76. NESTLÉ PHILIPPINES, INC v.
NLRC The company retaliated by dismissing the union officers and members
G.R. No. 91231 February 4, 1991
Doctrines: 1. The fact that the retirement plan is non-contributory,
i.e., that the employees contribute nothing to the operation of the plan,
does not make it a non-issue in the CBA negotiations. As a matter of
fact, almost all of the benefits that the petitioner has granted to its
employees under the CBA—salary increases, rice allowances, midyear
bonuses, 13th and 14th month pay, seniority pay, medical and
hospitalization plans, health and dental services, vacation, sick & other
leaves with pay—are non-contributory benefits. Since the retirement
plan has been an integral part of the CBA since 1972, the Union’s
demand to increase the benefits due the employees under said plan, is
a valid CBA issue.
2. Petitioner’s contention that employees have no vested or
demandable right to a non-contributory retirement plan has no merit;
Reason.—The petitioner’s contention, that employees have no vested
or demandable right to a non-contributory retirement plan, has no
merit for employees do have a vested and demandable right over
existing benefits voluntarily granted to them by their employer. The
latter may not unilaterally withdraw, eliminate or diminish such
benefits.
Facts:
UFE was certified as the sole and exclusive bargaining agent for all
regular rank-and-file employees at the petitioner's Cagayan de Oro
factory, as well as its Cebu/Davao Sales Office. August, 1987, while the
parties, were negotiating, the employees at Cabuyao resorted to a
"slowdown" and walk-outs prompting the petitioner to shut down the
factory. Marathon collective bargaining negotiations between the
parties ensued. On September 2, 1987, the UFE declared a bargaining
deadlock. On September 8, 1987, the Secretary of Labor assumed
jurisdiction and issued a return to work order. In spite of that order,
the union struck, without notice, at the Alabang/Cabuyao factory, the
Makati office and Cagayan de Oro factory on September 11, 1987 up
to December 8, 1987.
1
Page
of the negotiating panel who participated in the illegal strike. The NLRC
affirmed the dismissals. On January 26, 1988, UFE filed a notice of
strike on the same ground of CBA deadlock and unfair labor practices.
However, on March 30, 1988, the company was able to conclude a CBA
with the union at the Cebu/Davao Sales Office, and on August 5, 1988,
with the Cagayan de Oro factory workers. The union assailed the
validity of those agreements and filed a case of unfair labor practice
against the company on November 16, 1988.
After conciliation efforts of the National Conciliation and Mediation
Board (NCMB) yielded negative results, the dispute was certified to the
NLRC by the Secretary of Labor on October 28, 1988.
The dispute was certified to the NLRC. The NLRC issued a resolution
on June 5, 1989, whose pertinent disposition regarding the union's
demand for liberalization of the company's retirement plan for its
workers. the NLRC issued a resolution denying the motions for
reconsideration. With regard to the Retirement Plan, the NLRC held that
anent management's objection to the modification of its Retirement
Plan, the plan is specifically mentioned in the previous bargaining
agreements there by integrating or incorporating the provisions thereof
to the agreement. By reason of its incorporation, the plan assumes a
consensual character which cannot be terminated or modified at will by
either party. Consequently, it becomes part and parcel of CBA
negotiations. Petitioner alleged that since its retirement plan is non-
contributory, Nestle has the sole and exclusive prerogative to define
the terms of the plan because the workers have no vested and
demandable rights, the grant thereof being not a contractual obligation
but merely gratuitous. At most the company can only be directed to
maintain the same but not to change its terms. It should be left to the
discretion of the company on how to improve or modify the same.
Issue: Whether the workers have vested and demandable rights over
the retirement plan.
Held: YES. The Court ruled that employees have a vested and
demandable right over the retirement plan. The inclusion of the
retirement plan in the collective bargaining agreement as part of the
package of economic benefits extended by the company to its
 employees to provide them a measure of financial security after they
shall have ceased to be employed in the company, reward their loyalty,
boost their morale and efficiency and promote industrial peace, gives
"a consensual character" to the plan so that it may not be terminated
or modified at will by either party.

The fact that the retirement plan is non-contributory, i.e., that the
employees contribute nothing to the operation of the plan, does not
make it a non-issue in the CBA negotiations. As a matter of fact, almost
all of the benefits that the petitioner has granted to its employees under
the CBA — salary increases, rice allowances, mid-year bonuses, 13th
and 14th month pay, seniority pay, medical and hospitalization plans,
health and dental services, vacation, sick & other leaves with pay —
are non-contributory benefits. Since the retirement plan has been an
integral part of the CBA since 1972, the Union's demand to increase
the benefits due the employees under said plan, is a valid CBA issue.
The deadlock between the company and the union on this issue was
resolvable by the Secretary of Labor, or the NLRC, after the Secretary
had assumed jurisdiction over the labor dispute (Art. 263,
subparagraph [i] of the Labor Code).
2
Page
 77. MACTAN WORKERS UNION v. DON RAMON ABOITIZ
G.R. No. L-30241 June 30, 1972
Doctrines: 1. Collective bargaining agreement; Effect of.—The terms
and conditions of a collective bargaining contract constitute the law
between the parties. Those who are entitled to its benefits can invoke
its provisions. In the event that an obligation therein imposed is not
fulfilled, the aggrieved party has the right to go to court for redress.
2. bargaining agreement benefits extend even to non-union
members.—It is a well-settled doctrine that the benefits of a collective
bargaining agreement extend to the laborers and employees in the
collective bargaining unit, including those who do not belong to the
chosen bargaining labor organization.
Facts: Cebu Shipyard & Engineering Works, Inc. in Lapulapu City is
employing laborers and employees belonging to two rival labor unions.
Seventy-two of these employees or laborers whose names appear in
the complaint are affiliated with the Mactan Workers Union while the
rest are members of the intervenor Associated Labor Union. On
November 28, 1964, the defendant Cebu Shipyard & Engineering
Works, Inc. and the Associated Labor Union entered into a 'Collective
Bargaining Agreement' ... the pertinent part of which, Article XIII
thereof, [reads thus]: '... The [Company] agrees to give a profit-sharing
bonus to its employees and laborers to be taken from ten per cent
(10%) of its net profits or net income derived from the direct operation
of its shipyard and shop in Lapulapu City and after deducting the
income tax and the bonus annually given to its General Manager and
the Superintendent and the members of the Board of Directors and
Secretary of the Corporation, to be payable in two (2) installments, the
first installment being payable in March and the second installment in
June, each year out of the profits in agreement. In the computation of
said ten per cent (10%) to [be] distributed as a bonus among the
employees and laborers of the [Company] in proportion to their salaries
or wages, only the income derived by the [Company] from the direct
operation of its shipyard and shop in Lapulapu City, as stated herein-
above-commencing from the earnings during the year 1964, shall be
3
included. Said profit-sharing bonus shall be paid by the [Company] to
Page
[Associated Labor Union] to be delivered by the latter to the employees
and laborers concerned and it shall be the duty of the Associated Labor
Union to furnish and deliver to the [Company] the corresponding
receipts duly signed by the laborers and employees entitled to receive
the profit-sharing bonus within a period of sixty (60) days from the date
of receipt by [it] from the [Company] of the profit-sharing bonus. If a
laborer or employee of the [Company] does not want to accept the
profit-sharing bonus which the said employee or laborer is entitled
under this Agreement, it shall be the duty of the [Associated Labor
Union] to return the money received by [it] as profit-sharing bonus to
the [Company] within a period of sixty (60) days from the receipt by
the [Union] from the [Company] of the said profit-sharing bonus.
In 1965, Cebu Shipyard delivered the bonus to Associated Labor Union,
for the months of March and June. Members of the Mactan Workers
Union failed to receive their shares in the second installment of bonus
because they did not like to go to the office of the ALU to collect their
shares. In accordance with the terms of the collective bargaining after
60 days, the uncollected shares of the plaintiff union members were
returned by the ALU to the defendant corporation.
Issue: Whether members of the rival union are also entitled to the
bonus
Held: YES. The terms and conditions of a collective bargaining contract
constitute the law between the parties. Those who are entitled to its
benefits can invoke its provisions. In the event that an obligation
therein imposed is not fulfilled, the aggrieved party has the right to go
to court for redress. Nor does it suffice as a defense that the claim is
made on behalf of non-members of intervenor Associated Labor Union,
for it is a well-settled doctrine that the benefits of a collective
bargaining agreement extend to the laborers and employees in the
collective bargaining unit, including those who do not belong to the
chosen bargaining labor organization. Any other view would be a
discrimination on which the law frowns. It is appropriate that such
should be the case. As was held in United Restauror's Employees and
Labor Union v. Torres, this Court speaking through Justice Sanchez,
"the right to be the exclusive representative of all the employees in an
appropriate collective bargaining unit is vested in the labor union
'designated or selected' for such purpose 'by the majority of the
 employees' in the unit concerned."9 If it were otherwise, the highly
salutory purpose and objective of the collective bargaining scheme to
enable labor to secure better terms in employment condition as well as
rates of pay would be frustrated insofar as non-members are
concerned, deprived as they are of participation in whatever
advantages could thereby be gained. The labor union that gets the
majority vote as the exclusive bargaining representative does not act
for its members alone. It represents all the employees in such a
bargaining unit. It is not to be indulged in any attempt on its part to
disregard the rights of non-members. Yet that is what intervenor labor
union was guilty of, resulting in the complaint filed on behalf of the
laborers, who were in the ranks of plaintiff Mactan Labor Union.
4
Page
 78. SANTOS JUAT V. CIR
G.R. No. L-20764 November 29, 1965
Doctrine: Collective bargaining agreement; Closed-shop proviso;
Employees bound.—The closed-shop proviso' of a collective bargaining
agreement entered into between an employer and a duly authorized
Iabor union is- applicable not only to the employees or laborers that
are employed after the collective bargaining agreement had been
entered into but also to old employees who are not members of any
labor union at the time the said collective bargaining agreement was
entered into. In other words, if an employee or laborer is already a
member of labor union different from the contracting labor unions said
employee or worker cannot be obliged to become a member of that
union as a condition for his continued employment, Upon the other
hand, if said employee or worker is a non-member of any labor union,
he can be compelled to join the contracting labor union, and his refusal
to do so would constitute a justifiable basis for dismissal
Facts: Santos Juat before the Court of Industrial Relations against
respondents Bulaklak Publications and its Executive Officer, Acting
Prosecutor Alberto Cruz of the Court of Industrial Relations filed a
complaint, docketed as Case No. 2889-ULP, charging Bulaklak
Publications and/or Juan N. Evangelista of unfair labor practice within
the meaning of Section 4 (a) subsections 1, 4 and 5 of Republic Act
875, alleging, among others, that complainant Santos Juat was an
employee of the respondent company since August 1953; that on or
about July 15, 1960, and on several occasions thereafter, complainant
Santos Juat was asked by his respondent employer to join the Busocope
Labor Union, but he refused to do so; that respondent employer
suspended him without justifiable cause; that two separate cases were
filed by complainant against the respondents.
On December 1, 1959, a collective bargaining agreement was entered
into between the Bulaklak Publications and the BUSOCOPE LABOR
UNION, to remain in effect for 3 years, and renewable for another term
of 3 years. Section 4 of said agreement contains a closed shop proviso.
On December 27, 1960, said Section 4 of said agreement was amended
5
to read as follows:
Page
"All employees and/or workers who on January 1, 1960 are members
of the Union in good standing in accordance with its Constitution and
By-Laws and all members who become members after that date shall,
as a condition of employment, maintain their membership in the Union
for the duration of this Agreement. All employees and/or workers who
on January 1, 1961 are not yet members of the Union shall, as a
condition of maintaining their employment, become members of such
union."
Respondent Bulaklak Publications averred that because of the refusal
of Santos Juat to become a member of said Union, Mr. Juan N.
Evangelists, the executive officer of respondent company, suspended
him for 15 days. After the expiration of the suspension of Santos Juat,
Mr. Evangelista addressed a letter to the former, ordering him to report
back for duty, and in spite of said letter, Santos Juat did not report for
work, consequently, Santos Juat was dropped from the service of the
company. Juat could afford not to report for duty because he has his
own business by the name of JUAT PRINTING PRESS CO., INC. The
refusal of Santos Juat to become a member of the Busocope Labor
Union as well as his refusal to report for work when ordered by his
superior officer, shows the lack of respect on the part of Santos Juat
toward his superior officer. With such attitude, the continuation in the
service of the company of Santos Juat is indeed inimical to the interest
of his employer.
Issue: Whether the refusal of Santos Juat from joining the BUSOCOPE
LABOR UNION is a valid ground for dismissal
Held: YES. A closed-shop agreement has been considered as one form
of union security whereby only union members can be hired and
workers must remain union members as a condition of continued
employment. The requirement for employees or workers to become
members of a union as a condition for employment redounds to the
benefit and advantage of said employees because by holding out to
loyal members a promise of employment in the closed-shop the union
wields group solidarity. In fact, it is said that "the closed-shop contract
is the most prized achievement of unionism”
 This Court had categorically held in the case of Freeman Shirt
Manufacturing Co., Inc., et al. vs. Court of Industrial Relations, et al.,
that the closed-shop proviso of a collective bargaining agreement
entered into between an employer and a duly authorized labor union is
applicable not only to the employees or laborers that are employed
after the collective bargaining agreement had been entered into but
also to old employees who are not members of any labor union at the
time the said collective bargaining agreement was entered into. In
other words, if an employee or laborer is already a member of a labor
union different from the union that entered into a collective bargaining
agreement with the employer providing for a closed-shop, said
employee or worker cannot be obliged to become a member of that
union which had entered into a collective bargaining agreement with
the employer as a condition for his continued employment.

It being established by the evidence that petitioner Santos Juat,

although an old employee of the respondent Bulaklak Publications, was
not a member of any labor union at the time when the collective
bargaining agreement in question was entered into he could be obliged
by the respondent Bulaklak Publications to become a member of the
Busocope Labor Union. And because petitioner refused to join the
Busocope Labor Union respondent Bulaklak Publications was justified
in dismissing him from the service on the ground that he had refused
to join said union.
We, therefore, hold that the respondent Court of Industrial Relations
did not err, nor did it commit a grave abuse of discretion, when it
decided that the respondent Bulaklak Publications did not commit unfair
labor practice when it dismissed petitioner because of his refusal to join
the Busocope labor union.
6
Page
 79. FERRER v. NLRC
RULING :
The need of the company investigation is founded on the consistent
ruling that the twin requirements of notice and hearing which are
essential elements of due process must be met in employment-
termination cases. The employee concerned must be notified of the
employer’s intent to dismiss him and of the reasons for the proposed
dismissal. The hearing afford the employee an opportunity to answer
the charges against him and to defend himself therefrom before
dismissal is effected. Observance to the letter of company rules on
investigation of an employee about to be dismissed is not mandatory.
It is enough that there is due notice and hearing is conducted, the
requirements of due process would have been met where a chance to
explain a party’s side of the controversy had been accorded him.
The law recognizes the right of the employer to dismiss the employee
in warranted cases, however, it frowns upon arbitrariness as when
employees are not accorded due process. The prerogatives of OFC to
dismiss the petitioners should not have whimsically done for it unduly
exposed itself to a charge of unfair labor practice for dismissing the
petitioners in line with the closed shop provision of the CBA, without
proper hearing. Neither can the manner of dismissal be considered a
managerial prerogative, it is not an absolute prerogative subject as it
is to limitations founded in law, the CBA, or general principles of fair
play and justice.
Petitioner Ferrer and the SAMAHAN filed with DOLE a complaint for the
expulsion from SAMAHAN several officers for inattentiveness to the
economic demands of the workers but the petition was then withdrawn.
Petitioners conducted a special election of officers of the SAMAHAN but
the said election was then questioned by FFW. Nonetheless, the elected
officers dissuaded OFC from remitting union dues to the officers led by
Capitle who’s an ally of FFW. One of the officers elected manifested to
the DOLE that he was no longer objecting to the remittance of the
union dues to the officers led by Capitle. Petitioners move to stage a
strike based on economic demands was also later disowned by
members off SAMAHAN.
A resolution expelling petitioners from the SAMAHAN was issued by the
union officials headed by Capitle and a letter was sent to Hui Kam
Chang requesting that petitioners to be dismissed on the ground of
failure to retain the membership in good standing which lead to their
dismissal from employment. They volunteered to be admitted as
members of Federation of Democratic Labor Unions (FEDLU) and
requested that they be represented by the FEDLU in the complaint
against SAMAHAN, the FWW and the company for illegal dismissal,
reinstatement, and other benefits in accordance with law.
LA dismissed the complaint as the OFC was merely complying with the
CBA - the law between the company and the union. NLRC affirmed LA’s
decision.

FACTS :
Petitioners in this case were regular and permanent employees of
Occidental Foundry Corporation (OFC) in Valenzuela, Metro Manila
which was under the management of Hui Kam Chang. SAMAHAN and
OFC entered into a CBA which would be effective for the three year
period between October 1, 1988 and September 30, 1991 where OFC
agrees that all permanent and regular factory workers in the company
who are members in good standing of the union or who thereafter
becomes a member shall as a condition of continued employment,
maintain their membership in the union in good standing for the
duration of the agreement and failure to retain membership in good
7

standing with the union shall be ground for the dismissal by the
Page

company of the aforesaid employee upon written request by the union.

Page
8
 80. MSMG-UWP v. RAMOS
RULING :
Union Security Clauses embodied in the CBA may be validly enforced
and that dismissals pursuant thereto may likewise be validly enforced
and that dismissals pursuant thereto may be valid, this does not erode
the fundamental requirement of due process. The reason behind the
enforcement of union security clauses which is the sanctity and
inviolability of contracts cannot override ones right to due process.
While the company, under maintenance of membership provision of the
CBA, is bound to dismiss employees expelled by the union for disloyalty
upon its written request, this undertaking should not be done hastily
and summarily. The company acts in bad faith in dismissing a worker
without giving him the benefit of a hearing.
The power to dismiss is a normal prerogative of an employer. However,
this is not without limitation. 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 CBA. 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 the means of livelihood. Employer should respect and protect the
rights of their employees, which includes the right to labor.
Respondent company dismissed the employees without conducting
independent investigation. It did not inquire into the cause of the
expulsion and whether or not the federation had sufficient grounds to
effect the same.
FACTS :
Petitioner is an affiliate of the private respondent, ULGWP. The CBA
between MSMG and M. Greenfield, Inc., include the dismissal by the
company by recommendation of the union of employees who fails to
maintain his membership in the union for non-payment of union dues,
resignation and for violation of union’s constitution and by-laws, also
failure of new employees to maintain membership in the union.
9
Petitioner held an election under the auspices of ULGWP wherein the
Page
petitioner Villanueva and other union officers were proclaimed as
winners. The minutes were filed with the Bureau of Labor Relations. A
petition for impeachment was filed with the national federation ULGWP
by the defeated candidates in the election. An audit was made by
ULGWP on the MSMG’s funds. The audit did not yield any unfavorable
result and the officers were cleared of the charges of anomaly in the
custody, handling and disposition of the union funds.
14 defeated candidates filed a petition for impeachment/expulsion of
the officers with the DOLE, however, it was dismissed for failure to
substantiate the charges and to present evidence in support of the
allegations. MSMG general membership meeting was held and several
members failed to attend prompting the Executive Board to create a
committee tasked to investigate the non-attendance of several union
members in the said assembly pursuant to the union’s constitution and
by-laws. A letter was sent to the respondent company requesting
deduction of fines from wages/salaries of those members who failed to
attend the general membership meeting. The company denied the
request and referred the matter to be settled in the proper government
office for the resolution in order to avoid placing the company in the
middle of the issue.
The imposition of fine became the subject of disagreement between
the ULGWP and MSMG culminating in the MSMG’s declaration of
general autonomy from ULGWP though a resolution by the executive
board and ratified by the general membership. In retaliation, ULGWP
asked the respondent company to stop the remittance of the MSMG
share in the education funds. This was objected by MSMG which
demanded that the education fund be remitted in full. The company
was constrained to file a complaint for interpleader with the Med-
Arbitration of DOLE who then ordered that ULGWP through MSMG’s
officers to administer the CBA; the company to remit the education
program fund to ULGWP; and collection of the penalty for non-
attendance in the general membership meeting.
A petition for audit and examination of ULGWP and the education
program funds which was granted by the Med-Arbiter. The ULGWP
advised the company to expel 30 union officers and demanded their
separation from employment pursuant to the Union Security Clause in
their CBA. The letter was sent twice to the company. A notice of strike
 to compel the company to expel the union officers was made with the
National Conciliation and Mediation Board. The company was
compelled and dismissed the employees. DOLE dismissed the petition.
10
Page
 81. METROBANK UNION v. NLRC RA. 6727 took effect increasing the wage of employees in the private
sector, whether agricultural or non-agricultural by P25 per day.
RULING : Pursuant to the said provision, the bank gave P25 increase per day or
Wage distortion means a situation where an increase in prescribed P750 a month to its probationary employees who had been promoted
wage rates results in the elimination or severe contradiction of to regular or permanent status before the passage of the law but whose
intentional quantitative differences in wage or salary rates between and daily rate was P100 and below. The bank refused to give the same
among employee groups in an establishment as to effectively obliterate increase to its regular employees who were receiving more than P100
the distinctions embodied in such wage structure based on skills , per day and the recipients of the P900 CBA increase.
length of service, or other logical bases of differentiation. The union sought from the bank the correction of the alleged distortion
In mandating an adjustment, the law did not require that there be an in pay. In order to avert an impending strike, the bank petitioned the
elimination or total abrogation of quantitative wage or salary Secretary of Labor to assume jurisdiction over the case to certify the
differences; a severe contraction thereof is enough. Contraction same to the NLRC under Art. 263 (g) of the Labor Code. The parties
between personnel groupings comes close to 83%, which cannot, by agreed to refer the issue for compulsory arbitration to the NLRC.
any stretch of imagination, be considered less than severe. LA disregarded the bank’s contention that the increase in its
The intentional quantitative differences in wage among employees of implementation of the RA. Did not constitute a distortion because only
the bank has been set by the CBA to about P900 per month. It is 143 employees or 6.8% of the bank’s population of a total of 2,108
intentional as it has been arrived at through the CB process to which regular employees benefited. LA stresses that it is not necessary
the parties are thereby concluded. that a big number of wage earners within a company be
In keeping then with the intendment of the law and the agreement of benefited by the mandatory increase of wage before a wage distortion
the parties themselves, along with the often repeated rule that all may be considered to have taken place. Such increase in the severe
doubts in the interpretation and implementation of labor law should be contraction of an intentional quantitative difference in wage between
resolved in favor of labor, approximate an acceptable quantitative the employee groups. NLRC reversed the LA’s decision.
difference between and among the CBA agreed work levels. Giving the
employees an across-the-board increase of P750 may not be
conductive to the policy of encouraging employers to grant wage and
allowance increases to their employees higher than the minimum rates
or increases prescribed in the statute or administrative regulation.
To compel employer simply to add on legislated increases in salaries or
allowances without regard to what is already being paid, would be to
penalize employers who grant their workers more than the statutorily
prescribed minimum rates of increases. Clearly, this would be counter-
productive so far as securing the interest of labor is concerned.
FACTS :
The bank entered into a CBA with MBTCEU, granting a monthly P900
wage increase in 1989, P600 in 1990, P200 in 1991. The union also
bargained for the inclusion of probationary employees in the list of
employees who would benefit from the first P900 increase but the bank
11

adamantly refused. Consequently, only regular employees were given

Page

he increase to the exclusion of probationary employees.

 82. E. RAZON, INC. [formerly known as Metro Services,
Inc.], Petitioner, vs. THE HONORABLE SECRETARY OF LABOR
AND EMPLOYMENT (DOLE) and MARINA PORT SERVICES, INC.
(MARINA), Respondents.
DOCTRINE:
A successor-employer does not need to assume the responsibilities and
obligations then accruing before the date of the succession. Mere
absorbing of employees and honoring the terms and conditions in the
collective bargaining agreement between the former employer and its
employees, does not equate to an assumption of the responsibility of
paying separation pay to the employees. Employees' benefits, should
be applied prospectively with respect to the successor employer. There
is no law that requires the purchaser to absorb the employees of the
selling corporation. As such, when MARINA rehired the ERI/MPSI
employees, it had all the right to consider them as new ones.
FACTS:
E. Razon, Inc. (ERI) operates arrastre services in Manila which
executed a management contract covering all the piers in South
Harbor, Manila for a term of 5 years renewable for another 5 years. ERI
became Metro Port (MPSI) and the PPA then executed a new contract
with ERI/MPSI for a term of (8) years. 2 years before the expiration of
the eight-year term, the PPA cancelled the management contract for
alleged violations, took over the cargo-handling operations as well as
all the equipment of MPSI, and issued Permit for cargo-handling
services to Marina Port Services, Inc. (MARINA). The permit, provided
that “Labor and personnel of previous operator, except those positions
of trust and confidence, shall be absorbed by grantee. Labor or
employees benefits provided for under existing CBA shall likewise be
honored.”
MARINA began the services. The bulk of the 2,700 employees
concerned discovered that they had been hired by MARINA as new
12
employees, prompting them for the payment of their separation pay
but both the MARINA and ERI/MPSI refused to be liable. A P2,
Page
000,000.00 was deducted for rentals for MPSI equipment for the
payment thereof. Still dissatisfied, a notice of strike was effected and
this move prompted the PPA, MARINA, ERI, and representatives of the
AWU, Associated Port Checkers Workers Union (ASTEU), and Marina
Management Employees (MARINE ME) to enter into an agreement
regarding the separation pay. Still, the workers went on strike as the
appraisal of the pieces of equipment and machinery of MPSI
had not been completed.
SOLE then took jurisdiction over the matter, and the separation pay of
the workers was later taken. SOLE then determined that MARINA did
not undertake to be liable for the separation pay of the workers, as it
still was not bound thereto pursuant to paragraph 7 of the permit.
ERI/MPSI then raised the instant petition against the SOLE order, as
MARINA became the successor-employer of the workers.
ISSUE
Whether MARINA should pay such benefit to the employees concerned.
RULING
NO. Under Article 283 of the Labor Code, separation pay is required
where the termination of employment relationship is occasioned by the
"cessation of operations" of an establishment. The burden of paying
separation pay on ERI/MPSI, the employer for whom services had been
rendered by the employees who were separated from employment in
view of the cessation of its business operations by the cancellation of
its management contract with the PPA.
The circumstances of this case do not warrant the conclusion that, by
"absorbing" the ERI/MPSI employees, MARINA took the place of the
ERI/MPSI as an employer as if there had been no interruption in the
employer-employee relationship between ERI/MPSI and its employees
and, therefore, MARINA should assume all responsibilities of ERI/MPSI.
For, while in Marina Port Services, Inc. vs. NLRC, the Court opined that
by virtue of Paragraph 7, security guards of the MPSI did become
employees of MARINA, the undeniable fact is that, by the termination
of its management contract with the PPA, ERI/MPSI ceased to be an
 employer. Admittedly, the consequent separation from the employment
of its employees was not of the ERI/MPSI's own making. However, it
may not validly lay such consequence on the lap of MARINA which, like
itself, had no hand in the termination of the management contract by
the PPA. The fact that a couple of days later, the PPA, without public
bidding, issued to MARINA, permit to operate, does not imply that
MARINA stepped into the shoes of ERI/MPSI as if there were absolute
identity between them. Parenthetically, the issue of the legality of the
cancellation of MPSI's permit to operate was laid to rest in E. Razon,
Inc. vs. Philippine Ports Authority.

MARINA might have been impelled not only by compassion for the
employees but also by their tested skills in hiring them back upon their
separation from the employment of ERI/MPSI. It should be recalled,
however, there is no law that requires the purchaser to absorb the
employees of the selling corporation. As such, when MARINA rehired
the ERI/MPSI employees, it had all the right to consider them as new
ones. On the other hand, ERI/MPSI, to whom years of service had been
rendered by its suddenly jobless employees, had the corresponding
obligation to grant them what is theirs under the law and the collective
bargaining agreement. After all, a collective bargaining agreement is
the law between the parties and compliance therewith is mandated by
the express policy of the law.

The situation in this case is completely different from that obtaining

in Filipinas Port Services, Inc. vs. NLRC, where the petitioner was
obligated "not only to absorb the workers of the dissolved companies
but also to include the length of service earned by the absorbed
employees with their former employers as well" because said case
involved a merger of different companies into a single company as a
result of the PPA's integration of stevedoring/arrastre services. On the
other hand, in the case at bar, there is no privity of contract between
ERI/MPSI and MARINA so as to make the latter a common or even
substitute employer that it should be burdened with the obligations of
the former.
13
Page
 83. BENGUET CONSOLIDATED, INC., plaintiff-appellant, vs. BCI
EMPLOYEES and WORKERS UNION-PAFLU, PHILIPPINE
ASSOCIATION OF FREE LABOR UNIONS, CIPRIANO CID and
JUANITO GARCIA, defendants-appellees.
DOCTRINE
The Doctrine of Substitution, as formulated by the NLRB (initial
compromise solution to the problem facing it when there occurs a shift
in employees' union allegiance after the execution of a bargaining
contract with their employer), merely states that even during the
effectivity of a collective bargaining agreement executed between
employer and employees thru their agent, the employees can change
said agent but the contract continues to bind them up to its expiration
date. They may bargain however for the shortening of said expiration
date.
In formulating the "substitutionary" doctrine, the only consideration
involved was the employees' interest in the existing bargaining
agreement. The agent's interest never entered the picture. In fact, the
justification 9 for said doctrine was:
that the majority of the employees, as an entity under the
statute, is the true party in interest to the contract, holding
rights through the agency of the union representative. Thus,
any exclusive interest claimed by the agent is defeasible at the
will of the principal.
Stated otherwise, the "substitutionary" doctrine only provides that the
employees cannot revoke the validly executed collective bargaining
contract with their employer by the simple expedient of changing their
bargaining agent. And it is in the light of this that the phrase "said new
agent would have to respect said contract" must be understood. It only
means that the employees, thru their new bargaining agent, cannot
renege on their collective bargaining contract, except of course to
negotiate with management for the shortening thereof.
14
FACTS
Page
BBWU entered into a CBA with BENGUET, effective for a period of 4-½
years, containing a No-Strike, No-Lockout clause. About three years
later, a certification election was conducted by the DOLE among all the
rank and file employees of BENGUET in the same collective bargaining
units. BCI Employees & Workers Union (UNION) obtained more than
50% of the total number of votes, and was certified as the sole and
exclusive collective bargaining agent of all BENGUET employees as
regards rates of pay, wages, hours of work and such other terms and
conditions of employment allowed them by law or contract.
Subsequently, separate meetings were conducted at Antamok, Balatoc
and Acupan Mines respectively by UNION directing its president to file
a notice of strike against BENGUET for: Refusal to grant any amount
as monthly living allowance for the workers; Violation of Agreements
reached in conciliation meetings among which is the taking down of
investigation UNION members went on strike (violent, unruly, nearly
overturned a car, but was prevented by PC soldiers). The parties agreed
to end the raging dispute and a collective bargaining contract was
finally executed between UNION-PAFLU and BENGUET.
BENGUET as a result of the strike incurred expenses for the
rehabilitation of mine openings, repair of mechanical equipment,
amounting to P1, 911,363.83. BENGUET sued UNION, PAFLU and their
respective Presidents to recover said amount in the CFI Manila, on the
sole premise that said defendants breached their undertaking
in the existing CONTRACT not to strike during the effectivity
thereof.
CFI MANILA: dismissed the complaint grounded on that the CONTRACT
did not bind defendants. BENGUET interposed the present appeal.
ISSUE
WON the CBA executed between BENGUET and BBWU automatically
bind UNION-PAFLU upon its certification as sole bargaining
representative of all BENGUET employees?
RULING
 NO. BENGUET wrongly invoked the so-called "Doctrine of Substitution”
as the pronouncement was obiter dictum. The only issue in
the General Maritime Stevedores' Union case was whether a collective
bargaining agreement which had practically run for 5 years constituted
a bar to certification proceedings. We held it did not and
accordingly directed the court a quo to order certification
elections. The "substitutionary" doctrine, therefore, cannot be
invoked to support the contention that a newly certified
collective bargaining agent automatically assumes all the
personal undertakings — like the no-strike stipulation here —
in the collective bargaining agreement made by the deposed union.
When BBWU bound itself and its officers not to strike, it could
not have validly bound also all the other rival unions existing
in the bargaining units in question. BBWU was the agent of the
employees, not of the other unions which possess distinct
personalities. To consider UNION contractually bound to the no-strike
stipulation would therefore violate the legal maxim that res inter
alios nec prodest nec nocet. 10

Of course, UNION, as the newly certified bargaining agent, could

always voluntarily assume all the personal undertakings made
by the displaced agent. But as the lower court found, there was no
showing at all that, prior to the strike, 11 UNION formally adopted
the existing CONTRACT as its own and assumed all the liability
ties imposed by the same upon BBWU. There is also no estoppel.
UNION did not assert the above statement against BENGUET
to force it to rely upon the same to effect the union check-off
in its favor. There is nothing then, in law as well as in fact, to support
plaintiff BENGUET's contention that defendants are contractually bound
by the CONTRACT. There is no question, defendants were not
signatories nor participants in the CONTRACT.
15
Page
 83. SANYO PHILIPPINES WORKERS UNION-PSSLU LOCAL
CHAPTER NO. 109 AND/OR ANTONIO DIAZ, PSSLU NATIONAL
PRESIDENT, petitioners, vs.HON. POTENCIANO S. CANIZARES,
in his capacity as Labor Arbiter, BERNARDO YAP, RENATO
BAYBON, SALVADOR SOLIBEL, ALLAN MISTERIO, EDGARDO
TANGKAY, LEONARDO DIONISIO, ARNEL SALVO, REYNALDO
RICOHERMOSO, BENITO VALENCIA, GERARDO LASALA AND
ALEXANDER ATANASIO, respondents.
DOCTRINE
The reference to a Grievance Machinery and Voluntary Arbitrators for
the adjustment or resolution of grievances arising from the
interpretation or implementation of their CBA and those arising from
the interpretation or enforcement of company personnel policies is
mandatory. The law grants to voluntary arbitrators the
original and exclusive jurisdiction to hear and decide all unresolved
grievances arising from the interpretation or implementation of the
Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies (Art. 261,
Labor Code). The failure of the parties to the CBA to establish the
grievance machinery and its unavailability is not an excuse for the Labor
Arbiter to assume jurisdiction over disputes arising from the
implementation and enforcement of a provision in the CBA. In the
existing CBA between PSSLU and Sanyo, the procedure and mechanics
of its establishment had been clearly laid out. All that needs to be done
to set the machinery into motion is to call for the convening thereof. If
the parties to the CBA had not designated their representatives yet,
they should be ordered to do so.
The procedure introduced in RA 6715 of referring certain grievances
originally and exclusively to the grievance machinery and when not
settled at this level, to a panel of voluntary arbitrators outlined in CBA's
does not only include grievances arising from the interpretation or
implementation of the CBA but applies as well to those arising from the
implementation of company personnel policies. No other body shall
16
take cognizance of these cases. The last paragraph of Article 261
enjoins other bodies from assuming jurisdiction.
Page
FACTS
PSSLU had an existing CBA with Sanyo Philippines containing a union
security clause. In a letter, PSSLU informed the management of Sanyo
that the some employees were notified that their membership with
PSSLU were cancelled for anti-union, activities, economic sabotage,
threats, coercion and intimidation, disloyalty and for joining another
union. The same letter informed Sanyo that the same employees
refused to submit themselves to the union's grievance investigation
committee. It appears that many of these employees were not
members of PSSLU but of another union, KAMAO. Officers of KAMAO,
executed a pledged of cooperation with PSSLU promising cooperation
with the latter union and among others, respecting, accepting and
honoring the CBA between Sanyo, but still engaged in anti-union
activities and willfully violated the pledge of cooperation with PSSLU as
they were still threatening with bodily harm and even death the officers
of the union. This prompted a recommendation from PSSLU for the
dismissal of the employees concerned. The company sent a
memorandum to the same workers and placing them under preventive
suspension. The company received no information on whether or not
said employees appealed to PSSLU, thus it considered them dismissed.
The dismissed employees filed a complaint with the NLRC for illegal
dismissal.
PSSLU filed a motion to dismiss the complaint alleging that the Labor
Arbiter was without jurisdiction over the case, since cases arising from
the interpretation or implementation of the collective bargaining
agreements shall be disposed of by the labor arbiter by referring the
same to the grievance machinery and voluntary arbitration.
Labor Arbiter: assumed jurisdiction over the complaint of private
respondents
ISSUE
WON the termination cases fall under the jurisdiction of the Labor
Arbiter.
 RULING

YES. It is clear that termination cases fall under the jurisdiction of the
Labor Arbiter. It was provided in the CBA executed between PSSLU and
Sanyo that a member's voluntary resignation from membership, willful
refusal to pay union dues and his/her forming, organizing, joining,
supporting, affiliating or aiding directly or indirectly another labor union
shall be a cause for it to demand his/her dismissal from the company.
The demand for the dismissal and the actual dismissal by the company
on any of these grounds is an enforcement of the union security clause
in the CBA. This act is authorized by law provided that enforcement
should not be characterized by arbitrariness and always with due
process.

In the instant case, however, We hold that the Labor Arbiter and not
the Grievance Machinery provided for in the CBA has the jurisdiction to
hear and decide the complaints of the private respondents. While it
appears that the dismissal of the private respondents was made upon
the recommendation of PSSLU pursuant to the union security clause
provided in the CBA, We are of the opinion that these facts do not come
within the phrase "grievances arising from the interpretation or
implementation of (their) Collective Bargaining Agreement and those
arising from the interpretation or enforcement of company personnel
policies," the jurisdiction of which pertains to the Grievance Machinery
or thereafter, to a voluntary arbitrator or panel of voluntary arbitrators.

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
17

ventilated before an impartial body. Since there has already been an

actual termination, the matter falls within the jurisdiction of the Labor
Page

Arbiter.
 85. CELESTINO VIVIERO vs. COURT OF APPEALS, HAMMONIA however, parties failed to reach and settle the dispute amicably, thus,
MARINE SERVICES, and HANSEATIC SHIPPING CO., LTD. complainant filed a complaint with the POEA. Private respondents filed
a Motion to Dismiss on the ground that the POEA had no jurisdiction
DOCTRINE:
over the case considering petitioner Vivero's failure to refer it to a
A dismissal of an employee MAY constitute a "grievance between the Voluntary Arbitration Committee in accordance with the CBA between
parties," as defined under the provisions of the CBA, and consequently, the parties.
within the exclusive original jurisdiction of the Voluntary Arbitrators.
Labor Arbiter: dismissed the Complaint for want of jurisdiction
However, it is not sufficient to merely say that parties to the CBA agree
grounded on the fact that since the CBA of the parties provided for the
on the principle that "all disputes" should first be submitted to a
referral to a Voluntary Arbitration Committee should the Grievance
Voluntary Arbitrator. There is a need for an express stipulation in the
Committee fail to settle the dispute, and considering the mandate of
CBA that illegal termination disputes should be resolved by a Voluntary
Art. 261 of the Labor Code on the original and exclusive jurisdiction of
Arbitrator or Panel of Voluntary Arbitrators, since the same fall within
Voluntary Arbitrators, the Labor Arbiter clearly had no jurisdiction over
a special class of disputes that are generally within the exclusive
the case.
original jurisdiction of Labor Arbiters by express provision of law.
NLRC: set aside the decision of the Labor Arbiter on the ground that
Absent such express stipulation, the phrase "all disputes" should be
the record was clear that petitioner had exhausted his remedy by
construed as limited to the areas of conflict traditionally within the
submitting his case to the Grievance Committee of AMOSUP; and that
jurisdiction of Voluntary Arbitrators, i.e., disputes relating to contract-
the contested portion in the CBA providing for the intercession of a
interpretation, contract-implementation, or interpretation or
Voluntary Arbitrator was not binding upon petitioner since both
enforcement of company personnel policies. Illegal termination
petitioner and private respondents had to agree voluntarily to submit
disputes - not falling within any of these categories - should then be
the case before a Voluntary Arbitrator or Panel of Voluntary Arbitrators.
considered as a special area of interest governed by a specific provision
of law. CA: ruled in favor of private respondents, and held that the CBA "is the
law between the parties and compliance therewith is mandated by the
FACTS
express policy of the law."
Petitioner Vivero, a licensed seaman, is a member of the Associated
ISSUE:
Marine Officers and Seamen's Union of the Philippines (AMOSUP) with
an existing Collective Bargaining Agreement with private respondents. WON the dismissal of a VIVERO constitute a "grievance between the
He was hired by respondent as Chief Officer of the vessel "M.V. Sunny parties," as defined under the provisions of the CBA, and consequently,
Prince, but on grounds of very poor performance and conduct, refusal within the exclusive original jurisdiction of the Voluntary Arbitrators,
to perform his job; refusal to report to the Captain or the vessel’s thereby rendering the NLRC without jurisdiction to decide the case?
Engineers or cooperate with other ship officers about the problem in
RULING
cleaning the cargo holds; of the shipping pump and his dismal relations
with the Captain of the vessel, complainant was repatriated. No. In this case, however, while the parties did agree to make
18

termination disputes the proper subject of voluntary arbitration, such

Complainant filed a complaint for illegal dismissal at AMOSUP of which
submission remains discretionary upon the parties. A perusal of the
Page

complainant was a member. Grievance proceedings were conducted;

 CBA provisions shows that Sec. 6, Art. XII (Grievance Procedure) of the
CBA is the general agreement of the parties to refer grievances,
disputes or misunderstandings to a grievance committee, and
henceforth, to a voluntary arbitration committee. The requirement of
specificity is fulfilled by Art. XVII (Job Security).

The use of the word "may" shows the intention of the parties to reserve
the right to submit the illegal termination dispute to the jurisdiction of
the Labor Arbiter, rather than to a Voluntary Arbitrator. Petitioner
validly exercised his option to submit his case to a Labor Arbiter when
he filed his Complaint before the proper government agency. The use
of the word "may" shows the intention of the parties to reserve the
right of recourse to Labor Arbiters. The CBA clarifies the proper
procedure to be followed in situations where the parties expressly
stipulate to submit termination disputes to the jurisdiction of a
Voluntary Arbitrator or Panel of Voluntary Arbitrators.

After the grievance proceedings have failed to bring about a resolution,

AMOSUP, as agent of petitioner, should have informed him of his option
to settle the case through voluntary arbitration. Private respondents,
on their part, should have also timely invoked the provision of their CBA
requiring the referral of their unresolved disputes to a Voluntary
Arbitrator once it became apparent that the grievance machinery failed
to resolve it prior to the filing of the case before the proper tribunal.
The private respondents should not have waited for (9) months from
the filing of their Position Paper with the POEA before it moved to
dismiss the case purportedly for lack of jurisdiction. As it is, private
respondents are deemed to have waived their right to question the
procedure followed by petitioner, assuming that they have the right to
do so. Under their CBA, both Union and respondent companies are
responsible for selecting an impartial arbitrator or for convening an
arbitration committee; yet, it is apparent that neither made a move
towards this end. Consequently, petitioner should not be deprived of
his legitimate recourse because of the refusal of both Union and
respondent companies to follow the grievance procedure.
19
Page
 86. LUDO & LUYM CORPORATION V SAORNIDO
G. R. No. 140960 - January 20, 2003
Doctrine:
1. Basic is the rule that findings of fact of administrative and quasi-
judicial bodies, which have acquired expertise because their jurisdiction
is confined to specific matters, are generally accorded not only great
respect but even finality.
2. Compulsory arbitration has been defined both as "the process of
settlement of labor disputes by a government agency which has the
authority to investigate and to make an award which is binding on all
the parties, and as a mode of arbitration where the parties are
compelled to accept the resolution of their dispute through arbitration
by a third party.
Facts:
Petitioner LUDO & LUYM CORPORATION is a domestic corporation
engaged in the manufacture of coconut oil, corn starch, glucose and
related products.
In the course of its business operations, LUDO engaged the arrastre
services of Cresencio Lu Arrastre Services for the loading and unloading
of its finished products at the wharf. Accordingly, several arrastre
workers were deployed by CLAS to perform the services needed by
LUDO.
These arrastre workers were subsequently hired, on different dates, as
regular rank-and-file employees of LUDO every time the latter needed
additional manpower services. Said employees thereafter joined
respondent union, the LUDO Employees Union (LEU), which acted as
the exclusive bargaining agent of the rank-and-file employees.
On April 13, 1992, respondent union entered into a collective
bargaining agreement with LUDO which provides certain benefits to the
employees, the amount of which vary according to the length of service
rendered by the availing employee.
20
Page
Thereafter, the union requested LUDO to include in its members period
of service the time during which they rendered arrastre services to
LUDO through the CLAS so that they could get higher benefits. LUDO
failed to act on the request. Thus, the matter was submitted for
voluntary arbitration.
The parties accordingly executed a submission agreement raising the
sole issue of the date of regularization of the workers for resolution by
the Voluntary Arbitrator.
In its decision dated April 18, 1997, the Voluntary Arbitrator ruled that:
(1) the respondent employees were engaged in activities necessary and
desirable to the business of petitioner, and (2) CLAS is a labor-only
contractor of petitioner.
Issue:1. Whether or not benefits for the years 1977 to 1987 are
already barred by prescription when private respondents filed their case
in january 1995; and
2. Whether or not a voluntary arbitrator can award benefits not claimed
in the submission agreement
Ruling:
1. We hold that this contention is without merit. So is petitioners stance
that the benefits claimed by the respondents, i.e., sick leave, vacation
leave and 13th-month pay, had already prescribed, considering the
three-year period for the institution of monetary claims.15 Such
determination is a question of fact which must be ascertained based on
the evidence, both oral and documentary, presented by the parties
before the Voluntary Arbitrator. In this case, the Voluntary Arbitrator
found that prescription has not as yet set in to bar the respondents
claims for the monetary benefits awarded to them. Basic is the rule that
findings of fact of administrative and quasi-judicial bodies, which have
acquired expertise because their jurisdiction is confined to specific
matters, are generally accorded not only great respect but even
finality. Here, the Voluntary Arbitrator received the evidence of the
parties first-hand. No compelling reason has been shown for us to
diverge from the findings of the Voluntary Arbitrator, especially since
the appellate court affirmed his findings, that it took some time for
 respondent employees to ventilate their claims because of the repeated
assurances made by the petitioner that it would review the company
records and determine therefrom the validity of the claims, without
expressing a categorical denial of their claims.

2. We held in San Jose vs. NLRC, that the jurisdiction of the Labor
Arbiter and the Voluntary Arbitrator or Panel of Voluntary Arbitrators
over the cases enumerated in the Labor Code, Articles 217, 261 and
262, can possibly include money claims in one form or
another. Comparatively, in Reformist Union of R.B. Liner, Inc. vs.
NLRC, compulsory arbitration has been defined both as "the process of
settlement of labor disputes by a government agency which has the
authority to investigate and to make an award which is binding on all
the parties, and as a mode of arbitration where the parties are
compelled to accept the resolution of their dispute through arbitration
by a third party (emphasis supplied)." While a voluntary arbitrator is
not part of the governmental unit or labor departments personnel, said
arbitrator renders arbitration services provided for under labor laws.

Generally, the arbitrator is expected to decide only those questions

expressly delineated by the submission agreement. Nevertheless, the
arbitrator can assume that he has the necessary power to make a final
settlement since arbitration is the final resort for the adjudication of
disputes.
21
Page
 87. SIME DARBY PILIPINAS, INC. v MAGSALIN
G.R. No. 90426. December 15, 1989
Doctrine:
1. It must be borne in mind that the writ of certiorari is an extraordinary
remedy and that certiorari jurisdiction is not to be equated with
appellate jurisdiction. In a special civil action of certiorari, the Court will
not engage in a review of the facts found nor even of the law as
interpreted or applied by the Arbitrator unless the supposed errors of
fact or of law are so patent and gross and prejudicial as to amount to
a grave abuse of discretion or an excs de pouvoir on the part of the
Arbitrator.
Facts:
On 13 June 1989, petitioner Sime Darby and private respondent SDEA
executed a CBA providing, among others, that:
"Article X, Section 1. A performance bonus shall be granted, the amount
of which [is] to be determined by the Company depending on the return
of [sic] capital investment as reflected in the annual financial
statement."
On 31 July 1989, the Sime Darby Salaried Employees Association-ALU
(SDSEA-ALU) wrote petitioner demanding the implementation of a
provision identical to the above contained in their own CBA with
petitioner. Subsequently, petitioner called both respondent SDEA and
SDEA-ALU to a meeting wherein the former explained that it was
unable to grant the performance bonus corresponding to the fiscal year
1988-1989 on the ground that the workers’ performance during said
period did not justify the award of such bonus.
On 27 July 1989, private respondent SDEA filed with the National
Conciliation and Mediation Board (NCMB) an urgent request for
preventive conciliation between private respondent and petitioner.
On 1 August 1989, the parties were called to a conciliation meeting and
in such meeting, both parties agreed to submit their dispute to
22
voluntary arbitration. Their agreement to arbitrate stated, among other
Page
things, that they were "submitting the issue of performance bonus to
voluntary arbitration" and that "the decision/award of the voluntary
arbitrator shall be respected and implemented by the parties as final
and executory, in accordance with the law."
On 14 August 1989, petitioner filed its position paper which aimed to
show that the performance of the members of respondent union during
the year was below the production goals or targets set by Sime Darby
for 1988-1989 and below previous years’ levels for which reason the
performance bonus could not be granted. Petitioner there referred to
the following performance indicators: a) number of tires produced; b)
degree of wastage of production materials; and c) number of pounds
of tires produced per man hour. On that same day, 14 August 1989,
petitioner manifested before the Voluntary Arbitrator that it would file
a Reply to the union’s Position Paper submitted on 10 August 1989 not
later than 18 August 1989.
The Voluntary Arbitrator on 17 August 1989 issued an award which
declared respondent union entitled to a performance bonus equivalent
to 75% of the monthly basic pay of its members.
Issue:
1. whether or not the Voluntary Arbitrator acted with grave abuse of
discretion or without or in excess of jurisdiction in passing upon both
the question of whether or not a performance bonus is to be granted
by petitioner; and
2. whether or not the Voluntary Arbitrator gravely abused his discretion
or acted without or in excess of jurisdiction in awarding an amount
equivalent to seventy-five percent (75%) of the basic monthly pay of
members of respondent union.
Ruling:
1. No. It is thus essential to stress that the Voluntary Arbitrator had
plenary jurisdiction and authority to interpret the agreement to
arbitrate and to determine the scope of his own authority subject only,
in a proper case, to the certiorari jurisdiction of this Court. The
Arbitrator, as already indicated, viewed his authority as embracing not
merely the determination of the abstract question of whether or not a
performance bonus was to be granted but also, in the affirmative case,
 the amount thereof. The Arbitrator said in his award. the total labor cost incurred by the Company. It should not merely be
confined to those pertaining to the members of the Sime Darby
At this juncture, it would not be amiss to emphasize to the parties that Employees Association but necessarily include that which shall be paid
the matter of performance bonus necessarily includes not only the and granted to all other employees of Sime Darby this year." 6
determination of the existence of the right of the union to this benefit (Emphasis supplied)
but also the amount thereof. This conclusion arises from a perusal of
the terms of the submission agreement entered into by Sime Derby On balance, we believe and so hold that the award of the Voluntary
Pilipinas, Inc. and Sime Darby Employees Association which limited the Arbitrator of a bonus amounting to seventy-five percent (75%) of the
voluntary arbitration only with regard to submission of position papers basic monthly salary cannot be said to be merely arbitrary or capricious
of the parties, disposition and rendition of the award. Nary (sic) a trace or to constitute an excs de pouvoir.
of qualification as to the sole issue of performance bonus may be
gleaned from a review of said agreement.

With that as a timely reminder, this Arbitrator now proceeds to resolve

the issues herein submitted for resolution. Without doubt, the Sime
Darby Employees Association is entitled to performance bonus.

2. The Voluntary Arbitrator, explicitly considered the net earnings of

petitioner Sime Darby in 1988 (P100,000,000.00) and in the first
semester of 1989 (P95,377,507.00) as well as the increase in the
company’s retained earnings from P265,729,826.00 in 1988 to
P324,370,372.00 as of 30 June 1989. Thus, the Arbitrator impliedly or
indirectly took into account the return on stockholders’ investment
realized for the fiscal year 1988-1989. It should also be noted that the
relevant CBA provision does not specify a minimum rate of return on
investment (ROI) which must be realized before any particular amount
of bonus may or should be declared by the company.

The Voluntary Arbitrator also took into account, again in an indirect

manner, the performance of Sime Darby’s employees by referring in his
award to "the total labor cost incurred by the Company"
:jgc:chanrobles.com.ph

"This Arbitrator, however, is well aware that any effort in this regard
must be tempered and balanced as against the need to sustain the
continued viability of Sime Darby Pilipinas, Inc. in accordance with the
constitutional provision which recognizes `the right of enterprise to
23

reasonable returns on investment and to expansion and growth.’

Page

Furthermore, any award to be rendered must likewise take into account

 88. LUZON DEVELOPMENT BANK vs. ASSOCIATION
G.R. No. 120319 October 6, 1995
Doctrine:
1. In labor law context, arbitration is the reference of a labor dispute
to an impartial third person for determination on the basis of evidence
and arguments presented by such parties who have bound themselves
to accept the decision of the arbitrator as final and binding.
2. Compulsory arbitration is a system whereby the parties to a dispute
are compelled by the government to forego their right to strike and are
compelled to accept the resolution of their dispute through arbitration
by a third party.
3. Voluntary arbitration is the referral of a dispute by the parties is
made, pursuant to a voluntary arbitration clause in their collective
agreement, to an impartial third person for a final and binding
resolution.
Facts:
At a conference, the parties agreed on the submission of their
respective Position Papers on December 1-15, 1994. Atty. Ester S.
Garcia, in her capacity as Voluntary Arbitrator, received ALDBE's
Position Paper on January 18, 1995. LDB, on the other hand, failed to
submit its Position Paper despite a letter from the Voluntary Arbitrator
reminding them to do so. As of May 23, 1995 no Position Paper had
been filed by LDB.
On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitrator
rendered a decision disposing as follows:
WHEREFORE, finding is hereby made that the Bank has not adhered to
the Collective Bargaining Agreement provision nor the Memorandum of
Agreement on promotion.
Hence, this petition for certiorari and prohibition seeking to set aside
the decision of the Voluntary Arbitrator and to prohibit her from
24
enforcing the same.
Page
Issue:
Whether or not voluntary arbiter’s decision is appealable to the CA and
not the SC
Ruling:
The jurisdiction conferred by law on a voluntary arbitrator or a panel of
such arbitrators is quite limited compared to the original jurisdiction of
the labor arbiter and the appellate jurisdiction of the NLRC for that
matter. The “(d)ecision, awards, or orders of the Labor Arbiter are final
and executory unless appealed to the Commission …” Hence, while
there is an express mode of appeal from the decision of a labor arbiter,
Republic Act No. 6715 is silent with respect to an appeal from the
decision of a voluntary arbitrator.
Yet, past practice shows that a decision or award of a voluntary
arbitrator is, more often than not, elevated to the SC itself on a petition
for certiorari, in effect equating the voluntary arbitrator with the NLRC
or the CA. In the view of the Court, this is illogical and imposes an
unnecessary burden upon it.
In Volkschel Labor Union, et al. v. NLRC, et al., 8 on the settled
premise that the judgments of courts and awards of quasi-judicial
agencies must become final at some definite time, this Court ruled
that the awards of voluntary arbitrators determine the rights of parties;
hence, their decisions have the same legal effect as judgments of a
court. In Oceanic Bic Division (FFW), et al. v. Romero, et al., this Court
ruled that “a voluntary arbitrator by the nature of her functions acts in
a quasi-judicial capacity.” Under these rulings, it follows that the
voluntary arbitrator, whether acting solely or in a panel, enjoys in
law the status of a quasi-judicial agency but independent of, and apart
from, the NLRC since his decisions are not appealable to the latter.
Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902,
provides that the Court of Appeals shall exercise:
(B) Exclusive appellate jurisdiction over all final judgments, decisions,
resolutions, orders or awards of RTC s and quasi-judicial agencies,
instrumentalities, boards or commissions, including the Securities and
Exchange Commission, the Employees Compensation Commission and
 the Civil Service Commission, except those falling within the appellate those of the quasi-judicial agencies, boards and commissions
jurisdiction of the Supreme Court in accordance with the Constitution, enumerated therein.
the Labor Code of the Philippines under Presidential Decree No. 442,
as amended, the provisions of this Act, and of subparagraph (1) of the In the same vein, it is worth mentioning that under Section 22 of
third paragraph and subparagraph (4) of the fourth paragraph of Republic Act No. 876, also known as the Arbitration Law, arbitration is
Section 17 of the Judiciary Act of 1948. deemed a special proceeding of which the court specified in the
contract or submission, or if none be specified, the RTC for the province
Assuming arguendo that the voluntary arbitrator or the panel of or city in which one of the parties resides or is doing business, or in
voluntary arbitrators may not strictly be considered as a quasi-judicial which the arbitration is held, shall have jurisdiction.
agency, board or commission, still both he and the panel are
comprehended within the concept of a “quasi-judicial instrumentality.” In effect, this equates the award or decision of the voluntary arbitrator
An “instrumentality” is anything used as a means or agency. Thus, the with that of the RTC. Consequently, in a petition for certiorari from that
terms governmental “agency” or “instrumentality” are synonymous in award or decision, the CA must be deemed to have concurrent
the sense that either of them is a means by which a government acts, jurisdiction with the SC. As a matter of policy, this Court shall
or by which a certain government act or function is performed. The henceforth remand to the Court of Appeals petitions of this nature for
word “instrumentality,” with respect to a state, contemplates an proper disposition.
authority to which the state delegates governmental power for the
performance of a state function. An individual person, like an
administrator or executor, is a judicial instrumentality in the settling of
an estate, in the same manner that a sub-agent appointed by a
bankruptcy court is an instrumentality of the court, and a trustee in
bankruptcy of a defunct corporation is an instrumentality of the state.
The voluntary arbitrator no less performs a state function pursuant to
a governmental power delegated to him under the provisions therefor
in the Labor Code and he falls, therefore, within the contemplation of
the term “instrumentality” in the aforequoted Sec. 9 of B.P. 129. The
fact that his functions and powers are provided for in the Labor Code
does not place him within the exceptions to said Sec. 9 since he is a
quasi-judicial instrumentality as contemplated therein.

It will be noted that, although the Employees Compensation

Commission is also provided for in the Labor Code, Circular No. 1-91,
which is the forerunner of the present Revised Administrative Circular
No. 1-95, laid down the procedure for the appealability of its decisions
to the CA under the foregoing rationalization, and this was later
adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129. A
fortiori, the decision or award of the voluntary arbitrator or panel of
25

arbitrators should likewise be appealable to the CA, in line with the

Page

procedure outlined in Revised Administrative Circular No. 1-95, just like

 89. Insular Life Assurance Co. EA vs. Insular Life Assurance Co.
G.R. No. L-25291 January 30, 1971
Doctrine:
it is an unfair labor practice for an employer operating under a collective
bargaining agreement to negotiate or to attempt to negotiate with his
employees individually in connection with changes in the agreement.
And the basis of the prohibition regarding individual bargaining with
the strikers is that although the union is on strike, the employer is still
under obligation to bargain with the union as the employees' bargaining
representative
Facts:
The Insular Life Assurance Co., Ltd., Employees Association-NATU, FGU
Insurance Group Workers & Employees Association-NATU, and Insular
Life Building Employees Association-NATU (hereinafter referred to as
the Unions), while still members of the Federation of Free Workers
(FFW), entered into separate collective bargaining agreements with the
Insular Life Assurance Co., Ltd. and the FGU Insurance Group
(hereinafter referred to as the Companies).
Two of the lawyers of the Unions then were Felipe Enaje and Ramon
Garcia; the latter was formerly the secretary-treasurer of the FFW and
acting president of the Insular Life/FGU unions and the Insular Life
Building Employees Association. Garcia, as such acting president, in a
circular issued in his name and signed by him, tried to dissuade the
members of the Unions from disaffiliating with the FFW and joining the
National Association of Trade Unions (NATU), to no avail.
Enaje and Garcia soon left the FFW and secured employment with the
Anti-Dummy Board of the Department of Justice. Thereafter, the
Companies hired Garcia in the latter part of 1956 as assistant corporate
secretary and legal assistant in their Legal Department, and he was
soon receiving P900 a month, or P600 more than he was receiving from
the FFW. Enaje was hired on or about February 19, 1957 as personnel
manager of the Companies, and was likewise made chairman of the
negotiating panel for the Companies in the collective bargaining with
the Unions.
In a letter dated September 16, 1957, the Unions jointly submitted
26
proposals to the Companies for a modified renewal of their respective
Page
collective bargaining contracts which were then due to expire on
September 30, 1957. The parties mutually agreed and to make
whatever benefits could be agreed upon retroactively effective October
1, 1957.
Thereafter, in the months of September and October 1957 negotiations
were conducted on the Union's proposals, but these were snagged by
a deadlock on the issue of union shop, as a result of which the Unions
filed on January 27, 1958 a notice of strike for "deadlock on collective
bargaining." Several conciliation conferences were held under the
auspices of the Department of Labor wherein the conciliators urged the
Companies to make reply to the Unions' proposals en toto so that the
said Unions might consider the feasibility of dropping their demand for
union security in exchange for other benefits. However, the Companies
did not make any counter-proposals but, instead, insisted that the
Unions first drop their demand for union security, promising money
benefits if this was done.
On May 20, 1958 the Unions went on strike and picketed the offices of
the Insular Life Building at Plaza Moraga.
Issue:
1. Whether or not the Companies are guilty of unfair labor practice
when they sent individual letters to the strikers with the promise of
additional benefits, and notifying them to either return to work, or lose
their jobs; and
2. Whether or not the Companies are guilty of unfair labor practice for
discriminating against the striking members of the Unions in
readmission of employees after the strike.
Ruling:
1. The Companies contended that by sending those letters, it
constituted a legitimate exercise of their freedom of expression. That
contention is untenable. The Companies are guilty of unfair labor
practice when they sent individual letters to the strikers. It is an act of
interference with the right to collective bargaining through dealing with
the strikers individually instead of through their collective bargaining
representatives. Although the Unions are on strike, the employer is still
obligated to bargain with the union as the employees’ bargaining
 representative. Further, it is also an act of interference for the employer
to send individual letters to the employees notifying them to return to
their jobs, otherwise, they would be replaced. Individual solicitation of
the employees urging them to cease union activity or cease striking
consists of unfair labor practice. Furthermore, when the Companies
offered to “bribe” the strikers with “comfortable cots, free coffee, and
movies, overtime work pay” so they would abandon their strike and
return to work, it was guilty of strike-breaking and/or union busting
which constitute unfair labor practice.

2. Some of the members of the Unions were refused readmission

because they had pending criminal charges. However, despite the fact
they were able to secure clearances, 34 officials and members were
still refused readmission on the alleged ground that they committed
acts inimical to the Companies. It should be noted, however, that non-
strikers who also had criminal charges pending against them in the
fiscal’s office, arising from the same incidents whence against the
criminal charges against the strikers are involved, were readily
readmitted and were not required to secure clearances. This is an act
of discrimination practiced by the Companies in the process of rehiring
and is therefore a violation of Sec. 4(a)(4) of the Industrial Peace Act.

The respondent Companies did not merely discriminate against all

strikers in general since they separated the active rom the less active
unionists on the basis of their militancy, or lack of it, on the picket lines.
Discrimination exists where the record shows that the union activity of
the rehired strikers has been less prominent than that of the strikers
who were denied reinstatement.
27
Page
 90. G.R. Nos. L-20667 and 20669 October 29, 1965
PHILIPPINE STEAM NAVIGATION CO V PHILIPPINE OFFICERS
GUILD,
DOCTRINE: The rule in this jurisdiction is that subjection by the
company of its employees to a series of questionings regarding their
membership in the union or their union activities, in such a way as to
hamper the exercise of free choice on their part, constitutes unfair labor
practice.
The Philippine Steam Navigation Co., Inc., hereafter referred to as
PHILSTEAM, is a domestic corporation, with head offices in Cebu City,
engaged in inter-island shipping. I had a total of 128 officers.
Philippine Marine Officers Guild, herein otherwise called PMOG, is a
labor union affiliated with the Federation of Free Workers (FFW),
representing, and which represented in 1954, some of PHILSTEAM's
officers.
The Cebu Seamen's Association, CSA for short, is another labor union
that represents and likewise represented in 1954 some of PHILSTEAM's
officers.
PMOG sent PHILSTEAM a set of demands with a request for collective
bargaining. PHILSTEAM transmitted its answer to PMOG, requiring the
latter to first prove its representation of a majority of PHILSTEAM's
employees before its demands will be considered as requested.
PHILSTEAM, on the same date, started interrogating and investigating
its captains, deck officers, and engineers, to find out directly from them
if they had joined PMOG or authorized PMOG to represent them.
A strike by PMOG was conducted while PHILSTEAM therein recognized
CSA as representing the majority of its employees and proceeded to
consider CSA's demands.
PHILSTEAM and CSA signed a collective bargaining agreement. On the
same date, PMOG declared a strike against PHILSTEAM. Although not
the subject of the present appeal, it should also be mentioned that the
28
dispute included two other shipping companies, namely, Compania
Page
Maritima and Madrigal Shipping, and that PMOG simultaneously struck
against all three companies.
The Court of Industrial Relations Ruled that PHILSTEAM interfered with,
coerced, and restrained employees in their rights to self-organization.
The same, if true, is unfair labor practice (Section 4 [a] [1], Republic
Act 875).
ISSUE: WoN, the act of PHILSTEAM in investigating its employees
constitute ULP by restraining their rights to self-organization.
RULE: YES
The respondent court has found that PHILSTEAM's interrogation of its
employees had in fact interfered with, restrained and coerced the
employees in the exercise of their rights to self-organization (Petition,
Annex A, p. 31). Such finding being upon questions of fact, the same
cannot be reversed herein, because it is fully supported by substantial
evidence.
The rule in this jurisdiction is that subjection by the company of its
employees to a series of questionings regarding their membership in
the union or their union activities, in such a way as to hamper the
exercise of free choice on their part, constitutes unfair labor practice
(Scoty's Department Store vs. Micaller, 52 O.G. 5119). PHILSTEAM's
aforestated interrogation squarely falls under this rule.
PMOG's subjection to vilification is likewise borne out by substantial
evidence. Santiago Beliso, PHILSTEAM's purchasing agent, told Luis
Feliciano, on August 6, 1954, that PMOG was a "money-asking union,"
that "all the members of the FFW are low people" and that CSA "is a
good union." Fernando Guerrero, PHILSTEAM's inter-island manager,
had authorized Beliso to assist him in his investigation of PMOG
membership. The statement of Beliso was made in the presence of
PHILSTEAM office manager Ernesto Mañeru and PHILSTEAM pier
superintendent Jose Perez, and these supervisory officials did nothing
to disavow Beliso's conduct as not intended to represent PHILSTEAM's
opinion. PHILSTEAM, through its supervisory officials, obviously made
it appear to Feliciano that Beliso was speaking for or on behalf of the
company, when he made the remarks derogatory to PMOG and
 favorable to CSA. PHILSTEAM thereby interfered with Feliciano's right
to self-organization.
WHEREFORE, the decision and resolution appealed from are hereby
affirmed, with costs against petitioner. So ordered.
29
Page
 91. G.R. No. L-51494 August 19, 1982
JUDRIC CANNING CORPORATION vs.. INCIONG,
DOCTRINE: There is unfair labor practice for an employer "to initiate,
dominate, assist or otherwise interfere with the formation or
administration of any labor organization, including the giving of
financial or other support to it.
Facts:
The records show that the herein private respondents Norma Pineda,
Vicky Penalosa, Leonila Morales, Teresita Balmaceda, Adelina
Valenzuela, and Juanita Reposar are employees of the petitioner
corporation and are members of the United Lumber and General
Workers of the Philippines (ULGWP). The said complainants were
allegedly not allowed to report for work due to their union activities in
soliciting membership in a union yet to be organized in the company
and their time cards were removed from the rack. As a result, the said
complainants and their labor union filed a complaint for unfair labor
practice against the petitioner with Region IV of the Ministry of Labor,
seeking the reinstatement of the complainants with full backwages.
Under Article 248(a) of the Labor Code of the Philippines, "to interfere
with, restrain, or coerce employees in their exercise of the right to self-
organization" is an unfair labor practice on the part of the employer.
Paragraph (d) of said Article also considers it an unfair labor practice
for an employer "to initiate, dominate, assist or otherwise interfere with
the formation or administration of any labor organization, including the
giving of financial or other support to it. In this particular case, the
private respondents were dismissed or their services were terminated,
because they were soliciting signatures in order to form a union within
the plant.
For sure, the petitioner corporation is guilty of unfair labor practice in
interfering with the formation of a labor union and retaliating against
the employees' exercise of their right to self-organization.
WHEREFORE, the petition should be, as it is hereby, DISMISSED. The
temporary restraining order heretofore issued is hereby LIFTED and set
ASIDE. With costs against the petitioner.

Petitioner denied the allegations

RD of Labor and employment Ruled in favor of complainants.

Ministry of Labor dismissed Jurdric’s appeal.

The petitioner further claims that it could not have committed the unfair
labor practice charge for dismissing some of its employees due to their
alleged union activities because the alleged dismissal took place more
than four (4) months before the organizational meeting of the union
and more than one (1) year before actual registration of said union with
the Labor Organization Division of the Bureau of Labor Relations.

ISSUE: WoN, petitioner is guilty for ULP for dismissing the respondents
for their alleged union activities.
30

RULE: YES
Page
 92. WISE AND CO., INC vs.
WISE & CO., INC. EMPLOYEES UNION-NATU
G.R. No. L-87672 October 13, 1989
DOCTRINE:
1. There can be no discrimination where the employees concerned are
not similarly situated.
2. The Court holds that it is the prerogative of management to regulate,
according to its discretion and judgment, all aspects of employment.
This flows from the established rule that labor law does not authorize
the employer in the conduct of its business. Such management
prerogative may be availed of without fear of any liability so long as it
is exercised in good faith for the advancement of the employers'
interest and not for the purpose of defeating or circumventing the
rights of employees under special laws or valid agreement and are not
exercised in a malicious, harsh, oppressive, vindictive or wanton
manner or out of malice or spite.
Facts:
Management issued a memorandum circular introducing a profit
sharing scheme for its managers and supervisors the initial distribution
of which was to take effect March 31, 1988.
The union wrote petitioner through its president asking for participation
in this scheme. This was denied by petitioner on the ground that it had
to adhere strictly to the Collective Bargaining Agreement (CBA).
In the meantime, talks were underway for early negotiation by the
parties of the CBA which was due to expire.The negotiation thus begun
earlier than the freedom period. Petitioner wrote respondent union
advising the latter that they were prepared to consider including the
employees covered by the CBA in the profit sharing scheme beginning
the year 1987 provided that the ongoing negotiations were concluded
prior to December 1987. However, the collective bargaining
negotiations reached a deadlock on the issue of the scope of the
bargaining unit. No settlement was reached.
31
Petitioner distributed the profit sharing benefit not only to managers
Page
and supervisors but also to all other rank and file employees not
covered by the CBA. This caused the respondent union to file a notice
of strike alleging that petitioner was guilty of unfair labor practice
because the union members were discriminated against in the grant of
the profit sharing benefits.
Voluntary Arbitrator Ruled that union members be included in the
scheme.
ISSUE: WoN, such scheme was constitutive of ULP for being
discriminatory.
RULE: NO
The CBA "consists of all regular or permanent employees, below the
rank of assistant supervisor, Also expressly excluded from the term
"appropriate bargaining unit" are all regular rank and file employees in
the office of the president, vice-president, and the other offices of the
company — personnel office, security office, corporate affairs office,
accounting and treasurer department .
It is to this class of employees who were excluded in the "bargaining
unit" and who do not derive benefits from the CBA that the profit
sharing privilege was extended by petitioner.
There can be no discrimination committed by petitioner thereby as the
situation of the union employees are different and distinct from the
non-union employees. 5 Indeed, discrimination per se is not unlawful.
There can be no discrimination where the employees concerned are not
similarly situated.
Respondent union can not claim that there is grave abuse of discretion
by the petitioner in extending the benefits of profit sharing to the non-
union employees as they are two (2) groups not similarly situated.
These non-union employees are not covered by the CBA. They do not
derive and enjoy the benefits under the CBA.
The Court holds that it is the prerogative of management to regulate,
according to its discretion and judgment, all aspects of employment.
This flows from the established rule that labor law does not authorize
the the employer in the conduct of its business.6 such management
prerogative may be availed of without fear of any liability so long as it
 is exercised in good faith for the advancement of the employers'
interest and not for the purpose of defeating or circumventing the
rights of employees under special laws or valid agreement and are not
exercised in a malicious, harsh, oppressive, vindictive or wanton
manner or out of malice or spite.7

WHEREFORE, the petition is GRANTED and the award of respondent

Voluntary Arbitrator dated March 20,1989 is hereby REVERSED AND
SET ASIDE being null and void, without pronouncement as to costs.
SO ORDERED.
32
Page
 93. BALMAR FARMS, INC. vs. NLRC
G.R. No. 73504 October 15, 1991
DOCTRINE: The purpose of certification election is to give the
employees true representation in their collective bargaining with an
employer because certification election is the most democratic and
expeditious method by which the laborers can freely determine the
union that shall act as their representative in their dealing with the
establishment where they are working. It is the most effective way of
determining which labor organization can truly represent the working
force.
FACTS:
Petitioner Balmar Farms, Inc. (BALMAR for short) is a corporation
engaged in the planting of bananas in Davao while private respondent
Associated Labor Union (ALU for short) is a labor organization duly
registered with the Ministry of Labor and Employment.
Med-Arbiter Antonino G. Jolejole issued an order certifying the ALU as
the sole and exclusive bargaining representative of the rank and file
workers and employees of BALMAR.
Sometime in November, 1982, BALMAR received a copy of the letter
dated November 12, 1982 signed by Johnny Y. Luces in his capacity as
President of the BALMAR Employees Association, addressed to the
Regional Director, Hon. Eugenio Sagmit, Jr. The letter states that:
BALMAR Employees Association now requests through a letter that the
management must negotiate with them directly and not through ALU.
Consequently BALMAR negotiated with the Union (BALMAR
EMPLOYEES UNION) stating that ALU was dis-associated.
For alleged refusal to bargain, ALU filed a complaint for unfair labor
practice and damages against BALMAR.
NLRC: BALMAR guilty of ULP.
33
ISSUE:
Page
WoN, petitioner BALMAR is guilty of unfair labor practice for refusing to
bargain collectively with ALU.
RULE:
The purpose of certification election is to give the employees true
representation in their collective bargaining with an employer because
certification election is the most democratic and expeditious method by
which the laborers can freely determine the union that shall act as their
representative in their dealing with the establishment where they are
working. It is the most effective way of determining which labor
organization can truly represent the working force.
Employees (like the employees in the case at bar) have a constitutional
right to choose their own bargaining representative and it is only
through certification election that they can obtain this purpose.
In the bargaining process, the workers and employer shall be
represented by their exclusive bargaining representatives. The labor
organization designated or selected by the majority of employees in an
appropriate collective bargaining unit, shall be the exclusive
representative of the employees in such unit for the purpose of
collective bargaining. In the case at bar, it is the ALU which is the
exclusive bargaining representative of BALMAR employees and as such
it has the right and duty to bargain collectively with BALMAR.
The duty to bargain collectively means the performance of a mutual
obligation to meet and convene promptly and expeditiously in good
faith for the purpose of negotiating an agreement with respect to
wages, hours of work and all other terms and conditions or employment
including proposals for adjusting any grievance or questions arising
under such agreement if requested by either party but such duty does
not compel any party to agree to a proposal or to make any concession
(Art. 252, Labor Code, as amended).
Procedurally, ALU sent a letter to BALMAR, attaching therewith its
proposals for collective bargaining agreement. In reply, BALMAR
refused to negotiate with ALU allegedly because` it received a copy of
a letter purportedly written on November 12, 1982 by one Johnny
Luces, who claimed to be the president of Balmar Farms Employees
 Association, informing the Labor Regional Director that more than a
majority of them would like to negotiate directly with their employer
BALMAR. There is no showing, however, that said letter was favorably
acted upon, much less, is there an order superseding the Med-Arbiter's
order of October 27, 1982 certifying ALU as the sole and exclusive
bargaining representative of the rank and file workerks of BALMAR.

BALMAR cannot also invoke good faith in refusing to negotiate with

ALU, considering that the latter has been certified as the exclusive
bargaining representative of BALMAR rank and file employees.

PREMISES CONSIDERED, the petition is DISMISSED for lack of merit

and the assailed resolution is AFFIRMED.
SO ORDERED.
34
Page
 94. ALHAMBRA INDUSTRIES, INC versus COURT OF
INDUSTRIAL RELATIONS
Doctrine: Failure on petitioner’s part to live up in good faith to the
terms its collective bargaining agreement by denying the privileges and
benefits thereof to the fifteen drivers and helpers through its device of
trying to pass them off as ‘employees’ of its salesmen and
propagandists was a serious violation of petitioner’s duty to bargain
collectively and constituted unfair labor practice in any language.
Facts: The complaint for unfair labor practice 1 for violation of section
4(a) subsections (4) and (6) of the Industrial Peace Act, was filed by
the acting prosecutor of respondent court against petitioner, upon the
charges of respondent union that fifteen of the union members,
employed as drivers and helpers of petitioner, were being discriminated
against by petitioner’s not affording them the benefits and privileges
enjoyed by all the other employees for no justifiable reason other than
their union membership; and that the union had asked petitioner to
negotiate with respect to said fifteen drivers and helpers who were
being excluded from the benefits of their subsisting collective
bargaining agreement, but petitioner refused to do so. The union
prayed for a desistance order and that petitioner be ordered to bargain
collectively in good faith and to grant the drivers and helpers the same
benefits and privileges extended to and enjoyed by all its other
employees. In answer, petitioner denied the unfair labor practice
imputed to it and countered that the fifteen drivers and helpers were
not its employees, but separate and independent employees of its
salesmen and propagandists who exercised discretion and control over
their selection, employment, compensation, suspension and dismissal.
Issue: Whether or not petitioner is guilty of unfair labor practice?
Ruling: Yes, In accordance with the ‘memorandum of instructions,’
Exhibit ‘24,’ which the respondent corporation issues to the salesman
or propagandist, it is really from here that the latter is authorized by
the former to engage the services of a driver or helper. So that even
when the driver or helper does not apply directly to the respondent
35
corporation for the job but to the salesman or propagandist,
Page
nevertheless, the authority of the salesman or propagandist to employ
the driver or helper emanates from the respondent corporation. It is,
therefore, apparent that in truth and in fact, the respondent corporation
is the ‘employer’ of the driver or helper and not the salesman or
propagandist who is merely expressly authorized by the former to
engage such services.
The salary of the driver or helper also comes from the respondent
corporation in the form of driver allowance’ which is appropriated for
the purpose. The duties and obligations of the driver or helper do not
come from the salesman or propagandist but are expressly stated by
the respondent corporation in the ‘memorandum of instructions. It is
therefore clear that the terms and conditions of employment of the
driver or helper are those fixed and determined by the respondent
corporation. From all the foregoing consideration we are convinced that
the driver or helper is an employee of respondent corporation.
Petitioner’s failure to comply with its duty under the collective
bargaining agreement to extend the privileges, rights and benefits
thereof to the drivers and helpers as its actual employees clearly
amounted to the commission of an unfair labor practice. And
consequently respondent court properly ordered in its judgment that
said drivers and helpers should be given and/or extended all the
privileges, rights and benefits that are given to all the other regular
employees.
Failure on petitioner’s part to live up in good faith to the terms its
collective bargaining agreement by denying the privileges and benefits
thereof to the fifteen drivers and helpers through its device of trying to
pass them off as ‘employees’ of its salesmen and propagandists was a
serious violation of petitioner’s duty to bargain collectively and
constituted unfair labor practice in any language.
 95. FRANCISCO SALUNGA, vs.COURT OF INDUSTRIAL
RELATIONS
Doctrine: Although, generally, a state may not compel ordinary
voluntary associations to admit thereto any given individual, because
membership therein may be accorded or withheld as a matter of
privilege, the rule is qualified in respect of labor unions holding a
monopoly in the supply of labor, either in a given locality, or as regards
a particular employer with which it has a closed-shop agreement.
Facts: San Miguel Brewery, Inc (Company) entered with the Union, of
which respondent John de Castillo is the president, into a CBA.
Section 3 of the CBA reads: The company agrees to require as a
condition of employment of those workers covered by this agreement
who either are members of the UNION on the date of the signing of
this agreement, or may join the UNION during the effectivity of this
agreement, that they shall not voluntarily resign from the UNION earlier
than thirty (30) days before the expiry date of this agreement as
provided in Article XIII hereof, provided, however, that nothing herein
contained shall be construed to require the company to enforce any
sanction whatsoever against any employee or worker who fails to retain
his membership in the UNION as hereinbefore stated, for any cause
other than voluntary resignation or non-payment of regular union dues
on the part of said employee or worker.
Petitioner Francisco Salunga was a member of the National Brewery
and Allied Industries Labor Union of the Philippines (PAFLU) since 1953.
On August 18, 1961, he tendered his resignation from the Union. The
Union accepted the resignation, and transmitted it to the Company,
with a request for the immediate implementation of said Section 3. The
Company informed petitioner that his resignation would result in the
termination of his employment, in view of Section 3.
Petitioner wrote to the Union a letter withdrawing or revoking his
resignation and advising the Union to continue deducting his monthly
union dues. The Union told the Company that petitioner's membership
36
could not be reinstated and insisted on his separation from the service,
Page
conformably with the stipulation above-quoted. The Company replied:
Mr. Salunga told us that he did not realize that he would be losing his
job if he were to resign from the Union. We did not at any time ask or
urge him to withdraw his resignation; neither are we now asking or
insisting that you readmit him into your membership. We thought that
informing him of the consequences of his resignation from the Union,
was the only humane thing to do under the circumstances.
Nevertheless, if notwithstanding our foregoing clarification you still
consider him as having actually resigned from your organization, and
you insist that we dismiss him from the service in accordance with Sec.
3, Article II of our agreement, we will have no alternative but to do so.
The Company notified petitioner that, in view of said letter and the
aforementioned section, "we regret we have to terminate your
employment for cause.” Petitioner was discharged from the
employment of the Company.
A prosecutor of the Court of Industrial Relations commenced the
present proceedings for unfair labor practice against the Union, its
president, respondent John de Castillo, respondent Cipriano Cid, as
PAFLU president, the Company, and its aforementioned Vice-President
Miguel Noel.
The trial Judge rendered a decision directing them to readmit and to
continue the membership of Salunga in the membership rolls of the
union after paying all union dues
This decision was reversed by the CIR — sitting en banc. Hence, this
appeal by the petitioner.
Issue: Whether or not petitioner should be readmitted
Ruling: Yes, Having been denied readmission into the Union and
having been dismissed from the service owing to an unfair labor
practice on the part of the Union, petitioner is entitled to reinstatement
as member of the Union.
The appeal is well taken, for, although petitioner had resigned from the
Union and the latter had accepted the resignation, the former had, soon
later — upon learning that his withdrawal from the Union would result
in his separation from the Company, owing to the closed-shop provision
 above referred to — revoked or withdrawn said resignation, and the
Union refused to consent thereto without any just cause therefor.
The Union had not only acted arbitrarily in not allowing petitioner to
continue his membership. The trial Judge found said refusal of the
Union officers to be due to his critical attitude towards certain measures
taken or sanctioned by them. As set forth in the decision of the trial
Judge: Prior to August, 1961, he had been criticizing and objecting to
what he believed were illegal or irregular disbursements of union funds.
Salunga was later removed by the union from his position as steward
without his knowledge, and that the union did not honor the of attorney
executed in his favor by Alejandro Miranda, a co-worker, for the
collection of Miranda's indebtedness of P60.00 to him.
The officers of the Union tried to justify themselves by characterizing
said criticisms as acts of disloyalty to the Union, which, of course, is not
true, not only because the criticism assailed, not the Union, but certain
acts of its officers, and, indirectly, the officers themselves, but also
because the Constitution and By-laws of the Union explicitly recognize
the right of its members to give their views on "all transactions made
by the Union."
Although, generally, a state may not compel ordinary voluntary
associations to admit thereto any given individual, because
membership therein may be accorded or withheld as a matter of
privilege, the rule is qualified in respect of labor unions holding a
monopoly in the supply of labor, either in a given locality, or as regards
a particular employer with which it has a closed-shop agreement. The
reason is that the closed shop and the union shop cause the admission
requirements of trade union to become affected with the public
interest. Likewise, a closed shop, a union shop, or maintenance of
membership clauses cause the administration of discipline by unions to
be affected with the public interest.
Consequently, it is well settled that such unions are not entitled to
arbitrarily exclude qualified applicants for membership, and a closed-
shop provision would not justify the employer in discharging, or a union
37
in insisting upon the discharge of, an employee whom the union thus
Page
refuses to admit to membership, without any reasonable ground
therefor. Needless to say, if said unions may be compelled to admit
new members, who have the requisite qualifications, with more reason
may the law and the courts exercise the coercive power when the
employee involved is a long standing union member, who, owing to
provocations of union officers, was impelled to tender his resignation,
which he forthwith withdrew or revoked. Surely, he may, at least,
invoke the rights of those who seek admission for the first time, and
can not arbitrarily he denied readmission.
We cannot agree, however, with the finding of the trial Judge to the
effect that the Company was guilty of unfair labor practice. The
Company was reluctant — if not unwilling — to discharge the petitioner.
When the Union first informed the Company of petitioner's resignation
and urged implementation of Section 3 of the bargaining contract, the
Company advised petitioner of the provision thereof, thereby intimating
that he had to withdraw his resignation in order to keep his
employment. Besides, the Company notified the Union that it (the
Company) would not take any action on the case and would consider
the petitioner, "still a member" of the Union. When the latter,
thereafter, insisted on petitioner's discharge, the Company still
demurred and explained it was not taking sides and that its stand was
prompted merely by "humane" considerations, springing from the belief
that petitioner had resigned from the Union without realizing its effect
upon his employment. And, as the Union reiterated its demand, the
Company notified petitioner that it had no other alternative but to
terminate his employment, and dismissed him from the service,
although with "regret".
Under these circumstances, the Company was not "unfair" to the
petitioner. At the same time, the Company could not safely inquire into
the motives of the Union officers, in refusing to allow the petitioner to
withdraw his resignation. The arbitrary nature of the decision of said
officers was not such as to be apparent and to justify the company in
regarding said decision unreasonable. Moreso, the petitioner had
appealed to the National Officers of the PAFLU and the latter had
sustained the Union. The Company was justified in presuming that the
PAFLU had inquired into all relevant circumstances, including the
motives of the Union Officers.
 Having been denied readmission into the Union and having been
dismissed from the service owing to an unfair labor practice on the part
of the Union, petitioner is entitled to reinstatement as member of the
Union and to his former or substantially equivalent position in the
Company, without prejudice to his seniority and/or rights and
privileges, and with back pay, which back pay shall be borne exclusively
by the Union.
38
Page

96. UNITED RESTAUROR'S EMPLOYEES & LABOR UNION-
PAFLU, vs. HON. GUILLERMO E. TORRES,
Doctrine: Collective bargaining cannot be the appropriate objective of
petitioning Union's continuation of their concerted activities. The record
before us does not reveal any other legitimate purpose. To allow said
Union to continue picketing for the purpose of drawing the employer to
the collective bargaining table would obviously be to disregard the
results of the consent election. To further permit the Union's picketing
activities would be to flaunt at the will of the majority.
The outcome of a consent election cannot be rendered meaningless by
a minority group of employees who had themselves invoked the
procedure to settle the dispute. Those who voted in the consent
election against the labor union that was eventually certified are
hidebound to the results thereof. Logic is with this view. By their very
act of participating in the election, they are deemed to have acquiesced
to whatever is the consequence of the election. As to those who did
not participate in the election, the accepted theory is that they "are
presumed to assent to the expressed will of the majority of those
voting. Adherence to the methods laid down by statute for the
settlement of industrial strife is one way of achieving industrial peace;
one such method is certification election. It is the intent and purpose
of the law that this procedure, when adopted and availed of by parties
to labor controversies, should end industrial disputes, not continue
them.
Facts:
The case arose from a verified complaint for injunction with prayer for
preliminary injunction filed by Delta Development Corporation (Delta),
against the Union It is there averred that: Delta is the owner of the
Makati Commercial Center situated at Makati, Rizal. It is in the business
of leasing portions thereof. On the other hand, the Union is an
association of some employees of Sulo Restaurant, a lessee of Delta.
The Union sought permission from Delta to conduct picketing activities
"on the private property of plaintiff surrounding Sulo Restaurant. Delta
39
denied the request because it "may be held liable for any incident that
Page
may happen in the picket lines, since the picketing would be conducted
on the private property owned by plaintiff. Without awaiting resolution
of its motion to dismiss the Union commenced in this Court the present
original petition for certiorari on September 18, 1965, claiming that
respondent judge acted without or in excess of his jurisdiction in issuing
the injunctive writ as no restraining order could be validly issued
against the right to picket as part of freedom of speech.
After the submission of the parties' memoranda in lieu of oral
argument, Delta moved to dismiss the proceeding at bar on the ground
that it has become moot and academic. It averred that the Union lost
in the consent election conducted by the Department of and thereby
also lost its right to picket; and that in said election cases, a rival union
Sulo Employees Labor Union (SELU, for short) was certified by CIR as
the exclusive bargaining representative of all the employees of Sulo
Restaurant.
Issue: Whether or not the petition must be dismissed?
Ruling: Yes, the petition must be dismissed. The case before us has
become moot and academic. The consent election, it should be noted,
was ordered by CIR pursuant to the Union's petition for direct
certification and a similar petition for certification filed by SELU. Verily,
the Union can no longer demand collective bargaining. For, it became
the minority union. As matters stand, said right properly belongs to
SELU, which commands the majority. By law, the right to be the
exclusive representative of all the employees in an appropriate
collective bargaining unit is vested in the labor union designated or
selected for such purpose by the majority of the employees in the unit
concerned. SELU has the right as well as the obligation to hear voice
out and seek remedies for the grievances of all Sulo employees,
including employees who are members of petitioner Union, regarding
the "rates of pay, wages, hours of employment, or other conditions of
employment.
Collective bargaining cannot be the appropriate objective of petitioning
Union's continuation of their concerted activities. The record before us
does not reveal any other legitimate purpose. To allow said Union to
continue picketing for the purpose of drawing the employer to the
collective bargaining table would obviously be to disregard the results
 of the consent election. To further permit the Union's picketing
activities would be to flaunt at the will of the majority.
The outcome of a consent election cannot be rendered meaningless by
a minority group of employees who had themselves invoked the
procedure to settle the dispute. Those who voted in the consent
election against the labor union that was eventually certified are
hidebound to the results thereof. Logic is with this view. By their very
act of participating in the election, they are deemed to have acquiesced
to whatever is the consequence of the election. As to those who did
not participate in the election, the accepted theory is that they "are
presumed to assent to the expressed will of the majority of those
voting. Adherence to the methods laid down by statute for the
settlement of industrial strife is one way of achieving industrial peace;
one such method is certification election. It is the intent and purpose
of the law that this procedure, when adopted and availed of by parties
to labor controversies, should end industrial disputes, not continue
them.
Upon the law then, the Union's right to strike and consequently to
picket ceased by its defeat in the consent election. That election
occurred during the pendency before this Court of this original petition
for certiorari lodged by the Union the thrust of which is to challenge
the power of the Court of First Instance to enjoin its picketing activities.
The Union may not continue to picket.
40
Page
 97. MANILA MANDARIN EMPLOYEES UNION vs. NATIONAL
LABOR RELATIONS COMMISSION, and MELBA C. BELONCIO
Doctrine: It is a well-settled principle that findings of facts quasi-
judicial agencies like the NLRC, which have acquired expertise because
their jurisdiction is confined to specific matters, are generally accorded
not only respect but at times even finality if such findings are supported
by substantial evidence.
If the dispute is not purely intra-union but involves an interpretation of
the collective bargaining agreement (CBA) provisions and whether or
not there was an illegal dismissal, the NLRC has jurisdiction over the
dispute.
A closed-shop agreement is an agreement whereby an employer binds
himself to hire only members of the contracting union who must
continue to remain members in good standing to keep their jobs. It is
"the most prized achievement of unionism." It adds membership and
compulsory dues. By holding out to loyal members a promise of
employment in the closed-shop, it welds group solidarity. It is a very
effective form of union security agreement.
A closed-shop is a valid form of union security, and such a provision in
a collective bargaining agreement is not a restriction of the right of
freedom of association guaranteed by the Constitution. However, union
security clauses are also governed by law and by principles of justice,
fair play, and legality. Union security clauses cannot be used by union
officials against an employer, much less their own members, except
with a high sense of responsibility, fairness, prudence, and
judiciousness.
A union member may not be expelled from her union, and consequently
from her job, for personal or impetuous reasons or for causes foreign
to the closed-shop agreement and in a manner characterized by
arbitrariness and whimsicality.
Facts: Melba Beloncio was Asst. head waitress of Manila Mandarins
41
coffee shop. She got the ire of the Union when she made taray to a
Page
lazy busboy and retorted to a co-employee, wala akong tiwala sa Union
ninyo. The Union filed a Notice of Strike, this compelled Manila
Mandarin to have Beloncio on forced leave without pay. Closed-shop
agreement, a union security clause, i.e., Er to only hire Union members
this is valid under the law However, Union security clauses cannot be
used by union officials against an employer, much less their own
members, except with a high sense of responsibility, fairness,
prudence, and judiciousness. The NLRC settled the case in favor of
Beloncio
Issues: 1. Whether or not NLRC has jurisdiction?
2. Whether or not petitioner is liable for the payment of Beloncio’s
salary and fringe benefits?
Ruling:
1. Yes, On the issue of the NLRC jurisdiction over the case, the Court
finds no grave abuse of discretion in the NLRC conclusion that the
dispute is not purely intra-union but involves an interpretation of the
collective bargaining agreement (CBA) provisions and whether or not
there was an illegal dismissal. Under the CBA, membership in the union
may be lost through expulsion only if there is non-payment of dues or
a member organizes, joins, or forms another labor organization. The
charge of disloyalty against Beloncio arose from her emotional remark
to a waitress who happened to be a union steward, "Wala akong tiwala
sa Union ninyo." The remark was made in the course of a heated
discussion regarding Beloncio's efforts to make a lazy and recalcitrant
waiter adopt a better attitude towards his work.
It is a well-settled principle that findings of facts quasi-judicial agencies
like the NLRC, which have acquired expertise because their jurisdiction
is confined to specific matters, are generally accorded not only respect
but at times even finality if such findings are supported by substantial
evidence.
2. Yes, on the issue of liability of petitioner, the collective bargaining
agreement in this case contains a union security clause — a closed-
shop agreement.
A closed-shop agreement is an agreement whereby an employer binds
himself to hire only members of the contracting union who must
 continue to remain members in good standing to keep their jobs. It is
"the most prized achievement of unionism." It adds membership and
compulsory dues. By holding out to loyal members a promise of
employment in the closed-shop, it welds group solidarity. It is a very
effective form of union security agreement.

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

The Court stresses, however, that union security clauses are also
governed by law and by principles of justice, fair play, and legality.
Union security clauses cannot be used by union officials against an
employer, much less their own members, except with a high sense of
responsibility, fairness, prudence, and judiciousness.

A union member may not be expelled from her union, and consequently
from her job, for personal or impetuous reasons or for causes foreign
to the closed-shop agreement and in a manner characterized by
arbitrariness and whimsicality.

This is particularly true in this case where Ms. Beloncio was trying her
best to make a hotel bus boy do his work promptly and courteously so
as to serve hotel customers in the coffee shop expeditiously and
cheerfully. Union membership does not entitle waiters, janitors, and
other workers to be sloppy in their work, inattentive to customers, and
disrespectful to supervisors. The Union should have disciplined its
erring and troublesome members instead of causing so much hardship
to a member who was only doing her work for the best interests of the
employer, all its employees, and the general public whom they serve
42
Page