mem-ers as o0 the eKective date o0 the agreement, or 3ho therea0ter -ecome mem-
ers, must maintain union mem-ership as a condition 0or continued emplo2ment until the2
are promoted or trans0erred out o0 the -argaining unit or the agreement is terminated.
6&'8
A closed<shop, on the other hand, ma2 -e de1ned as an enterprise in 3hich, -2 agreement -
et3een the emplo2er and his emplo2ees or their representatives, no person ma2 -e
emplo2ed in an2 or certain agreed departments o0 the enterprise unless he or she is, -
ecomes, and, 0or the duration o0 the agreement, remains a mem-er in good standing o0 a
union entirel2 comprised o0 or o0 3hich the emplo2ees in interest are apart
o. 149552 : March 10, 2010
GENERAL MILLING CORPORATION, Petitioner, v. ERNESTO CASIO, ROLANDO IGOT, MARIO
FAMADOR, NELSON LIM, FELICISIMO BOOC, PROCOPIO OBREGON, JR., and ANTONIO
ANINIPOK, Respondents,
and
VIRGILIO PINO, PAULINO CABREROS, MA. LUNA P. JUMAOAS, DOMINADOR BOOC, FIDEL
VALLE, BARTOLOME AUMAN, REMEGIO CABANTAN, LORETO GONZAGA, EDILBERTO
MENDOZA and ANTONIO PANILAG, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking the
reversal of the Decision1cЃa dated March 30, 2001 and Resolution2cЃa dated July 18, 2001 of
the Court of Appeals in CA-G.R. SP No. 40280, setting aside the Voluntary Arbitration
Award3cЃa dated August 16, 1995 of the National Conciliation and Mediation Board (NCMB),
Cebu City, in VA Case No. AC 389-01-01-95. Voluntary Arbitrator Alice K. Canonoy-Morada
(Canonoy-Morada) dismissed the Complaint filed by respondents Ernesto Casio, Rolando
Igot, Mario Famador, Nelson Lim, Felicisimo Booc, Procopio Obregon, Jr. and Antonio
Aninipok (Casio, et al.) against petitioner General Milling Corporation (GMC) for unfair labor
practice, illegal suspension, illegal dismissal, and payment of moral and exemplary
damages.chanroblesvirtua|awlibary
The labor union Ilaw at Buklod ng Mangagawa (IBM)-Local 31 Chapter (Local 31) was the sole
and exclusive bargaining agent of the rank and file employees of GMC in Lapu-Lapu City. On
November 30, 1991, IBM-Local 31, through its officers and board members, namely,
respondents Virgilio Pino,4cЃa Paulino Cabreros, Ma. Luna P. Jumaoas, Dominador Booc,
Bartolome Auman, Remegio Cabantan, Fidel Valle, Loreto Gonzaga, Edilberto Mendoza and
Antonio Panilag (Pino, et al.), entered into a Collective Bargaining Agreement (CBA) with
GMC. The effectivity of the said CBA was retroactive to August 1, 1991.5cЃa
The CBA contained the following union security provisions:
Section 3. MAINTENANCE OF MEMBERSHIP All employees/workers employed by the
Company with the exception of those who are specifically excluded by law and by the terms
of this Agreement must be members in good standing of the Union within thirty (30) days
upon the signing of this agreement and shall maintain such membership in good standing
thereof as a condition of their employment or continued
employment.chanroblesvirtua|awlibary
Section 6. The Company, upon written request of the Union, shall terminate the services of
any employee/worker who fails to fulfill the conditions set forth in Sections 3 and 4 thereof,
subject however, to the provisions of the Labor Laws of the Philippines and their
Implementing Rules and Regulations. The Union shall absolve the Company from any and all
liabilities, pecuniary or otherwise, and responsibilities to any employee or worker who is
dismissed or terminated in pursuant thereof.6cЃa
Casio, et al. were regular employees of GMC with daily earnings ranging from P173.75 to
P201.50, and length of service varying from eight to 25 years.7cЃa Casio was elected IBM-
Local 31 President for a three-year term in June 1991, while his co-respondents were union
shop stewards.chanroblesvirtua|awlibary
In a letter8cЃa dated February 24, 1992, Rodolfo Gabiana (Gabiana), the IBM Regional
Director for Visayas and Mindanao, furnished Casio, et al. with copies of the Affidavits of
GMC employees Basilio Inoc and Juan Potot, charging Casio, et al. with "acts inimical to the
interest of the union." Through the same letter, Gabiana gave Casio, et al. three days from
receipt thereof within which to file their answers or counter-affidavits. However, Casio, et al.
refused to acknowledge receipt of Gabianas letter.chanroblesvirtua|awlibary
Subsequently, on February 29, 1992, Pino, et al., as officers and members of the IBM-Local
31, issued a Resolution9cЃa expelling Casio, et al. from the union. Pertinent portions of the
Resolution are reproduced below:
Whereas, Felicisimo Booc, Rolando Igot, Procopio Obregon, Jr., Antonio Aninipok, Mario
Famador, Nelson Lim and Ernesto Casio, through Ernesto Casio have refused to acknowledge
receipt of the letter-complaint dated February 24, 1992, requiring them to file their answer[s]
or counter-affidavits as against the charge of "acts inimical to the interest of the union" and
that in view of such refusal to acknowledge receipt, a copy of said letter complaint was
dropped or left in front of E. Casio;
Whereas, the three (3)[-]day period given to file their answer or counter-affidavit have
already lapsed prompting the union Board to investigate the charge ex parte;
Whereas, after such ex parte investigation the said charge has been more than adequately
substantiated by the affidavits/witnesses and documentary exhibits
presented.chanroblesvirtua|awlibary
NOW, THEREFORE, RESOLVED as it is hereby RESOLVED, that Ernesto Casio, Felicisimo Booc,
Rolando Igot, Procopio Obregon, Jr., Antonio Aninipok, Mario Famador and Nelson Lim be
expelled as union member[s] of good standing effectively
immediately.chanroblesvirtua|awlibary
RESOLVED FURTHER, to furnish copy of this Resolution to the GMC Management for their
information and guidance with the recommendation as it is hereby recommended to dismiss
the above-named employees from work.chanroblesvirtua|awlibary
Gabiana then wrote a letter10cЃa dated March 10, 1992, addressed to Eduardo Cabahug
(Cabahug), GMC Vice-President for Engineering and Plant Administration, informing the
company of the expulsion of Casio, et al. from the union pursuant to the Resolution dated
February 29, 1992 of IBM-Local 31 officers and board members. Gabiana likewise requested
that Casio, et al. "be immediately dismissed from their work for the interest of industrial
peace in the plant.cra|aw"
Gabiana followed-up with another letter11cЃa dated March 19, 1992, inquiring from
Cabahug why Casio, et al. were still employed with GMC despite the request of IBM-Local 31
that Casio, et al. be immediately dismissed from service pursuant to the closed shop
provision in the existing CBA. Gabiana reiterated the demand of IBM-Local 31 that GMC
dismiss Casio, et al., with the warning that failure of GMC to do so would constitute gross
violation of the existing CBA and constrain the union to file a case for unfair labor practice
against GMC.chanroblesvirtua|awlibary
Pressured by the threatened filing of a suit for unfair labor practice, GMC acceded to
Gabianas request to terminate the employment of Casio, et al. GMC issued a Memorandum
dated March 24, 1992 terminating the employment of Casio, et al. effective April 24, 1992
and placing the latter under preventive suspension for the
meantime.chanroblesvirtua|awlibary
On March 27, 1992, Casio, et al., in the name of IBM-Local 31, filed a Notice of Strike with the
NCMB-Regional Office No. VII (NCMB-RO). Casio, et al. alleged as bases for the strike the
illegal dismissal of union officers and members, discrimination, coercion, and union busting.
The NCMB-RO held conciliation proceedings, but no settlement was reached among the
parties.12cЃa
Casio, et al. next sought recourse from the National Labor Relations Commission (NLRC)
Regional Arbitration Branch VII by filing on August 3, 1992 a Complaint against GMC and
Pino, et al. for unfair labor practice, particularly, the termination of legitimate union officers,
illegal suspension, illegal dismissal, and moral and exemplary damages. Their Complaint was
docketed as NLRC Case No. RAB-VII-08-0639-92.13cЃa
Finding that NLRC Case No. RAB-VII-08-0639-92 did not undergo voluntary arbitration, the
Labor Arbiter dismissed the case for lack of jurisdiction, but endorsed the same to the NCMB-
RO. Prior to undergoing voluntary arbitration before the NCMB-RO, however, the parties
agreed to first submit the case to the grievance machinery of IBM-Local 31. On September 7,
1994, Casio, et al. filed their Complaint with Pino, the Acting President of IBM-Local 31. Pino
acknowledged receipt of the Complaint and assured Casio, et al. that they would be
"seasonably notified of whatever decision and/or action the Board may have in the instant
case."14cЃa When the IBM-Local 31 Board failed to hold grievance proceedings on the
Complaint of Casio, et al., NCMB Voluntary Arbitrator Canonoy-Morada assumed jurisdiction
over the same. The Complaint was docketed as VA Case No. AC 389-01-01-
95.chanroblesvirtua|awlibary
Based on the Position Papers and other documents submitted by the parties,15cЃa Voluntary
Arbitrator Canonoy-Morada rendered on August 16, 1995 a Voluntary Arbitration Award
dismissing the Complaint in VA Case No. AC 389-01-01-95 for lack of merit, but granting
separation pay and attorneys fees to Casio, et al. The Voluntary Arbitration Award presented
the following findings: (1) the termination by GMC of the employment of Casio, et al. was in
valid compliance with the closed shop provision in the CBA; (2) GMC had no competence to
determine the good standing of a union member; (3) Casio, et al. waived their right to due
process when they refused to receive Gabianas letter dated February 24, 1992, which
required them to submit their answer to the charges against them; (4) the preventive
suspension of Casio, et al. by GMC was an act of self-defense; and (5) the IBM-Local 31
Resolution dated February 29, 1992 expelling Casio, et al. as union members, also
automatically ousted them as union officers.16cЃa The dispositive portion of the Voluntary
Arbitration Award reads:
WHEREFORE, above premises considered, this case filed by [Casio, et al.] is hereby ordered
DISMISSED for lack of merit.chanroblesvirtua|awlibary
Since the dismissal is not for a cause detrimental to the interest of the company, respondent
General Milling Corporation is, nonetheless, ordered to pay separation pay to all [Casio, et
al.] within seven (7) calendar days upon receipt of this order at the rate of one-half month I
per year of service reckoned from the time of their employment until the date of their
separation on March 24, 1992, thus: THE HONORABLE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF OR EXCESS OF JURISDICTION WHEN IT SET ASIDE THE AWARD OF
Employee Date Hired Rate/Month THE VOLUNTARY ARBITRATOR, AND IN AWARDING REINSTATEMENT AND FULL BACKWAGES
(1/2 mo/yr TO [Casio, et al.].
of service) Service Total
Casio April 24/74 P2,636.29 x 18 years = P47,453.22 II
Igot May 1980 P2,472.75 x 12 years = P29,673.00
Famador Feb. 1977 P2,498.92 x 15 years = P37,483.80 THE HONORABLE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION
Lim Aug. 1975 P2,466.21 x 17 years = P41,925.57 AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT SAID THAT PETITIONER GMC
Booc Aug. 1978 P2,498.92 x 14 years = P34,984.88 FAILED TO ACCORD DUE PROCESS TO [Casio, et al.].
Obregon May 1984 P2,273.23 x 08 years = P18,185.84
Aninipok Sept. 1967 P2,616.01 x 25 years = P65,400.25 III
cralawThe attorneys fees for [Casio, et al.s] counsel shall be ten percent (10%) of the total
amount due them; and shall be shared proportionately by all of the same [Casio, et al.]. THE HONORABLE PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF OR EXCESS OF JURISDICTION WHEN IT DID NOT ABSOLVE
All other claims are hereby denied.17cЃa PETITIONER GMC OF ANY LIABILITY AND INSTEAD RULED THAT IT WAS SOLIDARILY LIABLE
WITH THE UNION OFFICERS FOR THE PAYMENT OF FULL BACKWAGES TO [Casio, et al.].
Dissatisfied with the Voluntary Arbitration Award, Casio, et al. went to the Court of Appeals
by way of a Petition for Certiorari under Rule 65 of the Rules of Court to have said Award set At this point, we take note that Pino, et al. did not appeal from the decision of the Court of
aside.chanroblesvirtua|awlibary Appeals.chanroblesvirtua|awlibary

The Court of Appeals granted the writ of certiorari and set aside the Voluntary Arbitration
Award. The appellate court ruled that while the dismissal of Casio, et al., was made by GMC
pursuant to a valid closed shop provision under the CBA, the company, however, failed to
observe the elementary rules of due process in implementing the said dismissal.
Consequently, Casio, et al. were entitled to reinstatement with backwages from the time of
their dismissal up to the time of their reinstatement. Nevertheless, the Court of Appeals did
not hold GMC liable to Casio, et al. for moral and exemplary damages and attorneys fees,
there being no showing that their dismissal was attended by bad faith or malice, or that the
dismissal was effected in a wanton, oppressive, or malevolent manner, given that GMC
merely accommodated the request of IBM-Local 31. The appellate court, instead, made Pino,
et al. liable to Casio, et al., for moral and exemplary damages and attorneys fees, since it was
on the basis of the imputations and actuations of Pino, et al. that Casio, et al. were illegally
dismissed from employment. The Court of Appeals thus decreed:
WHEREFORE, the assailed award is hereby SET ASIDE, and private respondent General Milling
Corporation is hereby ordered to reinstate [Casio, et al.] to their former positions without
loss of seniority rights, and to pay their full backwages, solidarily with [Pino, et al.]. Further,
[Pino, et al.] are ordered to indemnify each of [Casio, et al.] in the form of moral and
exemplary damages in the amounts of P50,000.00 and P30,000.00, respectively, and to pay
attorneys fees.18cЃa
The Motion for Reconsideration of GMC was denied by the Court of Appeals in the Resolution
dated July 18, 2001.
Hence, GMC filed the instant Petition for Review, arguing that:
GMC avers that in reviewing and reversing the findings of the Voluntary Arbitrator, the Court
of Appeals departed from the principle of conclusiveness of the trial judges findings. GMC
also claims that the findings of the Voluntary Arbitrator as to the legality of the termination
from employment of Casio, et al. are well supported by evidence. GMC further insists that
before IBP-Local 31 expelled Casio, et al. from the union and requested GMC to dismiss
Casio, et al. from service pursuant to the closed shop provision in the CBA, IBP-Local 31
already accorded Casio, et al. due process, only that Casio, et al. refused to avail themselves
of such opportunity. GMC additionally maintains that Casio, et al. were expelled by IBP-Local
31 for "acts inimical to the interest of the union," and GMC had no authority to inquire into
or rule on which employee-member is or is not loyal to the union, this being an internal affair
of the union. Thus, GMC had to rely on the presumption that Pino, et al. regularly performed
their duties and functions as IBP-Local 31 officers and board members, when the latter
investigated and ruled on the charges against Casio, et al.19cЃa GMC finally asserts that Pino,
et al., the IBP-Local 31 officers and board members who resolved to expel Casio, et al. from
the union, and not GMC, should be held liable for the reinstatement of and payment of full
backwages to Casio, et al. for the company had acted in good faith and merely complied with
the closed shop provision in the CBA.chanroblesvirtua|awlibary
On the other hand, Casio, et al. counters that GMC failed to identify the specific pieces of
evidence supporting the findings of the Voluntary Arbitrator. Casio, et al. contends that to
accord them due process, GMC itself, as the employer, should have held proceedings distinct
and separate from those conducted by IBM-Local 31. GMC cannot justify its failure to
conduct its own inquiry using the argument that such proceedings would constitute an
intrusion by the company into the internal affairs of the union. The claim of GMC that it had
acted in good faith when it dismissed Casio, et al. from service in accordance with the closed
shop provision of the CBA is inconsistent with the failure of the company to accord the
dismissed employees their right to due process.chanroblesvirtua|awlibary
In general, in a "petition for review on certiorari as a mode of appeal under Rule 45 of the
Rules of Court, the petitioner can raise only questions of law - the Supreme Court is not the
proper venue to consider a factual issue as it is not a trier of facts. A departure from the
general rule may be warranted where the findings of fact of the Court of Appeals are
contrary to the findings and conclusions of the trial court [or quasi-judicial agency, as the
case may be], or when the same is unsupported by the evidence on record."20cЃa
Whether Casio, et al. were illegally dismissed without any valid reason is a question of fact
better left to quasi-judicial agencies to determine. In this case, the Voluntary Arbitrator was
convinced that Casio, et al. were legally dismissed; while the Court of Appeals believed the
opposite, because even though the dismissal of Casio, et al. was made by GMC pursuant to a
valid closed shop provision in the CBA, the company still failed to observe the elementary
rules of due process. The Court is therefore constrained to take a second look at the evidence
on record considering that the factual findings of the Voluntary Arbitrator and the Court of
Appeals are contradictory.chanroblesvirtua|awlibary
There are two aspects which characterize the concept of due process under the Labor Code:
one is substantive whether the termination of employment was based on the provision of
the Labor Code or in accordance with the prevailing jurisprudence; the other is procedural
the manner in which the dismissal was effected.21cЃa
After a thorough review of the records, the Court agrees with the Court of Appeals. The
dismissal of Casio, et al. was indeed illegal, having been done without just cause and the
observance of procedural due process.chanroblesvirtua|awlibary
In Alabang Country Club, Inc. v. National Labor Relations Commission,22cЃa the Court laid
down the grounds for which an employee may be validly terminated, thus:
Under the Labor Code, an employee may be validly terminated on the following grounds: (1)
just causes under Art. 282; (2) authorized causes under Art. 283; (3) termination due to
disease under Art. 284, and (4) termination by the employee or resignation under Art.
285.chanroblesvirtua|awlibary
Another cause for termination is dismissal from employment due to the enforcement of the
union security clause in the CBA. x x x. (Emphasis ours.)
"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 as a condition for their continued employment. There is
maintenance of membership shop when employees, who are union members as of the
effective date of the agreement, or who thereafter become members, must maintain union
membership as a condition for continued employment until they are promoted or
transferred out of the bargaining unit or the agreement is terminated. A closed shop, on the
other hand, may be defined as an enterprise in which, by agreement between the employer
and his employees or their representatives, no person may be employed in any or certain
agreed departments of the enterprise unless he or she is, becomes, and, for the duration of
the agreement, remains a member in good standing of a union entirely comprised of or of
which the employees in interest are a part.23cЃa
Union security clauses are recognized and explicitly allowed under Article 248(e) of the Labor
Code, which provides that:
Art. 248. Unfair Labor Practices of Employers. x x x
xxxx
(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. (Emphasis supplied.)
It is State policy to promote unionism to enable workers to negotiate with management on
an even playing field and with more persuasiveness than if they were to individually and
separately bargain with the employer. For this reason, the law has allowed stipulations for
"union shop" and "closed shop" as means of encouraging workers to join and support the
union of their choice in the protection of their rights and interest vis-à-vis the
employer.24cЃa
Moreover, a stipulation in the CBA authorizing the dismissal of employees are of equal
import as the statutory provisions on dismissal under the Labor Code, since "a CBA is the law
between the company and the union and compliance therewith is mandated by the express
policy to give protection to labor."25cЃa
In terminating the employment of an employee by enforcing the union security clause, the
employer needs only to determine and prove that: (1) the union security clause is applicable;
(2) the union is requesting for the enforcement of the union security provision in the CBA;
and (3) there is sufficient evidence to support the decision of the union to expel the
employee from the union. These requisites constitute just cause for terminating an employee
based on the union security provision of the CBA.26cЃa
There is no question that in the present case, the CBA between GMC and IBM-Local 31
included a maintenance of membership and closed shop clause as can be gleaned from
Sections 3 and 6 of Article II. IBM-Local 31, by written request, can ask GMC to terminate the
employment of the employee/worker who failed to maintain its good standing as a union
member.chanroblesvirtua|awlibary
It is similarly undisputed that IBM-Local 31, through Gabiana, the IBM Regional Director for
Visayas and Mindanao, twice requested GMC, in the letters dated March 10 and 19, 1992, to
terminate the employment of Casio, et al. as a necessary consequence of their expulsion
from the union.chanroblesvirtua|awlibary
It is the third requisite that there is sufficient evidence to support the decision of IBM-Local
31 to expel Casio, et al. which appears to be lacking in this case.chanroblesvirtua|awlibary
The full text of the individual but identical termination letters,27cЃa served by GMC on Casio,
et al., is very revealing. They read:
To: [Employees Name]
From: Legal Counsel
Subject: Dismissal Upon Union Request Thru
CBA Closed Shop Provision
The company is in receipt of two letters dated March 10, 1992 and March 19, 1992
respectively from the union at the Mill in Lapulapu demanding the termination of your
employment pursuant to the closed shop provision of our existing Collective Bargaining
Agreement. It appears from the attached resolutions that you have been expelled from union
membership and has thus ceased to become a member in good standing. The resolutions are
signed by the same officers who executed and signed our existing CBA, copies of the letters
and resolutions are enclosed hereto for your reference.
The CBA in Article II provides the following:
Section 3. MAINTENANCE OF MEMBERSHIP All employees/workers employed by the
Company with the exception of those who are specifically excluded by law and by the terms
of this Agreement must be members in good standing of the Union within thirty (30) days
upon the signing of this agreement and shall maintain such membership in good standing
thereof as a condition of their employment or continued
employment.chanroblesvirtua|awlibary
Section 6. The Company, upon written request of the Union, shall terminate the services of
any employee/worker who fails to fulfill the conditions set forth in Sections 3 and 4 thereof,
subject however, to the provisions of the Labor Laws of the Philippines and their
Implementing Rules and Regulations. The Union shall absolve the Company from any and all
liabilities, pecuniary or otherwise, and responsibilities to any employee or worker who is
dismissed or terminated in pursuant thereof.chanroblesvirtua|awlibary
The provisions of the CBA are clear enough. The termination of employment on the basis of
the closed shop provision of the CBA is well recognized in law and in
jurisprudence.chanroblesvirtua|awlibary
There is no valid ground to refuse to terminate. On the other hand as pointed out in the
unions strongly demanding letter dated March 19, 1992, the company could be sued for
unfair labor practice. While we would have wanted not to accommodate the unions request,
we are left with no other option. The terms of the CBA should be respected. To refuse to
enforce the CBA would result in the breakdown of industrial peace and the end of
harmonious relations between the union and management. The company would face the
collective anger and enmity of its employees who are union
members.chanroblesvirtua|awlibary
In the light of the unions very insistent demand, verbal and in writing and to avoid the union
accusation of "coddling" you, and considering the explicitly mandatory language of the closed
shop provision of the CBA, the company is constrained to terminate your employment, to
give you ample time to look and find another employment, and/or exert efforts to become
again a member of good standing of your union, effective April 24,
1992.chanroblesvirtua|awlibary
In the meantime, to prevent serious danger to the life and property of the company and of its
employees, we are placing you under preventive suspension beginning
today.chanroblesvirtua|awlibary
It is apparent from the aforequoted letter that GMC terminated the employment of Casio, et
al. relying upon the Resolution dated February 29, 1992 of Pino, et al. expelling Casio, et al.
from IBM-Local 31; Gabianas Letters dated March 10 and 19, 1992 demanding that GMC
terminate the employment of Casio, et al. on the basis of the closed shop clause in the CBA;
and the threat of being sued by IBM-Local 31 for unfair labor practice. The letter made no
mention at all of the evidence supporting the decision of IBM-Local 31 to expel Casio, et al.
from the union. GMC never alleged nor attempted to prove that the company actually looked
into the evidence of IBM-Local 31 for expelling Casio, et al. and made a determination on the
sufficiency thereof. Without such a determination, GMC cannot claim that it had terminated
the employment of Casio, et al. for just cause.chanroblesvirtua|awlibary
The failure of GMC to make a determination of the sufficiency of evidence supporting the
decision of IBM-Local 31 to expel Casio, et al. is a direct consequence of the non-observance
by GMC of procedural due process in the dismissal of employees.chanroblesvirtua|awlibary
As a defense, GMC contends that as an employer, its only duty was to ascertain that IBM-
Local 31 accorded Casio, et al. due process; and, it is the finding of the company that IBM-
Local 31 did give Casio, et al. the opportunity to answer the charges against them, but they
refused to avail themselves of such opportunity.
This argument is without basis.chanroblesvirtua|awlibary
The Court has stressed time and again that allegations must be proven by sufficient evidence
because mere allegation is definitely not evidence.28cЃa Once more, in Great Southern
Maritime Services Corporation. v. Acuña,29cЃa the Court declared:
Time and again we have ruled that in illegal dismissal cases like the present one, the onus of
proving that the employee was not dismissed or if dismissed, that the dismissal was not
illegal, rests on the employer and failure to discharge the same would mean that the
dismissal is not justified and therefore illegal. Thus, petitioners must not only rely on the
weakness of respondents evidence but must stand on the merits of their own defense. A
party alleging a critical fact must support his allegation with substantial evidence for any
decision based on unsubstantiated allegation cannot stand as it will offend due process. x x x.
(Emphasis supplied.)
The records of this case are absolutely bereft of any supporting evidence to substantiate the
bare allegation of GMC that Casio, et al. were accorded due process by IBM-Local 31. There is
nothing on record that would indicate that IBM-Local 31 actually notified Casio, et al. of the
charges against them or that they were given the chance to explain their side. All that was
stated in the IBM-Local 31 Resolution dated February 29, 1992, expelling Casio, et al. from
the union, was that "a copy of the said letter complaint [dated February 24, 1992] was
dropped or left in front of E. Casio."30cЃa It was not established that said letter-complaint
charging Casio, et al. with acts inimical to the interest of the union was properly served upon
Casio, that Casio willfully refused to accept the said letter-notice, or that Casio had the
authority to receive the same letter-notice on behalf of the other employees similarly
accused. Its worthy to note that Casio, et al. were expelled only five days after the issuance
of the letter-complaint against them. The Court cannot find proof on record when the three-
day period, within which Casio, et al. was supposed to file their answer or counter-affidavits,
started to run and had expired. The Court is likewise unconvinced that the said three-day
period was sufficient for Casio, et al. to prepare their defenses and evidence to refute the
serious charges against them.chanroblesvirtua|awlibary
Contrary to the position of GMC, the acts of Pino, et al. as officers and board members of
IBM-Local 31, in expelling Casio, et al. from the union, do not enjoy the presumption of
regularity in the performance of official duties, because the presumption applies only to
public officers from the highest to the lowest in the service of the Government, departments,
bureaus, offices, and/or its political subdivisions.31cЃa
More importantly, in Liberty Cotton Mills Workers Union v. Liberty Cotton Mills, Inc.,32cЃa
the Court issued the following reminder to employers:
The power to dismiss is a normal prerogative of the employer. However, this is not without
limitations. The employer is bound to exercise caution in terminating the services of his
employees especially so when it is made upon the request of a labor union pursuant to the
Collective Bargaining Agreement. x x x. Dismissals must not be arbitrary and capricious. Due
process must be observed in dismissing an employee because it affects not only his position
but also his means of livelihood. Employers should therefore respect and protect the rights of
their employees, which include the right to labor. x x x.chanroblesvirtua|awlibary
The Court reiterated in Malayang Samahan ng mga Manggagawa sa M. Greenfield v.
Ramos33cЃa that:
While respondent company may validly dismiss the employees expelled by the union for
disloyalty under the union security clause of the collective bargaining agreement upon the
recommendation by the union, this dismissal should not be done hastily and summarily
thereby eroding the employees right to due process, self-organization and security of tenure.
The enforcement of union security clauses is authorized by law provided such enforcement is
not characterized by arbitrariness, and always with due process. Even on the assumption that
the federation had valid grounds to expel the union officers, due process requires that these
union officers be accorded a separate hearing by respondent company. (Emphases supplied.)
The twin requirements of notice and hearing constitute the essential elements of procedural
due process. The law requires the employer to furnish the employee sought to be dismissed
with two written notices before termination of employment can be legally effected: (1) a
written notice apprising the employee of the particular acts or omissions for which his
dismissal is sought in order to afford him an opportunity to be heard and to defend himself
with the assistance of counsel, if he desires, and (2) a subsequent notice informing the
employee of the employers decision to dismiss him. This procedure is mandatory and its
absence taints the dismissal with illegality.34cЃa
Irrefragably, GMC cannot dispense with the requirements of notice and hearing before
dismissing Casio, et al. even when said dismissal is pursuant to the closed shop provision in
the CBA. The rights of an employee to be informed of the charges against him and to
reasonable opportunity to present his side in a controversy with either the company or his
own union are not wiped away by a union security clause or a union shop clause in a
collective bargaining agreement. An employee is entitled to be protected not only from a
company which disregards his rights but also from his own union the leadership of which
could yield to the temptation of swift and arbitrary expulsion from membership and hence
dismissal from his job.35cЃa
In the case at bar, Casio, et al. did not receive any other communication from GMC, except
the written notice of termination dated March 24, 1992. GMC, by its own admission, did not
conduct a separate and independent investigation to determine the sufficiency of the
evidence supporting the expulsion of Casio, et al. by IBP-Local 31. It straight away acceded to
the demand of IBP-Local 31 to dismiss Casio, et al.chanroblesvirtua|awlibary
The very same circumstances took place in Liberty Cotton Mills, wherein the Court held that
the employer-company acted in bad faith in dismissing its workers without giving said
workers an opportunity to present their side in the controversy with their union, thus:
While respondent company, under the Maintenance of Membership provision of the
Collective Bargaining Agreement, is bound to dismiss any employee expelled by PAFLU for
disloyalty, upon its written request, this undertaking should not be done hastily and
summarily. The company acted in bad faith in dismissing petitioner workers without giving
them the benefit of a hearing. It did not even bother to inquire from the workers concerned
and from PAFLU itself about the cause of the expulsion of the petitioner workers. Instead,
the company immediately dismissed the workers on May 30, 1964 after its receipt of the
request of PAFLU on May 29, 1964 in a span of only one day stating that it had no alternative
but to comply with its obligation under the Security Agreement in the Collective Bargaining
Agreement, thereby disregarding the right of the workers to due process, self-organization
and security of tenure.36cЃa (Emphasis ours.)
In sum, the Court finds that GMC illegally dismissed Casio, et al. because not only did GMC
fail to make a determination of the sufficiency of evidence to support the decision of IBM-
Local 31 to expel Casio, et al., but also to accord the expelled union members procedural due
process, i.e., notice and hearing, prior to the termination of their employment
Consequently, GMC cannot insist that it has no liability for the payment of backwages and
damages to Casio, et al., and that the liability for such payment should fall only upon Pino, et
al., as the IBP-Local 31 officers and board members who expelled Casio, et al. GMC
completely missed the point that the expulsion of Casio, et al. by IBP-Local 31 and the
termination of employment of the same employees by GMC, although related, are two
separate and distinct acts. Despite a closed shop provision in the CBA and the expulsion of
Casio, et al. from IBP-Local 31, law and jurisprudence imposes upon GMC the obligation to
accord Casio, et al. substantive and procedural due process before complying with the
demand of IBP-Local 31 to dismiss the expelled union members from service. The failure of
GMC to carry out this obligation makes it liable for illegal dismissal of Casio, et
al.chanroblesvirtua|awlibary
In Malayang Samahan ng mga Manggagawa sa M. Greenfield,37cЃa the Court held that
notwithstanding the fact that the dismissal was at the instance of the federation and that the
federation undertook to hold the company free from any liability resulting from the dismissal
of several employees, the company may still be held liable if it was remiss in its duty to
accord the would-be dismissed employees their right to be heard on the
matter.chanroblesvirtua|awlibary
An employee who is illegally dismissed is entitled to the twin reliefs of full backwages and
reinstatement. If reinstatement is not viable, separation pay is awarded to the employee. In
awarding separation pay to an illegally dismissed employee, in lieu of reinstatement, the
amount to be awarded shall be equivalent to one month salary for every year of service.
Under Republic Act No. 6715, employees who are illegally dismissed are entitled to full
backwages, inclusive of allowances and other benefits or their monetary equivalent,
computed from the time their actual compensation was withheld from them up to the time
of their actual reinstatement but if reinstatement is no longer possible, the backwages shall
be computed from the time of their illegal termination up to the finality of the decision. Thus,
Casio, et al. are entitled to backwages and separation pay considering that reinstatement is
no longer possible because the positions they previously occupied are no longer existing, as
declared by GMC.38cЃa
Casio, et al., having been compelled to litigate in order to seek redress for their illegal
dismissal, are entitled to the award of attorneys fees equivalent to 10% of the total monetary
award.39cЃa
WHEREFORE, the instant petition is hereby DENIED.The assailed decision of the Court of
Appeals dated March 30, 2001 in CA-G.R. SP No. 40280 is AFFIRMED.
PICOP Resources Inc vs Taneca
OCTOBER 23, 2012 ~ VBDIAZ
PICOP Resources Inc vs Taneca
GR 160828
Facts:
Respondents were regular rank-and-file employees of PRI and bona fide members of
Nagkahiusang Mamumuo sa PRI Southern Philippines Federation of Labor (NAMAPRI-SPFL),
which is the collective bargaining agent for the rank-and-file employees of petitioner PRI. PRI
has a CBA with NAMAPRI-SPFL. The CBA contained the following union security provisions:
Article II- Union Security and Check-Off
Section 6. Maintenance of membership.
6.1 All employees within the appropriate bargaining unit who are members of the UNION at
the time of the signing of this AGREEMENT shall, as a condition of continued employment by
the COMPANY, maintain their membership in the UNION in good standing during the
effectivity of this AGREEMENT.
6.3 The COMPANY, upon the written request of the UNION and after compliance with the
requirements of the New Labor Code, shall give notice of termination of services of any
employee who shall fail to fulfill the condition provided in Section 6.1 and 6.2 of this Article
Atty. Fuentes sent a letter to the management of PRI demanding the termination of
employees who allegedly campaigned for, supported and signed the Petition for Certification
Election of the Federation of Free Workers Union (FFW) during the effectivity of the CBA.
NAMAPRI-SPFL considered said act of campaigning for and signing the petition for
certification election of FFW as an act of disloyalty and a valid basis for termination for a
cause in accordance with its Constitution and By-Laws, and the terms and conditions of the
CBA, specifically Article II, Sections 6.1 and 6.2 on Union Security Clause.
On October 16, 2000, PRI served notices of termination for causes to employees whom
NAMAPRIL-SPFL sought to be terminated on the ground of “acts of disloyalty” committed
against it when respondents allegedly supported and signed the Petition for Certification
Election of FFW before the “freedom period” during the effectivity of the CBA. A Notice
dated October 21, 2000 was also served on the DOLE, Caraga Region.
Respondents then accused PRI of ULP.
Issue:
WON respondents were validly terminated.
Held:
“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 as a condition for their continued
employment. There is maintenance of membership shop when employees, who are union
members as of the effective date of the agreement, or who thereafter become members,
must maintain union membership as a condition for continued employment until they are
promoted or transferred out of the bargaining unit, or the agreement is terminated. A closed
shop 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.
However, in terminating the employment of an employee by enforcing the union security
clause, the employer needs to determine and prove that: (1) the union security clause is
applicable; (2) the union is requesting for the enforcement of the union security provision in
the CBA; and (3) there is sufficient evidence to support the decision of the union to expel the
employee from the union. These requisites constitute just cause for terminating an employee
based on the union security provision of the CBA.
As to the first requisite, there is no question that the CBA between PRI and respondents
included a union security clause. Secondly, it is likewise undisputed that NAMAPRI-SPFL, in
two (2) occasions demanded from PRI, in their letters dated May 16 and 23, 2000, to
terminate the employment of respondents due to their acts of disloyalty to the Union.
However, as to the third requisite, we find that there is no sufficient evidence to support the
decision of PRI to terminate the employment of the respondents.
The mere signing of the authorization in support of the Petition for Certification Election of
FFW on March 19, 20 and 21, or before the “freedom period,” is not sufficient ground to
terminate the employment of respondents inasmuch as the petition itself was actually filed
during the freedom period. Nothing in the records would show that respondents failed to
maintain their membership in good standing in the Union. Respondents did not resign or
withdraw their membership from the Union to which they belong. Respondents continued to
pay their union dues and never joined the FFW.
Petition denied.
BPI VS BPI EMPLOYEES UNIONFacts:
The BSP approved the Articles of Merger executed on January 20, 2000 by and betweenBPI,
and FEBTC. This Article and Plan of Merger was approved by the SEC on April 7,
2000.Pursuant to the Article and Plan of Merger, all the assets and liabilities of FEBTC
weretransferred to and absorbed by BPI as the surviving corporation. FEBTC employees,
includingthose 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 is theexclusive bargaining agent of BPI¶s rank and file employees in Davao City. The
former FEBTCrank-and-file employees in Davao City did not belong to any labor union at the
time of themerger. Prior to the effectivity of the merger, respondent union invited said
FEBTC employeesto a meeting regarding the Union Shop Clause of the existing CBA between
petitioner BPI andrespondent union. The parties both advert to certain provisions of the
existing CBA.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. Respondent union then sent notices to the former FEBTC
employees who refusedto join, as well as those who retracted their membership and called
them to a hearing regardingthe 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.After two months of management
inaction on the request, respondent informed petitioner of itsdecision to refer the issue of
the implementation of the Union Shop Clause of the CBA to theGrievance Committee.
However, the issue remained unresolved at this level and so it wassubsequently submitted
for voluntary arbitration by the parties. Voluntary Arbitrator ruled infavor of petitioner BPI.
Respondent Union filed a motion for reconsideration, but the voluntaryarbitrator denied the
same. It appealed to the CA and the CA reversed and set aside the decisionof the voluntary
arbitrator. Hence, this petition.
Issue:
May a corporation invoke its merger with another corporation as a valid ground toexempt its
absorbed employees from the coverage of a union shop clause contained in itsexisting CBA
with its own certified labor unionEmployment Contracts
Significantly, too, the Articles of Merger and Plan of Merger dated April 7, 2000 did not
containany specific stipulation with respect to the employment contracts of existing
personnel of thenon-surviving entity which is FEBTC. Unlike the Voluntary Arbitrator, this
Court cannot upholdthe reasoning that the general stipulation regarding transfer of FEBTC
assets and liabilities toBPI as set forth in the Articles of Merger necessarily includes the
transfer of all FEBTCemployees into the employ of BPI and neither BPI nor the FEBTC
employees allegedly could doanything about it. Even if it is so, it does not follow that the
absorbed employees should not besubject 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 andcollective 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 merelycreates an action in personam and
does not create any real right which should be respected bythird parties. This conclusion
draws its force from the right of an employer to select hisemployees and to decide when to
engage them as protected under our Constitution, and the samecan only be restricted by law
through the exercise of the police power.(BANK OF THEPHILIPPINE ISLANDS v. BPI
EMPLOYEES UNION-DAVAO CHAPTER-FEDERATIONOF UNIONS IN BPI UNIBANK, G.R. No.
164301, August 10, 201
[G.R. No. 126322. January 16, 2002]
YUPANGCO COTTON MILLS, INC., petitioner, vs. COURT OF APPEALS, HON. URBANO C.
VICTORIO, SR., Presiding Judge, RTC Branch 50, Manila, RODRIGO SY MENDOZA, SAMAHANG
MANGGAGAWA NG ARTEX (SAMAR-ANGLO) represented by its Local President RUSTICO
CORTEZ, and WESTERN GUARANTY CORPORATION, respondents.
FACTS: “From the records before us and by petitioner’s own allegations and admission, it has
taken the following actions in connection with its claim that a sheriff of the National Labor
Relations Commission “erroneously and unlawfully levied” upon certain properties which it
claims as its own.
“1. It filed a notice of third-party claim with the Labor Arbiter on May 4, 1995.
“2. It filed an Affidavit of Adverse Claim with the National Labor Relations Commission (NLRC)
on July 4, 1995, which was dismissed on August 30, 1995, by the Labor Arbiter.
“3. It filed a petition for certiorari and prohibition with the Regional Trial Court of Manila,
Branch 49, docketed as Civil Case No. 95-75628 on October 6, 1995. The Regional Trial Court
dismissed the case on October 11, 1995 for lack of merit.
“4. It appealed to the NLRC the order of the Labor Arbiter dated August 13, 1995 which
dismissed the appeal for lack of merit on December 8, 1995.
“5. It filed an original petition for mandatory injunction with the NLRC on November 16,
1995. This was docketed as Case No. NLRC-NCR-IC. 0000602-95. This case is still pending with
that Commission.
“6. It filed a complaint in the Regional Trial Court in Manila which was docketed as Civil Case
No. 95-76395. The dismissal of this case by public respondent triggered the filing of the
instant petition.
“In all of the foregoing actions, petitioner raised a common issue, which is that it is the owner
of the properties located in the compound and buildings of Artex Development Corporation,
which were erroneously levied upon by the sheriff of the NLRC as a consequence of the
decision rendered by the said Commission in a labor case docketed as NLRC-NCR Case No. 00-
05-02960-90.”[2]
On March 29, 1996, the Court of Appeals promulgated a decision[3] dismissing the petition
on the ground of forum shopping and that petitioner’s remedy was to seek relief from this
Court.
On April 18, 1996, petitioner filed with the Court of Appeals a motion for reconsideration of
the decision.[4] Petitioner argued that the filing of a complaint for accion reinvindicatoria
with the Regional Trial Court was proper because it is a remedy specifically granted to an
owner (whose properties were subjected to a writ of execution to enforce a decision
rendered in a labor dispute in which it was not a party) by Section 17 (now 16), Rule 39,
Revised Rules of Court and by the doctrines laid down in Sy v. Discaya,[5] Santos v. Bayhon[6]
and Manliguez v. Court of Appeals.[7]
On August 27, 1996, the Court of Appeals denied petitioner’s motion for reconsideration
RULING:
1) FORUM SHOPPING. There is no forum-shopping where two different orders were
questioned, two distinct causes of action and issues were raised, and two objectives were
sought.
In the case at bar, there was no identity of parties, rights and causes of action and reliefs
sought.
The case before the NLRC where Labor Arbiter Reyes issued a writ of execution on the
property of petitioner was a labor dispute between Artex and Samar-Anglo. Petitioner was
not a party to the case. The only issue petitioner raised before the NLRC was whether or not
the writ of execution issued by the labor arbiter could be satisfied against the property of
petitioner, not a party to the labor case.
On the other hand, the accion reinvindicatoria filed by petitioner in the trial court was to
recover the property illegally levied upon and sold at auction. Hence, the causes of action in
these cases were different.
2) THIRD PARTY CLAIM. a third party whose property has been levied upon by a sheriff to
enforce a decision against a judgment debtor is afforded with several alternative remedies to
protect its interests. The third party may avail himself of alternative remedies cumulatively,
and one will not preclude the third party from availing himself of the other alternative
remedies in the event he failed in the remedy first availed of.
Thus, a third party may avail himself of the following alternative remedies:
a) File a third party claim with the sheriff of the Labor Arbiter, and
b) If the third party claim is denied, the third party may appeal the denial to the NLRC.[13]
The remedies above mentioned are cumulative and may be resorted to by a third-party
claimant independent of or separately from and without need of availing of the others. If a
third-party claimant opted to file a proper action to vindicate his claim of ownership, he must
institute an action, distinct and separate from that in which the judgment is being enforced,
with the court of competent jurisdiction even before or without need of filing a claim in the
court which issued the writ, the latter not being a condition sine qua non for the former. In
such proper action, the validity and sufficiency of the title of the third-party claimant will be
resolved and a writ of preliminary injunction against the sheriff may be issued.
G.R. NO. L-46496 FEBRUARY 27, 1940
ANG TIBAY, REPRESENTED BY TORIBIO TEODORO, MANAGER AND PROPIETOR, AND
NATIONAL WORKERS BROTHERHOOD, PETITIONERS, VS. THE COURT OF INDUSTRIAL
RELATIONS AND NATIONAL LABOR UNION, INC., RESPONDENTS.
69 Phil. 635 – Political Law – Constitutional Law – Due Process in Administrative Bodies
Facts:
Teodoro Toribio owns and operates Ang Tibay, a leather company which supplies the
Philippine Army. Due to alleged shortage of leather, Toribio caused the lay off of a number of
his employees. However, the National Labor Union, Inc. (NLU) questioned the validity of said
lay off as it averred that the said employees laid off were members of NLU while no
members of the rival labor union National Workers Brotherhood (NWB) were laid off. NLU
claims that NWB is a company dominated union and Toribio was merely busting NLU.
The case reached the Court of Industrial Relations (CIR) where Toribio and NWB won.
Eventually, NLU went to the Supreme Court invoking its right for a new trial on the ground of
newly discovered evidence. The Supreme Court agreed with NLU. The Solicitor General,
arguing for the CIR, filed a motion for reconsideration.
ISSUE:
Whether or not the National Labor Union, Inc. is entitled to a new trial.
HELD:
Yes. The records show that the newly discovered evidence or documents obtained by NLU,
which they attached to their petition with the SC, were evidence so inaccessible to them at
the time of the trial that even with the exercise of due diligence they could not be expected
to have obtained them and offered as evidence in the Court of Industrial Relations. Further,
the attached documents and exhibits are of such far-reaching importance and effect that
their admission would necessarily mean the modification and reversal of the judgment
rendered (said newly obtained records include books of business/inventory accounts by Ang
Tibay which were not previously accessible but already existing).
The SC also outlined that administrative bodies, like the CIR, although not strictly bound by
the Rules of Court must also make sure that they comply to the requirements of due process.
For administrative bodies, due process can be complied with by observing the following:
The right to a hearing which includes the right of the party interested or affected to present
his own case and submit evidence in support thereof.
Not only must the party be given an opportunity to present his case and to adduce evidence
tending to establish the rights which he asserts but the tribunal must consider the evidence
presented.
While the duty to deliberate does not impose the obligation to decide right, it does imply a
necessity which cannot be disregarded, namely, that of having something to support its
decision. A decision with absolutely nothing to support it is a nullity, a place when directly
attached.
Not only must there be some evidence to support a finding or conclusion but the evidence
must be “substantial.” Substantial evidence is more than a mere scintilla It means such
relevant evidence as a reasonable mind might accept as adequate to support a conclusion.
The decision must be rendered on the evidence presented at the hearing, or at least
contained in the record and disclosed to the parties affected.
The administrative body or any of its judges, therefore, must act on its or his own
independent consideration of the law and facts of the controversy, and not simply accept the
views of a subordinate in arriving at a decision.
The administrative body should, in all controversial questions, render its decision in such a
manner that the parties to the proceeding can know the various issues involved, and the
reasons for the decisions rendered. The performance of this duty is inseparable from the
authority conferred upon it
McBurnie V Ganzon October 17, 2013 J. Reyes Facts: On October 4, 2002, McBurnie, an
Australian national, instituted a complaint for illegal dismissal and other monetary claims
against the respondents. McBurnie claimed that on May 11, 1999, he signed a five-year
employment agreement with the company EGI as an Executive Vice-President
who shall oversee the management of the company’s hotels and
resorts within the Philippines. He performed work for the company until sometime in
November 1999, when he figured in an accident that compelled him to go back to Australia
while recuperating from his injuries. While in Australia, he was informed by respondent
Ganzon that his services were no longer needed because their intended project would no
longer push through. The respondents opposed the complaint, contending that their
agreement with McBurnie was to jointly invest in and establish a company for the
management of hotels. They did not intend to create an employer-employee relationship,
and the execution of the employment contract that was being invoked by McBurnie was
solely for the purpose of allowing McBurnie to obtain an alien work permit in the Philippines.
At the time McBurnie left for Australia for his medical treatment, he had not yet obtained a
work permit. In a Decision dated September 30, 2004, the LA declared McBurnie as having
been illegally dismissed from employment, and thus entitled to receive: (a) US$985,162.00 as
salary and benefits for the unexpired term of
their employment contract, (b) ₱2,000,000.00 as moral and exemplary damages, and (c)
attorney’s fees equivalent to 10%
of the total monetary award. On appeal, the NLRC dismissed the appeal and motion to
reduce the bond of approximately P60M. On one of the many appeals to CA, it granted the
motion to reduce appeal bond and directed NLRC to give due course to their appeal. NLRC
then reversed and set aside the ruling of LA above. The NLRC rule that: (1) McBurnie was
never an employee of the respondents and (2) he failed to obtain work permit that would
have allowed him to work for the respondents. The third division of SC however reversed the
decision of CA granting the motion to reduce the bond and it directive for the NLRC to give
course to the appeal. The earlier ruling of LA thus became final. This is deemed a third MR.
(Note: The court held that even if it is procedurally defective since
it’s
already a third MR, it does not preclude the court from ruling for the sake of substantial
justice.)
Issue: W/N McBurnie, an Australian national can be considered as an employee of Ganzon?
NO
The court basically adopted the ruling of NLRC.

Court held that before McBurnie can allege illegal dismissal, it was necessary for him to
establish, first and foremost, that he was qualified and duly authorize to obtain employment
w/in our jurisdiction. This requirement for foreigners who intend to work w/in the country
to obtain employment permit is laid down in Art. 40 Title II of the Labor Code. Failure to do
so poses serious problem in obtaining relief from the Court. Hence, by the very fact that
McBurnie failed to obtain employment permit necessitates the dismissal of his labor
complaint.
The court also noted that McBurnie failed to establish employer
– section.Orozco in this case is considered as an independentcontractor. As stated in the case
employee relationship. The records disclose that employment of McBurnie is conditional on
the successful completion of the project financing for the hotel project in Baguio City and his
acquisition of Alien Employment Permit.
o unique viewpoint as a feminist advocate. How she utilized allthese in writing her column was
It must be noted that the project didn’t push through.
McBurnie likewise failed to prove employer-employee relationship in accordance w/ the
four-fold test: (1) selection & engagement (2) payment of wages (3) power of dismissal and
(4) control.
the four-fold test, the Court held that PDIlacked control over the petitioner. Though PDI
issued guidelinesfor the petitioner to follow in the course of writing her columns,careful
examination reveals that the factors enumerated by thepetitioner are inherent conditions in
running a newspaper. Inother words, the so-called control as to time, space, anddiscipline
are dictated by the very nature of the newspaper business itself. Aside from the constraints
presented by thespace allocation of her column, there were no restraints on her creativity;
petitioner was free to write her column in the manner and style she was accustomed to and
to use whatever researchmethod she deemed suitable for her purpose. The
apparentlimitation that she had to write only on subjects that befitted theLifestyle section
did not translate to control, but was simply alogical consequence of the fact that her column
appeared in thatsection and therefore had to cater to the preference of thereaders of that
of Sonza vs. ABS-CBN,independent contractors often present themselves to possessunique
skills, expertise or talent to distinguish them from ordinaryemployees. Like the petitioner in
the cited case, Petitioner wasengaged as a columnist for her talent, skill, experience, and her
not subject to dictation byrespondent. As in
Sonza
, respondent PDI was not involved inthe actual performance that produced the finished
product. Itonly reserved the right to shorten petitioner’s articles based onthe newspaper’s
capacity to accommodate the same. This factwas not unique to petitioner’s column. It is a
reality in thenewspaper business that space constraints often dictate thelength of articles
and columns, even those that regularly appear therein.

McBurnie also failed to show any document such as payslips or vouchers of his salaries
during the time that he allegedly worked for the responden

1. Orozco vs. Fifth Division of the Court of AppealsFacts:PDI engaged the services of Orozco
to write a weeklycolumn for its Lifestyle section. She religiously submitted her articles except
for a 6-month stint when she went to NY City.Nevertheless, she continued to send her
articles through mail.She also received compensation for every column that
waspublished.When Orozco’s column appeared in the newspaper for the last time, her
editor, Logarta, told her that the PDI’s editor-in-chief, Magsanoc, wanted to stop publishing
her columns for noreason at all and advised her to talk to the editor-in-chief. WhenOrozco
talked to Magsanoc, the latter told her that it was the PDIchairperson who wanted to stop
the publication of her column.However, when Orozco talked to Apostol, the latter told her
thatMagsanoc informed her that the Lifestyle section had alreadymany columnists.PDI claims
that Magsanoc met with the editor of theLifestyle section to discuss how to improve said
section. Theyagreed to cut down the number of columnists by keeping onlythose whose
columns were well-written, with regular feedbackand following. In their judgment,
petitioner’s column failed toimprove, continued to be superficially and poorly written,
andfailed to meet the high standards of the newspaper. Hence, theydecided to terminate
petitioner’s column.Orozco filed a complaint for illegal dismissal. The LAdecided in favor of
petitioner. On appeal, the NLRC dismissedthe appeal and affirmed the LA’s decision. The CA
on the other hand, set aside the NLRC’s decision and dismissed
Orozco’scomplaint.Issue:Whether petitioner is an employee of PDI.Whether petitioner was
illegally dismissed.Decision:Petition dismissed. Judgment and Resolution affirmed.Applying