Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

The deletion of the relief of reinstatement was justified by the NLRC in the following manner: 11 Certainly, with the actuations of complainant, respondent had ample reason or enough basis then to lose trust and confidence in him. Complainant, being a salesman, should be considered to have occupied a position of responsibility so that, if respondent had lost trust and confidence in him, the former could validly and legally terminate the services of the latter (Lamaan Trading, Inc. vs. Leodegario, Jr., G.R. 73245, September 30, 1986). However, although there was valid and lawful cause in the dismissal of complainant by respondent, the manner in which it was effected was not in accordance with law. Complainant was not given written notice by respondent but was only verbally advised, thru its Field Sales Manager, sometime in May 1985 that he should not report for work anymore, obviously, because there was a charge against him. And this is what makes the dismissal of complainant arbitrary and illegal for failure to comply with the notice requirement under Batas Pambansa Blg. 130 on termination of employees. Ordinarily, when the dismissal of an employee is declared unjustified or illegal, he is entitled to reinstatement and backwages (Art. 279 of the Labor Code). However, in the instant case, considering that respondent had already lost trust and confidence in complainant which is founded on a reasonable ground, as discussed earlier, there is no point in requiring respondent to reinstate complainant to his former position. To do so would be tantamount to compelling the management to employ someone whom it can no longer trust, which is oppressive. It appears that both Alisasis and Pepsi-Cola, Inc. accepted the NLRC's verdict and complied therewith; that Pepsi-Cola gave Alisasis back wages for one (1) year; and that, Alisasis issued the corresponding quitclaim and considered himself separated from his employment. Alisasis thereafter asked his labor organization, PSAU, to pay him monetary benefits in accordance with Section 3, Article X of the "Amended By-Laws of the Mutual Aid Plan of the Pepsi-Cola Sales & Advertising Union (U.O.E.F.), 12 in an amount equal to "One (P1.00) Peso per year of service multiplied by the number of member(s) . . ." 13 PSAU demurred, invoking in its turn Section 1, Article XII of the same amended by-laws, declaring as disqualified from any entitlement to the PLAN and . . (from any) Benefit or return of contributions . . under any circumstances," inter alia, "(a)ny member dismissed for cause." 14 Alisasis thereupon filed a complaint against the union, PSAU, with the Med Arbitration Unit, National Capital Region, Department of Labor and Employment, to compel the latter to pay him his claimed benefits. 15 The principal defenses alleged by PSAU were that Alisasis was disqualified to claim any benefits under the Mutual Aid Plan, supra; and that the Med-Arbiter had no original jurisdiction over the case since Alisasis' claim for financial assistance was not among the cases cognizable by Med-Arbiters under the law "such as representation cases, internal union and inter-union disputes . . (or) a violation of the union's constitution and by-laws and the rights and conditions of membership in a labor organization." 16 After due proceedings, the Med-Arbiter promulgated an Order on April 16, 1990, ruling that he had jurisdiction and "ordering respondent . . (PSAU) to pay complainant Roberto Alisasis . . his claim for financial assistance under the Mutual Aid Fund of the union." PSAU appealed to the Secretary of Labor and Employment who, by Resolution dated July 25, 1990, denied the appeal but reduced the Med-Arbiter's award from P18,669.00 to P17,886.00. 17 Nullification of the Med-Arbiter's Order of

G.R. No. 97092 July 27, 1992 PEPSI-COLA SALES AND ADVERTISING UNION, petitioner, vs. HON. SECRETARY OF LABOR and ROBERTO ALISASIS, respondents.

NARVASA, C.J.: In its Decision in G.R. No. 80587 (Wenphil Corporation v. NLRC), promulgated on February 8, 1989, 1 this Court 2laid down the doctrine governing an illegal dismissal case where the employee satisfactorily establishes that his employment was terminated without due process i.e., without written notice to him of the charges against him and without according him opportunity to defend himself personally or through a representative but the employer nevertheless proves the existence of just cause for the employee's dismissal. The controlling principle in such a case is that since the employee's dismissal was for just cause, he is entitled neither to reinstatement or back wages nor separation pay or salaries for the unexpired portion of his contract, being entitled only to the salaries earned up to the last day of employment; at the same time, however, as a general proposition, the employer is obliged, on account of its failure to comply with the requirements of due process in terminating the services of the employee, to pay damages to the latter fixed at P1,000.00, a sum deemed adequate for the purpose. This doctrine, which has since been reaffirmed by this Court, 3 applies in the case at bar, in resolution of the issue of whether or not the private respondent, Roberto Alisasis, may be considered to have been dismissed for just cause within the meaning of the charter papers organizing and governing a mutual aid program of which he was a participant. From 1964 until sometime about 1985, Alisasis was an employee of the Pepsi-Cola Bottling Co., Inc. and later, of the Pepsi-Cola Products (Philippines) Inc., after the latter had bought out the former. 4 He was also a member of the labor organization of all regular route and truck salesmen and truck helpers of the company the Pepsi Cola Sales & Advertising Union (PSAU) from June 1, 1965 up to the termination of his employment in 1985. 5 As a member of the PSAU, he was also a participant in the "Mutual Aid Plan" set up by said union sometime in 1980. During the entire period of his employment, there were regularly deducted from his wages the amounts corresponding to union dues as well as contributions to the fund of the Mutual Aid Plan. 6 On May 7, 1986, Alisasis filed with the NLRC Arbitration Branch, Capital Region, Manila, a complaint for illegal dismissal against PepsiCola, Inc. 7 This resulted in a judgment by the Labor Arbiter dated January 25, 1988 declaring him to have been illegally dismissed and ordering the employer to reinstate him "to his former position without loss of seniority rights and with full backwages for one (1) year from the time he was not allowed to report for work . . ." 8 The judgment was subsequently affirmed with modification. by the Fourth Division of the NLRC dated December 29, 1989, 9 disposing of the appeal as follows: 10 In view therefore of the foregoing considerations, the decision appealed from is hereby modified in the sense that the order for respondent to reinstate complainant is hereby set aside. The rest of the decision shall stand.

April 16, 1990 and the respondent Secretary's Resolution of July 25, 1990 is the prayer sought by the petitioner in the special civil action of certiorari at bar. Resolving first the issue of whether or not the case at bar is within the original jurisdiction of the Med-Arbiter of the Bureau of Labor Relations, the Court holds that it is. The jurisdiction of the Bureau of Labor Relations and its Divisions is set forth in the first paragraph of Article 226 of the Labor Code, as amended, viz.: Art. 226. Bureau of Labor Relations. The Bureau of Labor Relations and the Labor Relations Divisions in the regional offices of the Department of Labor shall have original and exclusive authority to act, at their own initiative or upon request of either or both parties, on all interunion and intra-union conflicts, and all disputes, grievances or problems arising from or affecting labor management relations in all workplaces whether agricultural or non-agricultural, except those arising from the implementation or interpretation of collective bargaining agreements which shall be the subject of grievance procedure and/or voluntary arbitration. xxx xxx xxx It is evident that the case at bar does not concern a dispute, grievance or problem "arising from or affecting labor-management relations." So, if it is to be deemed as coming within the Med-Arbiter's jurisdiction, it will have to be as either an "intra-union" or "inter-union" conflict. No definition is given by law of these precise terms, "intra-union and inter-union conflicts." It is known, however, that "intra-" and "inter-" are both combining forms, prefixes the first, "intra-," meaning "within, inside of [intramural, intravenous];" and the other, "inter-, denoting "1. between or among: the second element is singular in form [interstate] 2. with or on each other (or one another), together, mutual, reciprocal, mutually, or reciprocally [interact]." 18 An intra-union conflict would therefore refer to a conflict within or inside a labor union conflict would therefore refer to a conflict within or inside a labor union, and an interunion controversy or dispute, one occurring or carried on between or among unions. In this sense, the controversy between Alisasis and his union, PSAU respecting the former's rights under the latter's "Mutual Aid Plan" would be an intra-union conflict under Article 226 of the Labor Code and hence, within the exclusive, original jurisdiction of the Med-Arbiter of the Bureau of Labor Relations whose decision, it may additionally be mentioned, is appealable to the Secretary of Labor. Certainly, said controversy is not one of those within the jurisdiction of the Labor Arbiters in accordance with Article 217 of the Code, it not being an unfair labor practice case, or a termination dispute, or one involving wages, rates of pay, hours of work and other terms and conditions of employment (which is "accompanied with a claim for reinstatement"), or one for damages arising from the employeremployee relations, or one for a violation of Article 264 of the Code, or any other claim arising from employer-employee relations, or from the interpretation or implementation of a collective bargaining agreement or of company personnel policies. The second issue relates to the character of Alisasis' dismissal from employment. The Court holds that Alisasis had indeed been "dismissed for cause." His employer had established this factual proposition by competent evidence to the satisfaction of both the Labor Arbiter and the National Labor Relations Commission. In the Latter's view, and in its own words, "Certainly, with the actuations of complainant, . . (Alisasis' employer) had ample reason or enough basis to lose trust and confidence in him . . . considering that (said employer) had already lost trust and confidence in complainant which is founded on a reasonable ground, as discussed earlier, (and therefore) there is no point in requiring respondent to reinstate complainant to his former position . . (as to) do so would be tantamount to compelling the

management to employ someone whom it can no longer trust, which is oppressive." It was merely "the manner in which such a dismissal from employment was effected . . (that was deemed as) not in accordance with law, (there having been) failure to comply with the notice requirement under Batas Pambansa Blg. 130 on termination of employees." That imperfection is, however, a circumstance quite distinct from the existence of what the NLRC has clearly and expressly conceded to be a "valid and lawful cause in the dismissal of complainant by respondent." And this is precisely the reason why, as already pointed out, the NLRC declined to accord to Alisasis all the remedies or reliefs usually attendant upon an illegal termination of employment e.g., reinstatement, award of damages although requiring payment by the employer of the sum of P1,000.00 simply on account of its failure "to comply with the notice requirement under Batas Pambansa Blg. 130 on termination of employees." The situation is on all fours with that in the Wenphil Corporation Case, 19 cited in this opinion's opening paragraph, in which the following pronouncements, among others, were made: Thus in the present case, where the private respondent, who appears to be of violent temper, caused trouble during office hours and even defied his superiors as they tried to pacify him, should not be rewarded with re-employment and back wages. It may encourage him to do even worse and will render a mockery of the rules of discipline that employees are required to observe. Under the circumstances the dismissal of the private respondent for just cause should be maintained. He has no right to return to his former employer. However, the petitioner (employer) must nevertheless be held to account for failure to extend to private respondent his right to an investigation before causing his dismissal. . . Thus, it must be imposed a sanction for its failure to give a formal notice and conduct an investigation as required by law before dismissing . . (respondent) from employment. Considering the circumstances of this casepetitioner (employer) must indemnify the private respondent (employee) the amount of P1,000.00. The measure of this award depends on the facts of each case and the gravity of the omission committed by the employer. The petitioner union (PSAU) was therefore quite justified in considering Alisasis as a "member dismissed for cause," and hence disqualified under its amended by-laws to claim any "Benefit or return of contributions . . under any circumstances, . . ." The ruling to the contrary of the Med-Arbiter and the Secretary of Labor and Employment must thus be set aside as tainted with grave abuse of discretion. WHEREFORE, the petition is granted and the writ of certiorari prayed for issued, NULLIFYING and SETTING ASIDE the challenged Order of the Med-Arbiter dated April 16, 1990 and the Resolution of the respondent Secretary of Labor and Employment dated July 25, 1990, and DIRECTING THE DISMISSAL of Alisasis' complaint in NLRC Case No. NCR-Od-M-90-01-037, without pronouncement as to costs. SO ORDERED. Padilla, Regalado and Nocon, JJ., concur. Paras, J., Retired as of July 4, 1992.

Footnotes

1 170 SCRA 69. 2 First Division, per Gancayco, J ., who has since retired. 3 SEE Seahorse Maritime Corp. v. NLRC, 173 SCRA 390 (1980); Kwikway Engineering Works v. NLRC, 195 SCRA 526 (1991). 4 Rollo, pp. 37-38. 5 Id., pp. 25, 32-33. 6 Id., pp. 25, 55. 7 Docketed as NLRC NCR Case No. 5-1794-86. 8 Rollo, p. 37. 9 Id., pp. 37-44. 10 Emphasis supplied. 11 Rollo, pp. 42-43 Emphasis supplied. 12 Id., pp. 45-54. The relevant facts as established by the record are as follows: 13 Id., p. 51. 14 Id., p. 52. 15 The complaint was filed on January 17, 1990, and was docketed as Case No. NCR-Od-M-90-01037. 16 Rollo, p. 6. 17 Id., p. 26, Annex D, petition. 18 Webster's New World Dictionary of the American Language, Second College Edition. Webster's Third New International Dictionary, 1968 ed., describes "inter-" as a "prefix . . . (signifying) 1: between, among, in the midst [intermediate] [interspace] 2: mutual, reciprocal [intermarry] [intermesh] [interrelation] [interwine] 3: between or among the parts of [intercostal] [interdental] 4: carried on between [intercollegiate] [intercommunication] [international] 5: occurring between: intervening [interglacial] [intertidal] 6: shared by or derived from two or more [interdepartmental] [interfaith] 7: between the limits of: within [intertropical] "intra" as another prefex meaning 1a: within esp. in adjectives formed from adjectives [intraglacial] [intravaginal] [intracellular] [intra-European] [intracosmical] . . . ." 19 170 SCRA 69, 76; emphasis and parenthetical insertions supplied. The doctrine has since been applied to other cases: SEE footnote 3, supra. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION Petitioner, a duly-registered labor union, is the sole and exclusive bargaining representative of all daily-paid workers of the Metro Manila plants of San Miguel Corporation, hereinafter referred to as SMC. On December 3, 1986, petitioner and SMB entered into a Memorandum of Agreement on Collective Bargaining Agreement (CBA). The National Council of petitioner called a general meeting on December 7, 1986 for the ratification of the CBA. On the morning of December 7, 1986, the National Council held a special meeting wherein the members present unanimously passed "Resolusyon Blg. 265, Serye 1986" (Annex G, Petition, p. 52, Rollo). It was agreed at said meeting to submit the resolution to the general membership for approval. Two thousand two hundred forty three (2,243) members attended the general meeting. Said Resolusyon Blg. 265 was submitted to the general assembly for approval. Two Thousand one hundred seven (2,107) members voted in favor and thirty six (36) voted against the resolution. In said general membership meeting the 1986 CBA was ratified by the members. Under said resolution, each member of the union was assessed P1,098.00 to be deducted from the lump sum of P10,980.00 which each employee was to receive under the CBA. Private respondents protested the deduction and refused to sign the authorization slip for the deduction. Petitioner passed a resolution on January 6, 1987, (Annex 9, Private Respondents' Comment, p. 169, Rollo) expelling private respondents from the union. SMB held in trust the amount of P1,098.00 pertaining to each private respondent. On January 8, 1987, private respondents Antonio Magsipoc and Abundio Ibasco filed a complaint (Annex I, Petition, p. 59, Rollo) docketed as NLRC-NCR Case No. 1-092-87, before the Arbitration Branch, National Capital Region, National Labor Relations Commission for illegal and exorbitant deduction and illegal expulsion from the union. In February, 1987, a similar complaint docketed as NLRC Case No. 00-02-00731-87 was filed by private respondents Carlos Villarante and Bienvenido Ramirez. On January 29, 1987, petitioner filed a motion to dismiss (Annex A, Petition, pp. 34-35, Rollo) Case No. 1-092-87 on the ground of lack of MELO, J.: Before us is a petition for certiorari seeking the annulment of the order dated February 4, 1987, of respondent Labor Arbiter, the decision dated May 29, 1987 rendered by said respondent, and the resolutions dated October 12, 1987, and January 11, 1988, of the respondent National Labor Relations Commission. G.R. Nos. 81852-53 March 5, 1993 ILAW AT BUKLOD NG MANGGAGAWA (IBM), petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER MANUEL P. ASUNCION, ABUNDIO IBASCO, ANTONIO MAGSIPOC, CARLOS VILLARANTE and BIENVENIDO RAMIREZ, respondents. Potenciano A. Flores, Jr. for the petitioner. Gilbert P. Lorenzo for respondents A. Ibasco and A. Magsipoc. Renato Ramos for respondent Carlos Villarante.

jurisdiction of NLRC. On February 4, 1987, respondent Labor Arbiter Manuel Asuncion issued an order (Annex B, Petition, pp. 36-37, Rollo) denying the motion to dismiss. It appears that the two cases were consolidated, and respondent Labor Arbiter proceeded to take cognizance of the cases and directed the parties to file their position papers. Only private respondents filed their position paper with petitioner continuing to refuse to submit to the jurisdiction of the Labor Arbiter. On May 29, 1987, respondent Labor Arbiter rendered a decision (Annex C, Petition, pp. 39-43, Rollo) finding the questioned assessment illegal and ordering petitioner and SMB to return the amount of P1,098.00 to each of private respondents; declaring the expulsion of private respondents from the union null and void; and ordering petitioner to desist from expelling the members who objected to the deduction of the questioned assessment from their CBA differentials. Petitioner seasonably filed a notice of appeal (Annex K, Petition, p. 61, Rollo) with respondent National Labor Relations Commission. On October 12, 1987, the NLRC issued a resolution (Annex D, Petition, pp. 44-46, Rollo) affirming the decision of respondent Labor Arbiter and dismissing the appeal. Petitioner filed a motion for reconsideration but the same was denied in a resolution dated January 11, 1988. (Annex E, Petition, p. 47, Rollo). Hence, the instant recourse under the following assigned errors: 1. The NLRC committed reversible error in assuming jurisdiction over the person of petitioner union; 2. The NLRC committed a reversible error in assuming jurisdiction over the nature of the action; 3. The NLRC committed reversible error in declaring the sum from which the special assessment is made, is a wage, that it is a deduction from a wage and that it is an attorney's fee. (pp. 12-13, Rollo) The second assigned error raising as it does the central issue of jurisdiction, attention must be focused on the same. It is fundamental that jurisdiction over the subject matter is conferred by law (Tijam vs. Sibonghanoy, 23 SCRA 29 [1968]) and is determined by the allegations of the complaint, irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein (Serrano vs. Muoz (Hi) Motors, Inc., 21 SCRA 1085 [1967]). A perusal of the complaint (Annex I, Petition, p. 59, Rollo) clearly shows that the subject-matter concerns: (a) the assessment and deduction of 10% from private respondents' CBA differential pay which were denounced by private respondents as illegal and exorbitant and made against their will, and (b) private respondents' expulsion from the union. The assessment and deduction of 10% from each employee's differential pay were imposed by petitioner through Resolusyon Blg. 265 and the expulsion was adopted by petitioner through Resolusyon Blg. 15, dated January 6, 1987, both of which were denounced by private respondents as illegal and violative of their rights as union members. Clearly this is an intra-union dispute a dispute between a labor union and its members. "Internal Union Dispute" includes all disputes or grievances arising from any violation of or disagreement over any provision of the constitution and by-laws of a union, including any violation of the rights and conditions of union membership provided for in the Code (Book V, Rule I, Section l(a), Omnibus Rules Implementing The Labor Code). Article 226 of the Labor Code of the Philippines vests on the Bureau of Labor Relations and the Labor Relations Divisions jurisdiction to act on all inter-union or intra-union conflicts. Said Article thus provides: Art. 226. Bureau of Labor Relations The Bureau of Labor Relations and the Labor Relations

Division in the regional offices of the Department of Labor shall have original and exclusive authority to act, at their own initiative or upon request of either or both parties, on all inter-union and intra-union conflicts, and all disputes, grievances or problems arising from or affecting labor-management relations in all work places whether agricultural or non-agricultural, except those arising from the implementation or interpretation of collective bargaining agreements which shall be subject of grievance procedure and/or voluntary arbitration. Unquestionably, therefore, NLRC Case No. 1-092-87 and Case No. 00-02-00731-87, the subject of which is an intra-union dispute, fall under the original and exclusive jurisdiction of the Bureau of Labor Relations, and respondent Labor Arbiter and NLRC have no jurisdiction over said cases. In view of the foregoing conclusion, there is no further need to discuss the other errors assigned by petitioner. WHEREFORE, the order dated February 4, 1987 issued by respondent Labor Arbiter, the decision rendered on May 29, 1987, by said respondent, the resolution dated October 12, 1987, of respondent NLRC affirming the decision of respondent Labor Arbiter and the resolution dated January 11, 1988, of respondent NLRC are hereby ANNULLED and SET ASIDE. Respondent Labor Arbiter is hereby ordered to dismiss NLRC Case No. 1-072-87 and NLRC Case No. 0002-00731-87, without prejudice to private respondents' filing the same with the Bureau of Labor Relations. SO ORDERED. Feliciano, Bidin, Davide, Jr. and Romero, JJ., concur. Gutierrez, Jr., J., is on leave. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-41106 September 22, 1977 LITEX EMPLOYEES ASSOCIATION, petitioner, vs. GEORGE A. EDUVALA, in his capacity as Officer-in-Charge, BUREAU OF LABOR RELATIONS Departmentof Labor and FEDERATION OF FREE WORKERS (F.F.W.), respondents. Esteban M. Mendoza for petitioner. F. F. Bonifacio, Jr. for respondent FFW. Acting Solicitor General Hugo E. Gutierrez, Jr., Assistant Solicitor General Reynato S. Puno and Solicitor Romeo C. de la Cruz for respondent George A. Eduvala, etc.

FERNANDO, J.: In this and certiorari and prohibition proceeding, what is sought to be nullified is an Order of respondent George A. Eduvala, the then Officerin-Charge of the Bureau of Labor Relations, requiring that a memorandumm election be held among the members of the Litex Employees Association, petioner labor union, to ascertain their wishes

as to their wishes as to their affiliation with respondent Federation of Free Workers. It is the contention of petitioner Union that there is no statutory authorization for the holding of such a referendum election. That is the decisive issue in this comtroversy. In support of the competence of respondent public official, Article 226 of the Present Labor Code is cited. It reads thus: "The Bureau of Labor Relations and the Labor Relations Division in the the regional offices of the Labor shall have and exclusive authority to act, at their own initiation or upon request of either or both parties, on all inter-union and intra-union conflicts, and disputes, grievances of probe arising from or affecting labor-management relations in all workplaces, whether natural or nonagricultural, except those arising from the implementation or interpretation of collective bargaining agreements which shall be the subject of grievance Procedure and/or voluntary arbitration." 1 The comment of the then Acting Solicitor General, now Associate Justice of the Court of Appeal, Hugo E. Gutierrez, Jr., treated as the answer, 2 maintained that the wording of the above provision sustains the authority thus challenged. There is considerable persuasiveness to such a view. It would be an unduly restrictive interpretation them if a negative answer were Seven to the question posed. It would be oblivious to the basic end and aim of the pant Labor Code to confer on the Department of Labor and its bereaus the competence to pass upon and decide labor controversies and thus minimize judicial intervention. There is no legal basis for nullifying such order. This later dispute originated from a petition of respondent Federation of Free Workers filed with the Bureau of labor Relations against petitioner labor Union to hold a referendum among the members of the union for the of determining whether they desired to be affiliated with such Federation. It was alleged that a "great majority" of the members of the union desired such affiliaion, but that its President, a certain Johnny de Leon, was opposed. The contention of petitioner Union acting through its counsel was that only about 700 out of more than 2,200 employees of the company had manifested their desire to affliate with the Federation and that a substantial number of such had since then repudiated their signatures. It also raised the point that what was sought was a certification election which was not proper as there was a certified collective bargaining agreement between the union and the company. The Compulsory Arbitrator, after a careful study of the pleadings, reached the conclusion that the truth of the matter could best be assertained by a referendum election. Respondent as Officerin-Charge of the Bureau of labor Relations affirmed. Hence this petition directed to this Court, as a jurisdictional question is raised. The petition, as noted at the outset, lacks merit. 1. Article 226 of the New Labor Code cannot be misread to signify that the authority conferred on the Secretary of labor and the officials of the Department is limited in character. On the contrary, even a cursory reading thereof readily yields the conclusion that in the interest of industrial peace and for the promotion of the salutary constitutional objectives of social justice and protection to labor, the competence of the governmental entrusted with supervision over disputes involving employers and employees as well as "inter-union and intra-union conflicts," is broad and expensive. Thereby its purpose becomes crystal-clear. As is quite readily discernible where it concerns the promotion of social and economy rights, the active participation in the implementation of the codal objective is entrusted to the executive department. There is no support for any allegation of jurisdictional infirmity, considering that the language employed is well-nigh inclusive with the stress on its "and exclusive authority to act." If it were otherwise, its policy might be rendered futile. That is to run counter to a basic postulate in the canons of statutory interpretation. Learned Hand referred to it as the proliferation of purpose. As was emphatecally asserted by Justice Frankfurter: "The generating consideration is that legislation is more than composition. It is an active instrument of government which, for purposes of interpretation, means that laws have ends to be achieved. It is in this connection that Holmes said, 'words are flexible.' Again it was Holmes, the last judge to give quarter to loose thinking or vague yearning, who said that 'the general purpose is a more is a more important aid to the meaning than any rule which grammar or formal logic may lay down.' And it was Holmes who chided courts for being apt to err by sticking too closely to the words of a law when those words import a policy that goes beyond them." 3 What is intended by the framers of code or statute is not to be frustrated. Even on the assumption that by some strained or literal reading of the

employed, a doubt can be raised as to its scope, the 'immitation should not be at war with the end sought to be attained. It cannot be denied that if through an ingenious argumentation, limits may be set on a statutory power which should not be there, there would be a failure to effectuate the statutory purpose and policy. That kind of approach in statutory construction has never recommended itself. 4 2. Nor has petitioner made out a case of grave abuse of since the matter involved is a dispute as to whether or not the members of petitioner labor union had decided, contrary to the wishes of its president, to join respondent Federation. What better way could there be of ascertaining the truth there than to hold the referendum election. The guarantee of fairness as to whether there is accuracy depends on the impartiality and neutrality of the Bureau of Labor Relations. There is nothing in petitioner's submission to indicate that such would not be the case. Under such circumstances then, petitioner labor union could not be held to allege that there was an abuse, much less a grave abuse, of the discretionary authority vested in such office. It suffices to take note of how often this Court, after a careful consideration of the issue involved, had rejected such a contention in certification cases, analogous, if not similar in character. Invariably, the imputation that the holding of an election for the purpose of determining with exactitude the wishes of the employees concerned as amounting to arbitrary exercise exercise of a power had been rejected. 5 WHEREFORE, the petition for certiorari is dismissed. This decision is immediately executory. Barredo, Concepcion Jr. and Santos, JJ., concur.

Separate Opinions ANTONIO, J., concurring: The respondent public officer has sufficient authority, under the labor Code, to conduct the referendum aforementioned. AQUINO, J., concur: Because the instant case was rendered moot by the 1975 petition of FFW for a certification election among the employees and workers of Lirag Textile Mills, Inc. If a certification election will be held, a referendum is not necessary.

Separate Opinions ANTONIO, J., concurring: The respondent public officer has sufficient authority, under the labor Code, to conduct the referendum aforementioned. AQUINO, J., concur: Because the instant case was rendered moot by the 1975 petition of FFW for a certification election among the employees and workers of Lirag Textile Mills, Inc. If a certification election will be held, a referendum is not necessary. Footnotes 1 Article 226 of the New Labor Code (1974).

2 He was assisted by Assistant Solicitor General Reynato S. Puno and Solicitor Romeo C. de la Cruz. 3 Frankfurter, Of Law and Men, 59-60 (1965). 4 Cf. Ty Sue v. Hord 12 Phil, 485 (1909); United States v. Toribio, 11-D Phil. 85 (1910); Riera v. Palmaroli, 40 Phil. 105 (1919): Commissioner of Customs v. Caltex Phil., Inc., 106 Phil. 829 (1959); Sarcos v. Castillo, L- 29755, Jan. 31, 1969, 26 SCRA 853; Automotive Parts & Equipment Co., Inc. v. Lingad, L-26406, Oct. 31, 1969, 30 SCRA 248-1 Lopez v. Commissioner of Customs, L28235, Jan. 30,1971, 37 SCRA 327; Matabuena v. Cervantes, L-28771, March 31, 1971, 38 SCRA 284; Republic Flour Mills v. Commissioner of Customs, L. 28463, May 31, 1971, 39 SCRA 269; Lozano v. Romero, L-33245, Sept. 30, 1971, 41 SCRA 247; Caltex Filipino Managers and Supervisors Association v. Court of Industrial Relations, L-30623-33, April 11, 1972, 44 SCRA 350. 5 Cf. United Employees Union v. Gelmart Industries v. Noriel, 67 SCRA 267; Philippine Association of Free Labor Unions v. Bureau of Labor Relations, 69 SCRA 132 (1976); Federacion Obrera v. Noriel, 72 SCRA 24 (1976); U. E. Automotive Employees and Workers Union-Trade Unions of the Philippines and Allied Services v. Noriel, 74 SCRA 72 (1976); Philippine Labor Alliance Council v. Bureau of Labor Relations, L41288, Jan. 31, 1977; Today's Knitting Free Workers Union v. Noriel, L-45057, Feb. 28, 1977; Benguet Exploration Miner's 4575, June 20, 1977; Rowell Labor Union v. Ople, L-42270, July 29, 1977. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

Tondea Inc. at its Tondo Plant. On May 31, 1989 it lost in a certification election to the Ilaw at Buklod ng Manggagawa (IBM). It appears that, on March 14, 1989, about 200, out of 1,015 members of petitioner, petitioned the National Capital Region Office of the Department of Labor and Employment (hereafter referred to as DOLENCR) for an audit or examination of the funds and financial records of the union. Accordingly an audit was ordered and, on April 17, 1989, the acting auditing examiner of the DOLE-NCR, Nepomuceno Leao II, submitted a report finding Ramon de la Cruz and Norma Marin accountable for P367,553.00 for union dues remitted by La Tondea Inc. to LTWU. De la Cruz and Marin appealed to then DOLE Secretary Franklin Drilon, complaining that they had not been heard before the report was made. The case was indorsed to the respondent Director of the Bureau of Labor Relations, who, on August 7, 1989, directed the DOLE-NCR to forward to the BLR the records of the case. In her order dated September 29, 1989, the respondent BLR Director found that indeed De la Cruz and Marin had not been heard before they were held liable for union funds. For this reason she set aside the findings and recommendations of the DOLE-NCR and ordered another audit/examination to be conducted. The dispositive portion of her order stated: WHEREFORE, premises considered, the findings/recommendations of the National Capital Region contained in the letter of NCR Director Luna C. Piezas to Teodoro Monleon, et al. petitioners, dated 11 May 1989 are hereby set aside. Accordingly, the Labor Relations and Reporting Division (LRRD), this Bureau is hereby directed to conduct an audit/examination of the books of accounts and other financial records of La Tondea Workers Union (LTWU) for the period of 1986 to February 1989. SO ORDERED. Petitioner moved for a reconsideration of the order insofar as it ordered an audit/examination of books of accounts and financial records. It argued that certain requirements of Art. 274 of the Labor Code, as amended by R.A. 6715, must first be complied with before an audit/examination could be ordered, to wit: (1) there must be a sworn written complaint, (2) it must be supported by at least 20% of the total membership of the union and (3) it must not have been conducted during the freedom period nor within the 30 days immediately preceding the date of election of union officials. Petitioner's motion was denied by the BLR in a resolution dated December 1, 1989. Ramon de la Cruz, Danilo Manrique, Arturo Bautista and Norma Marin were ordered to submit "all financial records and related documents of the union for the period 1986 to February 1989 within ten (10) days from receipt of this order." The union, through its new president, Danilo Manrique, again moved for a reconsideration, this time raising a jurisdictional question: That under Art. 274 of the Labor Code, as amended by Republic Act No. 6715, the power to order an examination of the books of accounts and financial activities of a union is vested in the Secretary of Labor and Employment or his representative and the BLR can not be considered the Secretary's representative. In its order of January 22, 1990, however, the BLR denied petitioner's motion, even as it reiterated its previous order of December 1, 1989, with warning that if the records and documents required were not produced within five days petitioner would be deemed to have waived the right to present its evidence. The union filed a petition for review of the orders of December 1, 1989 and January 22, 1990 to the DOLE Secretary. But the BLR proceeded with its examination, and, as the union officers refused to comply with

G.R. No. 96821 December 9, 1994 LA TONDEA WORKERS UNION, petitioner, vs. THE HONORABLE SECRETARY OF LABOR AND EMPLOYMENT, and HON. PURA FERRER-CALLEJA, in her capacity as Director, Bureau of Labor Relations, respondents. Amorito V. Canete for petitioner.

MENDOZA, J.: This is a petition for certiorari to set aside orders and the decision of respondent Director of the Bureau of Labor Relations (BLR) and Secretary of Labor and Employment in BLR-AE-8-18-89, finding Ramon de la Cruz and Norma Marin, president and treasurer respectively of petitioner La Tondea Worker's Union (LTWU), accountable for union funds in the amount of P367,553.00. Petitioner LTWU is a duly registered labor organization. For more that thirty years it was bargaining agent of the rank-and-file workers of La

its orders, the BLR based the audit/examination on the certification of the company. In an order dated July 5, 1990, the BLR found the union officers personally accountable and liable for the total amount of P367,553.00, which La Tondea Inc. certified it had remitted to LTWU as union dues. The Secretary of Labor and Employment did not act on the petition for review of the union. Instead, he referred the petition to the BLR which denied the petition for having become moot and academic. The dispositive portion of its order, dated November 21, 1990, states: WHEREFORE, premises considered, the petition for review is denied for lack of merit. The Order of this Bureau dated 5 July 1990 issued in the exercise of its appellate jurisdiction over audit/examination case heard before the Regional Office, this Department, is hereby affirmed in toto. Hence this petition, alleging grave abuse of discretion by respondent Secretary of Labor and Employment and Director of the Bureau of Labor Relations. Petitioner alleges several grounds which raise the following issues: 1. Whether under the law the power to examine the books of accounts of petitioner is vested in the Secretary of Labor and Employment or in the Bureau of Labor Relations. 2. If it is vested in the Secretary of Labor and Employment, whether the power was not delegated by him in this case to the Bureau of Labor Relations. 3. Whether the examination of petitioner's books was validly ordered despite the fact that the requirements of Art. 274 of the Labor Code had not been complied with. 4. Whether the union officers were properly held accountable for union funds. With regard to the first issue, the petitioner cites Art. 274 of the Labor Code and Rule VIII-A of the implementing rules, in support of its contention that the BLR had no authority to conduct an examination of the books of the LTWU and that such authority is vested solely in the Secretary of Labor or his duly authorized representative. These provision state: Art. 274. Visitorial Powers. The Secretary of Labor and Employment or his duly authorized representative is hereby empowered to inquire into the financial activities of legitimate labor organizations upon the filing of a complaint under oath and duly supported by the written consent of at least twenty (20%) percent of the total membership of the labor organization concerned and to examine their books of accounts and other records to determine compliance or noncompliance with the law and to prosecute any violations of the law and the union constitutions and by-laws; Provided, that such inquiry or examination shall not be conducted during the sixty (60) day freedom period nor within the thirty (30) days immediately preceding the date of election of union officials. Rule VIII-A VISITORIAL POWER

Sec. 1. Exercise of visitorial power. The Secretary of Labor and Employment or his duly authorized representative shall inquire into the financial activities of any legitimate labor organization and examine their books of accounts and other records to determine compliance with the law and the organization, constitution and bylaws, upon the filing of a complaint under oath and duly supported by the written consent of at least 20% of the total membership of the labor organization concerned. Sec. 2. Period of inquiry or examination. No inquiry or examination of the financial activities and books of accounts as well as other records of any legitimate labor organization mentioned in the preceding section shall be conducted during the 60 day freedom period nor within 30 days immediately preceding the date of election of union officials. The petitioner argues that although Art. 274 authorizes the Secretary to delegate the examination of accounts to a representative, the BLR Director cannot be considered a duly authorized representative because the power to examine the books of accounts of a union has already been delegated to union account officers pursuant to the implementing rules, Rule 1, sec. 1(ff) which provides: "Union Accounts Examiners" are officials of the Bureau or the Industrial Relations Division in the Regional Office empowered to audit books of accounts of the union. On the other hand, the public respondents contend that union accounts examiners are actually officials of the BLR because the word "Bureau" in sec. 1(ff) refers to the Bureau of Labor Relations. At any rate, they contend that by endorsing the case to the BLR, the Secretary of Labor and Employment clearly designated the BLR to act on his behalf. Respondent's contention is well taken. The "union accounts examiners of the Bureau" mentioned in Rule 1, sec. 1(ff) of the implementing rules as having the power to audit the books of accounts of unions are actually officials of the BLR because the word "Bureau" is defined in Rule 1, sec. 1(b) of the same rules as the Bureau of Labor Relations. Anyway, the delegation of authority to union accounts examiners in Rule 1, sec. 1(ff) is not exclusive. By indorsing the case to the BLR, the Secretary of Labor and Employment must be presumed to have authorized the BLR to act on his behalf. As already stated, the Secretary made two indorsements: first, when he referred to the BLR the letter dated July 27, 1989 of Ramon de la Cruz and Norma Marin seeking the annulment of the audit report of the DOLE NCR, and second, on September 4, 1990 when, instead of acting on the petition for review of the union, he indorsed it to the BLR. Independently of any delegation, the BLR had power of its own to conduct the examination of accounts in this case. Book IV, Title VII, Chapter 4, sec. 16 of the Administrative Code of 1987 provides: Sec. 16. Bureau of Labor Relations. The Bureau of Labor Relations shall set policies, standards, and procedures on the registration and supervision of legitimate labor union activities including denial, cancellation and revocation of labor union permits. It shall also set policies, standards, and procedure relating to collective bargaining agreements, and the examination of financial records of accounts of labor organizations to determine compliance with relevant laws.

The Bureau shall also provide proper orientation to workers on their rights and privileges under existing laws and regulations, and develop schemes and project for the improvement of the standards of living of workers and their families. The Labor Code, as amended by RA 6715, likewise authorizes the BLR to decide intra-union disputes. This includes the examinations of accounts. Thus, Art. 226 of the Code provides: Art. 226. Bureau of Labor Relations. The Bureau of Labor Relations and the Labor Relations Divisions in the regional offices of the Department of Labor shall have original and exclusive authority to act, at their own initiative or upon request of either or both parties, on all inter-union and intra-union conflicts, and all disputes, grievances or problems arising from or affecting labor-management relations in all workplaces whether agricultural or nonagricultural, except those arising from the implementation or interpretation of collective bargaining agreements which shall be the subject of grievance procedure and/or voluntary arbitration. The Bureau shall have fifteen (15) working days to act on labor cases before it, subject to extension by agreement of the parties. Petitioner's contention that the intra-union dispute mentioned in this provision does not include the examination of accounts of the union because it contemplates intra-union conflicts affecting labormanagement relations is untenable. Conflicts affecting labormanagement relations are apart from intra-union conflicts, as is apparent from the text of Art. 226. This brings us to the second question, whether the examination of accounts in this case is valid considering that it was not initiated through a sworn written complaint by at least 20% of the total membership of the LTWU. As already stated, the case arose from a letter written by 200, out of a total membership force of 1,015 of the LTWU. These represented 19.70% of the total membership of the union, just a little less than the required number. The requirements referred to were inserted in Art. 274 by way of an amendment by R.A. 6715 which took effect on March 21, 1989. On the other hand, the letter of the union members petitioning for an examination of the financial records of the union was made on March 14, 1989, i.e., seven days before the effectivity of the amendments. At the time the letter was made, Art. 274 merely provided: Art. 274. Visitorial power. The Secretary of Labor or his duly authorized representative is hereby empowered to inquire, from time to time, into the financial activities of legitimate labor organizations and to examine their books of accounts and other records to determine compliance or non-compliance with the law and to prosecute any violations of the law and the union constitution and by-laws. The validity of the request for examination of union accounts must be determined as of the time of its filing. Hence we hold that the request of the 200 union members in this case was validly made and conferred jurisdiction on the DOLE-NCR to conduct the examination of the books of accounts of the petitioners. It is indeed true that, in setting aside the audit report of the DOLENCR, the BLR cited the fact that the examination of accounts had been made within the so-called "freedom period." But as the BLR pointed out in its order dated September 29, 1989, the ban on examination or audit of union funds within 60 days of the expiration of the collective

bargaining agreement had been a policy of the Department of Labor and Employment even before R.A. 6715 took effect. There is, therefore, nothing inconsistent in holding that the examination of accounts by the DOLE-NCR as void for having been conducted within the freedom period and saying now that since the letter requesting such an examination was made before the effectivity of R.A. 6715, the requirements of sworn written complaint and support of at least 20% of the total membership of the union do not apply. The examination subsequently ordered by the BLR, although made after the effectivity of R.A. 6715, was validly conducted because it was simply a continuation of proceedings already began in the DOLE-NCR. As a matter of fact the petitioners, in elevating the matter to the Secretary of Labor, specifically requested that their letter be treated as a motion for reconsideration or as an appeal from the audit report of the DOLE-NCR. Finally, it is claimed that petitioners Ramon de la Cruz and Norma Marin were denied due process by the BLR. As already shown, however, they were given every opportunity to defend themselves, including a warning that if they persisted in their refusal to submit the books of accounts of the union they would be considered to have waived the right to present their evidence. As they did not heed the warning, we think the BLR was justified in using, as basis of its examination, the certification of La Tondea, Inc. as to the amount remitted by it to the LTWU as union dues. This, at any rate, is a factual matter and the rule is that the findings of facts of administrative agencies, when supported by substantial evidence, will not be disturbed. WHEREFORE, the petition for certiorari is DISMISSED. SO ORDERED. Narvasa, C.J., Regalado and Puno, JJ., concur. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-48192 March 30, 1979 ARSENIO REYES, R. ZINGAPAN E. SERRANO, P. SISON, L. MENDOZA, F. PEREZ, O. CRUZ, E. BAUTISTA, H. ANGCIANGCO, G. SANTOS, R. PINEDA, J. LLENAS, R. VALDEZEO, C. HERNAL, S. TRIPOLI, D. TRINE, P. MAGAT, N. NATAGOC, J. SASIS AND CRISPA-FLORO WORKERS' ASSN., petitioners, vs. THE HONORABLE BLAS OPLE, CARMELO C. NORIEL and ROMEO A. YOUNG, and NAFLU, respondents. B. R. de Luna & Associates for petitioners. Office of the Solicitor General for respondents.

TEEHANKEE, J.: The Court finds without merit the protest of petitioners against the holding and results of the certification election held in December, 1977 whereby the National Federation of Labor Unions (NAFLU) was certified as the sole and exclusive bargaining agent of the workers with the employer P. Floro & Sons, Inc. and therefore dismisses the petition at bar. The individual petitioners, as alleged in their petition, were declared the duly elected officers of the union Crispa Floro Workers Association

(CFWA) in a "much delayed election of union officers on August 9, 1977" the outcome of which "was finally determined" only on November 22, 1977, due to an intra-union dispute among the workersmembers aspiring to the leadership of the union (CFWA) which then was officially affiliated with the 'Trade Unions of the Philippines and Allied Services (TUPAS) On September 1, 1977, however, upon petition of the CFWA-TUPAS (at the instance of petitioners' opponents), the Bureau of Labor Relations caged for a certification election at the employer company, P. Floro & Sons, Inc. Many pre-election conferences in the months of September to November, 1977 were held and all interested unions were allowed to intervene and the lists of voters-workers were agreed upon. The certification election was held on December 6, 1977 with no union emerging with a clear majority, as follows: 1) NAFLU..................................................................... 554 2) CRISPA FLORO WORKERS ASSOCIATIONTUPAS.................................................................... .................................. 1 3) FEDERATION OF FREE WORKERS (FFW)....... 524 4) NATIONAL UNION OF GARMENT, TEXTILE, CORDAGE & ALLIED WORKERS OF THE PHIL. (GATCORD)............................................................ ................................ 2 5) PLUM FEDERATION OF INDUSTRIAL & AGRARIAN WORKERS.............................................................. ............................... 136 6) NO UNION............................................................. 7 7) SPOILED................................................................. 29 TOTAL.................................................................... 1,253 Petitioners Reyes, et al under CFWA which they had disaffiliated from TUPAS and the PLUM both filed protests to set aside the election results. In the questioned Resolution of December 12, 1977, respondent Bureau of Labor Relations Director Carmelo C. Noriel dismissed the protests holding insofar as petitioners Reyes, et al. were concerned that their move to disaffiliate from the mother federation (TUPAS) had not been formalized beforehand, that they could not utilize just the name of Crispa Floro Workers Association which was not registered by itself and did not have the required personality of a labor organization and that they and their supporters could have duly intervened in the elections "still under aegis of the CFWA-TUPAS", as follows: Anent Reyes et als assertion of grave abuse of discretion, the same may have been given credence, if they have been possessed of the action on their move to intervene was a tacit recognition of the fact that Reyes et als group, in utilizing the name of Crispa Floro Workers Association was not yet possessed of the personality of a legitimate labor organization. This is so, as officially, Crispa Floro Workers Association is still an affiliate of the Trade Unions of the Philippines and Allied Services (TUPAS),

one of the intervenors in the instant case. Their move to disaffiliate from the mother federation was sad to state, never formalized before him What is appellant from the record of this case, is an unfortunate intra-union squabble among two sets of officers, one group headed by Reyes, et al and another group of defeated officers, the one advocating disaffiliation from the mother federation and the other eventually supporting the other intervenor unions in this case Officially therefore, as there is no formal disaffiliation made, the herein aggrupation which is shown to be just a set of newly elected officers without any noticeable union members supporting them, could have only intervened still under the aegis of the Crispa Floro Worker's Association-TUPAS. To have procrastinated on the holding of the certification election by mere reason of this unfortunate incident that happened in one of the intervenor unions, would have equally deprived the others of their legitimate right to represent the already restive workers at the aforementioned corporation. This Office chose the latter alternative. It could not have done otherwise. 1 Respondent Noriel accordingly ordered the holding of a runoff election on December 14, 1977 between the two unions that had gathered the top two places at which the NAFLU emerged with 664 votes as the winner of an absolute majority of the 1,253 votes cast (with FFW receiving 566 votes and 23 votes declared spoiled) and was subsequently certified on December 20, 1977 as the exclusive bargaining representative of all the workers of the employer company. Hence, this petition filed on May 5, 1978 after petitioners had failed to obtain reconsideration from respondents Noriel and Ople as Secretary (now Minister) of Labor The correctness of respondents' questioned actions was confirmed at the hearing held by the Court on March 2, 1979 and respondents cannot be held to have acted with grave abuse of discretion. Petitioners were well aware of the calling of the certification election for determining the union chosen by the workers themselves to represent them as their bargaining representative but limited themselves to sending letters to the Bureau of Labor Relations, one on November 23, 1977 alleging for "leave to intervene and that "pending resolution of our intervention, may we request that this issue be deferred" and another letter on November 28, 1977 alleging that they had disaffiliated CFWA from the mother federation TUPAS. Respondents had properly ruled that disaffiliated from TUPAS, CFWA had no personality not having been duly registered as such. The certification of July 25, 1978 to this effect issued by the Bureau of Labor Relations and submitted by the Solicitor General on behalf of respondents public officials clearly bears this out, thus: This is to certify that based on the records of this office, CRISPA-FLORO WORKERS ASSOCIATION is not a registers, labor organization. However, CRISPA-FLORO WORKERS ASSOCIATION-TUPAS was registered in this Office on 14 February 1974 and was issued Registration Certificates No.(Fed.-404) 7184-IP-129. 2 That the elections were held peacefully and orderly is not questioned by petitioners. The Court has consistently favored and upheld the holding of certification elections for the workers themselves to elect the union that the majority may choose as their bargaining representative or if they wish, to vote that there be no union. Their plea that another certification election be held at which they may duly take part would be but a futile exercise in the light of the results which were highlighted by the lack of any noticeable support for them by the rank and file, as well as by their admission at the hearing that the winner and certified union, the NAFLU, enjoys the workers' full support, having signed up more than a thousand of them as members.

ACCORDINGLY, the petition is dismissed and the restraining order issued on May 17, 1978 is lifted effective immediately. No costs. Makasiar, Fernandez, Guerrero, De Castro, and Melencio-Herrera, JJ., concur.

at Authorization," and "Listahan ng mga Dumalo sa Pangkalahatang Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas" were not executed under oath and certified by the union secretary and attested to by the union president as required by Section 235 of the Labor Code7 in relation to Section 1, Rule VI of Department Order (D.O.) No. 9, series of 1997. The union registration was, thus, fatally defective. The Med-Arbiter further held that the list of membership of petitioner union consisted of 12 batchman, mill operator and leadman who performed supervisory functions. Under Article 245 of the Labor Code, said supervisory employees are prohibited from joining petitioner union which seeks to represent the rank-and-file employees of respondent company. As a result, not being a legitimate labor organization, petitioner union has no right to file a petition for certification election for the purpose of collective bargaining. Department of Labor and Employments Ruling

#Footnotes 1 Rollo, p. 23. 2 Rollo, p. 78. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 169717 March 16, 2011

SAMAHANG MANGGAGAWA SA CHARTER CHEMICAL SOLIDARITY OF UNIONS IN THE PHILIPPINES FOR EMPOWERMENT AND REFORMS (SMCC-SUPER), ZACARRIAS JERRY VICTORIO-Union President,Petitioner, vs. CHARTER CHEMICAL and COATING CORPORATION, Respondent. DECISION DEL CASTILLO, J.: The right to file a petition for certification election is accorded to a labor organization provided that it complies with the requirements of law for proper registration. The inclusion of supervisory employees in a labor organization seeking to represent the bargaining unit of rank-and-file employees does not divest it of its status as a legitimate labor organization. We apply these principles to this case. This Petition for Review on Certiorari seeks to reverse and set aside the Court of Appeals March 15, 2005 Decision1 in CA-G.R. SP No. 58203, which annulled and set aside the January 13, 2000 Decision2 of the Department of Labor and Employment (DOLE) in OS-A-6-53-99 (NCR-OD-M-9902-019) and the September 16, 2005 Resolution3 denying petitioner unions motion for reconsideration. Factual Antecedents On February 19, 1999, Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for Empowerment and Reforms (petitioner union) filed a petition for certification election among the regular rank-and-file employees of Charter Chemical and Coating Corporation (respondent company) with the Mediation Arbitration Unit of the DOLE, National Capital Region. On April 14, 1999, respondent company filed an Answer with Motion to Dismiss4 on the ground that petitioner union is not a legitimate labor organization because of (1) failure to comply with the documentation requirements set by law, and (2) the inclusion of supervisory employees within petitioner union.5 Med-Arbiters Ruling

On July 16, 1999, the DOLE initially issued a Decision8 in favor of respondent company dismissing petitioner unions appeal on the ground that the latters petition for certification election was filed out of time. Although the DOLE ruled, contrary to the findings of the MedArbiter, that the charter certificate need not be verified and that there was no independent evidence presented to establish respondent companys claim that some members of petitioner union were holding supervisory positions, the DOLE sustained the dismissal of the petition for certification after it took judicial notice that another union, i.e., Pinag-isang Lakas Manggagawa sa Charter Chemical and Coating Corporation, previously filed a petition for certification election on January 16, 1998. The Decision granting the said petition became final and executory on September 16, 1998 and was remanded for immediate implementation. Under Section 7, Rule XI of D.O. No. 9, series of 1997, a motion for intervention involving a certification election in an unorganized establishment should be filed prior to the finality of the decision calling for a certification election. Considering that petitioner union filed its petition only on February 14, 1999, the same was filed out of time. On motion for reconsideration, however, the DOLE reversed its earlier ruling. In its January 13, 2000 Decision, the DOLE found that a review of the records indicates that no certification election was previously conducted in respondent company. On the contrary, the prior certification election filed by Pinag-isang Lakas Manggagawa sa Charter Chemical and Coating Corporation was, likewise, denied by the Med-Arbiter and, on appeal, was dismissed by the DOLE for being filed out of time. Hence, there was no obstacle to the grant of petitioner unions petition for certification election, viz: WHEREFORE, the motion for reconsideration is hereby GRANTED and the decision of this Office dated 16 July 1999 is MODIFIED to allow the certification election among the regular rankand-file employees of Charter Chemical and Coating Corporation with the following choices: 1. Samahang Manggagawa sa Charter Chemical-Solidarity of Unions in the Philippines for Empowerment and Reform (SMCC-SUPER); and 2. No Union. Let the records of this case be remanded to the Regional Office of origin for the immediate conduct of a certification election, subject to the usual pre-election conference. SO DECIDED.9

On April 30, 1999, Med-Arbiter Tomas F. Falconitin issued a Decision6 dismissing the petition for certification election. The MedArbiter ruled that petitioner union is not a legitimate labor organization because the Charter Certificate, "Sama-samang Pahayag ng Pagsapi

Court of Appeals Ruling On March 15, 2005, the CA promulgated the assailed Decision, viz:

WHEREFORE, the petition is hereby GRANTED. The assailed Decision and Resolution dated January 13, 2000 and February 17, 2000 are hereby [ANNULLED] and SET ASIDE. SO ORDERED.10 In nullifying the decision of the DOLE, the appellate court gave credence to the findings of the Med-Arbiter that petitioner union failed to comply with the documentation requirements under the Labor Code. It, likewise, upheld the Med-Arbiters finding that petitioner union consisted of both rank-and-file and supervisory employees. Moreover, the CA held that the issues as to the legitimacy of petitioner union may be attacked collaterally in a petition for certification election and the infirmity in the membership of petitioner union cannot be remedied through the exclusion-inclusion proceedings in a pre-election conference pursuant to the ruling in Toyota Motor Philippines v. Toyota Motor Philippines Corporation Labor Union.11 Thus, considering that petitioner union is not a legitimate labor organization, it has no legal right to file a petition for certification election. Issues I Whether x x x the Honorable Court of Appeals committed grave abuse of discretion tantamount to lack of jurisdiction in granting the respondent [companys] petition for certiorari (CA G.R. No. SP No. 58203) in spite of the fact that the issues subject of the respondent company[s] petition was already settled with finality and barred from being re-litigated. II Whether x x x the Honorable Court of Appeals committed grave abuse of discretion tantamount to lack of jurisdiction in holding that the alleged mixture of rank-and-file and supervisory employee[s] of petitioner [unions] membership is [a] ground for the cancellation of petitioner [unions] legal personality and dismissal of [the] petition for certification election. III Whether x x x the Honorable Court of Appeals committed grave abuse of discretion tantamount to lack of jurisdiction in holding that the alleged failure to certify under oath the local charter certificate issued by its mother federation and list of the union membership attending the organizational meeting [is a ground] for the cancellation of petitioner [unions] legal personality as a labor organization and for the dismissal of the petition for certification election.12 Petitioner Unions Arguments Petitioner union claims that the litigation of the issue as to its legal personality to file the subject petition for certification election is barred by the July 16, 1999 Decision of the DOLE. In this decision, the DOLE ruled that petitioner union complied with all the documentation requirements and that there was no independent evidence presented to prove an illegal mixture of supervisory and rank-and-file employees in petitioner union. After the promulgation of this Decision, respondent company did not move for reconsideration, thus, this issue must be deemed settled. Petitioner union further argues that the lack of verification of its charter certificate and the alleged illegal composition of its membership are not grounds for the dismissal of a petition for certification election under Section 11, Rule XI of D.O. No. 9, series of 1997, as amended, nor are they grounds for the cancellation of a unions registration under Section 3, Rule VIII of said issuance. It contends that what is required to be certified under oath by the local unions secretary or treasurer and attested to by the local unions president are limited to the unions constitution and by-laws, statement of the set of officers, and the books of accounts.

Finally, the legal personality of petitioner union cannot be collaterally attacked but may be questioned only in an independent petition for cancellation pursuant to Section 5, Rule V, Book IV of the Rules to Implement the Labor Code and the doctrine enunciated in Tagaytay Highlands International Golf Club Incoprorated v. Tagaytay Highlands Empoyees Union-PTGWO.13 Respondent Companys Arguments Respondent company asserts that it cannot be precluded from challenging the July 16, 1999 Decision of the DOLE. The said decision did not attain finality because the DOLE subsequently reversed its earlier ruling and, from this decision, respondent company timely filed its motion for reconsideration. On the issue of lack of verification of the charter certificate, respondent company notes that Article 235 of the Labor Code and Section 1, Rule VI of the Implementing Rules of Book V, as amended by D.O. No. 9, series of 1997, expressly requires that the charter certificate be certified under oath. It also contends that petitioner union is not a legitimate labor organization because its composition is a mixture of supervisory and rank-and-file employees in violation of Article 245 of the Labor Code. Respondent company maintains that the ruling in Toyota Motor Philippines vs. Toyota Motor Philippines Labor Union14 continues to be good case law. Thus, the illegal composition of petitioner union nullifies its legal personality to file the subject petition for certification election and its legal personality may be collaterally attacked in the proceedings for a petition for certification election as was done here. Our Ruling The petition is meritorious. The issue as to the legal personality of petitioner union is not barred by the July 16, 1999 Decision of the DOLE. A review of the records indicates that the issue as to petitioner unions legal personality has been timely and consistently raised by respondent company before the Med-Arbiter, DOLE, CA and now this Court. In its July 16, 1999 Decision, the DOLE found that petitioner union complied with the documentation requirements of the Labor Code and that the evidence was insufficient to establish that there was an illegal mixture of supervisory and rank-and-file employees in its membership. Nonetheless, the petition for certification election was dismissed on the ground that another union had previously filed a petition for certification election seeking to represent the same bargaining unit in respondent company. Upon motion for reconsideration by petitioner union on January 13, 2000, the DOLE reversed its previous ruling. It upheld the right of petitioner union to file the subject petition for certification election because its previous decision was based on a mistaken appreciation of facts.15 From this adverse decision, respondent company timely moved for reconsideration by reiterating its previous arguments before the Med-Arbiter that petitioner union has no legal personality to file the subject petition for certification election. The July 16, 1999 Decision of the DOLE, therefore, never attained finality because the parties timely moved for reconsideration. The issue then as to the legal personality of petitioner union to file the certification election was properly raised before the DOLE, the appellate court and now this Court. The charter certificate need not be certified under oath by the local unions secretary or treasurer and attested to by its president. Preliminarily, we must note that Congress enacted Republic Act (R.A.) No. 948116 which took effect on June 14, 2007.17 This law introduced substantial amendments to the Labor Code. However, since the operative facts in this case occurred in 1999, we shall decide the

issues under the pertinent legal provisions then in force (i.e., R.A. No. 6715,18 amending Book V of the Labor Code, and the rules and regulations19 implementing R.A. No. 6715, as amended by D.O. No. 9,20 series of 1997) pursuant to our ruling in Republic v. Kawashima Textile Mfg., Philippines, Inc.21 In the main, the CA ruled that petitioner union failed to comply with the requisite documents for registration under Article 235 of the Labor Code and its implementing rules. It agreed with the Med-Arbiter that the Charter Certificate, Sama-samang Pahayag ng Pagsapi at Authorization, and Listahan ng mga Dumalo sa Pangkalahatang Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas were not executed under oath. Thus, petitioner union cannot be accorded the status of a legitimate labor organization. We disagree. The then prevailing Section 1, Rule VI of the Implementing Rules of Book V, as amended by D.O. No. 9, series of 1997, provides: Section 1. Chartering and creation of a local chapter A duly registered federation or national union may directly create a local/chapter by submitting to the Regional Office or to the Bureau two (2) copies of the following: (a) A charter certificate issued by the federation or national union indicating the creation or establishment of the local/chapter; (b) The names of the local/chapters officers, their addresses, and the principal office of the local/chapter; and (c) The local/chapters constitution and by-laws provided that where the local/chapters constitution and by-laws [are] the same as [those] of the federation or national union, this fact shall be indicated accordingly. All the foregoing supporting requirements shall be certified under oath by the Secretary or the Treasurer of the local/chapter and attested to by its President. As readily seen, the Sama-samang Pahayag ng Pagsapi at Authorization and Listahan ng mga Dumalo sa Pangkalahatang Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas are not among the documents that need to be submitted to the Regional Office or Bureau of Labor Relations in order to register a labor organization. As to the charter certificate, the above-quoted rule indicates that it should be executed under oath. Petitioner union concedes and the records confirm that its charter certificate was not executed under oath. However, in San Miguel Corporation (Mandaue Packaging Products Plants) v. Mandaue Packing Products Plants-San Miguel Corporation Monthlies Rank-and-File Union-FFW (MPPP-SMPP-SMAMRFUFFW),22 which was decided under the auspices of D.O. No. 9, Series of 1997, we ruled In San Miguel Foods-Cebu B-Meg Feed Plant v. Hon. Laguesma, 331 Phil. 356 (1996), the Court ruled that it wasnot necessary for the charter certificate to be certified and attested by the local/chapter officers. Id. While this ruling was based on the interpretation of the previous Implementing Rules provisions which were supplanted by the 1997 amendments, we believe that the same doctrine obtains in this case. Considering that the charter certificate is prepared and issued by the national union and not the local/chapter, it does not make sense to have the local/chapters officers x x x certify or attest to a document which they had no hand in the preparation of.23 (Emphasis supplied) In accordance with this ruling, petitioner unions charter certificate need not be executed under oath. Consequently, it validly acquired the status of a legitimate labor organization upon submission of (1) its

charter certificate,24 (2) the names of its officers, their addresses, and its principal office,25 and (3) its constitution and by-laws26 the last two requirements having been executed under oath by the proper union officials as borne out by the records. The mixture of rank-and-file and supervisory employees in petitioner union does not nullify its legal personality as a legitimate labor organization. The CA found that petitioner union has for its membership both rankand-file and supervisory employees. However, petitioner union sought to represent the bargaining unit consisting of rank-and-file employees. Under Article 24527 of the Labor Code, supervisory employees are not eligible for membership in a labor organization of rank-and-file employees. Thus, the appellate court ruled that petitioner union cannot be considered a legitimate labor organization pursuant to Toyota Motor Philippines v. Toyota Motor Philippines Corporation Labor Union28(hereinafter Toyota). Preliminarily, we note that petitioner union questions the factual findings of the Med-Arbiter, as upheld by the appellate court, that 12 of its members, consisting of batchman, mill operator and leadman, are supervisory employees. However, petitioner union failed to present any rebuttal evidence in the proceedings below after respondent company submitted in evidence the job descriptions29 of the aforesaid employees. The job descriptions indicate that the aforesaid employees exercise recommendatory managerial actions which are not merely routinary but require the use of independent judgment, hence, falling within the definition of supervisory employees under Article 212(m)30 of the Labor Code. For this reason, we are constrained to agree with the Med-Arbiter, as upheld by the appellate court, that petitioner union consisted of both rank-and-file and supervisory employees. Nonetheless, the inclusion of the aforesaid supervisory employees in petitioner union does not divest it of its status as a legitimate labor organization. The appellate courts reliance on Toyota is misplaced in view of this Courts subsequent ruling in Republic v. Kawashima Textile Mfg., Philippines, Inc.31 (hereinafter Kawashima). InKawashima, we explained at length how and why the Toyota doctrine no longer holds sway under the altered state of the law and rules applicable to this case, viz: R.A. No. 6715 omitted specifying the exact effect any violation of the prohibition [on the co-mingling of supervisory and rank-andfile employees] would bring about on the legitimacy of a labor organization. It was the Rules and Regulations Implementing R.A. No. 6715 (1989 Amended Omnibus Rules) which supplied the deficiency by introducing the following amendment to Rule II (Registration of Unions): "Sec. 1. Who may join unions. - x x x Supervisory employees and security guards shall not be eligible for membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor organizations of their own; Provided, that those supervisory employees who are included in an existing rank-andfile bargaining unit, upon the effectivity of Republic Act No. 6715, shall remain in that unit x x x. (Emphasis supplied) and Rule V (Representation Cases and Internal-Union Conflicts) of the Omnibus Rules, viz: "Sec. 1. Where to file. - A petition for certification election may be filed with the Regional Office which has jurisdiction over the principal office of the employer. The petition shall be in writing and under oath. Sec. 2. Who may file. - Any legitimate labor organization or the employer, when requested to bargain collectively, may file the petition. The petition, when filed by a legitimate labor organization, shall contain, among others: xxxx

(c) description of the bargaining unit which shall be the employer unit unless circumstances otherwise require; and provided further, that the appropriate bargaining unit of the rank-and-file employees shall not include supervisory employees and/or security guards. (Emphasis supplied) By that provision, any questioned mingling will prevent an otherwise legitimate and duly registered labor organization from exercising its right to file a petition for certification election. Thus, when the issue of the effect of mingling was brought to the fore in Toyota, the Court, citing Article 245 of the Labor Code, as amended by R.A. No. 6715, held: "Clearly, based on this provision, a labor organization composed of both rank-and-file and supervisory employees is no labor organization at all. It cannot, for any guise or purpose, be a legitimate labor organization. Not being one, an organization which carries a mixture of rank-and-file and supervisory employees cannot possess any of the rights of a legitimate labor organization, including the right to file a petition for certification election for the purpose of collective bargaining. It becomes necessary, therefore, anterior to the granting of an order allowing a certification election, to inquire into the composition of any labor organization whenever the status of the labor organization is challenged on the basis of Article 245 of the Labor Code. xxxx In the case at bar, as respondent union's membership list contains the names of at least twenty-seven (27) supervisory employees in Level Five positions, the union could not, prior to purging itself of its supervisory employee members, attain the status of a legitimate labor organization. Not being one, it cannot possess the requisite personality to file a petition for certification election." (Emphasis supplied) In Dunlop, in which the labor organization that filed a petition for certification election was one for supervisory employees, but in which the membership included rank-and-file employees, the Court reiterated that such labor organization had no legal right to file a certification election to represent a bargaining unit composed of supervisors for as long as it counted rank-and-file employees among its members. It should be emphasized that the petitions for certification election involved in Toyota and Dunlop were filed on November 26, 1992 and September 15, 1995, respectively; hence, the 1989 Rules was applied in both cases. But then, on June 21, 1997, the 1989 Amended Omnibus Rules was further amended by Department Order No. 9, series of 1997 (1997 Amended Omnibus Rules). Specifically, the requirement under Sec. 2(c) of the 1989 Amended Omnibus Rules that the petition for certification election indicate that the bargaining unit of rank-and-file employees has not been mingled with supervisory employees was removed. Instead, what the 1997 Amended Omnibus Rules requires is a plain description of the bargaining unit, thus: Rule XI Certification Elections xxxx Sec. 4. Forms and contents of petition. - The petition shall be in writing and under oath and shall contain, among others, the following: x x x (c) The description of the bargaining unit. In Pagpalain Haulers, Inc. v. Trajano, the Court had occasion to uphold the validity of the 1997 Amended Omnibus Rules, although the specific provision involved therein was only Sec. 1, Rule VI, to wit:

"Section. 1. Chartering and creation of a local/chapter.- A duly registered federation or national union may directly create a local/chapter by submitting to the Regional Office or to the Bureau two (2) copies of the following: a) a charter certificate issued by the federation or national union indicating the creation or establishment of the local/chapter; (b) the names of the local/chapter's officers, their addresses, and the principal office of the local/chapter; and (c) the local/ chapter's constitution and by-laws; provided that where the local/chapter's constitution and by-laws is the same as that of the federation or national union, this fact shall be indicated accordingly. All the foregoing supporting requirements shall be certified under oath by the Secretary or the Treasurer of the local/chapter and attested to by its President." which does not require that, for its creation and registration, a local or chapter submit a list of its members. Then came Tagaytay Highlands Int'l. Golf Club, Inc. v. Tagaytay Highlands Employees Union-PGTWO in which the core issue was whether mingling affects the legitimacy of a labor organization and its right to file a petition for certification election. This time, given the altered legal milieu, the Court abandoned the view in Toyota and Dunlopand reverted to its pronouncement in Lopez that while there is a prohibition against the mingling of supervisory and rank-and-file employees in one labor organization, the Labor Code does not provide for the effects thereof. Thus, the Court held that after a labor organization has been registered, it may exercise all the rights and privileges of a legitimate labor organization. Any mingling between supervisory and rank-and-file employees in its membership cannot affect its legitimacy for that is not among the grounds for cancellation of its registration, unless such mingling was brought about by misrepresentation, false statement or fraud under Article 239 of the Labor Code. In San Miguel Corp. (Mandaue Packaging Products Plants) v. Mandaue Packing Products Plants-San Miguel Packaging ProductsSan Miguel Corp. Monthlies Rank-and-File Union-FFW, the Court explained that since the 1997 Amended Omnibus Rules does not require a local or chapter to provide a list of its members, it would be improper for the DOLE to deny recognition to said local or chapter on account of any question pertaining to its individual members. More to the point is Air Philippines Corporation v. Bureau of Labor Relations, which involved a petition for cancellation of union registration filed by the employer in 1999 against a rank-and-file labor organization on the ground of mixed membership: the Court therein reiterated its ruling in Tagaytay Highlands that the inclusion in a union of disqualified employees is not among the grounds for cancellation, unless such inclusion is due to misrepresentation, false statement or fraud under the circumstances enumerated in Sections (a) and (c) of Article 239 of the Labor Code. All said, while the latest issuance is R.A. No. 9481, the 1997 Amended Omnibus Rules, as interpreted by the Court in Tagaytay Highlands, San Miguel and Air Philippines, had already set the tone for it. Toyota and Dunlop no longer hold sway in the present altered state of the law and the rules.32 [Underline supplied] The applicable law and rules in the instant case are the same as those in Kawashima because the present petition for certification election was filed in 1999 when D.O. No. 9, series of 1997, was still in effect. Hence, Kawashimaapplies with equal force here. As a result, petitioner union was not divested of its status as a legitimate labor organization even if some of its members were supervisory employees; it had the right to file the subject petition for certification election. The legal personality of petitioner union cannot be collaterally attacked by respondent company in the certification election proceedings. Petitioner union correctly argues that its legal personality cannot be collaterally attacked in the certification election proceedings. As we explained in Kawashima:

Except when it is requested to bargain collectively, an employer is a mere bystander to any petition for certification election; such proceeding is non-adversarial and merely investigative, for the purpose thereof is to determine which organization will represent the employees in their collective bargaining with the employer. The choice of their representative is the exclusive concern of the employees; the employer cannot have any partisan interest therein; it cannot interfere with, much less oppose, the process by filing a motion to dismiss or an appeal from it; not even a mere allegation that some employees participating in a petition for certification election are actually managerial employees will lend an employer legal personality to block the certification election. The employer's only right in the proceeding is to be notified or informed thereof. The amendments to the Labor Code and its implementing rules have buttressed that policy even more.33 WHEREFORE, the petition is GRANTED. The March 15, 2005 Decision and September 16, 2005 Resolution of the Court of Appeals in CA-G.R. SP No. 58203 are REVERSED and SET ASIDE. The January 13, 2000 Decision of the Department of Labor and Employment in OS-A-6-53-99 (NCR-OD-M-9902-019) is REINSTATED. No pronouncement as to costs. SO ORDERED. MARIANO C. DEL CASTILLO Associate Justice WE CONCUR: RENATO C. CORONA Chief Justice Chairperson PRESBITERO J. VELASCO, TERESITA J. LEONARDO-DE JR. CASTRO Associate Justice Associate Justice JOSE PORTUGAL PEREZ Associate Justice CERTIFICATION

Id. at 215-220. Id. at 40-50. Presidential Decree No. 442, as amended. Rollo, pp. 52-54. Id. at 75. Id. at 36. 335 Phil. 1045 (1997). Rollo, pp. 12-13. 443 Phil. 841 (2003). Supra note 11.

10

11

12

13

14

15

Upon reconsideration, the DOLE noted that the other union which allegedly filed a prior petition for certification election was prevented from doing so because its petition for certification election was filed out of time. Thus, there was no obstacle to the conduct of a certification election in respondent company.
16

"An Act Strengthening the Workers Constitutional Right to Self-Organization, Amending for the Purpose Presidential Decree No. 442, as Amended, Otherwise Known as the Labor Code of the Philippines."
17

Republic v. Kawashima Textile Mfg., Philippines, Inc., G.R. No. 160352, July 23, 2008, 559 SCRA 386,396.
18

"An Act to Extend Protection to Labor, Strengthen the Constitutional Rights of Workers to Self-Organization, Collective Bargaining and Peaceful Concerted Activities, and Foster Industrial Peace and Harmony." Effective March 21, 1989.
19

Approved on May 24, 1989. Effective: June 21, 1997. Supra note 17 at 396-397. 504 Phil. 376 (2005). Id. at 400. DOLE records, p. 51. Id. at 43-44. Id. at 25-40.

20

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson's attestation, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. RENATO C. CORONA Chief Justice

21

22

23

24

25

Footnotes
26 1

Rollo, pp. 29-36; penned by Associate Justice Estela M. Perlas-Bernabe and concurred in by Associate Justices Elvi John S. Asuncion and Hakim S. Abdulwahid.
2

27

Id. at 74-75. Id. at 38. Id. at 214-223.

Article 245. Ineligibility of Managerial Employees to Join Any Labor Organization; Right of Supervisory Employees. x x x Supervisory employees shall not be eligible for membership in the collective bargaining unit of the rank-andfile employees but may join, assist or form separate collective bargaining units and/or legitimate labor organizations of their own. x x x
28

Supra note 11.

29

Respondent company claimed that the batchman, mill operator and leadman perform, among others, the following functions: Prepares, coordinates and supervises work schedules and activities of subordinates or helpers in their respective area of responsibility. 1. Recommends the reduction, increase, transfer and number of employees assigned to them. 2. Sees to it that daily production schedules and outputs are carried on time. 3. Coordinates with their respective managers the needed raw materials and the quality of finished products. (Rollo, p. 220)
30

(a) An existing collective bargaining contract for four years (1954-1958) between the Acoje Mining Company hereinafter designated as the Mining Company and the Pelta; and (b) The Court had, under investigation, an unfair labor practice complaint (Case No. 255-ULP) wherein the Mining Company stood charge with having assisted in the organization of the workers Union and of controlling the same. The Mining Company admitted the existence of the Bargaining Agreement; but in view of the pronouncements of this Court in PLDT Employees Union vs. Philippine Long Distance Telephone Co., 91 Phil., 424, 51 Off. Gaz., 4519, it submitted the question whether the existence of said Agreement could prevent the certification election, since there had been "no certification election held during the twelve months prior to the date of the present request of the employees." By its motion of December 22, 1954, the Pelta, reiterating the points mentioned in its answer, prayed that the holding of certification election be held in abeyance. The Workers Union opposed; but the Court ordered suspension, because it "had invariably suspended the proceedings in certification election cases until after the termination of the unfair labor practice cases alleging company domination." Having failed in a move to reconsider, the employees took the matter to this Court. This time they were joined, as petitioners, by the Workers Union. There is no question that, months before the presentation of the employee's petition for election, to be more specific, on May 19, 1954, the Pelta complained to the Industrial Court that the Mining Company had organized a company-dominated labor association called Acoje United Workers Union; that it had performed several acts of discrimination against workers of the Pelta even as it favored members of the Workers Union, openly encouraging and urging its laborers to join the latter. There is no assertion that such complaint was flimsy, or made in bad faith or filed purposely to form the certification election. So, no reason existed for the Industrial Court to depart from its established practice of suspending the election proceeding. And this seems to be accepted rule in the law of labor relations, the reason being, in the words of Mr. Justice Montemayor, if there is a union dominated by the company, to which some of the workers belong, an election among workers and employees of the company would not reflect the true sentiment and wishes of the said workers and employees because the votes of the members of the dominated union would not be free."1 And we have held, through Mr. Justice J. B. L. Reyes, that such charge of company domination is a prejudicial question that until decided, shall suspend or bar proceedings for certification election." 2 Indeed, if as a result of the Pelta's complaint in Case No. 255-ULP, the Workers Union should be ordered dissolved3 as a company-dominated union, any election held in the meantime would be a waste of energy and money to all parties concerned. Petitioners herein take the position that once a petition for certification election is submitted and signed by at least 10 per cent (10%) of all the workers in the bargaining unit, it is mandatory upon the Court to order a certification election with no exceptions. They quote section 12 (c) of Republic Act 875, which reads as follows: SEC. 12 (c). In an instance where a petition is filed by at least ten percent of the employees in the appropriate unit requesting an election, it shall be mandatory on the Court to order an election for the purpose of determining the representative of the employees the appropriate bargaining unit. The above command to the Court is not so absolute as it may appear at first glance. The statute itself expressly recognizes one exception:

Article 212(m) of the Labor Code, states in part: "Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. x x x"
31

Supra note 17. Id. at 402-407. Id. at 408. Republic of the Philippines SUPREME COURT Manila EN BANC

32

33

G.R. No. L-11273

November 21, 1958

ACOJE MINES EMPLOYEES and ACOJE UNITED WORKERS UNION, petitioners-appellants, vs. ACOJE LABOR UNION (PELTA) and ACOJE MINING CO., respondents-appellees. Alberto O. Villaraza for appellants. Eulalio B. Garcia for appellee Labor Union (PELTA). Perkins and Ponce Enrile for appellee Mining Company. BENGZON, J.: This petition for review involves the suspension of proceedings for certification election. There are decisions squarely in point. In case No. 288-MC of the Court of Industrial Relations, 334 employees of the Acoje Mines Inc., signed and submitted to that court in August 1955, a petition for certification election, alleging that for the six hundred and twenty employees in the corporation, there were two legitimate labor organizations, namely, the Acoje United Workers Union hereinafter called Workers Union and the Acoje Labor Union (Pelta) hereinafter called Pelta and that an election was necessary to choose the true representative of the employees for purposes of collective bargaining. The workers Union manifested its willingness to submit to election. On the other hand, the Pelta objected, alleging among other defenses:

when a certification election had occurred within one year.4 And the judicial and administrative agencies have found two exceptions: where there is an unexpired bargaining agreement not exceeding two years5 and when there is a pending charge of company-domination of one of the labor unions intending to participate in the election.6 Anent the contention that the Industrial Court's order amounted to a curtailment of the rights of the majority, it is enough to point out that petitioners have not yet shown, in an election, that they constitute the majority; and as indicated by the decisions, the suspension was decreed and desired precisely for the purpose of insuring that the wishes of the majority of the workers freely exercising the right to vote, shall be expressed without interference by the employer, without the hindrances affecting a company-dominated association. Wherefore, the Industrial Court acted prudently and legally in ordering the suspension upon the ground already mentioned. And thus the necessity is obviated of passing on the issue whether the existing bargaining agreement of four years was another obstacle to the certification election. The Mining Company, it may be noted, expressing its neutrality upon the two questions in debate, asked for a declaration of the continued effectivity until February 1958 of its agreement with the Pelta, should a certification election be approved in this Court. Inasmuch as we decline to direct the holding of such election, and as February 1958 has already come and gone, we find it unnecessary to make the declaration prayed for. Accordingly the petition for review is denied, with costs against petitioners. Paras, C. J., Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L. and Endencia, JJ.,concur.

vs. BUREAU OF LABOR RELATIONS (BLR) and SOUTHERN PHILIPPINES FEDERATION OF LABOR (SPFL), respondents, PACIFIC CEMENT COMPANY, INC. (PACEMCO), employer. Hustino E. Horculada for petitioner. Alfonso S. Casurra for respondent PACEMCO. Fuentes Law Office for respondent SPFL.

CRUZ, J.: Will the direct certification of a labor union as the exclusive bargaining agent of the workers preempt and preclude the calling of a certification election on petition of another labor union in the same establishment? The direct certification was obtained on Jane 6, 1986, by the petitioner in this case, the National Association of Free Trade Unions (NAFLUTUCP), on the strength of its allegation, as confirmed by the medarbiter, that there was no other labor union requesting recognition as representative of the workers in their negotiations with the management of the Pacific Cement Co. (PACEMCO). 1 On June 20, 1986, however, and also within the freedom period, the Southern Philippines Federation of Labor (SPFL), the private respondent herein, filed a petition for certification election signed by 168 workers, representing over 60% of the total number of rank-and-filers of the company. 2 NAFTU, as forced intervenor, opposed the petition, invoking its own earlier direct certification, but on August 11, 1986, the med-arbiter who had granted the same reversed his previous order and authorized the holding of the certification election. 3 On appeal, his order was sustained by the Bureau of Labor Standards, which held that the certification election was justified under the circumstances, adding that the workers had the constitutional right to choose the labor union to represent them in negotiating with the management. 4 Its motion for reconsideration having been denied, the petitioner then came to this Court to ask for the reversal of the resolution of the public respondent dated October 24, 1986, on the ground that it was reached with grave abuse of discretion correctible by writ of certiorari. The original Article 257 of the Labor Code provided as follows:

Footnote
1

Manila Paper Mills Employees vs. Court of Industrial Relations, supra., p. 10.
2

Standard Cigarette Workers Union vs. Court of Industrial Relations, 53 Off. Gaz., 5216.
3

Sec. 23 (d) Republic Act 875. Sec. 12 (b) Republic Act 875.

Where in view of the nature of the business such term is found to be reasonable. PLDT Employees Union vs. Phil. Long Distance, supra.
6

Manila Paper Mills, supra. Standard Cigarette, supra. Unless the same Union that charged the company with unfair labor practice, insists in holding election despite pendency of such charge. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 77818 August 3, 1988 NATIONAL ASSOCIATION OF FREE TRADE UNIONS (NAFLUTUCP), petitioner,

ART. 257. Procedure governing representation issues. When a question concerning the representation of employees is submitted to the Ministry, a Med-Arbiter shall hear and decide such controversy and certify to the parties in writing the name of the labor organization that has been designated or selected by the majority of the workers in the appropriate bargaining unit as the exclusive bargaining agent. If there is any reasonable doubt as to which union the employees have chosen as their representative for the purpose of collective bargaining, the MedArbiter shall order an election by secret ballot to be conducted by the Ministry to ascertain the freely chosen representative of the employees concerned, under such rules and regulations as the Ministry may prescribe, at which election representatives of the contending parties shall have the right to act as inspectors. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining representative of the workers. The petitioner contends that having been directly certified by the medarbiter as the exclusive bargaining representative of the workers, it cannot now be replaced through the certification election, which was not validly called under the above provision. It stresses that the first method of choosing such representation is by direct certification and, once employed, can no longer be undone by the certification election

which, as the exception to the rule, should be applied only when there is a reasonable doubt on the real choice of the laborers as their negotiating agent. In the view of the petitioner, there is no such reasonable doubt to justify reversal of the med-arbiter's order of June 6, 1986. For its part, the private respondent invokes the support of the 168 workers who had signed the petition for certification election, including some of those who had earlier supposedly manifested their confidence in the petitioner union, and argues that such change of support demonstrates the need for the holding of a certification election as required by the said article. This election will erase once and for all the reasonable doubt as to the real choice of the union that will represent the workers in the negotiation of the new collective bargaining agreement with PACEMCO, besides giving the workers the freedom to which they are entitled in making this choice. Assuming that the original provisions of Article 257 are still applicable in this case, the Court inclines to the position taken by the private respondent as more conformable to the language and spirit of the said law. This rule precisely called for the holding of a certification election whenever there appeared to be a reasonable doubt as to whether or not the union directly certified had really been chosen by the majority of the workers as their exclusive bargaining representative. Such was the situation in the case at bar. Moreover, a certification election is a more acceptable method than direct certification, which under the provisions of the aforementioned article, should be resorted to only where there was no doubt that the union so certified had the full or at least the majority support of the workers. In the instant case, we find that the manifestation made by most of the workers in favor of NAFTU was later questioned on the ground that it was obtained through the suspicious grant of a food subsidy to the signatories. 5This was denied by the petitioner, which claimed that the said manifestation was spontaneous and voluntary. At any rate, whether true or not, the charge generated the reasonable doubt that justified the med-arbiter in reversing his previous direct certification of the petitioner and in authorizing the holding of a certification election instead. It is noteworthy that since this case arose in 1986, an important change has been made in Article 257. By virtue of Executive Order No. 111, which became effective on March 4,1987, the direct certification originally allowed in this article has apparently been discontinued as a method of selecting the exclusive bargaining agent of the workers. This amendment affirms the superiority of the certification election over the direct certification which, assuming it was validly made in favor of the petitioner in 1986, is no longer available to it now under the change in the said provision. The new rule as amended by the executive order now reads as follows: ART. 256. Representation issues on organized establishments. In organized establishments, when a petition questioning the majority status of the incumbent bargaining agent is filed before the Ministry within the sixty-day period before the expiration of the collective bargaining agreement, the Med-Arbiter shall automatically order an election by secret ballot to ascertain the will of the employees in the appropriate bargaining unit. To have a valid election, at least a majority of all eligible voters in the unit must have cast their votes. The labor union receiving the majority of the valid votes cast shall be certified as the exclusive bargaining agent of all the workers in the unit. When an election which provides for three or more choices results in no choice receiving a majority of the valid cast, a run-off election shall be conducted between the choices receiving the two highest number of votes. Additionally, the record discloses that the certification election ordered by the med-arbiter and sustained by the Bureau of Labor Relations was actually held on March 9, 1987, resulting in the victory of private respondent SPFL.6 Despite notices duly received by it, the petitioner

did not attend the pre-election conferences and did not participate in the said election after its motion to reset it was denied. It now says the election should not have been held because this petition was pending with the Court, although we had not issued any restraining order. It assumes too much, of course. In any event, after it was ascertained that the SPFL had obtained 201 of the 212 votes cast at the certification election, it was accordingly certified by the public respondent as the exclusive bargaining agent of the workers. As such, it thereafter negotiated and finally concluded a collective bargaining agreement with PACEMCO on September 15, 1987, which contract is now in force. 7 This is a fait accompli that has rendered this case moot and academic. It remains to stress, as we have repeatedly declared in earlier decisions, that the certification election is the most democratic and expeditious method by which the laborers can freely determine the union that shall act as their representation in their dealings with the establishment where they are working. Any union sure of the support of the workers should have no reason to resist the holding of a certification election where it can expect a vote of confidence from them for its efforts and ability to improve their interests. WHEREFORE, the petition is DISMISSED, with costs against the petitioner. SO ORDERED. Narvasa, Gancayco, Grio-Aquino and Medialdea, JJ., concur.

Footnotes 1 Rollo, pp. 29-30. 2 Ibid., pp. 42-43. 3 Id., pp. 42-45. 4 Id., pp. 61-63. 5 Id., pp. 36-37. 6 Id., p. 161. 7 Id., pp. 116-130. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-51602 January 17, 1985 GEORGE & PETER LINES, INC., petitioner, vs. ASSOCIATED LABOR UNIONS (ALU) HON. CARMELO NORIEL, DIRECTOR, BUREAU OF LABOR RELATIONS, MINISTRY OF LABOR, respondents. Manuel B. Pastrana for petitioner. Gerardo E. Gestopa Jr. for private respondent.

MELENCIO-HERRERA, J.: Petitioner George and Peter Lines, Incorporated, is a domestic corporation engaged in shipping, while respondent Associated Labor Unions (ALU) is a legitimate labor organization duly registered with the Ministry of Labor. On July 6, 1978, a Petition for Direct Certification was filed by respondent ALU with Region VII, Cebu City, of the Ministry of Labor, praying that it be certified as the sole and exclusive bargaining representative of all the rank and file employees of petitioner corporation there being no labor union organized thereat. Petitioner corporation OPPOSED the petition stating that respondent Union does not represent the majority of the employees concerned; and that more than 80% of the licensed and unlicensed crew of its vessels claim that they are not members of any union and have no desire to join any. It then filed on August 17, 1978, a Petition for Certification Election to determine once and for all whether the employees concerned wanted respondent ALU to be their sole bargaining representative. On August 25, 1978, the Med-Arbiter issued an Order directly certifying respondent ALU as the sole and exclusive bargaining agent of the licensed and unlicensed employees of petitioner corporation, opining that the majority membership status of any union is determined before or at the time of filing of the petition and not thereafter, otherwise, the union can be ousted anytime. Petitioner corporation moved for reconsideration alleging that the employees concerned, consisting of about 80%, denied their membership with respondent Union, and that a certification election should be called in the interest of fairness and justice. The entire records of the case were forwarded to the Director of the Bureau of Labor Relations. On February 5, 1979, the BLR Director modified the Order of August 25, 1978 by directing a certification election among the rank and file employees of petitioner corporation. Reconsideration sought by respondent Union was denied by the BLR Director on May 31, 1979, on the ground that there exists a doubt regarding the majority status of respondent ALU because of the withdrawal of membership by the workers, and directing the Labor Relations Division of the Regional Office of origin to hold a pre-election conference, and to conduct the certification election. Respondent Union, in its Second Motion for Reconsideration, argued that public respondent erred in finding its majority status doubtful as the same was proven during the hearing of the case before the MedArbiter. The BLR Director, in its questioned Decision of August 13, 1979, reconsidered its Resolution of May 31, 1979, and directly certified respondent ALU as the sole bargaining age it of all the rank and file employees of petitioner corporation Thus, this Petition for certiorari wherein petitioner seeks to set aside the said Decision, posing the following issues. (1) Did the Director of the Bureau of Labor Relations of the Ministry of Labor commit grave abuse of discretion by abruptly reversing his two previous resolutions for the holding of a certification election? (2) Are petitioner's employees entitled to choose their sole and exclusive bargaining representative with petitioner thru a certification election? and (3) Is petitioner entitled to file the petition for certification election? It is not disputed that after the filing of the petition for direct certification by respondent Union, a written manifestation duly signed by about

80% of the employees concerned, retracting their membership from said union, was submitted by them to the MOLE. Respondent Union submits, however, that the employees were merely pressured by management into withdrawing their membership. On the other hand, petitioner corporation argues that the retraction by the employees cast a serious doubt on the alleged majority representation of the Union. In ultimately resolving the issue in the Union's favor, public respondent held that the withdrawal of membership from the Union subsequent to the filing of the petition for direct certification did not affect the same nor did it divest it of its jurisdiction to take cognizance of the petition. We find for petitioner. The employees have the constitutional right to choose the labor organization which it desires to join. 1 The exercise of such right would be rendered nugatory and ineffectual if they would be denied the opportunity to choose in a certification election, which is not a litigation, but a mere investigation of a non-adversary character, 2the bargaining unit to represent them. 3 The holding of a certification election is a statutory policy that should not be circumvented. 4 As the right of respondent Union to represent the employees is seriously put in doubt by the withdrawal of 80% of the membership, which the Union claims to be involuntary, the best forum to determine if there was, indeed, undue pressure exerted upon the employees to retract their membership is in the certification election itself, wherein they can freely express their choice in a secret ballot. 5 Certification election is the best and most appropriate means of ascertaining the will of the employees as to their choice of an exclusive bargaining representative. 6 That there are no competing Unions involved should not alter that principle, the freedom of choice by the employees being the primordial consideration besides the fact that the employees can still choose between ALU and No Union. Even if the withdrawals of the employees concerned were submitted after the Petition for direct certification had been filed, the doubt as to the majority representation of the Union has arisen and it is best to determine the true sentiment of the employees through a certification election. If respondent Union is confident that it commands the majority of the workers, there is no reason why it should object to the holding of a certification election. WHEREFORE, the assailed Decision of August 17, 1979 is hereby SET ASIDE. The Regional Office concerned of the Ministry of Labor and Employment is hereby directed to cause the holding of a certification election within thirty (30) days from notice. SO ORDERED. Teehankee (Chairman), Plana, Relova, Gutierrez, Jr. and De la Fuente, JJ., concur.

Footnotes 1 FOITAF vs. Noriel 72 SCRA 24 [1976]. 2 Air Line Pilots Association of the Philippines vs. CIR, 76 SCRA 274 [1977]. 3 NAMAWUMIF vs. Estrella, 87 SCRA 84 [1978]. 4 ATU vs. Noriel 89 SCRA 264 [1979]. 5 FOITAF vs. Noriel, supra. 6 National Mines & Allied Workers Union vs. Luna, 83 SCRA 607 [1978]; Consolidated Farms. Inc., vs. Noriel, 84 SCRA 469 [1978].

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. L-45323 February 20, 1989 PHILIPPINE ASSOCIATION OF FREE LABOR UNIONS (PAFLU) LUZANO, petitioner, vs. HON. FRANCISCO L. ESTRELLA, Acting Director of the Bureau of Labor Relations, and/or Chief of Labor Appeals Review Staff, and ASSOCIATED LABOR UNIONS (ALU), respondents. Salvador and Rola, Jr. for petitioner. The Solicitor General for public respondent. Januario T. Seno for Associated Labor Unions. RESOLUTION

Nonetheless, on July 22, 1975, the Bureau affirmed the Med-Arbiter's order, ruling that the alleged contract could not bar the election because at the time it was approved, a representation question was pending resolution. Pre-election conference was then ordered. On October 22, 1975, ALU filed a motion for clarification praying that PAFLU be excluded from the list of unions to be voted on. On December 3, 1975, the Bureau passed upon the motion and announced that no further motion shall be entertained. On December 23, 1975, ALU appealed to the Secretary of Labor. Directed to treat the same as a motion to reconsider, the Bureau dismissed the appeal on February 27, 1976. Pursuant to the order, a certification election was held on June 30, 1976 yielding the following results: PAFLU 214 votes ALU 75 votes CCUP 3 votes NO UNION 3 votes On July 14, 1976, ALU filed an election protest contending that the election was void because its contract (i.e., the collective bargaining agreement with the company) was allegedly ratified by the employees and approved by the National Labor Relations Commission on April 11, 1975, and therefore barred the election held long after. On October 7, 1976, this Bureau dismissed the protest, standing firm on its previous orders. It therefore certified PAFLU-Luzano as the exclusive bargaining agent of the employees. On November 9, 1976, ALU repaired to the Secretary of Labor who, in turn, directed this Office to consider the same as a motion for reconsideration. On 16 December 1976, however, public respondent Francisco L. Estrella, then Acting Director of the Bureau of Labor Relations ("BLR"), issued the assailed Resolution, 1 the dispositive portion of which read: WHEREFORE, the election protest is hereby sustained, and all previous orders of this Bureau in this case are hereby set aside. SO ORDERED. The above conclusion was rationalized in the following terms:

FELICIANO, J.: The present Petition for Certiorari, filed with this Court on 4 January 1977, is directed at the Resolution dated 16 December 1976 of the Bureau of Labor Relations, in BLR Case No. 0314. That case originated from a Petition for Certification Election (docketed as Case No. 333-MC-CEBU) filed with the former Court of Industrial Relations, Cebu Branch, by petitioner Philippine Association of Free Labor Unions-Luzano ("PAFLU"). The facts are stated in the Resolution sought to be nullified: On March 26, 1968, the Philippine Association of Free Labor Unions (PAFLU) filed with the Court of Industrial Relations a petition for certification election at Visayan Glass Factory, Inc. The Cebu Central Union of the Philippines (CCLUP) moved to intervene. On the other hand, ALU moved to dismiss on the ground that it had then a collective agreement with the company which would expire on May 31, 1968. The latter motion was denied. The case, however, dragged on, and on May 20, 1968, ALU renewed the contract, this time expiring on May 31, 1971. ALU again moved to dismiss the petition. Even so, the case remained unresolved and on November 25,1971, a new contract expiring on May 31, 1974 was again concluded. On January 16,1975, the unresolved case was transferred to this Office pursuant to the provisions of the Labor Code. On March 3, 1975, the MedArbiter called a certification election. On March 14,1975, ALU appealed to this Office alleging that its contract of November 25, 1971 still subsisted because of its automatic renewal clause. On April 26, 1975, it filed a motion to dismiss alleging that it had negotiated a new contract on April 5,1975 which the National Labor Relations Commission approved on April 11; the contract would expire on April 4, 1979.

After thorough consideration of the issues raised and the arguments adduced, this Office [is] convinced that it should regard the protest with a more sympathetic mind. Indeed, the contract which ALU executed with the company was approved by the National Labor Relations Commission way back on April 11, 1975. That approval already amounts to a certification by this Bureau itself. It therefore bars a certification election as would a certification by this Bureau of a collective agreement in accordance with Article 230 of the Labor Code. For certainly, it would be unwise for this Bureau to annul an official act of the Commission. Yet, that would precisely be the result if the Bureau certify PAFLU and throw open

once more the bargaining negotiations which were already put to rest by the Commission when it approved the contract concluded by ALU with the company, from which the employees have since drawn untold benefits without complaints. That an election was held notwithstanding is quite unfortunate because it was clearly a nullity from the start. The Bureau should not compound its error by attaching undeserved weight to the results. The Resolution dated 16 December 1976 of the public respondent Acting Director of the BLR must be set aside. 1. The Med-Arbiter was not in error in issuing an order calling for a certification election at the Visayan Glass Factory, Inc. Neither was the BLR in error when, on 22 July 1975, it affirmed such order of the Med-Arbiter. In this respect, Article 257 of the Labor Code (as it then stood) provides: Art. 257. Requisites for certification election.-Any petition for certification election filed by any legitimate labor organization shall be supported by the written consent of at least thirty percent (30%) of all the employees in the bargaining unit. Upon receipt and verification of such petition, it shall be mandatory for the Bureau to conduct a certification election for the purpose of determining the representative of the employees in the appropriate bargaining unit and certify the winner as the exclusive collective bargaining representative of all the employees in the unit. (Emphasis supplied) It does not appear from the record of this case that the Petition for Certification Election filed by petitioner PAFLU on 26 March 1968, did not satisfy the requirements stated in the above provision. On the contrary, the Med-Arbitrer found as a matter of fact that said petition was supported by at least 30% of all company employees. Consequently, it was mandatory upon the BLR to grant the petition and, thereafter, to conduct certification elections at the Visayan Glass Factory, Inc. 2 Private respondent ALU would, however, invoke the "contract bar rule" and argue that the renegotiation on 5 April 1975 of a collective bargaining agreement between private respondent ALU and the company management rendered the certification election held at the Visayan Glass Factory, Inc. on 30 June 1976 a nullity. The argument is not persuasive. First of all, it is the rule in this jurisdiction that only a certified collective bargaining agreement i.e., an agreement duly certified by the BLR may serve as a bar to certification elections. 3 It is noteworthy that the BLR did not certify the 5 April 1975 collective bargaining agreement here in question. Second, even assuming (though merely arguendo) that approval of said agreement by the NLRC on 11 April 1975 had the same effect as certification by the BLR, nevertheless, such approval did not quash, as it were, petitioner PAFLUs Petition for Certification Election which had then remained pending with the BLR for more than seven (7) years, such petition having been filed as early as March of 1968. To hold otherwise would be to create an incentive for labor unions or employers to block the expeditious disposition of petitions for certification elections which are, after all, the mechanisms through which the choice of the workers of their own representatives is ascertained. 2. It does not follow as a matter of course that reversal of the BLR's Resolution of 16 December 1976 necessarily results in nullification of an "official act" of the NLRC: the collective bargaining agreement executed between private respondent ALU and the company management in April of 1975 need not be disturbed, especially considering that the substantive terms and conditions thereof bad not once been assailed, whether by labor or management, and that the employees of the company had in fact availed of

the benefits offered thereunder. In other words, the fairness of the agreement has not here been put in issue. What must be resolved, however, is which union-petitioner PAFLU or private respondent ALU-has the exclusive right to represent the workers of the Visayan Glass Factory, Inc. for the purpose of collective bargaining with company management. In this respect, the record clearly shows that the workers of the company, in the certification election held on 30 June 1976, had chosen petitioner PAFLU to be their bargaining representative. The will of the workers having been unequivocally and freely expressed, it is the duty of this Court, as well as of all other agencies concerned, to give life and meaning to rather than subvert that will. It remains only to note that what the Court is here saying is that petitioner PAFLU was entitled to be certified as the exclusive bargaining representative of the employees at the Visayan Glass Factory, Inc. as of December 1976. The Court is not informed of developments concerning the representation of those employees after 12 August 1977, the date of the last pleading filed with the Court by the parties in this case. This Resolution must therefore be regarded as subject to such subsequent developments, e.g., a subsequent election resulting in the certification of some other union as exclusive bargaining representative of Visayan Glass employees. ACCORDINGLY, the Petition for certiorari is GRANTED. The Resolution dated 16 December 1976 of the Acting Director of the Bureau of Labor Relations in BLR Case No. 00314, is hereby SET ASIDE. This Resolution is immediately executory. No pronouncement as to costs. Fernan, C.J., Gutierrez, Jr., Bidin and Cortes, JJ., concur.

Footnotes 1 Id., pp. 72-73. 2 Article 257, Labor Code (1976 ed., supra). National Organization of Trade Unions (NORTU) v. Secretary of Labor 90 SCRA 463 (1979; and Federacion Obrera de la Industria Tabaquera y Otros Trabajadores de Filipinos (FOITAFAssociated Anglo American Chapter) v. Noriel, 72 SCRA 24 (1976). 3 Chrysler Philippines Labor Union (CPLU) v. Estrella, 86 SCRA 338 (1978); Firestone Tire & Rubber Company Employees Union v. Estrella, 81 SCRA 49 (1978); and Foamtex Labor UnionTupas v. Noriel,72 SCRA 371(1976).See Article 230 of the Labor Code (1976 Ed.). See also Book V, Rule IX, Sec. 3 of the Rules and Regulations Implementing the Labor Code (1976 ed.). Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

G.R. No. 99266 March 2, 1999 SAN MIGUEL CORPORATION, petitioner, vs.

NATIONAL LABOR RELATIONS COMMISSION, SECOND DIVISION, AND SAN MIGUEL CORPORATION EMPLOYEES UNION (SMCEU) PTGWO, respondents.

The Plant Manager shall give his written comments and decision within ten (10) working days after his receipt of such grievance or the date of submission of the grievance for resolution, as the case may be. A copy of his Decision shall be furnished the Employee Relations Directorate. Step 3. If no satisfactory adjustment is arrived at Step 2, the employee may appeal the Decision to the Conciliation Board as provided under Section 6 hereof, within fifteen (15) working days from the date of receipt of the decision of the Plant Manager/Director or his designate. Otherwise, the decision in Step 2 shall be deemed accepted by the employee. The Conciliation Board shall meet on the grievance in such dates as shall be designated by the Division/Business Unit Manager or his representative. In every Division/Business Unit, Grievance Meetings of the Conciliation Board shall be scheduled at least once a month. The Conciliation Board shall have fifteen (15) working days from the date of submission of the grievance for resolution within which to decide on the grievance. Sec. 6. Conciliation Board. There shall be a conciliation Board per Business Unit or Division. Every Conciliation Board shall be composed of not more than five (5) representatives each from the Company and the Union. Management and the Union may be assisted by their respective legal counsels. In every Division/Business Unit, the names of the Company and Union representatives to the Conciliation Board shall be submitted to the Division/Business Unit Manager not later than January of every year. The Conciliation Board members shall act as such for one (1) year until removed by the Company or the Union, as the case may be. xxx xxx xxx Sec. 8. Submission to Arbitration. If the employee or Union is not satisfied with the Decision of the Conciliation Board and desires to submit the grievance to arbitration, the employee or the Union shall serve notice of such intention to the Company within fifteen (15) working days after receipt of the Board's decision. If no such written notice is received by the Company within fifteen (15) working days, the grievance shall be considered settled on the basis of the company's position and shall no longer be available for arbitration. 4 During the grievance proceedings, however, most of the employees were redeployed, while others accepted early retirement. As a result only 17 employees remained when the parties proceeded to the third level (Step 3) of the grievance procedure. In a meeting on October 26, 1990, petitioner informed private respondent union that if by October 30, 1990, the remaining 17 employees could not yet be redeployed, their services would be terminated on November 2, 1990. The said meeting adjourned when Mr. Daniel S. L. Borbon II, a representative of the union, declared that there was nothing more to discuss in view of the deadlock. 5 On November 7, 1990, the private respondent filed with the National Conciliation and Mediation Board (NCMB) of the Department of Labor

PURISIMA, J.: At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court, assailing the Resolution 1 of the National Labor Relations Commission in NLRC NCR CASE NO. 00094-90, which dismissed the complaint of San Miguel Corporation (SMC), seeking to dismiss the notice of strike given by the private respondent union and to compel the latter to comply with the provisions of the Collective Bargaining Agreement (CBA) 2 on grievance machinery, arbitration, and the nostrike clause, with prayer for the issuance of a temporary restraining order. The antecedent facts are as follows: In July 1990, San Miguel Cooperation, alleging the need to streamline its operations due to financial loses, shut down some of its plants and declared 55 positions as redundant listed as follows: seventeen (17) employees in the Business Logistics Division ("BLD"), seventeen (17) in the Ayala Operations Center (AOC), and eighteen (18) in the Magnolia-Manila Buying Station ("Magnolia-MBS"). 3 Consequently, the private respondent union filed several grievance cases for the said retrenched employees, praying for the redeployment of the said employees to the other divisions of the company. The grievance proceedings were conducted pursuant to Sections 5 and 8, Article VIII of the parties' 1990 Collective Bargaining Agreement providing for the following procedures, to wit: Sec.5. Processing of Grievance. Should a grievance arise, an earnest effort shall be made to settle the grievance expeditiously in accordance with the following procedures: Step 1. The individual employee concerned and the Union Directors, or the Union Steward shall, first take up the employee's grievance orally with his immediate superior. If no satisfactory agreement or adjustment of the grievance is reached, the grievance shall, within twenty (20) working days from the occurrence of the cause or event which gave rise to the grievance, be filed in writing with the Department Manager or the next level superior who shall render his decision within ten (10) working days from the receipt of the written grievance. A copy of the decision shall be furnished the Plant Personnel Officer. Step 2. If the decision in Step 1 is rejected, the employee concerned may elevate or appeal this in writing to the Plant Manager/Director or his duly authorized representative within twenty (20) working days from the receipt of the Decision of the Department Manager, Otherwise, the decision in Step 1 shall be deemed accepted by the employee. The Plant Manager/Director assisted by the Plant Personnel Officer shall determine the necessity, of conducting grievance meetings. If necessary, the Plant Manager/Director and the Plant Personnel Officer shall meet the employee concerned and the Union Director/Steward on such date(s) as may be designated by the Plant Manager. In every plant/office, Grievance Meetings shall be scheduled at least twice a month.

and Employment (DOLE) a notice of strike on the following grounds: a) bargaining deadlock; b) union busting; c) gross violation of the Collective Bargaining Agreement (CBA), such as non-compliance with the grievance procedure; d) failure to provide private respondent with a list of vacant positions pursuant to the parties side agreement that was appended to the 1990 CBA; and e) defiance of voluntary arbitration award. Petitioner on the other hand, moved to dismiss the notice of strike but the NCMB failed to act on the motion. On December 21, 1990, petitioner SMC filed a complaint with the respondent NLRC, praying for: (1) the dismissal the notice of strike; (2) an order compelling the respondent union to submit to grievance and arbitration the issue listed in the notice of strike; (3) the recovery of the expenses of litigation. On April 16, 1991, respondent NLRC came out with a minute resolution dismissing the complaint; holding, thus: NLRC NCR IC NO. 000094-90, entitled San Miguel Corporation, Complainant -versus- San Miguel Employees Union-PTWO (SMCEU), Respondent. Considering the allegations in the complaint to restrain Respondent Union from declaring a strike and to enforce mutual compliance with the provisions of the collective bargaining agreement on grievance machinery, and the no-strike clause, with prayer for issuance of temporary restraining order, and the evidence adduced therein, the Answer filed by the respondent and the memorandum filed by the complainant in support of its application for the issuance of an injunction, the Second Division, after due deliberation, Resolved to dismiss the complaint for lack of merit. 7 Aggrieved by the said resolution, petitioner found its way to this court via the present petition, contending that: I IT IS THE POSITIVE LEGAL DUTY OR RESPONDENT NLRC TO COMPEL ARBITRATION AND TO ENJOIN A STRIKE IN VIOLATION OF A NO STRIKE CLAUSE. II INJUNCTION IS THE ONLY IMMEDIATE, EFFECTIVE SUBSTITUTE FOR THE DISASTROUS ECONOMIC WARFARE THAT ARBITRATION IS DESIGNED TO AVOID. 8 On June 3, 1991, to preserve the status quo, the Court issued a Resolution 9 granting petitioners prayer for the issuance of a Temporary Restraining Order. The Petition is impressed with merit. Rule XXII, Section I, of the Rules and Regulations Implementing Book V the Labor Code 10, reads: Sec.1. Grounds for strike and lockout. A strike or lockout may be declared in cases of bargaining deadlocks and unfair labor practices. Violations of the collective bargaining agreements, except flagrant and/or malicious refusal to comply with its economic provisions, shall not be considered unfair labor practice and shall not be strikeable. No strike or lockout may be declared on grounds involving inter-union and intra-union disputes or on issues brought to voluntary, or compulsory, arbitration.
6

In the case under consideration, the grounds relied upon by the private respondent union are non-strikeable. The issues which may lend substance to the notice of strike filed by the private respondent union are: collective bargaining deadlock and petitioner's alleged violation of the collective bargaining agreement. These grounds, however, appear more illusory than real. Collective Bargaining Deadlock is defined as "the situation between the labor and the management of the company where there is failure in the collective bargaining negotiations resulting in a stalemate" 11 This situation, is non-existent in the present case since there is a Board assigned on the third level (Step 3) of the grievance machinery to resolve the conflicting views of the parties. Instead of asking the Conciliation Board composed of five representatives each from the company and the union, to decide the conflict, petitioner declared a deadlock, and thereafter, filed a notice of strike. For failing to exhaust all the steps in the grievance machinery and arbitration proceedings provided in the Collective Bargaining Agreement, the notice of strike should have been dismissed by the NLRC and private respondent union ordered to proceed with the grievance and arbitration proceedings. In the case of Liberal Labor Union vs. Phil. Can Co. 12, the court declared as illegal the strike staged by the union for not complying with the grievance procedure provided in the collective bargaining agreement, ruling that: . . . the main purpose of the parties in adopting a procedure in the settlement of their disputes is to prevent a strike. This procedure must be followed in its entirety if it is to achieve its objective. . . . strikes held in violation of the terms contained in the collective bargaining agreement are illegal, specially when they provide for conclusive arbitration clauses. These agreements must be strictly adhered to and respected if their ends have to be achieved. . . . 13 As regards the alleged violation of the CBA, we hold that such a violation is chargeable against the private respondent union. In abandoning the grievance proceedings and stubbornly refusing to avail of the remedies under the CBA. private respondent violated the mandatory provisions of the collective bargaining agreement. Abolition of departments or positions in the company is one of the recognized management prerogatives. 14Noteworthy is the fact that the private respondent does not question the validity of the business move of petitioner. In the absence of proof that the act of petitioner was illmotivated, it is presumed that petitioner San Miguel Corporation acted in good faith. In fact, petitioner acceded to the demands of the private respondent union by redeploying most of the employees involved; such that from an original 17 excess employees in BLD, 15 were successfully redeployed. In AOC, out of the 17 original excess, 15 were redeployed. In the Magnolia Manila Buying Station, out of 18 employees, 6 were redeployed and only 12 were terminated. 15 So also, in filing complaint with the NLRC, petitioner prayed that the private respondent union be compelled to proceed with the grievance and arbitration proceedings. Petitioner having evinced its willingness to negotiate the fate of the remaining employees affected, there is no ground to sustain the notice of strike of the private respondent union. All things studiedly considered. we are of the ineluctable conclusion, and so hold, that the NLRC gravely abused its discretion in dismissing the complaint of Petitioner SMC for the dismissal of the notice of strike, issuance of a temporary restraining order, and an order compelling the respondent union to settle the dispute under the grievance machinery of their CBA..

WHEREFORE, the instant petition is hereby GRANTED. Petitioner San Miguel Corporation and private respondent San Miguel Corporation Employees Union PTGWO are hereby directed to complete the third level (Step 3) of the Grievance Procedure and proceed with the Arbitration proceedings if necessary. No pronouncement as to costs. SO ORDERED. Romero and Gonzaga-Reyes, JJ., concur.

LUZON MAGNOLIA SALES LABOR UNIONINDEPENDENT, respondents. Siguion Reyna, Montecillo & Ongsiako for petitioner. E.N.A. Cruz & Associates for private respondent.

PUNO, J.: Vitug, J., abroad on official business. Panganiban, J., is on leave. Footnotes 1 Dated April 16, 1991; Rollo, pp. 183-184. 2 Annex: "A" of Petition. 3 Complaint Annex "F", Rollo, p. 53. 4 Annex "A", Petition; Collective Bargaining Agreement, pp.18-19. 5 Annex "B-3", Petition, Rollo, p. 31. 6 Annex "F", Petition, Rollo, pp. 48-65. 7 Annex "J"; Petition; Rollo, p. 183. 8 Rollo, p. 14. 9 Rollo, p. 185. 10 As amended by D.O. No 09 which took effect on June 21, 1997. 11 Tayag & P.F. Jardiniano, Dictionary of Philippine Labor Terms. p. 36. 12 91 Phil. 72. 13 Id. p. 77-78. citing; Shop N. Save vs. Retail Food Clerks Union (1940) Cal. Super. Ct. CCT. Tab. Case 91-18675; 2 A.L.R. Ann., 2nd Series, pp. 1278-1282. 14 Dangan vs. NLRC et al., 127 SCRA 706, p. 713. Petitioner claims that: 15 Complaint; Annex "A"; Rollo, p. 54. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION THE HONORABLE UNDERSECRETARY LAGUESMA ACTED WITH GRAVE ABUSE OF DISCRETION WHEN HE IGNORED AND TOTALLY DISREGARDED PETITIONER'S VALID AND JUSTIFIABLE GROUNDS WHY THE ERROR MADE IN GOOD FAITH BY PETITIONER'S COUNSEL BE CORRECTED, AND INSTEAD RULED: A G.R. No. 100485 September 21, 1994 SAN MIGUEL CORPORATION, petitioner, vs. THE HONORABLE BIENVENIDO E. LAGUESMA and NORTH THAT PRIVATE RESPONDENT IS "THE SOLE AND EXCLUSIVE BARGAINING AGENT FOR In a Resolution dated March 19, 1991, 4 public respondent, by authority of the Secretary of Labor, denied SMC's appeal and affirmed the Order of the Med- Arbiter. Hence this petition for certiorari. Petitioner San Miguel Corporation (SMC) prays that the Resolution dated March 19, 1991 and the Order dated April 12, 1991 of public respondent Undersecretary Bienvenido E. Laguesma declaring respondent union as the sole and exclusive bargaining agent of all the Magnolia sales personnel in northern Luzon be set aside for having been issued in excess of jurisdiction and/or with grave abuse of discretion. On June 4, 1990, the North Luzon Magnolia Sales Labor Union (respondent union for brevity) filed with the Department of Labor a petition for certification election among all the regular sales personnel of Magnolia Dairy Products in the North Luzon Sales Area. 1 Petitioner opposed the petition and questioned the appropriateness of the bargaining unit sought to be represented by respondent union. It claimed that its bargaining history in its sales offices, plants and warehouses is to have a separate bargaining unit for each sales office. The petition was heard on November 9, 1990 with petitioner being represented by Atty. Alvin C. Batalla of the Siguion Reyna law office. Atty. Batalla withdrew petitioner's opposition to a certification election and agreed to consider all the sales offices in northern Luzon as one bargaining unit. At the pre-election conference, the parties agreed inter alia, on the date, time and place of the consent election. Respondent union won the election held on November 24, 1990. In an Order dated December 3, 1990, 2 Mediator-Arbiter Benalfre J. Galang certified respondent union as the sole and exclusive bargaining agent for all the regular sales personnel in all the sales offices of Magnolia Dairy Products in the North Luzon Sales Area. Petitioner appealed to the Secretary of Labor. It claimed that Atty. Batalla was only authorized to agree to the holding of certification elections subject to the following conditions: (1) there would only be one general election; (2) in this general election, the individual sales offices shall still comprise separate bargaining units. 3

ALL THE REGULAR SALES OFFICES OF MAGNOLIA DAIRY PRODUCTS, NORTH LUZON SALES AREA", COMPLETELY IGNORING THE ESTABLISHED BARGAINING HISTORY OF PETITIONER SMC. B THAT PETITIONER IS ESTOPPED FROM QUESTIONING THE "AGREEMENT" ENTERED INTO AT THE HEARING ON 9 NOVEMBER 1990, IN CONTRAVENTION OF THE ESTABLISHED FACTS OF THE CASE AND THE APPLICABLE LAW ON THE MATTER. We find no merit in the petition. The issues for resolution are: (1) whether or not respondent union represents an appropriate bargaining unit, and (2) whether or not petitioner is bound by its lawyer's act of agreeing to consider the sales personnel in the north Luzon sales area as one bargaining unit. Petitioner claims that in issuing the impugned Orders, public respondent disregarded its collective bargaining history which is to have a separate bargaining unit for each sales office. It insists that its prior collective bargaining history is the most persuasive criterion in determining the appropriateness of the collective bargaining unit. There is no merit in the contention. A bargaining unit is a "group of employees of a given employer, comprised of all or less than all of the entire body of employees, consistent with equity to the employer, indicate to be the best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law." 5 The fundamental factors in determining the appropriate collective bargaining unit are: (1) the will of the employees (Globe Doctrine); 6 (2) affinity and unity of the employees' interest, such as substantial similarity of work and duties, or similarity of compensation and working conditions (Substantial Mutual Interests Rule); (3) prior collective bargaining history; and (4) similarity of employment status. 7 Contrary to petitioner's assertion, this Court has categorically ruled that the existence of a prior collective bargaining history is neither decisive nor conclusive in the determination of what constitutes an appropriate bargaining unit. 8 Indeed, the test of grouping is mutuality or commonality of interests. The employees sought to be represented by the collective bargaining agent must have substantial mutual interests in terms of employment and working conditions as evinced by the type of work they perform. In the case at bench, respondent union sought to represent the sales personnel in the various Magnolia sales offices in northern Luzon. There is similarity of employment status for only the regular sales personnel in the north Luzon area are covered. They have the same duties and responsibilities and substantially similar compensation and working conditions. The commonality of interest among he sales personnel in the north Luzon sales area cannot be gainsaid. In fact, in the certification election held on November 24, 1990, the employees concerned accepted respondent union as their exclusive bargaining agent. Clearly, they have expressed their desire to be one.

Petitioner cannot insist that each of the sales office of Magnolia should constitute only one bargaining unit. What greatly militates against this position is the meager number of sales personnel in each of the Magnolia sales office in northern Luzon. Even the bargaining unit sought to be represented by respondent union in the entire north Luzon sales area consists only of approximately fifty-five (55) employees. 9 Surely, it would not be for the best interest of these employees if they would further be fractionalized. The adage "there is strength in number" is the very rationale underlying the formation of a labor union. Anent the second issue, petitioner claims that Atty. Batalla was merely a substitute lawyer for Atty. Christine Ona, who got stranded in Legaspi City. Atty. Batalla was allegedly unfamiliar with the collective bargaining history of its establishment. Petitioner claims it should not be bound by the mistake committed by its substitute lawyer. We are not persuaded. As discussed earlier, the collective bargaining history of a company is not decisive of what should comprise the collective bargaining unit. Insofar as the alleged "mistake" of the substitute lawyer is concerned, we find that this mistake was the direct result of the negligence of petitioner's lawyers. It will be noted that Atty. Ona was under the supervision of two (2) other lawyers, Attys. Jacinto de la Rosa, Jr. and George C. Nograles. There is nothing in the records to show that these two (2) counsels were likewise unavailable at that time. Instead of deferring the hearing, petitioner's counsels chose to proceed therewith. Indeed, prudence dictates that, in such case, the lawyers allegedly actively involved in SMC's labor case should have adequately and sufficiently briefed the substitute lawyer with respect to the matters involved in the case and the specific limits of his authority. Unfortunately, this was not done in this case. The negligence of its lawyers binds petitioner. As held by this Court in the case of Villa Rhecar Bus v. De la Cruz: 10 . . . As a general rule, a client is bound by the mistakes of his counsel. Only when the application of the general rule would result in serious injustice should an exception thereto be called for. In the case at bench, petitioner insists that each of the sales offices in northern Luzon should be considered as a separate bargaining unit for negotiations would be more expeditious. Petitioner obviously chooses to follow the path of least resistance. It is not, however, the convenience of the employer that constitutes the determinative factor in forming an appropriate bargaining unit. Equally, if not more important, is the interest of the employees. In choosing and crafting an appropriate bargaining unit, extreme care should be taken to prevent an employer from having any undue advantage over the employees' bargaining representative. Our workers are weak enough and it is not our social policy to further debilitate their bargaining representative. In sum, we find that no arbitrariness or grave abuse of discretion can be attributed to public respondents certification of respondent union as the sole and exclusive bargaining agent of all the regular Magnolia sales personnel of the north Luzon sales area. WHEREFORE, premises considered, the challenged Resolution and Order of public respondent are hereby AFFIRMED in toto, there being no showing of grave abuse of discretion or lack of jurisdiction. SO ORDERED. Narvasa, C.J., Regalado and Mendoza, JJ., concur. Padilla, J., took no part.

#Footnotes

1 The Magnolia North Luzon Sales Area covers San Fernando, Pampanga, Cabanatuan City,

Olongapo City, Poro Point, La Union, Baguio City, Dagupan City, Laoag City and Ilagan, Isabela. 2 Annex "K", Petition, Rollo, pp. 94-97. 3 See Appeal, Annex "L", Petition, Rollo, pp. 98103, at p. 101. 4 Annex "A", Petition, Rollo, pp. 30-36. 5 U.P. v. Ferre-Calleja, G.R. No. 96189, July 14, 1992, 211 SCRA 451; Belyca Corporation v. Ferrer-Calleja, G.R. No. L-77395, November 29, 1988, 168 SCRA 184; both cases citing Rothenberg in Labor Relations, at p. 482. 6 Mechanical Department Labor Union Sa Philippine National Railways v. Court of Industrial Relations, No. L-28223, August 30, 1968, 24 SCRA 925. 7 Rothenberg on Labor Relations, pp. 482-510. 8 Free Trade Unions v. Mainit Lumber Development Company Workers Union, G.R. No. 79526, December 21, 1990, 192 SCRA 598. 9 See Petition for Certification Election, Annex "C", Petition, Rollo, at p. 39. 10 No. L-78936, January 7, 1988, 157 SCRA 13. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

On the third year of the CBA on August 1, 1992, the Company and the Union met to renegotiate the provisions of the CBA for the fourth and fifth years. The parties, however, failed to resolve some of their differences, as a result of which a deadlock developed. On November 12, 1992, a formal notice of deadlock was sent to the Company on the following issues: wages, vacation leave, sick leave, hospitalization, optional retirement, 13th month pay and signing bonus. On November 18, 1992, the Company announced a cost-cutting or retrenchment program. Charging unfair labor practice and citing the deadlock in the negotiations, the Union filed, on December 3, 1992, a notice of strike with the National Conciliation and Mediation Board (NCMB). On December 18, 1992, as a result of a conference called by the NCMB, the Union and the Company went back to the bargaining table and agreed on the following provisions: a. Wage Increase (Article V, Section 2, CBA) P3.00/day for the fourth year of the CBA and P3.00/day for the fifth year of the CBA; b. Vacation and Sick Leaves (Article VII, Section 1(c), CBA) 1,100 hours of aggregate service instead of the existing 1,500 hours within a year to be entitled to leave benefits but subject to reversion to the previous CBA if majority of the gangs average eight (8) vessels a month; c. Hospitalization (Article VIII, Section I, CBA) Maximum aggregate of 1,100 hours instead of the 1,500 hours and up to be entitled to the benefit of P2,500.00 with the lower brackets adjusted accordingly but subject to reversion to the previous CBA if majority of the gangs average eight (8) vessels a month; d. 13th Month Pay (Article XIII, Section 1, CBA) Average of six (6) vessels instead of the existing eight (8) vessels to be entitled to eleven (11) days basic pay but subject to reversion to the previous CBA if majority of the gangs average eight (8) vessels a month; e. Signing bonus; and f. Seniority. The agreement left only one issue for resolution of the parties, namely, retirement. Even this issue was soon settled as the parties met before the NCMB on January 14, 1993 and then agreed on an improved Optional Retirement Clause by giving the employees the option to retire after rendering eighteen (18) years of service instead of the previous twenty (20) years, and granting the employees retirement benefits equivalent to sixteen (16) days for every year of service. Thus, as the Med-Arbiter noted in the record of the January 14, 1993 conference, "the issues raised by the notice of strike had been settled and said notice is thus terminated." But no sooner had he stated this than the Company claimed that the wage increases which it had agreed to give to the employees should be creditable as compliance with future mandated wage increases. In addition, it maintained that such increases should not be retroactive. Reacting to this development, the Union again filed a Notice of Strike on January 28, 1993, with the NCMB. On March 7, 1993, the Union staged a strike.

G.R. No. 111809 May 5, 1997 MINDANAO TERMINAL AND BROKERAGE SERVICE, INC. petitioner, vs. HON. MA. NIEVES ROLDAN-CONFESSOR, in her capacity as Secretary of Labor and Employment, and ASSOCIATED LABOR UNIONS (ALU-TUCP), respondents.

MENDOZA, J.: This is a petition for certiorari to set aside the order of respondent Honorable Secretary of Labor and Employment, declaring (1) wage increases granted by petitioner to its employees not creditable as compliance by the company with future mandated wage increases; and (2) the increases to be retroactive, in the case of the fourth year wage increase, to August 1, 1992 to be implemented until July 31, 1993 and, in the case of the fifth year wage increase, to August 1, 1993 to be implemented until the expiration of the CBA on July 31, 1994. Petitioner Mindanao Terminal and Brokerage Service, Inc., (hereafter referred to as the Company) and respondent Associated Labor Unions, (hereafter referred to as the Union) entered into a collective bargaining agreement for a period of five (5) years, starting on August 1, 1989, and ending July 31, 1994.

The NCMB tried to settle the issues of creditability and retroactivity, calling for this purpose a conciliation conference on March 9, 1993. As conciliation proved futile, the Company petitioned respondent Secretary of Labor and Employment (hereafter Secretary of Labor) to assume jurisdiction over the dispute. On March 10, 1993, respondent assumed jurisdiction jurisdiction over the dispute and ordered the parties to submit their respective position papers on the two unresolved issues. After submission by the parties of their position papers, the Secretary of Labor issued an Order dated May 14, 1993, ordering the Company and the Union to incorporate into their existing collective bargaining agreement all improvements reached by them in the course of renegotiations. The Secretary of Labor held that the wage increases for the fourth and fifth years of the CBA were not to be credited as compliance with future mandated increases. In addition, the fourth year wage increase was to be retroactive to August 1992 and was to be implemented until July 31, 1993, while the fifth year wage increase was to take effect on August 1, 1993 until the expiration of the CBA. 1 On May 31, 1993, the Company sought reconsideration of the May 14, 1993 order. The motion was denied for lack of merit by the Secretary of Labor in a resolution dated July 7, 1993. Hence, this petition for certiorari, alleging grave abuse of discretion on the part of respondent Secretary of Labor. The petitioner contends that respondent erred in making the fourth year wage increase retroactive to August 1, 1992. It denies the power of the Secretary of Labor to decree retroaction of the wage increases, as the respondent herself had stated in her order subject of this petition, that it had been more than six (6) months since the expiration of the third anniversary of the CBA and, therefore, the automatic renewal clause of Art. 253-A of the Labor Code had no application. Although petitioner originally opposed giving retroactive effect to their agreement, it subsequently modified its stand and agreed that the fourth year wage increase and the other provisions of the CBA be made retroactive to the date the Secretary of Labor assumed jurisdiction of the dispute on March 10, 1993. The petition is without merit. Art. 253-A of the Labor Code reads: Terms of a collective bargaining agreement. Any Collective Bargaining Agreement that the parties may enter into shall, insofar as the representation aspect is concerned, be for a term of five (5) years. No petition questioning the majority status of the incumbent bargaining agent shall be entertained and no certification election shall be conducted by the Department of Labor and Employment outside of the sixty-day period immediately before the date of expiry of such five year term of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall be renegotiated not later than three (3) years after its execution. Any agreement on such other provisions of the Collective Bargaining Agreement entered into within six (6) months from the date of expiry of the term of such other provisions as fixed in such Collective Bargaining Agreement, shall retroact to the day immediately following such date. If any such agreement is entered into beyond six months, the parties shall agree on the duration of retroactivity thereof. In case of a deadlock in the renegotiation of the collective bargaining agreement, the parties may exercise their rights under this Code. The respondent indeed stated in her order of May 14, 1993 that "this case is clearly beyond the scope of the automatic renewal clause," 2 but she also stated in the same order that "the parties have reached an agreement on all the renegotiated provisions of the CBA" on January 14, 1993, i.e., within six (6) months of the expiration of the third year of the CBA.

The signing of the CBA is not determinative of the question whether "the agreement was entered into within six months from the date of expiry of the term of such other provisions as fixed in such collective bargaining agreement" within the contemplation of Art. 253-A.. As already stated, on November 12, 1992, the Union sent the Company a notice of deadlock in view of their inability to reconcile their positions on the main issues, 3 particularly on wages. The Union filed a notice of strike. However, on December 18, 1992, in a conference called by the NCMB, the Union and the Company agreed on a number of provisions of the CBA, including the provision on wage increase, 4 leaving only the issue of retirement to be threshed out. In time, this, too, was settled, so that in his record of the January 14, 1993 conference, the Med-Arbiter noted that "the issues raised by the notice of strike had been settled and said notice is thus terminated." It would therefore seem that at that point, there was already a meeting of the minds of the parties, which was before the February 1993 end of the six-month period provided in Art. 253-A. The fact that no agreement was then signed is of no moment. Art. 253A refers merely to an "agreement" which, according to Black's Law Dictionary is "a coming together of minds; the coming together in accord of two minds on a given proposition." 5 This is similar to Art. 1305 of the Civil Code's definition of "contract" as "a meeting of minds between two persons." The two terms, "agreement" and "contract," are indeed similar, although the former is broader than the latter because an agreement may not have all the elements of a contract. As in the case of contracts, however, agreements may be oral or written. 6 Hence, even without any written evidence of the Collective Bargaining Agreement made by the parties, a valid agreement existed in this case from the moment the minds of the parties met on all matters they set out to discuss. As Art. 1315 of the Civil Code states: Contracts are perfected by mere consent, and from that moment, the parties are bound not only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to their nature, may be in keeping with good faith, usage and law. The Secretary of Labor found that "as early as January 14, 1993, well within the six (6) month period provided by law, the Company and the Union have perfected their agreement." 7 The claim of petitioner to the contrary notwithstanding, this is a finding of an administrative agency which, in the absence of evidence to the contrary, must be affirmed. Moreover, the order of the Secretary of Labor may be considered in the nature of an arbitral award, pursuant to Art. 263(g) of the Labor Code, and, therefore, binding on the parties. After all, the Secretary of Labor assumed jurisdiction over the dispute because petitioner asked the Secretary of Labor to do so after the NCMB failed to make the parties come to an agreement. It is also conceded that the industry in which the petitioner is engaged is vital to the national interest. As stated in the Order issued by the Secretary of Labor on March 10, 1993: 8 The services being provided by the Company evidently reflect their indispensability to the normal operations of the Davao City Pier where millions of crates and boxes of goods are loaded and unloaded monthly. The current disruption, therefore, of the Company's services, if allowed to continue, will cause serious prejudice and damages to the agricultural exporters, the cargo handlers, the vessel owners, the foreign buyers of agricultural products and the entire business sector in the area. These considerations and the dispute's implications on the national economy warrant the intervention by this Office to exercise its power under Article 263(g) of the Labor Code, as amended.

In St. Luke's Medical Center, Inc. v. Torres, 9 a deadlock also developed during the CBA negotiations between management and the union. The Secretary of Labor assumed jurisdiction and ordered the retroaction of their CBA to the date of expiration of the previous CBA. As in this case, it was alleged that the Secretary of Labor gravely abused his discretion in making his award retroactive. In dismissing this contention this Court held: Therefore, in the absence of a specific provision of law prohibiting retroactivity of the effectivity of arbitral awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code, such as herein involved, public respondent is deemed vested with plenary and discretionary powers to determine the effectivity thereof. This case is controlled by the ruling in that case. With respect to the issue of the creditability of the fourth and fifth year wage increases, the Court takes cognizance of the fact that the question was raised by the Company only when the six-month period was almost over and all that was left to be done by the parties was to sign their agreement. Before that, the Company did not qualify its position. It should have known that crediting of wage increases in the CBA as compliance with future mandated increases is the exception rather than the rule. For the general rule is that such increases are over and above any increase that may be granted by law or wage order. As held in Meycauayan College v. Drilon: 10 Increments to the laborers' financial gratification, be they in the form of salary increases or changes in the salary scale are aimed at one thing improvement of the economic predicament of the laborers. As such they should be viewed in the light of the States avowed policy to protect labor. Thus, having entered into an agreement with its employees, an employer may not be allowed to renege on its obligation under a collective bargaining agreement should, at the same time, the law grant the employees the same or better terms and conditions of employment. Employee benefits derived from law are exclusive of benefits arrived at through negotiation and agreement unless otherwise provided by the agreement itself or by law. For making a belated issue of "creditability," petitioner is correctly said to have "delay[ed] the agreement beyond the six (6) month period so as to minimize its expenses to the detriment of its workers" and its conduct to smack of "bad faith and [to run counter] to the good faith required in Collective Bargaining." 11 If petitioner wanted to be given credit for the wage increases in the event of future mandated wage increases, it should have expressly stated its reservation during the early part of the CBA negotiations. WHEREFORE, the instant petition is hereby DISMISSED for lack of merit. SO ORDERED. Regalado, Romero, Puno and Torres, Jr., JJ., concur. Footnotes 1 Rollo, p. 28. 2 Id., p. 25. 3 Respondent's Comment, p. 2; Rollo, p. 103.

4 Ibid. 5 BLACK'S LAW DICTIONARY 62 (5th ed., 1979). 6 Royal Lines, Inc. v. Court of Appeals, 143 SCRA 609 (1986). 7 Respondent's Comment, p. 8; Rollo, p. 109. 8 Rollo, p. 53. 9 223 SCRA 779 (1993). 10 185 SCRA 50 (1990). 11 Respondent's Comment, p. 9. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 95013 September 21, 1994 TRADE UNIONS OF THE PHILIPPINES/FEBRUARY SIX MOVEMENT TUPAS/FSM), petitioner, vs. HON BIENVENIDO LAGUESMA, TRANSUNION CORPORATIONGLASS DIVISION, AND INTEGRATED LABOR ORGANIZATION (ILO-PHILIPPINES), respondents. Alar, Comia, Manalo and Associates Law Offices for petitioner. Arcaya & Associates for Transunion Corp.-Glass Division. Francisco A. Mercado, Jr. for Integrated Labor Organization (ILOPhils.)

PUNO, J.: Petitioner Trade Unions of the Philippines-February Six Movement (TUPAS-FSM) seeks the reversal of theResolution, dated July 25, 1990, rendered by then Secretary of Labor and Employment Ruben D. Torres, In OS-MA-A-5-167-90, which dismissed the petition for certification election filed by petitioner TUPAS-FSM for being prematurely filed. 1 The controlling facts, as culled from the records, are as follows: On March 23, 1990 TUPAS-FSM filed a petition for certification election with the Regional Office No. IV of the Department of Labor and Employment (DOLE), for the purpose of choosing a bargaining representative for the rank-and-file employees of Transunion Corporation's industrial plant, situated in Canlubang, Laguna, known as the Transunion Corporation-Glassware Division. Petitioner had then secured a Certification , dated March 22, 1990, issued by Tomas B. Bautista, Jr., Director IV of DOLE (Region IV), that "Transunion Corporation" has no existing collective bargaining agreement with any labor organization. 2 It appears, however, that before the filing of said petition, or on November 15, 1989, Integrated Labor Organization (ILO-Phils.) was

duly certified by DOLE as the sole and exclusive bargaining agent of the rank-and-file employees of Transunion Corporation-Glassware Division. 3 On November 28, 1989, a collective bargaining agreement (CBA) was the forged between Transunion-Glassware Division and ILO-Phils. covering the company's rank-and-file employees, The CBA, with a five-year term from December 1, 1989 to December 1, 1994, was ratified by a great majority of the rank-and -filers on December 8, 1989. 4 In the meantime, the President of ILO-PHILS died. An interunion conflict followed and the subject CBA was filed with DOLE, for registration purposes, only on March 14, 1990, more or less, three (3) months from its execution. Finally, on May 4, 1990, the Certification of Registration was issued by DOLE through Regional Director Romeo A. Young. 5 ILO-Phils., intervened in the certification election proceedings initiated by TUPAS-FSM. It opposed the petition in view of the existing CBA between ILO and the Transunion Corporation-Glassware Division. It stresses that the petition for certification election should be entertained only during the freedom period, or sixty day before the expiration of the CBA. Med-Arbiter Orlando S. deal Cruz dismissed the petition on the ground of prematurity. TUPAS-FSM appealed contending: (1) that pursuant to Article 231 of the Labor Code. CBAs shall be file with the Regional Office of the DOLE within thirty (30) days from the date of signing thereof; (2) that said requirement is mandatory, although it would not affect the enforceability of the CBA as between the parties thereto; and (3) since the CBA was filed outside the 30-day period specified under Article 231 of the Labor Code, the prohibition against certification election under Article 232 of the same Code should not apply to third parties such as petitioner. As stated earlier, the Secretary of Labor and Employment affirmed the impugned Order of the Med-Arbiter, ruling that the belated submission of the CBA was excusable and that the requirement of the law was substantially complied with upon the filing of a copy of the CBA prior to the filing of the petition for certification election. TUPAS-FSM then filed a motion for reconsideration, but it was also denied, Hence, this petition for certiorari where petitioner alleged: GRAVE ABUSE OF DISCRETION ON THE PART OF THE PUBLIC RESPONDENTS AMOUNTING TO LOSS OF JURISDICTION; and THE RESOLUTION IS CONTRARY TO THE FACTS AND THE LAW. The petition lacks merit. Petitioner raises both factual and legal issues in this present petition. First, the factual issues. Relying on the March 22, 1990 Dole Certification issued by Director Bautista, Jr., supra, petitioner insists there was no existing CBA between Transunion Corporation and any labor organization when it filed its petition for certification election on March 23, 1990. To further strengthen its position, petitioner charges that the filing of the CBA was antedated to march 14, 1990, to make it appear that the same was already existing and filed before the filing of the petition for certification election. Petitioner also claims that since Article 231 of the Labor Code mandates DOLE to act on the CBA filed in its office within Five (5) days from date of filing thereof, the subject CBA was filed on April 30, 1990, or five (5) days before its registration on May 4, 1990. The argument deserves scant consideration. It is elementary that the special civil action for certiorari under Rule 65 of the Revised Rules of Court can be availed of to nullify or modify the proceedings before the concerned tribunal, board, or officer exercising judicial functions who has acted without or in excess of its jurisdiction or with grave abuse of discretion and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law. This Court is not a trier of facts and it is not its function to examine and evaluate the probative value of all evidence presented to the concerned tribunal which formed the

basis of its impugned decision, resolution or order. 6 Following this hoary rule, it is inappropriate to review the factual findings of the Medarbiter and the Secretary of Labor, regarding the date of filing of the CBA on March 14, 1990 prior to the filing of the petition for certification election; the company's voluntary recognition and DOLE's certification of ILO-PHILS. as the sole and exclusive bargaining representative of the rank-and-file employees of Transunion Corporation-Glassware Division; and the subsequent registration of the CBA. They are binding on this Court as they are supported by substantial evidence. In contrast, petitioners bare allegation pertaining to the "antedating" of the date of filing of the CBA is unsubstantiated and based purely on conjectures. It is crystal clear from the records that the rank-and- file employees of private respondent's Glassware Division are, at present, represented by ILO-PHILS. Hence, petitioner's reliance on the March 22, 1990 Certification issued by Director Bautista, Jr., is misplaced. The existence and filing of their CBA was confirmed in a Certification, dated April 24, 1990, issued by Director Romeo A. Young of DOLE-Region IV. 7 The Certification of ILO-PHILS. "as thesole and exclusive bargaining agent of the rank-and-file workers of Transunion-Glassware Division," means it shall remain as such during the existence of the CBA, to the exclusion of other labor organizations, including petitioner, and no petition questioning the majority status of the incumbent bargaining agent shall be entertained, nor shall certification election be conducted, outside of the fifty-day freedom period immediately before the expiry date of the five-year term of the CBA. 8 We now resolved the legal issue. Petitioner points out that the subject CBA was filed beyond the 30-day period prescribed under Article 231 of the Labor Code. It also insists that under Article 232 of the Labor Code, the prohibition on the filing of a petition for certification election applies when the CBA had been duly registered and, in this case, since the CBA was not registered in accordance with the Art. 231, the prohibition will not apply. We disagree. Article 231 an s232 of the Labor Code read: Art. 231. Registry of unions and file of collective agreements. - . . . . Within thirty (30) days from the execution of a Collective Bargaining Agreement, the parties shall submit copies of the same directly to the Bureau or the Regional Office of the Department of Labor and Employment for registration accompanied with verified proofs of its posting n two conspicuous places in the place of work and ratification by the majority of all the workers in the bargaining unit. The Bureau or Regional Office shall act upon the application for registration of such Collective Bargaining Agreement within five (5) days from receipts thereof. The Regional Office shall furnish the Bureau with a copy of the Collective Bargaining agreement within five (5) days form its submission. xxx xxx xxx Art. 232. Prohibition on Certification Election. The Bureau shall not entertain any petition for certification election or any other action which may disturb the administration of duly registered existing collective bargaining agreement affecting the parties except under Articles 253, 253-A and 256 of this Code. Corollary thereto, Article 253-A of the same Code reads: Art. 253-A. Any Collective Bargaining Agreement that the parties may enter into shall, insofar as the representation aspect is concerned, be for a term of five (5) years. No petition

questioning agent shall be entertained and no certification election shall be conducted by the Department of Labor and Employment outside the sixty-day period immediately before the date of expiry of such five year term of the Collective Bargaining Agreement. . . . . It appears that the procedural requirement of filing the CBA within 30 days from date of execution under Article 231 was not met. The subject CBA was executed on November 28, 1989. It was ratified on December 8, 1989, and then filed with DOLE for registration purposes on March 14, 1990. Be that as it may, the delay in the filing of the CBA was sufficiently explained, i.e., there was an inter-union conflict on who would succeed to the presidency of ILO-PHILS. The CBA was registered by the DOLE only on May 4, 1990. It would be injudicious for us to assume, as what petitioner did, that the said CBA was filed only on April 30, 1990, or five (5) days before its registration, on the unsupported surmise that it was done to suit the law that enjoins Regional Offices of Dole to act upon an application for registration of a CBA within five (5) days from its receipt thereof. In the absence of any substantial evidence that DOLE officials or personnel, in collusion with private respondent, had antedated the filing date of the CBA, the presumption on regularity in the performance of official functions hold. More importantly, non-compliance with the cited procedural requirement should not adversely affect the substantive validity of the CBA between ILO-PHILS and the Transunion Corporation-Glassware Division covering the company's rank and file employees. A collective bargaining agreement is more than a contract. It is highly impressed with public interest for it is an essential instrument to promote industrial peace. Hence, it bears the blessings not only of the employer and employees concerned but even the Department of Labor and Employment. To set it aside on technical grounds is not conducive to the public good. IN VIEW WHEREOF, the impugned July 25, 1990 Resolution, and August 23, 1990 Order of Secretary Ruben D. Torres and Undersecretary Bienvenido E. Laguesma. respectively, in OS-MA-A-5167-90, is AFFIRMED in toto. Costs against petitioned. SO ORDERED. Narvasa, C.J., Padilla, Regalado and Mendoza, JJ., concur.

"SO ORDERED." 4. Annex "C" of Petition; Rollo, p. 27; See also Annexes "D" and "E", Comment (Transunion Corporation-Glassware Division); Rollo, pp. 84-94. 5. Rollo, p. 27. 6. Valdez, Jr., et al., v. Comelec. G.R. No. 85129, January 31, 1989, En Banc, Minute Resolution. 7. Rollo, p. 112. 8. Article 253-A, Labor Code, as amended by RA 6715. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 102130 July 26, 1994 GOLDEN FARMS, INC., petitioner, vs. THE HONORABLE SECRETARY OF LABOR and THE PROGRESSIVE FEDERATION OF LABOR, respondents. J.V. Yap Law Office for petitioner.

PUNO, J.: The sole issue for resolution in this Petition for Certiorari with prayer for the issuance of preliminary injunction and/or restraining order is whether or not petitioner's monthly paid rank-and file employees can constitute a bargaining unit separate from the existing bargaining unit of its daily paid rank-and-file employees. Petitioner Golden Farms, Inc., is a corporation engaged in the production and marketing of bananas for export. On February 27, 1992, private respondent Progressive Federation of Labor (PFL) filed a petition before the Med-Arbiter praying for the holding of a certification election among the monthly paid office and technical rank-and-file employees of petitioner Golden Farms. Petitioner moved to dismiss the petition on three (3) grounds. First, respondent PFL failed to show that it was organized as a chapter within petitioner's establishment. Second, there was already an existing collective bargaining agreement between the rank-and-file employees represented by the National Federation of Labor (NFL) and petitioner. And third, the employees represented by PFL had allegedly been disqualified by this Court from bargaining with management in Golden Farms, Inc., vs. Honorable Director Pura Ferrer-Calleja, G.R. No. 78755, July 19, 1989. 1 Respondent PFL opposed petitioner's Motion to Dismiss. It countered that the monthly paid office and technical employees should be allowed to form a separate bargaining unit because they were expressly excluded from coverage in the Collecting Bargaining Agreement (CBA) between petitioner and NFL. It also contended that the case invoked by petitioner was inapplicable to the present case.

#Footnotes

1. Annex "A" of Petition; Rollo, p. 20; reiterated by the Order dated August 23, 1990 denying petitioners motion for reconsideration. 2. Annex "B" to Petition; Rollo, p. 26. 3. The Order dated November 15, 1989 of MedArbiter Rolando S. dela Cruz, reads: "O R D E R "Considering PSSLUs (Philippine Social Security Labor Union) manifestation during the conference on July 27, 1989, that it is withdrawing from further participation in this (petition for certification election) case, and the Companys Manifestation filed on October 13, 1989 stating, among others, that it is voluntarily recognizing petitioner ILO as the sole and exclusive bargaining agent of its rank-and-file workers, let the Integrated Labor Organization (ILO-PHILS.) be, as it is hereby CERTIFIED as the sole and exclusive bargaining agent of the rank-and-file workers of Transunion Corporation-Glassware Division.

In its reply, petitioner argued that the monthly paid office and technical employees should have joined the existing collective bargaining unit of the rank-and-file employees if they are not manegerial employees. On April 18, 1991, the Med-Arbiter granted the petition and ordered that a certification election be conducted, viz: WHEREFORE, premises considered, the present petition filed by the Progressive Federation of Labor, for certification election among the office and technical employees of Golden Farms, Inc., is, as it is hereby, GRANTED with the following choices: 1. Progressive Federation of Labor (PFL); 2. No. union. The designated representation officer is hereby directed to call the parties to a pre-election conference to thresh out the mechanics of the election and to conduct and supervise the same within twenty (20) days from receipt by the parties of this Order. The "Masterlist of Office and Technical Employees" shall be the basis in determining the employees qualified to vote during the certification election. SO ORDERED. 2 Petitioner seasonably appealed to public respondent Secretary of Labor. On August 6, 1991, respondent Secretary of Labor issued the assailed Decision denying the appeal for lack of merit. 3 Petitioner filed a Motion for Reconsideration but the same was also denied on September 13, 1991. Thus, this petition for certiorari interposing two (2) issues. I THE CREATION OF AN ADDITIONAL BARGAINING UNIT FOR CERTAIN RANK AND FILE EMPLOYEES WILL NOT ONLY SPLIT THE EXISTING ONE BUT WILL ALSO NEGATE THE PRINCIPLE OF RES JUDICATA. II THE PROGRESSIVE FEDERATION OF LABOR BEING THE EXCLUSIVE BARGAINING AGENT OF THE SUPERVISORY EMPLOYEES IS DISQUALIFIED FROM REPRESENTING THE OFFICE AND TECHNICAL EMPLOYEES. The petition is devoid of merit. The monthly paid office and technical rank-and-file employees of petitioner Golden Farms enjoy the constitutional right to selforganization and collective bargaining. 4 A "bargaining unit" has been defined as a group of employees of a given employer, comprised of all or less than all of the entire body of employees, which the collective interest of all the employees, consistent with equity to the employer, indicate to be the best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law. 5 The community or mutuality of interest is therefore the essential criterion in the grouping. "And this is so because 'the basic test of an asserted bargaining unit's acceptability is whether or not it is fundamentally the combination which will best assure to all employees the exercise of their collective bargaining rights.' 6

In the case at bench, the evidence established that the monthly paid rank-and-file employees of petitioner primarily perform administrative or clerical work. In contradistinction, the petitioner's daily paid rankand-file employees mainly work in the cultivation of bananas in the fields. It is crystal clear the monthly paid rank-and-file employees of petitioner have very little in common with its daily paid rank-and-file employees in terms of duties and obligations, working conditions, salary rates, and skills. To be sure, the said monthly paid rank-and-file employees have even been excluded from the bargaining unit of the daily paid rank-and-file employees. This dissimilarity of interests warrants the formation of a separate and distinct bargaining unit for the monthly paid rank-and-file employees of the petitioner. To rule otherwise would deny this distinct class of employees the right to selforganization for purposes of collective bargaining. Without the shield of an organization, it will also expose them to the exploitations of management. So we held in University of the Philippines vs. FerrerCalleja, 7 where we sanctioned the formation of two (2) separate bargaining units within the establishment, viz: [T]he dichotomy of interests, the dissimilarity in the nature of the work and duties as well as in the compensation and working conditions of the academic and non-academic personnel dictate the separation of these two categories of employees for purposes of collective bargaining. The formation of two separate bargaining units, the first consisting of the rank-and-file non-academic employees, and the second, of the rank-and-file academic employees, is the set-up that will best assure to all the employees the exercise of their collective bargaining rights. Petitioner next contends that these monthly paid office and technical employees are managerial employees. They allegedly include those in the accounting and personnel department, cashier, and other employees holding positions with access to classified information. We are not persuaded. Article 212, paragraph (m) of the Labor Code, as amended, defines as managerial employee as follows: "Managerial employee" is one who is vested with power or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book. Given this definition, the monthly paid office and technical employees, accountants, and cashiers of the petitioner are not managerial employees for they do not participate in policy-making but are given cut out policies to execute and standard practices to observe. 8 In the main, the discharge of their duties does not involve the use of independent judgment. As factually found by the Med-Arbiter, to wit: A perusal of the list of the office and technical employees sought to be represented in the instant case, with their corresponding designation does not show that said Office and Technical employees exercises supervisory or managerial functions. The office believes and so hold that the employees whose names appear in the "Masterlist of Office and Technical Employees" submitted during the hearing are eligible to join/form a labor organization of their own choice. 9

Our decision in Golden Farms, Inc., vs. Honorable Pura Ferrer-Calleja, op. cit., does not pose any obstacle in holding a certification election among petitioner's monthly paid rank-and-file employees. The issue brought to fore in that case was totally different, i.e., whether or not petitioner's confidential employees, considering the nature of their work, should be included in the bargaining unit of the daily paid rankand-file employees. In the case at bench, the monthly paid rank-andfile employees of petitioner are being separated as a bargaining unit from its daily paid rank-and-file employees, on the ground that they have different interest to protect. The principle of res judicata is, therefore, inapplicable. The second assigned error which was not raised in the proceedings below must necessarily fail. The alleged error involves a question of fact which this Court cannot resolve. Petitioner submitted this contention only in its Memorandum dated February 12, 1993. 10 In this Memorandum, petitioner cited LRD Case No. OXI-UR-70 for Direct Recognition/Certification Election. But even a side glance of the cited case will reveal that it involves a petition for direct certification among the rank-and-file office and technical employees of the Golden Farms Inc., (not supervisory employees) under the House of Investment, Ladislawa Village, Buhaning, Davao City filed by the National Federation of Labor (not the respondent Progressive Federation of Labor). The averment of petitioner is baseless and its recklessness borders the contemptuous. Finally, we note that it was petitioner company that filed the motion to dismiss the petition for election. The general rule is that an employer has no standing to question a certification election since this is the sole concern of the workers. 11 Law and policy demand that employers take a strick, hands-off stance in certification elections. The bargaining representative of employees should be chosen free from any extraneous influence of management. A labor bargaining representative, to be effective, must owe its loyalty to the employees alone and to no other. WHEREFORE, the petition is DISMISSED for lack of merit. With costs against petitioner. SO ORDERED. Narvasa, C.J., Padilla, Regalado and Mendoza, JJ. concur.

10 Rollo, p. 121. 11 Philippine Telegraphic and Telephone Corp., vs. Laguesma, G.R. No. 101730, June 17, 1993, 223 SCRA 452. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. Nos. 184903 October 10, 2012

DIGITAL TELECOMMUNICATIONS PHILIPPINES, INC., Petitioner, vs. DIGITEL EMPLOYEES UNION (DEU), ARCELO RAFAEL A. ESPLANA, ALAN D. LICANDO, FELICITO C. ROMERO, JR., ARNOLD D. GONZALES, REYNEL FRANCISCO B. GARCIA, ZOSIMO B. PERALTA, REGINO T. UNIDAD and JIM L. JAVIER, Respondents. DECISION PEREZ, J.: This treats of the petition for review filed by Digital Telecommunications Philippines, Inc. (Digitel) assailing the 18 June 2008 Decision1 and 9 October 2008 Resolution of the Court of Appeals 10th Division in CA-G.R. SP No. 91719, which affirms the Order of the Secretary of Labor and Employment directing Digitel to commence Collective Bargaining Agreement (CBA) negotiations and in CA-G.R. SP No. 94825, which declares the dismissal of affected Digitel employees as illegal. The facts, as borne by the records, follow. By virtue of a certification election, Digitel Employees Union (Union) became the exclusive bargaining agent of all rank and file employees of Digitel in 1994. The Union and Digitel then commenced collective bargaining negotiations which resulted in a bargaining deadlock. The Union threatened to go on strike, but then Acting Labor Secretary Bienvenido E. Laguesma assumed jurisdiction over the dispute and eventually directed the parties to execute a CBA.2 However, no CBA was forged between Digitel and the Union. Some Union members abandoned their employment with Digitel. The Union later became dormant. Ten (10) years thereafter or on 28 September 2004, Digitel received from Arceo Rafael A. Esplana (Esplana), who identified himself as President of the Union, a letter containing the list of officers, CBA proposals and ground rules.3 The officers were respondents Esplana, Alan D. Licando (Vice-President), Felicito C. Romero, Jr. (Secretary), Arnold D. Gonzales (Treasurer), Reynel Francisco B. Garcia (Auditor), Zosimo B. Peralta (PRO), Regino T. Unidad (Sgt. at Arms), and Jim L. Javier (Sgt. at Arms). Digitel was reluctant to negotiate with the Union and demanded that the latter show compliance with the provisions of the Unions Constitution and By-laws on union membership and election of officers. On 4 November 2004, Esplana and his group filed a case for Preventive Mediation before the National Conciliation and Mediation Board based on Digitels violation of the duty to bargain. On 25 November 2004, Esplana filed a notice of strike. On 10 March 2005, then Labor Secretary Patricia A. Sto. Tomas issued an Order4 assuming jurisdiction over the labor dispute.

# Footnotes 1 Petition, Rollo, pp. 6-7. 2 Med-Arbiter's Order, Rollo, pp. 31-32. 3 Id., p. 43. 4 1987 Constitution, Article XIII, Section3. 5 University of the Philippines vs. Ferrer-Calleja, G.R. No. 96189, July 14, 1992, 211 SCRA 451; citing Rothenberg on Labor Relations, 482, cited in Fernandez & Quiazon, The Law of Labor Relations, 1963 ed., p. 281. 6 Supra., p. 467. 7 Supra., pp. 468-469. 8 Villuga vs. NLRC, G.R. No. 75038, August 23, 1993, 225 SCRA 537. 9 Rollo, pp. 30-31.

During the pendency of the controversy, Digitel Service, Inc. (Digiserv), a non-profit enterprise engaged in call center servicing, filed with the Department of Labor and Employment (DOLE) an Establishment Termination Report stating that it will cease its business operation. The closure affected at least 100 employees, 42 of whom are members of the herein respondent Union. Alleging that the affected employees are its members and in reaction to Digiservs action, Esplana and his group filed another Notice of Strike for union busting, illegal lock-out, and violation of the assumption order. On 23 May 2005, the Secretary of Labor ordered the second notice of strike subsumed by the previous Assumption Order.5 Meanwhile, on 14 March 2005, Digitel filed a petition with the Bureau of Labor Relations (BLR) seeking cancellation of the Unions registration on the following grounds: 1) failure to file the required reports from 1994-2004; 2) misrepresentation of its alleged officers; 3) membership of the Union is composed of rank and file, supervisory and managerial employees; and 4) substantial number of union members are not Digitel employees.6 In a Decision dated 11 May 2005, the Regional Director of the DOLE dismissed the petition for cancellation of union registration for lack of merit. The Regional Director ruled that it does not have jurisdiction over the issue of non-compliance with the reportorial requirements. He also held that Digitel failed to adduce substantial evidence to prove misrepresentation and the mixing of non-Digitel employees with the Union. Finally, he declared that the inclusion of supervisory and managerial employees with the rank and file employees is no longer a ground for cancellation of the Unions certificate of registration.7 The appeal filed by Digitel with the BLR was eventually dismissed for lack of merit in a Resolution dated 9 March 2007, thereby affirming the 11 May 2005 Decision of the Regional Director. CA-G.R. SP No. 91719 In an Order dated 13 July 2005, the Secretary of Labor directed Digitel to commence the CBA negotiation with the Union. Thus: WHEREFORE, all the foregoing premises considered, this Office hereby orders: 1. DIGITEL to commence collective bargaining negotiation with DEU without further delay; and, 2. The issue of unfair labor practice, consisting of union-busting, illegal termination/lockout and violation of the assumption of jurisdiction, specifically the return-to-work aspect of the 10 March 2005 and 03 June 2005 orders, be CERTIFIED for compulsory arbitration to the NLRC.8 Digitel moved for reconsideration on the contention that the pendency of the petition for cancellation of the Unions certificate of registration is a prejudicial question that should first be settled before the DOLE could order the parties to bargain collectively. On 19 August 2005, then Acting Secretary Manuel G. Imson of DOLE denied the motion for reconsideration, affirmed the 13 July 2005 Order and reiterated the order directing parties to commence collective bargaining negotiations.9 On 14 October 2005, Digitel filed a petition, docketed as CA-G.R. SP No. 91719, before the Court of Appeals assailing the 13 July and 19 August 2005 Orders of the DOLE Secretary and attributing grave abuse of discretion on the part of the DOLE Secretary for ordering Digitel to commence bargaining negotiations with the Union despite the pendency of the issue of union legitimacy. CA-G.R. SP No. 94825

In accordance with the 13 July 2005 Order of the Secretary of Labor, the unfair labor practice issue was certified for compulsory arbitration before the NLRC, which, on 31 January 2006, rendered a Decision dismissing the unfair labor practice charge against Digitel but declaring the dismissal of the 13 employees of Digiserv as illegal and ordering their reinstatement. The Union manifested that out of 42 employees, only 13 remained, as most had already accepted separation pay. The dispositive portion of the Decision reads: WHEREFORE, premises considered, the charge of unfair labor practice is hereby DISMISSED for lack of merit. However, the dismissal of the remaining thirteen (13) affected employees is hereby declared illegal and DIGITEL is hereby ORDERED to reinstate them to their former position with full backwages up to the time they are reinstated, computed as follows: x x x x.10 Upon motion for reconsideration filed by Digitel, four (4) affected employees, namely Ma. Loreta Eser, Marites Jereza, Leonore Tuliao and Aline G. Quillopras, were removed from entitlement to the awards pursuant to the deed of quitclaim and release which they all signed. 11 In view of this unfavorable decision, Digitel filed another petition on 9 June 2006 in CA-G.R. SP No. 94825 before the Court of Appeals, challenging the above NLRC Decision and Resolution and arguing mainly that Digiserv employees are not employees of Digitel. Ruling of the Court of Appeals On 18 June 2008, the Tenth Division of the Court of Appeals consolidated the two petitions in CA-G.R. SP No. 91719 and CA-G.R. SP No. 94825, and disposed as follows: WHEREFORE, the petition in CA-G.R. SP No. 91719 is DISMISSED. The July 13, 2005 Order and the August 19, 2005 Resolution of the DOLE Secretary are AFFIRMED in toto. With costs. The petition in CA-G.R. SP No. 94825 is partially GRANTED, with the effect that the assailed dispositions must be MODIFIED, as follows: 1) In addition to the order directing reinstatement and payment of full backwages to the nine (9) affected employees, Digital Telecommunications Philippines, Inc. is furthered ORDERED, should reinstatement is no longer feasible, to pay separation pay equivalent to one (1) month pay, or one-half (1/2) month pay for every year of service, whichever is higher. 2) The one hundred thousand (PhP 100,000.00) peso-fine imposed on Digital Telecommunications Philippines, Inc. is DELETED. No costs.12 The Court of Appeals upheld the Secretary of Labors Order for Digitel to commence CBA negotiations with the Union and emphasized that the pendency of a petition for the cancellation of a unions registration does not bar the holding of negotiations for a CBA. The Court of Appeals sustained the finding that Digiserv is engaged in labor-only contracting and that its employees are actually employees of Digitel. Digitel filed a motion for reconsideration but was denied in a Resolution dated 9 October 2008. Hence, this petition for review on certiorari. Digitel argues that the Court of Appeals seriously erred when it condoned the act of the Secretary of Labor in issuing an assumption order despite the pendency of an appeal on the issue of union registration. Digitel maintains that it cannot be compelled to negotiate with a union for purposes of collective bargaining when the very status of the same as the exclusive bargaining agent is in question.

Digitel insists that had the Court of Appeals considered the nature of the activities performed by Digiserv, it would reach the conclusion that Digiserv is a legitimate contractor. To bolster its claim, Digitel asserts that the affected employees are registered with the Social Security System, Pag-ibig, Bureau of Internal Revenue and Philhealth with Digiserv as their employer. Digitel further contends that assuming that the affected Digiserv employees are employees of Digitel, they were nevertheless validly dismissed on the ground of closure of a department or a part of Digitels business operation. The three issues raised in this petition are: 1) whether the Secretary of Labor erred in issuing the assumption order despite the pendency of the petition for cancellation of union registration; 2) whether Digiserv is a legitimate contractor; and 3) whether there was a valid dismissal. The pendency of a petition for cancellation of union registration does not preclude collective bargaining. The first issue raised by Digitel is not novel. It is well-settled that the pendency of a petition for cancellation of union registration does not preclude collective bargaining. The 2005 case of Capitol Medical Center, Inc. v. Hon. Trajano13 is apropos. The respondent union therein sent a letter to petitioner requesting a negotiation of their CBA. Petitioner refused to bargain and instead filed a petition for cancellation of the unions certificate of registration. Petitioners refusal to bargain forced the union to file a notice of strike. They eventually staged a strike. The Secretary of Labor assumed jurisdiction over the labor dispute and ordered all striking workers to return to work. Petitioner challenged said order by contending that its petition for cancellation of unions certificate of registration involves a prejudicial question that should first be settled before the Secretary of Labor could order the parties to bargain collectively. When the case eventually reached this Court, we agreed with the Secretary of Labor that the pendency of a petition for cancellation of union registration does not preclude collective bargaining, thus: That there is a pending cancellation proceeding against the respondent Union is not a bar to set in motion the mechanics of collective bargaining. If a certification election may still be ordered despite the pendency of a petition to cancel the unions registration certificate (National Union of Bank Employees vs. Minister of Labor, 110 SCRA 274), more so should the collective bargaining process continue despite its pendency. We must emphasize that the majority status of the respondent Union is not affected by the pendency of the Petition for Cancellation pending against it. Unless its certificate of registration and its status as the certified bargaining agent are revoked, the Hospital is, by express provision of the law, duty bound to collectively bargain with the Union.14 Trajano was reiterated in Legend International Resorts Limited v. Kilusang Manggagawa ng Legenda (KML-Independent).15 Legend International Resorts reiterated the rationale for allowing the continuation of either a CBA process or a certification election even during the pendency of proceedings for the cancellation of the unions certificate of registration. Citing the cases of Association of Court of Appeals Employees v. Ferrer- Calleja16 and Samahan ng Manggagawa sa Pacific Plastic v. Hon. Laguesma,17 it was pointed out at the time of the filing of the petition for certification election or a CBA process as in the instant case the union still had the personality to file a petition for certification or to ask for a CBA negotiation as in the present case. Digiserv is a labor-only contractor. Labor-only contracting is expressly prohibited by our labor laws. Article 106 of the Labor Code defines labor-only contracting as "supplying workers to an employer [who] does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such

person are performing activities which are directly related to the principal business of such employer." Section 5, Rule VIII-A, Book III of the Omnibus Rules Implementing the Labor Code (Implementing Rules), as amended by Department Order No. 18-02, expounds on the prohibition against labor-only contracting, thus: Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited. For this purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the following elements are present: i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or ii) The contractor does not exercise the right to control over the performance of the work of the contractual employee. The foregoing provisions shall be without prejudice to the application of Article 248 (c) of the Labor Code, as amended. xxxx The "right to control" shall refer to the right reserved to the person for whom, the services of the contractual workers are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end. The law and its implementing rules allow contracting arrangements for the performance of specific jobs, works or services. Indeed, it is management prerogative to farm out any of its activities, regardless of whether such activity is peripheral or core in nature. However, in order for such outsourcing to be valid, it must be made to an independent contractor because the current labor rules expressly prohibit labor-only contracting.18 After an exhaustive review of the records, there is no showing that first, Digiserv has substantial investment in the form of capital, equipment or tools. Under the Implementing Rules, substantial capital or investment refers to "capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work or service contracted out." The NLRC, as echoed by the Court of Appeals, did not find substantial Digiservs authorized capital stock of One Million Pesos (P 1,000,000.00). It pointed out that only Two Hundred Fifty Thousand Pesos (P 250,000.00) of the authorized capital stock had been subscribed and only Sixty-Two Thousand Five Hundred Pesos (P 62,500.00) had been paid up. There was no increase in capitalization for the last ten (10) years.19 Moreover, in the Amended Articles of Incorporation, as well as in the General Information Sheets for the years 1994, 2001 and 2005, the primary purpose of Digiserv is to provide manpower services. In PCI Automation Center, Inc. v. National Labor Relations Commission, 20 the Court made the following distinction: "the legitimate job contractor provides services while the labor-only contractor provides only manpower. The legitimate job contractor undertakes to perform a specific job for the principal employer while the labor-only contractor merely provides the personnel to work for the principal employer." The services provided by employees of Digiserv are directly related to the business of Digitel, as rationalized by the NLRC in this wise: It is undisputed that as early as March 1994, the affected employees, except for two, were already performing their job as Traffic Operator which was later renamed as Customer Service Representative (CSR).

It is equally undisputed that all throughout their employment, their function as CSR remains the same until they were terminated effective May 30, 2005. Their long period of employment as such is an indication that their job is directly related to the main business of DIGITEL which is telecommunications. Because, if it was not, DIGITEL would not have allowed them to render services as Customer Service Representative for such a long period of time.21 Furthermore, Digiserv does not exercise control over the affected employees. The NLRC highlighted the fact that Digiserv shared the same Human Resources, Accounting, Audit and Legal Departments with Digitel which manifested that it was Digitel who exercised control over the performance of the affected employees. The NLRC also relied on the letters of commendation, plaques of appreciation and certification issued by Digitel to the Customer Service Representatives as evidence of control. Considering that Digiserv has been found to be engaged in labor-only contracting, the dismissed employees are deemed employees of Digitel. Section 7 of the Implementing Rules holds that labor-only contracting would give rise to: (1) the creation of an employer-employee relationship between the principal and the employees of the contractor or sub-contractor; and (2) the solidary liability of the principal and the contractor to the employees in the event of any violation of the Labor Code. Accordingly, Digitel is considered the principal employer of respondent employees. The affected employees were illegally dismissed. In addition to finding that Digiserv is a labor-only contractor, records teem with proof that its dismissed employees are in fact employees of Digitel. The NLRC enumerated these evidences, thus: That the remaining thirteen (13) affected employees are indeed employees of DIGITEL is sufficiently established by the facts and evidence on record. It is undisputed that the remaining affected employees, except for two (2), were already hired by DIGITEL even before the existence of DIGISERV. (The other two (2) were hired after the existence of DIGISERV). The UNION submitted a sample copy of their appointment paper (Annex "A" of UNIONs Position Paper, Records, Vol. 1, p. 100) showing that they were appointed on March 1, 1994, almost three (3) months before DIGISERV came into existence on May 30, 1994 (Annex "B", Ibid, Records, Vol. 1, p. 101). On the other hand, not a single appointment paper was submitted by DIGITEL showing that these remaining affected employees were hired by DIGISERV. It is equally undisputed that the remaining, affected employees continuously held the position of Customer Service Representative, which was earlier known as Traffic Operator, from the time they were appointed on March 1, 1994 until they were terminated on May 30, 2005. The UNION alleges that these Customer Service Representatives were under the Customer Service Division of DIGITEL. The UNIONs allegation is correct. Sample of letter of commendations issued to Customer Service Representatives (Annexes "C" and "C-1" of UNIONs Position Paper, Records, p. 100 and 111) indeed show that DIGITEL has a Customer Service Division which handles its Call Center operations. Further, the Certificates issued to Customer Service Representative likewise show that they are employees of DIGITEL (Annexes "C-5", "C6" - "C-7" of UNIONs Position Paper, Records, Vol. 1, pp. 115 to 117), Take for example the "Service Award" issued to Ma. Loretta C. Esen, one of the remaining affected employees (Annex "C-5", Supra). The "Service Award" was signed by the officers of DIGITEL the VPCustomer Services Division, the VP-Human Resources Division and the Group Head-Human Resources Division. It was issued by DIGITEL

to Esen thru the above named officers "In recognition of her seven (7) years continuous and valuable contributions to the achievement of Digitels organization objectives". It cannot be gainsaid that it is only the employer that issues service award to its employees.22 (Emphasis not supplied) As a matter of fact, even before the incorporation of Digiserv, the affected employees were already employed by Digitel as Traffic Operators, later renamed as Customer Service Representatives. As an alternative argument, Digitel maintains that the affected employees were validly dismissed on the grounds of closure of Digiserv, a department within Digitel. In the recent case of Waterfront Cebu City Hotel v. Jimenez,23 we referred to the closure of a department or division of a company as retrenchment. The dismissed employees were undoubtedly retrenched with the closure of Digiserv. For a valid retrenchment, the following elements must be present: (1) That retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer; (2) That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment; (3) That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least month pay for every year of service, whichever is higher; (4) That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees right to security of tenure; and (5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status, efficiency, seniority, physical fitness, age, and financial hardship for certain workers.24 Only the first 3 elements of a valid retrenchment had been here satisfied. Indeed, it is management prerogative to close a department of the company. Digitels decision to outsource the call center operation of the company is a valid reason to close down the operations of a department under which the affected employees were employed. Digitel cited the decline in the volume of transaction of operator-assisted call services as supported by Financial Statements for the years 2003 and 2004, during which Digiserv incurred a deficit of P 163,624.00 and P164,055.00, respectively.25 All affected employees working under Digiserv were served with individual notices of termination. DOLE was likewise served with the corresponding notice. All affected employees were offered separation pay. Only 9 out of the 45 employees refused to accept the separation pay and chose to contest their dismissal before this Court. The fifth element regarding the criteria to be observed by Digitel clearly does not apply because all employees under Digiserv were dismissed. The instant case is all about the fourth element, that is, whether or not the affected employees were dismissed in good faith. We find that there was no good faith in the retrenchment. Prior to the cessation of Digiservs operations, the Secretary of Labor had issued the first assumption order to enjoin an impending strike. When Digiserv effected the dismissal of the affected employees, the Union filed another notice of strike. Significantly, the Secretary of Labor ordered that the second notice of strike be subsumed by the previous assumption order. Article 263(g) of the Labor Code provides:

When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an industry indispensable to the national interest, the Secretary of Labor and Employment may assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended or impending strike or lockout as specified in the assumption or certification order. If one has already taken place at the time of assumption or certification, all striking or locked out employees shall immediately return to work and the employer shall immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment or the Commission may seek the assistance of law enforcement agencies to ensure the compliance with this provision as well as with such orders as he may issue to enforce the same. The effects of the assumption order issued by the Secretary of Labor are two-fold. It enjoins an impending strike on the part of the employees and orders the employer to maintain the status quo. There is no doubt that Digitel defied the assumption order by abruptly closing down Digiserv. The closure of a department is not illegal per se. What makes it unlawful is when the closure is undertaken in bad faith. In St. John Colleges, Inc. v. St. John Academy Faculty and Employees Union,26 bad faith was evidenced by the timing of and reasons for the closure and the timing of and reasons for the subsequent opening. There, the collective bargaining negotiations between St. John and the Union resulted in a bargaining deadlock that led to the filing of a notice of strike. The labor dispute was referred to the Secretary of Labor who assumed jurisdiction. Pending resolution of the dispute, St. John closed the school prompting the Union to file a complaint for illegal dismissal and unfair labor practice. The Union members alleged that the closure of the high school was done in bad faith in order to get rid of the Union and render useless any decision of the SOLE on the CBA deadlocked issues. We held that closure was done to defeat the affected employees security of tenure, thus: The determination of whether SJCI acted in bad faith depends on the particular facts as established by the evidence on record. Bad faith is, after all, an inference which must be drawn from the peculiar circumstances of a case. The two decisive factors in determining whether SJCI acted in bad faith are (1) the timing of, and reasons for the closure of the high school, and (2) the timing of, and the reasons for the subsequent opening of a college and elementary department, and, ultimately, the reopening of the high school department by SJCI after only one year from its closure. Prior to the closure of the high school by SJCI, the parties agreed to refer the 1997 CBA deadlock to the SOLE for assumption of jurisdiction under Article 263 of the Labor Code. As a result, the strike ended and classes resumed. After the SOLE assumed jurisdiction, it required the parties to submit their respective position papers. However, instead of filing its position paper, SJCI closed its high school, allegedly because of the "irreconcilable differences between the school management and the Academys Union particularly the safety of our students and the financial aspect of the ongoing CBA negotiations." Thereafter, SJCI moved to dismiss the pending labor dispute with the SOLE contending that it had become moot because of the closure. Nevertheless, a year after said closure, SJCI reopened its high school and did not rehire the previously terminated employees. Under these circumstances, it is not difficult to discern that the closure was done to defeat the parties agreement to refer the labor dispute to the SOLE; to unilaterally end the bargaining deadlock; to render nugatory any decision of the SOLE; and to circumvent the Unions right to collective bargaining and its members right to security of tenure. By admitting that the closure was due to irreconcilable differences between the Union and school management, specifically, the financial aspect of the ongoing CBA negotiations, SJCI in effect admitted that it wanted to end the bargaining deadlock and eliminate the problem of dealing with the demands of the Union. This is precisely what the Labor Code abhors and punishes as unfair labor practice since the net

effect is to defeat the Unions right to collective bargaining.27 (Emphasis not supplied) As in St. John, bad faith was manifested by the timing of the closure of Digiserv and the rehiring of some employees to Interactive Technology Solutions, Inc. (I-tech), a corporate arm of Digitel. The assumption order directs employees to return to work, and the employer to reinstate the employees. The existence of the assumption order should have prompted Digitel to observe the status quo. Instead, Digitel proceeded to close down Digiserv. The Secretary of Labor had to subsume the second notice of strike in the assumption order. This order notwithstanding, Digitel proceeded to dismiss the employees. The timing of the creation of I-tech is dubious. It was incorporated on 18 January 2005 while the labor dispute within Digitel was pending. Itechs primary purpose was to provide call center/customer contact service, the same service provided by Digiserv. It conducts its business inside the Digitel office at 110 E. Rodriguez Jr. Avenue, Bagumbayan, Quezon City. The former head of Digiserv, Ms. Teresa Taniega, is also an officer of I-tech. Thus, when Digiserv was closed down, some of the employees presumably non-union members were rehired by I-tech. Thus, the closure of Digiserv pending the existence of an assumption order coupled with the creation of a new corporation performing similar functions as Digiserv leaves no iota of doubt that the target of the closure are the union member-employees. These factual circumstances prove that Digitel terminated the services of the affected employees to defeat their security of tenure. The termination of service was not a valid retrenchment; it was an illegal dismissal of employees. It needs to be mentioned too that the dismissal constitutes an unfair labor practice under Article 248(c) of the Labor Code which refers to contracting out services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their rights to self-organization. At the height of the labor dispute, occasioned by Digitels reluctance to negotiate with the Union, I-tech was formed to provide, as it did provide, the same services performed by Digiserv, the Union members nominal employer. Under Article 279 of the Labor Code, an illegally dismissed employee is entitled to backwages and reinstatement. Where reinstatement is no longer viable as an option, as in this case where Digiserv no longer exists, separation pay equivalent to one (1) month salary, or one-half (1/2) month pay for every year of service, whichever is higher, should be awarded as an alternative.28 The payment of separation pay is in addition to payment of backwages.29 Indeed, while we have found that the closure of Digiserv was undertaken in bad faith, badges thereof evident in the timing of Digiservs closure, hand in hand, with I-techs creation, the closure remains a foregone conclusion. There is no finding, and the Union makes no such assertion, that Digiserv and I-tech are one and the same corporation. The timing of Digiservs closure and I-techs ensuing creation is doubted, not the legitimacy of I-tech as a business process outsourcing corporation providing both inbound and outbound services to an expanded local and international clientele.30 The finding of unfair labor practice hinges on Digitels contracting-out certain services performed by union member-employees to interfere with, restrain or coerce them in the exercise of their right to selforganization. We have no basis to direct reinstatement of the affected employees to an ostensibly different corporation. The surrounding circumstance of the creation of I-tech point to bad faith on the part of Digitel, as well as constitutive of unfair labor practice in targeting the dismissal of the union member-employees. However, this bad faith does not contradict, much less negate, the impossibility of the employees reinstatement because Digiserv has been closed and no longer exists.

Even if it is a possibility that I-tech, as though Digitel, can absorb the dismissed union member-employees as I-tech was incorporated during the time of the controversy with the same primary purpose as Digiserv, we would be hard pressed to mandate the dismissed employees reinstatement given the lapse of more than seven (7) years. This length of time from the date the incident occurred to its Resolution31 coupled with the demonstrated litigiousness of the disputants: (1) with all sorts of allegations thrown by either party against the other; (2) the two separate filings of a notice of strike by the Union; (3) the Assumption Orders of the DOLE; (4) our own finding of unfair labor practice by Digitel in targeting the union memberemployees, abundantly show that the relationship between Digitel and the union member-employees is strained. Indeed, such discordance between the parties can very well be a necessary consequence of the protracted and branched out litigation. We adhere to the oft-quoted doctrine that separation pay may avail in lieu of reinstatement if reinstatement is no longer practical or in the best interest of the parties.32 Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust.33 Finally, an illegally dismissed employee should be awarded moral and exemplary damages as their dismissal was tainted with unfair labor practice.34 Depending on the factual milieu, jurisprudence has awarded varying amounts as moral and exemplary damages to illegally dismissed employees when the dismissal is attended by bad faith or fraud; or constitutes an act oppressive to labor; or is done in a manner contrary to good morals, good customs or public policy; or if the dismissal is effected in a wanton, oppressive or malevolent manner.351wphi1 In Nueva Ecija I Electric Cooperative, Inc. (NEECO I) Employees Association v. National Labor Relations Commission, we intoned: Unfair labor practices violate the constitutional rights of workers and employees to self-organization, are inimical to the legitimate interests of both labor and management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect; and disrupt industrial peace and hinder the promotion of healthy and stable labor-management relations. As the conscience of the government, it is the Courts sworn duty to ensure that none trifles with labor rights.36 We awarded moral damages in the amount of P 10,000.00 and likewise awarded P 5,000.00 as exemplary damages for each dismissed employee. In the recent case of Purefoods Corporation v. Nagkakaisang Samahang Manggagawa ng Purefoods Rank-and-File,37 we awarded the aggregate amount of P 500,000.00 as moral and exemplary damages to the illegally dismissed union member-employees which exact number was undetermined. In the case at hand, with the Unions manifestation that only 13 employees remain as respondents, as most had already accepted separation pay, and consistent with our finding that Digitel committed an unfair labor practice in violation of the employees constitutional right to self-organization, we deem it proper to award each of the illegally dismissed union member-employees the amount of P 10,000.00 and P 5,000.00 as moral and exemplary damages, respectively. WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 91719 isAFFIRMED, while the Decision in CA-G.R. SP No. 94825 declaring the dismissal of affected union member-employees as illegal is MODIFIED to include the payment of

moral and exemplary damages in amount of P10,000.00 and P 5,000.00, respectively, to each of the thirteen (13) illegally dismissed union-member employees. Petitioner Digital Telecommunications Philippines, Inc. is ORDERED to pay the affected employees backwages and separation pay equivalent to one (1) month salary, or one-half (1/2) month pay for every year of service, whichever is higher. Let this case be REMANDED to the Labor Arbiter for the computation of monetary claims due to the affected employees. SO ORDERED. JOSE PORTUGAL PEREZ Associate Justice WE CONCUR: ANTONIO T. CARPIO Associate Justice Chairperson ARTURO D. BRION Associate Justice MARIANO C. DEL CASTILLO Associate Justice

ESTELA M. PERLAS-BERNABE Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer or the opinion or the Court's Division. ANTONIO T. CARPIO Associate Justice Chairperson CERTIFICATION Pursuant to Section 13, Article VIII or the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer or the opinion of the Court's Division. MARIA LOURDES P.A. SERENO Chief Justice

Footnotes
1

Penned by Associate Justice Normandie B. Pizarro with Associate Justices Josefina Guevara-Salonga and Magdangal M. De Leon, concurring. Rollo, pp. 1042-1061.
2

Id. at 255-263. Id. at 62-63. Id. at 289-291. Id. at 123-124.

Id. at 271-285. Id. at 125-127. Id. at 154. Id. at 183-184. Id. at 590-594. Id. at 624-632. Id. at 1059-1060. 501 Phil. 144 (2005).

32

Velasco v. National Labor Relations Commission, 525 Phil. 749, 761 (2006).
33

Golden Ace Builders v. Talde, supra note 29 at 289-290.

34

10

Purefoods Corporation v. Nagkakaisang Samahang Manggagawa ng Puerfoods Rank-and-File, supra note 28 at 480; Quadra v. Court of Appeals, 529 Phil. 218, 224-225 (2006) citing Nueva Ecija I Electric Cooperative, Inc. (NEECO I) Employees Association v. National Labor Relations Commission, 380 Phil. 44, 57-58 (2000).
35

11

12

Woodridge School v. Pe Benito, G.R. No. 160240, 29 October 2008, 570 SCRA 164, 186.
36

13

Supra note 34 at 57-58. Supra note 28 at 481. Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

37 14

Id. at 150. G.R. No. 169754, 23 February 2011, 644 SCRA 94, 106. G.R. No. 94716, 15 November 1991, 203 SCRA 596. 334 Phil. 955 (1997).

15

16

17

G.R. No. 182018

18

October 10, 2012

Aliviado v. Procter & Gamble Phils., Inc., G.R. No. 160506, 6 June 2011, 650 SCRA 400, 412-414.
19

Rollo, p. 582. 322 Phil. 536, 550 (1996). Rollo, p. 583. Id. at 587-588. G.R. No. 174214, 13 June 2012. Id. Rollo, p. 707. 536 Phil. 631 (2006). Id. at 645-646.

20

NORKIS TRADING CORPORATION, Petitioner, vs. JOAQUIN BUENA VISTA, HENRY FABROA, RICARDO CAPE, BERTULDO TULOD, WILLY DONDOY ANO and GLEN VILLARASA, Respondents. DECISION REYES, J.: Before us is a Petition for Review on Certiorari filed by petitioner Norkis Trading Corporation (Norkis Trading) to assail the Decision1 dated May 7, 2007 and Resolution2 dated March 4, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 84041. The Facts The petition stems from an amended complaint for illegal suspension, illegal dismissal, unfair labor practice and other monetary claims filed with the National Labor Relations Commission (NLRC) by herein respondents Joaquin Buenavista (Buenavista), Henry Fabroa (Fabroa), Ricardo Cape (Cape), Bertuldo Tulod (Tulod), Willy Dondoyano (Dondoyano) and Glen Villariasa (Villariasa) against Norkis Trading and Panaghiusa sa Kauswagan Multi-Purpose Cooperative (PASAKA). The complaint was docketed as NLRC-RAB-VII Case No. 09-1402-99. During the proceedings a quo, herein respondents submitted the following averments: The respondents were hired by Norkis Trading, a domestic corporation engaged in the business of manufacturing and marketing of Yamaha motorcycles and multi-purpose vehicles, on separate dates and for various positions, particularly:

21

22

23

24

25

26

27

28

See Book VI, Rule 1, Section 4(b) of the Omnibus Rules Implementing the Labor Code; Purefoods Corporation v. Nagkakaisang Samahang Manggagawa ng Purefoods Rank-and-File, G.R. No. 150896, 28 August 2008, 563 SCRA 471, 480-481.
29

Golden Ace Builders v. Talde, G.R. No. 187200, 5 May 2010, 620 SCRA 283, 288-289 citing Macasero v. Southern Industrial Gases Philippines, G.R. No. 178524, 30 January 2009, 577 SCRA 500, 506-507.
30

See http://www.bestjobsph.com/bt-empditechsolutions.htm. (visited 2 October 2012).

31

Name Joaquin Buenavista Henry Fabroa

Date of Hiring March 14, 1994 January 5, 1993

Position Operator Welder

Panday v. National Labor Relations Commission, G.R. No. 67664, 20 May 1992, 209 SCRA 122, 126-127.

Ricardo Cape Bertuldo Tulod Willy Dondoyano Glen Villariasa

January 1993 November 13, 1994 January 1993 February 1993

Welder/Operator Welder/Assistant Operator Welder Welder3

memoranda sent to respondents Buenavista, Fabroa and Dondoyano.10 On August 16, 1999, the respondents received another set of memoranda from PASAKA, now charging them with the following violations of the cooperatives rules and regulations: (1) serious misconduct or willful disobedience of superiors instructions or orders; (2) gross and habitual neglect of duties by abandoning work without permission; (3) absences without filing leave of absence; and (4) wasting time or loitering on companys time or leaving their post temporarily without permission during office hours. 11 Copies of the memoranda12 sent to Fabroa and Cape form part of the records. On August 26, 1999, PASAKA informed the respondents of the cooperatives decision to suspend them for fifteen (15) working days, to be effective from September 1 to 21, 1999, for violation of PASAKA rules. The records include copies of the memoranda13 sent to Fabroa and Cape. The suspension prompted the respondents to file with the NLRC the complaint for illegal suspension against Norkis Trading and PASAKA. The 15-day suspension of the respondents was extended for another period of 15 days, from September 22, 1999 to October 12, 1999.14 Copies of PASAKAs separate letters15 to Buenavista, Fabroa, Cape and Dondoyano on the cooperatives decision to extend the suspension form part of the records. On October 13, 1999, the respondents were to report back to work but during the hearing in their NLRC case, they were informed by PASAKA that they would be transferred to Norkis Tradings sister company, Porta Coeli Industrial Corporation (Porta Coeli), as washers of Multicab vehicles. The respondents opposed the transfer as it would allegedly result in a change of employers, from Norkis Trading to Porta Coeli. The respondents also believed that the transfer would result in a demotion since from being skilled workers in Norkis Trading, they would be reduced to being utility workers.These circumstances made the respondents amend their complaint for illegal suspension, to include the charges of unfair labor practice, illegal dismissal, damages and attorneys fees. For their part, both Norkis Trading and PASAKA claimed that the respondents were not employees of Norkis Trading. They insisted that the respondents were members of PASAKA, which served as an independent contractor that merely supplied services to Norkis International Co., Inc. (Norkis International) pursuant to a job contract16 which PASAKA and Norkis International executed on January 14, 1999 for 121,500 pieces of F/GF-Series Reinforcement Production. After PASAKA received reports from its coordinator at Norkis International of the respondents low efficiency and violation of the cooperatives rules, and after giving said respondents the c hance to present their side, a penalty of suspension was imposed upon them by the cooperative. The illegal suspension being complained of was then not linked to the respondents employment, but to their membership with PASAKA. Norkis Trading stressed that the respondents were deployed by PASAKA to Norkis International, a company that is entirely separate and distinct from Norkis Trading. The Ruling of the Labor Arbiter On June 1, 2000, Labor Arbiter Jose G. Gutierrez (LA Gutierrez) dismissed the complaint via a Decision17 with decretal portion that reads: WHEREFORE, the foregoing premises considered, judgment is hereby rendered DISMISSING this case for lack of merit. Complainants herein respondents are however directed to report back to respondent

Although they worked for Norkis Trading as skilled workers assigned in the operation of industrial and welding machines owned and used by Norkis Trading for its business, they were not treated as regular employees by Norkis Trading. Instead, they were regarded by Norkis Trading as members of PASAKA, a cooperative organized under the Cooperative Code of the Philippines, and which was deemed an independent contractor that merely deployed the respondents to render services for Norkis Trading.4 The respondents nonetheless believed that they were regular employees of Norkis Trading, citing in their Position Paper5 the following circumstances that allegedly characterized their employment with the company: The work of the operators involves operating industrial machines, such as, press machine, hydraulic machine, and spotweld machine. On the other hand, the welders used the welding machines. The machines used by complainants herein respondents in their work are all owned by respondent Norkis Trading herein petitioner and these are installed and located in the working area of the complainants inside the companys premises. The complainants produced steel crates which are exported directly by respondent Norkis Trading to Japan. These crates are used as containers of motorcycle machines and are shipped from Japan back to respondent Norkis Trading. The materials and supplies used by complainants in their work are supplied by respondent Norkis Trading through Benjamin Gulbin, the companys Stockman, upon the request of Tirso Maslog, a Leadman also employed by respondent Norkis Trading. Respondent Norkis Trading gave instructions and supervised the work of complainants through Edwin Ponce and Kiven Alilin, who are both Leadmen, and Rico Cabanas, who is the Production Supervisor, of the former. The salaries of complainants are paid inside the premises of respondent Norkis Trading by Dalia Rojo and Belen Rubio, who are also employees of the said company assigned at the accounting office. Despite having served respondent Norkis Trading for many years and performing the same functions as regular employees, complainants were not accorded regular status. It was made to appear that complainants are not employees of said company but that of respondent PASAKA.6 Against the foregoing scenario, the respondents, together with several other complainants,7 filed on June 9, 1999 with the Department of Labor and Employment (DOLE) a complaint against Norkis Trading and PASAKA for labor-only contracting and non-payment of minimum wage and overtime pay. The complaint was docketed as LSED Case No. RO700-9906-CI-CS-168. The filing of the complaint for labor-only contracting allegedly led to the suspension of the respondents membership with PASAKA. On July 22, 1999, they were served by PASAKA with memoranda charging them with a violation of the rule against commission of acts injurious or prejudicial to the interest or welfare of the cooperative. The memoranda cited that the respondents filing of a case against Norkis Trading had greatly prejudiced the interest and welfare of the cooperative.8 In their answer9 to the memoranda, the respondents explained that they merely wanted to be recognized as regular employees of Norkis Trading. The case records include copies of the

PASAKA for work assignment within ten (10) days from receipt of this decision. Likewise, respondent PASAKA is directed to accept the complainants back for work. SO ORDERED.18 LA Gutierrez sustained the suspension imposed by PASAKA upon the respondents, taking into account the offenses that the said respondents were found to have committed. He likewise rejected the respondents claim of illegal dismissal. He ruled that to begin with, the respondents had failed to prove with convincing evidence that they were dismissed from employment. The Decision reads in part: Before the legality or illegality of a dismissal can be put in issue, the fact of dismissal itself must, first, be clearly established. In the instant case, We find that complainants herein respondents failed to prove with convincing evidence the fact that they were dismissed from employment. This observation is derived from their very own allegation in their position paper. The first paragraph of page 5 of the complainants position paper clearly shows that they were not yet dismissed from their employment. The said paragraph states: "Convinced that the company is bent on terminating their services, complainants amended their complaint to include the charges of unfair labor practice, illegal dismissal, damages and attorneys fees." The truth, as the record would show is that, complainants were only offered another post in order to save the contractual relations between their cooperative and Norkis Trading as the latter finds the complainants performance not satisfactory. The complainants took this offer as a demotion amounting to dismissal. We do not however, agree as their transfer to another post was only the best option available in order to save the contractual relations between their cooperative (PASAKA) and Norkis Trading.19 The allegation of unfair labor practice and claim for monetary awards were likewise rejected by the LA. Feeling aggrieved, the respondents appealed from the decision of the LA to the NLRC. In the meantime, DOLE Regional Director Melencio Q. Balanag (Regional Director Balanag) issued on August 22, 2000 his Order20 in LSED Case No. RO700-9906-CI-CS-168. Regional Director Balanag ruled that PASAKA was engaged in labor-only contracting.21 The other findings in his Order that are significant to this case are as follows: (1) PASAKA had failed to prove that it had substantial capital; 22 (2) the machineries, equipment and supplies used by the respondents in the performance of their duties were all owned by Norkis Trading and not by PASAKA;23 (3) the respondents membership with PASAKA as a cooperative was inconsequential to their employment with Norkis Trading;24 (4) Norkis Trading and PASAKA failed to prove that their sub-contracting arrangements were covered by any of the conditions set forth in Section 6 of Department Order No. 10, Series of 1997;25 (5) Norkis Trading and PASAKA failed to dispute the respondents claim that their work was supervised by leadmen and production supervisors of Norkis Trading;26 and (6) Norkis Trading and PASAKA failed to dispute the respondents allegation that their salaries were paid by employees of Norkis Trading.27 Norkis Trading and PASAKA were then declared solidarily liable for the monetary claims of therein complainants, as provided in the dispositive portion of Regional Director Balanags Order, to wit: WHEREFORE, respondent PANAGHIUSA SA KAUSWAGAN MULTIPURPOSE COOPERATIVEand/or NORKIS TRADING CORPORATION are hereby ORDERED to pay solidarily the amount ofTHREE HUNDRED THIRTEEN THOUSAND THREE HUNDRED FIFTY-FOUR AND 50/100 ([P]313,354.50) PESOS, Philippine Currency, within ten (10) calendar days from receipt hereof to herein complainants x x x: xxxx SO ORDERED.28

The respondents informed the NLRC of Regional Director Balanags Order by filing a Manifestation29 dated September 11, 2000, attaching thereto a copy of the Order dated August 22, 2000. It bears mentioning that Regional Director Balanags Order was later affirmed by then DOLE Secretary Patricia Sto. Tomas (Sec. Sto. Tomas) in her Orders dated February 7, 2002 and October 14, 2002.30 When the rulings of the DOLE Secretary were appealed before the CA via the petitions for certiorari docketed as CA-G.R. SP No. 73880 and CA-G.R. SP No. 74619, the CA affirmed the Orders of the DOLE Secretary.31 A motion for reconsideration of the CA decision was denied in a Resolution32 dated October 9, 2007. The two petitions docketed as G.R. Nos. 180078-79, which were brought before this Court to question the CAs rulings, were later denied with finality by this Court in the Resolutions dated December 5, 200733 and April 14, 2008.34 The Ruling of the NLRC On April 18, 2002, the NLRC rendered its Decision35 affirming with modification the decision of LA Gutierrez. It held that the respondents were not illegally suspended from work, as it was their membership in the cooperative that was suspended after they were found to have violated the cooperatives rules and regulations. It also declared that the respondents dismissal was not established by substantial evidence. The NLRC however declared that the LA had no jurisdiction over the dispute because the respondents were not employees, but members of PASAKA. The suspension of the respondents as members of PASAKA for alleged violation of the cooperatives rules and regulations was not a labor dispute, but an intra-corporate dispute.36 The complaint was also declared to have been filed against the wrong party because the respondents were found by the NLRC to have been deployed by PASAKA to Norkis International pursuant to a job contract. The dispositive portion of the NLRCs Decision reads: WHEREFORE, the Decision dated June 1, 2000 of the Labor Arbiter is AFFIRMED, with respect to the DISMISSAL of the complainants herein respondents for lack of merit [sic], but deleting the portion directing the complainants to report back to respondent PASAKA for work assignment and to accept them back to work being an internal concern of PASAKA. SO ORDERED.37 The respondents motion for reconsideration was denied by the NLRC in a Resolution38 dated December 18, 2003. Undaunted, the respondents questioned the NLRCs rulings before the CA via a petition for certiorari. The Ruling of the CA Finding merit in the petition for certiorari, the CA rendered its decision reversing and setting aside the decision and resolution of the NLRC. The dispositive portion of its Decision dated May 7, 2007 reads: WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the NLRC, are hereby REVERSED and SET ASIDE, and a new judgment is hereby rendered ordering the private respondents to: (1) Reinstate petitioners to their former positions without loss of seniority rights, and to pay full backwages inclusive of allowances and their other benefits or their monetary equivalent computed from the time of illegal dismissal to the time of actual reinstatement; and (2) Alternatively, if reinstatement is not possible, to pay full backwages inclusive of other benefits or their monetary equivalent from the time of illegal dismissal until the same is paid in full, and pay petitioners separation pay equivalent to one months salary for every year of service.

SO ORDERED.39 The CA rejected the argument of PASAKA and Norkis Trading that by virtue of a job contract executed on January 14, 1999, the respondents were deployed to Norkis International and not to Norkis Trading. The CA held: We are not convinced. Private respondents among them, herein petitioner own evidence belie their claim. In its Comment, NORKIS TRADING attached the Payroll Registers for PANAGHIUSA SA KAUSWAGAN (PASAKA) MULTIPURPOSE COOPERATIVE-NICI Tin Plate covering the payroll periods "12/28/9801/07/99" and "01/08/99-01/14/99". Included among the payees therein were the petitioners herein respondents. x x x Why were petitioners included in said payrolls for said payroll periods when the supposed Contract with NORKIS INTERNATIONAL was not yet executed? Apparently, private respondents slipped. Thus, we hold that the much ballyhooed January 14, 1999 Contract between PASAKA and NORKIS INTERNATIONAL, is but a mere afterthought, a concoction designed by private respondents to evade their obligations to petitioners.40 (Citations omitted and emphasis supplied) The CA also considered Regional Director Balanags finding in LSED Case No. RO700-9906-CI-CS-168 that PASAKA was engaged in labor-only contracting. In ruling that the respondents were illegally dismissed, the CA held that Norkis Tradings refusal to accept the respondents back to their former positions, offering them instead to accept a new assignment as washers of vehicles in its sister company, was a demotion that amounted to a constructive dismissal. Norkis Tradings motion for reconsideration was denied by the CA in its Resolution41 dated March 4, 2008. Hence, this petition. The Present Petition The petition is founded on the following grounds: 1) THE COURT OF APPEALS HAS DEPARTED FROM THE USUAL COURSE OF JUDICIAL PROCEEDINGS WHEN IT MADE ITS OWN FACTUAL FINDINGS AND DISREGARDED THE UNIFORM AND CONSISTENT FACTUAL FINDINGS OF THE LABOR ARBITER AND THE NLRC, WHICH MUST BE ACCORDED GREAT WEIGHT, RESPECT AND EVEN FINALITY. IN SO DOING, THE COURT OF APPEALS EXCEEDED ITS AUTHORITY ON CERTIORARI UNDER RULE 65 OF THE RULES OF COURT BECAUSE SUCH FACTUAL FINDINGS WERE BASED ON SPECULATIONS AND NOT ON OTHER EVIDENCES [SIC] ON RECORD. 2) THE COURT OF APPEALS HAS DETERMINED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN RULING THAT THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN ALLEGEDLY IGNORING THE RULING OF THE REGIONAL DIRECTOR. 3) THE COURT OF APPEALS HAS DETERMINED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN RULING THAT PETITIONER IS THE EMPLOYER OF RESPONDENTS. 4) THE COURT OF APPEALS HAS DETERMINED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN RULING THAT THE RESPONDENTS WERE CONSTRUCTIVELY DISMISSED CONTRARY TO THE FACTUAL FINDINGS OF THE LABOR ARBITER AND THE NLRC AND WITHOUT SHOWING ANY EVIDENCE TO OVERTURN SUCH FINDING OF FACT.42 The respondents oppose these grounds in their Comment.43 In support of their arguments, the respondents submit with their Comment copies of the CAs Decision44 and Resolution45 in CA-G.R. SP No. 73880 and CA-G.R. SP No. 74619, and this Courts Resolutions46 in G.R. Nos. 180078-79.

This Courts Ruling The Court resolves to deny the petition. Factual findings of labor officials may be examined by the courts when there is a showing that they were arrived at arbitrarily or in disregard of evidence on record. As regards the first ground, the petitioner questions the CAs reversal of LA Gutierrezs and the NLRCs rulings, and argues that said rulings should have been accorded great weight and finality by the appellate court as these were allegedly supported by substantial evidence. On this matter, the settled rule is that factual findings of labor officials, who are deemed to have acquired expertise in matters within their jurisdiction, are generally accorded not only respect but even finality by the courts when supported by substantial evidence, i.e., the amount of relevant evidence which a reasonable mind might accept as adequate to support a conclusion. We emphasize, nonetheless, that these findings are not infallible. When there is a showing that they were arrived at arbitrarily or in disregard of the evidence on record, they may be examined by the courts. The CA can then grant a petition for certiorari if it finds that the NLRC, in its assailed decision or resolution, has made a factual finding that is not supported by substantial evidence. It is within the jurisdiction of the CA, whose jurisdiction over labor cases has been expanded to review the findings of the NLRC.47 We have thus explained in Cocomangas Hotel Beach Resort v. Visca48 that the CA can take cognizance of a petition for certiorari if it finds that the NLRC committed grave abuse of discretion by capriciously, whimsically, or arbitrarily disregarding evidence which are material to or decisive of the controversy. The CA cannot make this determination without looking into the evidence presented by the parties. The appellate court needs to evaluate the materiality or significance of the evidence, which are alleged to have been capriciously, whimsically, or arbitrarily disregarded by the NLRC, in relation to all other evidence on record. This case falls within the exception to the general rule that findings of fact of labor officials are to be accorded respect and finality on appeal. As our discussions in the other grounds that are raised in this petition will demonstrate, the CA has correctly held that the NLRC has disregarded facts and evidence that are material to the outcome of the respondents case. No error can be ascribed to the appellate court for making its own assessment of the facts that are significant to the case to determine the presence or absence of grave abuse of discretion on the part of the NLRC, even if the CAs findings turn out to be different from the factual findings of both the LA and NLRC. Norkis Trading is the principal employer of the respondents, considering that PASAKA is a mere labor-only contractor. The second and third grounds, being interrelated as they both pertain to the CAs finding that an employer-employee relationship existed between the petitioner and the respondents, shall be discussed jointly. In its decision, the CA cited the findings of the Regional Director in LSED Case No. RO700-9906-CI-CS-168 and declared that the NLRC committed a grave abuse of discretion when it ignored said findings. The issue of whether or not the respondents shall be regarded as employees of the petitioner hinges mainly on the question of whether or not PASAKA is a labor-only contractor. Labor-only contracting, a prohibited act, is an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work, or service for a principal. In labor-only contracting, the following elements are present: (a) the contractor or subcontractor does not have substantial capital or investment to actually perform the job, work, or service under its own account and responsibility; and (b)

the employees recruited, supplied or placed by such contractor or subcontractor perform activities which are directly related to the main business of the principal. These differentiate it from permissible or legitimate job contracting or subcontracting, which refers to an arrangement whereby a principal agrees to put out or farm out with the contractor or subcontractor the performance or completion of a specific job, work, or service within a definite or predetermined period, regardless of whether such job, work, or service is to be performed or completed within or outside the premises of the principal. A person is considered engaged in legitimate job contracting or subcontracting if the following conditions concur: (a) the contractor carries on a distinct and independent business and partakes the contract work on his account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of his work except as to the results thereof; (b) the contractor has substantial capital or investment; and (c) the agreement between the principal and the contractor or subcontractor assures the contractual employees entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social welfare benefits.49 We emphasize that the petitioners arguments against the respondents claim that PASAKA is a labor-only contractor, which is thus to be regarded as a mere agent of Norkis Trading for which the respondents rendered service, are already mooted by the finality of this Courts Resolutions dated December 5, 2007 and April 14, 2008 in G.R. Nos. 180078-79, which stems from the CAs and the DOLE Secretarys review of the DOLE Regional Directors Order dated August 22, 2000 in LSED Case No. RO700-9906-CI-CS-168. To recapitulate, Regional Director Balanag issued on August 22, 2000 its Order50 in LSED Case No. RO700-9906-CI-CS-168 and declared PASAKA as a mere labor-only contractor, and Norkis Trading as the true employer of herein respondents. He explained that PASAKA failed to prove during the conduct of a summary investigation that the cooperative had substantial capital or investment sufficient to enable it to perform the functions of an independent contractor. The respondents claim that the machinery, equipment and supplies they used to perform their duties were owned by Norkis Trading, and not by PASAKA, was undisputed. While PASAKA reflected in its Statement of Financial Condition for the year 1996 property and equipment net of accumulated depreciation at P344,273.02, there was no showing that the properties covered thereby were actually and directly used in the conduct of PASAKAs business.51 The DOLE Regional Director explained: Herein respondents among them, herein petitioner failed to prove that their sub-contracting arrangements fall under any of the conditions set forth in Sec. 6 of D.O. # 10 S. 1997 to qualify as permissible contracting or subcontracting as provided for as follows: Sec. 6. Permissible contracting or subcontracting. Subject to conditions set forth in Sec. 4 (d) and (e) and Section 5 hereof, the principal may engage the services of a contractor or subcontractor for the performance of any of the following: a.) Works or services temporarily or occasionally needed to meet abnormal increase in the demand of products or services... b) Works or services temporarily or occasionally needed by the principal for undertakings requiring expert or highly technical personnel to improve the management or operations of an enterprise; c) Services temporarily needed for the introduction or promotion of new products...; d) Works or services not directly related or not integral to main business or operation of the principal including casual work, janitorial, security, landscaping and messengerial services and work not related to manufacturing processes in manufacturing establishments. e) Services involving the public display of manufacturers products...;

f) Specialized works involving the use of some particular, unusual or peculiar skills... and g) Unless a reliever system is in place among the regular workforce, substitute services for absent regular employees... It is therefore evident that herein respondents are engaged in "laboronly" contracting as defined in Art. 106 of the Labor Code. Furthermore, such contracting/sub-contracting arrangement not only falls under labor-only contracting but also fails to qualify as legitimate subcontracting as defined under Sec. 4 par. e of D.O. #10 S. 1997, to wit: "Sec. 4. Definition of terms. d) Subject to the provisions of Sections 6, 7 and 8 of this Rule, contracting or subcontracting shall be legitimate if the following circumstances concur: i) The contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility, according to its own manner and method, and free from the control and direction of the principal in all matters connected with the performance of the work except to the results thereof; ii) The contractor or subcontractor has substantial capital or investment; and iii) The agreement between the principal and contractor or subcontractor assures the contractual employees entitlement to all labor and occupational and safety and health standards, free exercise of the right to self-organization, security of tenure and social and welfare benefits."52 (Emphasis supplied) Together with his finding that PASAKA evidently lacked substantial capital or investment required from legitimate job contractors, Regional Director Balanag ruled that the cooperative failed to dispute the respondents allegation that officers of Norkis Trading supervised t heir work and paid their salaries. In conclusion, PASAKA and Norkis Trading were declared solidarily liable for the monetary awards made in favor of therein claimants-employees, which included herein respondents. A motion for reconsideration of the Order was denied by the Regional Director. Upon appeal, then DOLE Sec. Sto. Tomas affirmed the rulings of Regional Director Balanag. Both Norkis Trading and PASAKA filed their separate appeals from the orders of the DOLE Secretary to the CA via the petitions for certiorari docketed as CA-G.R. SP Nos. 73880 and 74619, but said petitions were dismissed for lack of merit by the CA in its Decision dated May 7, 2007 and Resolution dated October 9, 2007. The CA held: This Court agrees with the finding of the DOLE Regional Director, as affirmed by the Secretary of Labor in her assailed Order, that petitioners among them, herein petitioner were engaged in labor-only contracting. First. PASAKA failed to prove that it has substantial capitalization or investment in the form of tools, equipment, machineries, work premises, among others, to qualify as an independent contractor. PASAKAs claim that it has machineries and equipment worth P 344,273.02 as reflected in its Financial Statements and Supplementary Schedules is belied by private respondents among them, herein respondents evidence which consisted of pictures showing machineries and equipment which were owned by and located at the premises of petitioner NORKIS TRADING (as earlier noted, some of the pictures showed some of the private respondents operating said machines). Indeed it makes one wonder why, if PASAKA indeed had such machineries and equipment

worth P 344,273.02, private respondents were using machineries and equipment owned by and located at the premises of NORKIS TRADING. Even granting that indeed PASAKA had machineries and equipment worth P 344,273.02, it was not shown that said machineries and equipment were actually used in the performance or completion of the job, work, or service that it was contracted to render under its supposed job contract. xxxx Second. PASAKA likewise did not carry out an independent business from NORKIS TRADING. While PASAKA was issued its Certificate of Registration on July 18, 1991, all it could show to prove that it carried out an independent business as a job contractor were the Project Contract dated January 2, 1998 with NORKIS TRADING, and the Project Contract dated December 18, 1998 with NORKIS INTERNATIONAL. However, as earlier discussed, the Project Contract dated December 18, 1998 with NORKIS INTERNATIONAL is nothing more than an afterthought by the petitioners to confuse its workers and defeat their rightful claims. The same can be said of the Project Contract with WICKER and VINE, INC., considering that it was executed only on February 1, 2000. Verily, said contract was submitted only to strengthen PASAKAs claim that it is a legitimate job contractor. Third. Private respondents performed activities directly related to the principal business of NORKIS TRADING. They worked as welders and machine operators engaged in the production of steel crates which were sent to Japan for use as containers of motorcycles that are then sent back to NORKIS TRADING. Private respondents functions therefore are directly related and vital to NORKIS TRADINGs business of manufacturing of Yamaha motorcycles. All the foregoing considerations affirm by more than substantial evidence that NORKIS TRADING and PASAKA engaged in labor-only contracting.53 (Citations omitted and emphasis supplied) When the case was brought before this Court via the petitions for review on certiorari docketed as G.R. Nos. 180078-79, we resolved to issue on December 5, 2007 our Resolution dismissing the appeal for, among other grounds, the failure of Norkis Trading to sufficiently show any reversible error in the the CA decision. In our Resolution dated April 14, 2008, we denied with finality Norkis Tradings motion for reconsideration on the ground that no substantial argument and compelling reason was adduced to warrant a reconsideration of our dismissal of the petition. This Courts resolutions, affirming the findings of the CA, had then become final and executory. Applying the doctrine of res judicata, all matters that have been fully resolved with finality by this Courts dismissal of the appeal that stemmed from Regional Director Balanags Order dated August 22, 2000 in LSED Case No. RO700-9906-CI-CS-168 are already conclusive between the parties. Res judicata is defined as a matter adjudged; a thing judicially acted upon or decided; a thing or matter settled by judgment. Under this doctrine, an existing final judgment or decree rendered on the merits, and without fraud or collusion, by a court of competent jurisdiction, upon any matter within its jurisdiction, is conclusive of the rights of the parties or their privies, in all other actions or suits in the same or any other judicial tribunal of concurrent jurisdiction on the points and matters in issue in the first suit. To state simply, a final judgment or decree on the merits by a court of competent jurisdiction is conclusive of the rights of the parties or their privies in all later suits on all points and matters determined in the former suit.54 Res judicata has two aspects: bar by prior judgment and conclusiveness of judgment as provided under Section 47(b) and (c), Rule 39, respectively, of the Rules of Court.55 Under the doctrine of conclusiveness of judgment, facts and issues actually and directly resolved in a former suit cannot be raised in any future case between

the same parties, even if the latter suit may involve a different cause of action.56 Clearly, res judicata in the concept of conclusiveness of judgment has set in. In the proceedings before the Regional Director and the LA, there were identity of parties and identity of issues, although the causes of action in the two actions were different. First, herein respondents on the one hand, and Norkis Trading on the other hand, were all parties in the two cases, being therein complainants and respondent, respectively. As to the second requisite, the issue of whether PASAKA was a labor-only contractor which would make Norkis Trading the true employer of the respondents was the main issue in the two cases, especially since Norkis Trading had been arguing in both proceedings that it could not be regarded as the herein respondents employer, harping on the defense that PASAKA was a legitimate job contractor. Similarly, in Dole Philippines, Inc. v. Esteva,57 we held that the finding of the DOLE Regional Director, which had been affirmed by the Undersecretary of Labor, by authority of the Secretary of Labor, in an Order that has reached finality and which provided that the cooperative Cannery Multi-Purpose Cooperative (CAMPCO) was engaged in laboronly contracting should bind the NLRC in a case for illegal dismissal. We ruled: While the causes of action in the proceedings before the DOLE and the NLRC differ, they are, in fact, very closely related. The DOLE Regional Office conducted an investigation to determine whether CAMPCO was violating labor laws, particularly, those on labor-only contracting. Subsequently, it ruled that CAMPCO was indeed engaging in labor-only contracting activities, and thereafter ordered to cease and desist from doing so. x x x The matter of whether CAMPCO was a labor-only contractor was already settled and determined in the DOLE proceedings, which should be conclusive and binding upon the NLRC. What were left for the determination of the NLRC were the issues on whether there was illegal dismissal and whether respondents should be regularized. x x x For the NLRC to ignore the findings of DOLE Regional Director Parel and DOLE Undersecretary Trajano is an unmistakable and serious undermining of the DOLE officials authority.58 The rule on conclusiveness of judgment then now precludes this Court from re-opening the issues that were already settled with finality in G.R. Nos. 180078-79, which effectively affirmed the CAs findings that PASAKA was engaged in labor-only contracting, and that Norkis Trading shall be treated as the employer of the respondents. In the present petition, Norkis Trading still argues that the NLRC committed no grave abuse of discretion in ignoring the findings of Regional Director Balanag considering that his Order had not yet reached finality at the time the NLRC resolved the appeal from the decision of the LA. This notwithstanding, this Court holds that the CA still committed no error in finding grave abuse of discretion on the part of the NLRC by the latters utter disregard of the findings of the Regional Director that Norkis Trading should be considered the employer of herein respondents. As correctly observed by the CA in the assailed Decision dated May 7, 2007: Surprisingly, the NLRC failed to consider or even make reference to the said August 22, 2000 Order of the DOLE Regional Director. Considering the significance of the DOLE Regional Directors findings, the same cannot just be perfunctorily rejected. For the NLRC to ignore the findings of DOLE Regional Director is to undermine or disregard of [sic] the visitorial and enforcement power of the DOLE Secretary and his authorized representatives under Article 128 of the Labor Code, as amended. It was grave abuse of discretion then on the part of the NLRC to ignore or simply sweep under the rug the findings of the DOLE Regional Director.59 (Citation omitted and emphasis ours) A reading of the NLRCs Resolution60 dated December 18, 2003 indicates that while it was confronted with opposing findings of the Regional Director and the LA on the material issue of labor-only contracting, it failed to even attempt to review thoroughly the matter,

look into the records, reconcile the differing judgments and make its own appreciation of the evidence presented by the parties. Instead, it simply brushed aside the rulings of the Regional Director, without due consideration of the circumstance that said labor official had the jurisdiction to rule on the issue pursuant to the visitorial and enforcement powers of the DOLE Secretary and his duly authorized representatives under Article 12861 of the Labor Code. The rule in appeals in labor cases provides that the CA can grant a petition for certiorari if it finds that the NLRC, in its assailed decision or resolution, committed grave abuse of discretion by capriciously, whimsically or arbitrarily disregarding evidence which is material or decisive of the controversy.62 Significantly, the Secretary of Labor had already affirmed Regional Director Balanags Order when the appeal from the LAs rulings was resolved. In the NLRC Resolution dated December 18, 2003, the Commission nonetheless merely held: The photocopies of the Order of the Honorable Secretary of the Department of Labor and Employment dated February 7, 2002 and the Order of the Regional Director of the Regional Office of the Department of Labor and Employment finding the existence of laboronly contracting between respondent NORKIS [Trading] and respondent PASAKA do not provide sufficient basis to disturb Our Decision. We are not convinced that the facts and evidence, which are totally distinct from this case and which were presented in a separate proceedings and before another Office, would be a sufficient and valid basis to divest the Labor Arbiter a quo of his authority which undoubtedly the law vests upon him as his exclusive jurisdiction. The jurisdiction conferred by Article 217 of the Labor Code upon the Labor Arbiter is "original and exclusive", and his authority to hear and decide case[s] vested upon him is to the exclusion of any other court or quasijudicial body. By reason of their training, experience, and expertise, Labor Arbiters are in a better position to resolve controversies, for which they are conferred original and exclusive jurisdiction by law. Even Article 218 of the Labor Code does not empower the Regional Director of the Department of Labor and Employment to share original and exclusive jurisdiction conferred on the Labor Arbiter by Article 217 x x x.63 Such utter disregard by the NLRC of the findings of the Regional Director and DOLE Secretary amounts to grave abuse of discretion amounting to lack or excess of jurisdiction. As this Courts review of the records would confirm, a judicious study of the evidence presented by the parties would have supported the finding that Norkis Trading should be treated as the respondents true employer, with PASAKA being merely an agent of said employer. PASAKA failed to sufficiently show that it had substantial capital or investment in the form of tools, equipment, machineries and work premises required from legitimate job contractors. The work required from the respondents, being welders and/or operators of industrial machines, were also directly related to Norkis Tradings principal business of manufacturing. The job contract supposedly executed by and between PASAKA and Norkis International in 1999 deserved nil consideration given that the respondents had claimed early on that they began working for Norkis Trading on various dates from 1993 to 1994. Moreover, the records confirm that Norkis Trading was still among the clients of PASAKA as of July 1999, as clearly indicated in the memoranda it sent to respondents Buenavista, Fabroa and Dondoyano on July 22, 1999, which provide: Please take note that the recent action you have done in filing a case against one of our clients, Norkis Trading Co., Inc., has greatly prejudiced the interest and welfare of the Cooperative.64(Emphasis ours) This categorical statement of PASAKA that Norkis Trading was among its clients at the time the memoranda were issued only further bolsters the respondents claim, and Regional Director Balanags finding, that said respondents were deployed by PASAKA to Norkis Trading. This also contradicts petitioners argument that its contract with PASAKA had ended in 1998.65 Finally, contrary to the insinuations of Norkis Trading, the fact that PASAKA was a duly-registered cooperative did not preclude the possibility that it was engaged in labor-only contracting, as confirmed

by the findings of the Regional Director. An entity is characterized as a labor-only contractor based on the elements and guidelines established by law and jurisprudence, judging primarily on the relationship that the said entity has with the company to which the workers are deployed, and not on any special arrangement that the entity has with said workers. Termination of an employment for no just or authorized cause amounts to an illegal dismissal. As to the issue of whether the respondents were illegally dismissed by Norkis Trading, we answer in the affirmative, although not by constructive dismissal as declared by the CA, but by actual dismissal. Where an entity is declared to be a labor-only contractor, the employees supplied by said contractor to the principal employer become regular employees of the latter. Having gained regular status, the employees are entitled to security of tenure and can only be dismissed for just or authorized causes and after they had been afforded due process.66 Termination of employment without just or authorized cause and without observing procedural due process is illegal.1wphi1 In claiming that they were illegally dismissed from their employment, the respondents alleged having been informed by PASAKA that they would be transferred, upon the behest of Norkis Trading, as Multicab washers or utility workers to Porta Coeli, a sister company of Norkis Trading. Norkis Trading does not dispute that such job transfer was relayed by PASAKA unto the respondents, although the company contends that the transfer was merely an "offer" that did not constitute a dismissal. It bears mentioning, however, that the respondents were not given any other option by PASAKA and Norkis Trading but to accede to said transfer. In fact, there is no showing that Norkis Trading would still willingly accept the respondents to work for the company. Worse, it still vehemently denies that the respondents had ever worked for it. Again, all defenses of Norkis Trading that anchor on the alleged lack of employer-employee relationship between it and the respondents no longer merit any consideration, given that this Courts findings in G.R. Nos. 180078-79 have become conclusive. Thus, the respondents transfer to Porta Coeli, although relayed to the respondents by PASAKA was effectively an act of Norkis Trading. Where labor-only contracting exists, the Labor Code itself establishes an employer-employee relationship between the employer and the employees of the labor-only contractor. The statute establishes this relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer.67 No further evidence or document should then be required from the respondents to prove such fact of dismissal, especially since Norkis Trading maintains that it has no duty to admit and treat said respondents as its employees. Considering that Porta Coeli is an entity separate and distinct from Norkis Trading, the respondents employment with Norkis Trading was necessarily severed by the change in work assignment. It then did not even matter whether or not the transfer involved a demotion in the respondents rank and work functions; the intention to dismiss, and the actual dismissal of the respondents were sufficiently established. In the absence of a clear showing that the respondents dismissal was for just or authorized causes, the termination of the respondents employment was illegal. What may be reasonably deduced from the records was that Norkis Trading decided on the transfer, after the respondents had earlier filed their complaint for labor-only contracting against the company. Even Norkis Tradings contention that the transfer may be deemed a valid exercise of management prerogative is misplaced. First, the exercise of management prerogative presupposes that the transfer is only for positions within the business establishment. Second, the exercise of management prerogative by employers is not absolute, as it is limited by law and the general principles of fair play and justice.

WHEREFORE, premises considered, the petition is DENIED. SO ORDERED. BIENVENIDO L. REYES Associate Justice WE CONCUR:

13

Id. at 86-87. Id. at 73. Id. at 91-94. Id. at 106-110. Id. at 210-220. Id. at 219. Id. at 217-218. Id. at 223-239. Id. at 236. Id. at 233. Id. at 234. Id. at 235. Id. at 236. Id. at 237. Id. Id. at 238-239. Id. at 221-222. Id. at 268. Id. at 267-287. Id. at 288-289. Id. at 290-291. Id. at 292-293. Id. at 240-245. Id. at 244. Id. at 245. Id. at 246-247. Id. at 64. Id. at 60-61. Id. at 67-69. Id. at 27-28. Id. at 250-266.

14

15

16

17

MARIA LOURDES P. A. SERENO Chief Justice Chairperson TERESITA J. LEONARDO-DE CASTRO Associate Justice

18

19

LUCAS P. BERSAMIN Associate Justice

20

21

MARTIN S. VILLARAMA, JR. Associate Justice

22

CERTIFICATION
23

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. MARIA LOURDES P. A. SERENO Chief Justice

24

25

26

27

28

Footnotes
29 1

Penned by Associate Justice francisco P. Acosta, with Associate Justices Arsenio J. Magpale and Agustin S. Dizon, concurring; rollo, pp. 54-65.
2

30

31

Id. at 67-69.
32

Id. at 71.
33

Id. at 72.
34

Id. at 70-79.
35

Id. at 71-72.
36

The other complainants in LSED Case No. RO700-9906CI-CS-168 were Bernardo Tumulak, Jr., Efren Dadol, Melecio Bontuyan, Jose Ramil Suico, Constancio Layasan, Renato Montaner, Ronilo Bordario, Profil Suico and Florencio Capangpangan.
8

37

38

Rollo, p. 72. Id. at 83. Id. at 80-82. Id. at 72. Id. at 84-85.

39

40

10

41

11

42

12

43

44

Id. at 267-287. Id. at 288-289. Id. at 290-291 and 292-293.

45

46

have access to employers records and premises at any time of the day or night whenever work is being undertaken therein, and the right to copy therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of this Code and of any labor law, wage order or rules and regulations pursuant thereto. (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. An order issued by the duly authorized representative of the Secretary of Labor and Employment under this Article may be appealed to the latter. In case said order involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Secretary of Labor and Employment in the amount equivalent to the monetary award in the order appealed from. (As amended by R.A. No. 7730, June 2, 1994).
62

47

Prince Transport, Inc. v. Garcia, G.R. No. 167291, January 12, 2011, 639 SCRA 312, 325, citing Emcor Incorporated v. Sienes, G.R. No. 152101, September 8, 2009, 598 SCRA 617, 632.
48

G.R. No. 167045, August 29, 2008, 563 SCRA 705.

49

Babas v. Lorenzo Shipping Corporation, G.R. No. 186091, December 15, 2010, 638 SCRA 735, 745-746, citing Vinoya v. NLRC, 381 Phil. 460, 472-473 (2000).
50

Rollo, pp. 223-239. Id. at 234. Id. at 236-237. Id. at 283-285.

51

52

53

54

Antonio v. Sayman Vda. de Monje, G.R. No. 149624, September 29, 2010, 631 SCRA 471, 479-480, citing Agustin v. Delos Santos, G.R. No. 168139, January 20, 2009, 576 SCRA 576, 585.
55

Sec. 47. Effects of judgments or final orders. The effect of a judgment or final order rendered by a court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows: xxxx (b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto, conclusive between the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity; and (c) In any other litigation between the same parties or their successors in interest, that only is deemed to have been adjudged in a former judgment or final order which appears upon its face to have been so adjudged, or which was actually and necessarily included therein or necessary thereto.
56

AMA Computer College, Inc. v. Garcia, G.R. No. 166703, April 14, 2008, 551 SCRA 254, 270.
63

Rollo, pp. 246-247. Id. at 80-82. Id. at 103. Supra note 49, at 747.

64

65

66

67

Aliviado v. Procter and Gamble Phils., Inc., G.R. No. 160506, June 6, 2011, 650 SCRA 400, 417, citing PCI Automation Center, Inc. v. NLRC, 322 Phil. 536, 548 (1996). Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

Tan v. Court of Appeals, 415 Phil. 675, 681-682 (2001), citing Mata v. Court of Appeals, 376 Phil. 525, 540 (1999).
57

538 Phil. 817 (2006). G.R. No. 153511 July 18, 2012 Id. at 863-864. Rollo, pp. 61-62. Id. at 246-247. LEGEND HOTEL (MANILA), owned by TITANIUM CORPORATION, and/or, NELSON NAPUD, in his capacity as the President of Petitioner Corporation, Petitioner, vs. HERNANI S. REALUYO, also known as JOEY ROA, Respondent. DECISION

58

59

60

61

Art. 128. Visitorial and enforcement power. (a) The Secretary of Labor and Employment or his duly authorized representatives, including labor regulation officers, shall

BERSAMIN, J.: This labor case for illegal dismissal involves a pianist employed to perform in the restaurant of a hotel. On August 9, 1999, respondent, whose stage name was Joey R. Roa, filed a complaint for alleged unfair labor practice, constructive illegal dismissal, and the underpayment/nonpayment of his premium pay for holidays, separation pay, service incentive leave pay, and 13111 month pay. He prayed for attorney's fees, moral damages off P100,000.00 and exemplary damages for P100,000.00.1 Respondent averred that he had worked as a pianist at the Legend Hotels Tanglaw Restaurant from September 1992 with an initial rate of P400.00/night that was given to him after each nights performance; that his rate had increased to P750.00/night; and that during his employment, he could not choose the time of performance, which had been fixed from 7:00 pm to 10:00 pm for three to six times/week. He added that the Legend Hotels restaurant manager had required him to conform with the venues motif; that he had been subjected to the rules on employees representation checks and chits, a privilege granted to other employees; that on July 9, 1999, the management had notified him that as a cost-cutting measure his services as a pianist would no longer be required effective July 30, 1999; that he disputed the excuse, insisting that Legend Hotel had been lucratively operating as of the filing of his complaint; and that the loss of his employment made him bring his complaint.2 In its defense, petitioner denied the existence of an employeremployee relationship with respondent, insisting that he had been only a talent engaged to provide live music at Legend Hotels Madison Coffee Shop for three hours/day on two days each week; and stated that the economic crisis that had hit the country constrained management to dispense with his services. On December 29, 1999, the Labor Arbiter (LA) dismissed the complaint for lack of merit upon finding that the parties had no employer-employee relationship.3 The LA explained thusly: xxx On the pivotal issue of whether or not there existed an employeremployee relationship between the parties, our finding is in the negative. The finding finds support in the service contract dated September 1, 1992 xxx. xxx

Respondent appealed, but the National Labor Relations Commission (NLRC) affirmed the LA on May 31, 2001.5 Respondent assailed the decision of the NLRC in the Court of Appeals (CA) on certiorari. On February 11, 2002, the CA set aside the decision of the NLRC,6 holding: xxx Applying the above-enumerated elements of the employee-employer relationship in this case, the question to be asked is, are those elements present in this case? The answer to this question is in the affirmative. xxx Well settled is the rule that of the four (4) elements of employeremployee relationship, it is the power of control that is more decisive. In this regard, public respondent failed to take into consideration that in petitioners line of work, he was supervised and controlled by respondents restaurant manager who at certain times would require him to perform only tagalog songs or music, or wear barong tagalog to conform with Filipiniana motif of the place and the time of his performance is fixed by the respondents from 7:00 pm to 10:00 pm, three to six times a week. Petitioner could not choose the time of his performance. xxx. As to the status of petitioner, he is considered a regular employee of private respondents since the job of the petitioner was in furtherance of the restaurant business of respondent hotel. Granting that petitioner was initially a contractual employee, by the sheer length of service he had rendered for private respondents, he had been converted into a regular employee xxx. xxx xxx In other words, the dismissal was due to retrenchment in order to avoid or minimize business losses, which is recognized by law under Article 283 of the Labor Code, xxx. xxx

Even if we grant the initial non-existence of the service contract, as complainant suggests in his reply (third paragraph, page 4), the picture would not change because of the admission by complainant in his letter dated October 8, 1996 (Annex "C") that what he was receiving was talent fee and not salary. This is reinforced by the undisputed fact that complainant received his talent fee nightly, unlike the regular employees of the hotel who are paid by monthly xxx. xxx And thus, absent the power to control with respect to the means and methods by which his work was to be accomplished, there is no employer-employee relationship between the parties xxx. xxx WHEREFORE, this case must be, as it is hereby, DISMISSED for lack of merit. SO ORDERED.4

WHEREFORE, foregoing premises considered, this petition is GRANTED. xxx.7 Issues In this appeal, petitioner contends that the CA erred: I. XXX WHEN IT RULED THAT THERE IS THE EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE PETITIONER HOTEL AND RESPONDENT ROA. II. XXX IN FINDING THAT ROA IS A REGULAR EMPLOYEE AND THAT THE TERMINATION OF HIS SERVICES WAS ILLEGAL. THE CA LIKEWISE ERRED WHEN IT DECLARED THE REINSTATEMENT OF ROA TO HIS FORMER POSITION OR BE GIVEN A SEPARATION PAY EQUIVALENT TO ONE MONTH FOR EVERY YEAR OF SERVICE FROM SEPTEMBER 1999 UNTIL JULY 30, 1999 CONSIDERING THE ABSENCE OF AN EMPLOYMENT RELATIONSHIP BETWEEN THE PARTIES.

III. XXX WHEN IT DECLARED THAT ROA IS ENTITLED TO BACKWAGES, SERVICE INCENTIVE LEAVE AND OTHER BENEFITS CONSIDERING THAT THERE IS NO EMPLOYER EMPLOYEE RELATIONSHIP BETWEEN THE PARTIES. IV. XXX WHEN IT NULLIFIED THE DECISION DATED MAY 31, 2001 IN NLRC NCR CA NO. 023404-2000 OF THE NLRC AS WELL AS ITS RESOLUTION DATED JUNE 29, 2001 IN FAVOR OF HEREIN PETITIONER HOTEL WHEN HEREIN RESPONDENT ROA FAILED TO SHOW PROOF THAT THE NLRC AND THE LABOR ARBITER HAVE COMMITTED GRAVE ABUSE OF DISCRETION OR LACK OF JURISDICTION IN THEIR RESPECTIVE DECISIONS. V. XXX WHEN IT OVERLOOKED THE FACT THAT THE PETITION WHICH ROA FILED IS IMPROPER SINCE IT RAISED QUESTIONS OF FACT. VI. XXX WHEN IT GAVE DUE COURSE TO THE PETITION FILED BY ROA WHEN IT IS CLEARLY IMPROPER AND SHOULD HAVE BEEN DISMISSED OUTRIGHT CONSIDERING THAT A PETITION FOR CERTIORARI UNDER RULE 65 IS LIMITED ONLY TO QUESTIONS OR ISSUES OF GRAVE ABUSE OF DISCRETION OR LACK OF JURISDICTION COMMITTED BY THE NLRC OR THE LABOR ARBITER, WHICH ISSUES ARE NOT PRESENT IN THE CASE AT BAR. The assigned errors are divided into the procedural issue of whether or not the petition for certiorari filed in the CA was the proper recourse; and into two substantive issues, namely: (a) whether or not respondent was an employee of petitioner; and (b) if respondent was petitioners employee, whether he was validly terminated. Ruling The appeal fails. Procedural Issue: Certiorari was a proper recourse Petitioner contends that respondents petition for certiorari was improper as a remedy against the NLRC due to its raising mainly questions of fact and because it did not demonstrate that the NLRC was guilty of grave abuse of discretion. The contention is unwarranted. There is no longer any doubt that a petition for certiorari brought to assail the decision of the NLRC may raise factual issues, and the CA may then review the decision of the NLRC and pass upon such factual issues in the process. 8 The power of the CA to review factual issues in the exercise of its original jurisdiction to issue writs of certiorari is based on Section 9 of Batas Pambansa Blg. 129, which pertinently provides that the CA "shall have the power to try cases and conduct hearings, receive evidence and perform any and all acts necessary to resolve factual issues raised in cases falling within its original and appellate jurisdiction, including the power to grant and conduct new trials or further proceedings." Substantive Issue No. 1: Employer-employee relationship existed between the parties We next ascertain if the CA correctly found that an employer-employee relationship existed between the parties. The issue of whether or not an employer-employee relationship existed between petitioner and respondent is essentially a question of fact.9 The factors that determine the issue include who has the power

to select the employee, who pays the employees wages, who has the power to dismiss the employee, and who exercises control of the methods and results by which the work of the employee is accomplished.10 Although no particular form of evidence is required to prove the existence of the relationship, and any competent and relevant evidence to prove the relationship may be admitted,11 a finding that the relationship exists must nonetheless rest on substantial evidence, which is that amount of relevant evidence that a reasonable mind might accept as adequate to justify a conclusion.12 Generally, the Court does not review factual questions, primarily because the Court is not a trier of facts. However, where, like here, there is a conflict between the factual findings of the Labor Arbiter and the NLRC, on the one hand, and those of the CA, on the other hand, it becomes proper for the Court, in the exercise of its equity jurisdiction, to review and re-evaluate the factual issues and to look into the records of the case and re-examine the questioned findings.13 A review of the circumstances reveals that respondent was, indeed, petitioners employee. He was undeniably employed as a pianist in petitioners Madison Coffee Shop/Tanglaw Restaurant from September 1992 until his services were terminated on July 9, 1999. First of all, petitioner actually wielded the power of selection at the time it entered into the service contract dated September 1, 1992 with respondent. This is true, notwithstanding petitioners insistence that respondent had only offered his services to provide live music at petitioners Tanglaw Restaurant, and despite petitioners position that what had really transpired was a negotiation of his rate and time of availability. The power of selection was firmly evidenced by, among others, the express written recommendation dated January 12, 1998 by Christine Velazco, petitioners restaurant manager, for the increase of his remuneration.14 Petitioner could not seek refuge behind the service contract entered into with respondent. It is the law that defines and governs an employment relationship, whose terms are not restricted to those fixed in the written contract, for other factors, like the nature of the work the employee has been called upon to perform, are also considered. The law affords protection to an employee, and does not countenance any attempt to subvert its spirit and intent. Any stipulation in writing can be ignored when the employer utilizes the stipulation to deprive the employee of his security of tenure. The inequality that characterizes employer-employee relations generally tips the scales in favor of the employer, such that the employee is often scarcely provided real and better options.15 Secondly, petitioner argues that whatever remuneration was given to respondent were only his talent fees that were not included in the definition of wage under the Labor Code; and that such talent fees were but the consideration for the service contract entered into between them. The argument is baseless. Respondent was paid P400.00 per three hours of performance from 7:00 pm to 10:00 pm, three to six nights a week. Such rate of remuneration was later increased to P750.00 upon restaurant manager Velazcos recommendation. There is no denying that the remuneration denominated as talent fees was fixed on the basis of his talent and skill and the quality of the music he played during the hours of performance each night, taking into account the prevailing rate for similar talents in the entertainment industry.16 Respondents remuneration, albeit denominated as talent fees, was still considered as included in the term wage in the sense and context of the Labor Code, regardless of how petitioner chose to designate the remuneration. Anent this, Article 97(f) of the Labor Code clearly states: xxx wage paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is

payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered, and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee. Clearly, respondent received compensation for the services he rendered as a pianist in petitioners hotel. Petitioner cannot use the service contract to rid itself of the consequences of its employment of respondent. There is no denying that whatever amounts he received for his performance, howsoever designated by petitioner, were his wages. It is notable that under the Rules Implementing the Labor Code and as held in Tan v. Lagrama,17 every employer is required to pay his employees by means of a payroll, which should show in each case, among others, the employees rate of pay, deductions made from such pay, and the amounts actually paid to the employee. Yet, petitioner did not present the payroll of its employees to bolster its insistence of respondent not being its employee. That respondent worked for less than eight hours/day was of no consequence and did not detract from the CAs finding on the existence of the employer-employee relationship. In providing that the " normal hours of work of any employee shall not exceed eight (8) hours a day," Article 83 of the Labor Code only set a maximum of number of hours as "normal hours of work" but did not prohibit work of less than eight hours. Thirdly, the power of the employer to control the work of the employee is considered the most significant determinant of the existence of an employer-employee relationship.18 This is the so-called control test, and is premised on whether the person for whom the services are performed reserves the right to control both the end achieved and the manner and means used to achieve that end.19 Petitioner submits that it did not exercise the power of control over respondent and cites the following to buttress its submission, namely: (a) respondent could beg off from his nightly performances in the restaurant for other engagements; (b) he had the sole prerogative to play and perform any musical arrangements that he wished; (c) although petitioner, through its manager, required him to play at certain times a particular music or song, the music, songs, or arrangements, including the beat or tempo, were under his discretion, control and direction; (d) the requirement for him to wear barong Tagalog to conform with the Filipiniana motif of the venue whenever he performed was by no means evidence of control; (e) petitioner could not require him to do any other work in the restaurant or to play the piano in any other places, areas, or establishments, whether or not owned or operated by petitioner, during the three hour period from 7:00 pm to 10:00 pm, three to six times a week; and (f) respondent could not be required to sing, dance or play another musical instrument. A review of the records shows, however, that respondent performed his work as a pianist under petitioners supervision and control. Specifically, petitioners control of both the end achieved and the manner and means used to achieve that end was demonstrated by the following, to wit: a. He could not choose the time of his performance, which petitioners had fixed from 7:00 pm to 10:00 pm, three to six times a week; b. He could not choose the place of his performance; c. The restaurants manager required him at certain times to perform only Tagalog songs or music, or to wear barong Tagalog to conform to the Filipiniana motif; and d. He was subjected to the rules on employees representation check and chits, a privilege granted to other employees.

Relevantly, it is worth remembering that the employer need not actually supervise the performance of duties by the employee, for it sufficed that the employer has the right to wield that power. Lastly, petitioner claims that it had no power to dismiss respondent due to his not being even subject to its Code of Discipline, and that the power to terminate the working relationship was mutually vested in the parties, in that either party might terminate at will, with or without cause. The claim is contrary to the records. Indeed, the memorandum informing respondent of the discontinuance of his service because of the present business or financial condition of petitioner20 showed that the latter had the power to dismiss him from employment.21 Substantive Issue No. 2: Validity of the Termination Having established that respondent was an employee whom petitioner terminated to prevent losses, the conclusion that his termination was by reason of retrenchment due to an authorized cause under the Labor Code is inevitable. Retrenchment is one of the authorized causes for the dismissal of employees recognized by the Labor Code. It is a management prerogative resorted to by employers to avoid or to minimize business losses. On this matter, Article 283 of the Labor Code states: Article 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. xxx. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. The Court has laid down the following standards that an employer should meet to justify retrenchment and to foil abuse, namely: (a) The expected losses should be substantial and not merely de minimis in extent; (b) The substantial losses apprehended must be reasonably imminent; (c) The retrenchment must be reasonably necessary and likely to effectively prevent the expected losses; and (d) The alleged losses, if already incurred, and the expected imminent losses sought to be forestalled must be proved by sufficient and convincing evidence.22 Anent the last standard of sufficient and convincing evidence, it ought to be pointed out that a less exacting standard of proof would render too easy the abuse of retrenchment as a ground for termination of services of employees.23 Was the retrenchment of respondent valid? In termination cases, the burden of proving that the dismissal was for a valid or authorized cause rests upon the employer. Here, petitioner did not submit evidence of the losses to its business operations and the

economic havoc it would thereby imminently sustain. It only claimed that respondents termination was due to its "present business/financial condition." This bare statement fell short of the norm to show a valid retrenchment. Hence, we hold that there was no valid cause for the retrenchment of respondent. Indeed, not every loss incurred or expected to be incurred by an employer can justify retrenchment.1wphi1 The employer must prove, among others, that the losses are substantial and that the retrenchment is reasonably necessary to avert such losses. Thus, by its failure to present sufficient and convincing evidence to prove that retrenchment was necessary, respondents termination due to retrenchment is not allowed. The Court realizes that the lapse of time since the retrenchment might have rendered respondent's reinstatement to his former job no longer feasible. If that should be true, then petitioner should instead pay to him separation pay at the rate of one. month pay for every year of service computed from September 1992 (when he commenced to work for the petitioners) until the finality of this decision, and full backwages from the time his compensation was withheld until the finality of this decision. WHEREFORE, we DENY the petition for review on certiorari, and AFFIRM the decision of the Court of Appeals promulgated on February 11, 2002, subject to the modification that should reinstatement be no longer feasible, petitioner shall pay to respondent separation pay of one month for every year of service computed from September 1992 until the finality of this decision, and full backwages from the time his compensation was withheld until the finality of this decision. Costs of suit to be paid by the petitioners. SO ORDERED. LUCAS P. BERSAMIN Associate justice Acting Chairperson, First Division WE CONCUR: MARIANO C. DEL CASTILLO Associate justice ROBERTO A. ABAD* Associate Justice MARTIN S. VILLARAMA, JR. Associate Justice

ANTONIO T. CARPIO Senior Associate Justice (Per Section 12 R.A. 296, The Judiciary Act of 1948, as amended)

Footnotes
*

Vice Justice Teresita J. Leonardo-De Castro, who is on wellness leave, per Special Order No. 1252 issued on July 12, 2012.
1

Rollo. p. 45. Id. at 53-54. Id. at 53-58. Id. at 55-58. Id. at 60-64.

Id. at 67-77; penned by Associate Justice Mercedes GozoDadole (retired), with Associate Justice Salvador J. Valdez, Jr. (retired/deceased) and Associate Justice Juan Q. Enriquez, Jr. (retired) concurring.
7

Id. at 71-76.

Leonardo v. Court of Appeals, G.R. No. 152459, June 15, 2006, 490 SCRA 691, 697; St. Martin Funeral Homes v. NLRC, G.R. No. 130866, September 16, 1998, 295 SCRA 494, 502.
9

Lopez v. Bodega City, G.R. No. 155731, September 3, 2007, 532 SCRA 56, 64; Manila Water Company, Inc. v. Pea, G.R. No. 158255, July 8, 2004, 434 SCRA 53, 58.
10

Leonardo v. Court of Appeals, supra, note 8, p. 700.

11

Opulencia Ice Plant and Storage v. NLRC, G.R. No. 98368, December 15, 1993, 228 SCRA 473, 478.
12

ESTELA M. PERLAS-BERNABE Associate justice ATTESTATION

Section 5, Rule 133, Rules of Court; Peoples Broadcasting (Bombo Radyo Phils., Inc.) v. Secretary of the Department of Labor and Employment, G.R. No. 179652, May 8, 2009, 587 SCRA 724, 753.
13

l attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. LUCAS P. BERSAMIN Associate justice Acting Chairperson, First Division CERTIFICATION Pursuant to Section 13, Article VII of the Constitution and the Division Acting Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division.

Lopez v. Bodega City, supra, p. 64; Manila Water Company, Inc. v. Pena, supra, pp. 58-59; Tiu v. Pasaol, Sr., G.R. No. 139876, April 30, 2003, 402 SCRA 312, 319.
14

Rollo, p. 47.

15

Paguio v. National Labor Relations Commission, G.R. No. 147816, May 9, 2003, 403 SCRA 190, 198.
16

Rollo, p. 14. G.R. No. 151228, August 15, 2002, 387 SCRA 393.

17

18

Coca Cola Bottlers Phils., Inc. v. NLRC, G.R. No. 120466, May 17, 1999, 307 SCRA 131, 139.
19

Leonardo v. Court of Appeals, supra, note 8, p. 700.

20

Rollo, p. 46.

21

Television and Production Exponents, Inc. v. Servaa, G.R. No. 167648, January 28, 2008, 542 SCRA 578, 587.
22

Oriental Petroleum and Minerals Corporation v. Fuentes, G.R. No. 151818, October 14, 2005, 473 SCRA 106, 115; Anino v. National Labor Relations Commission, G.R. No. 123226, May 21, 1998, 290 SCRA 489, 502.
23

Harbutt shouted at him for having participated in the formation of a union. He was later dismissed from work. For his part, Gonzales averred that he was coerced to resign by Percy and Harbutt in the presence of their goons. Badilla10 claimed that she was also forced by Percy and Harbutt to sign a resignation letter, but she refused to do so because she was innocent of the charges against her. She was nevertheless dismissed from service. The three (3) respondents averred that they never received the memoranda containing their alleged violation of company rules and they argued that these memoranda were fabricated to give a semblance of cause to their termination. Soriano and Gonzales further claimed that the complaint filed against them was only an afterthought as the same was filed after petitioners learned that a complaint for illegal dismissal was already instituted against them. On September 27, 1998, the LA rendered a Decision11 finding that respondents were illegally dismissed because the alleged violations they were charged with were not reduced in writing and were not made known to them, thus, denying them due process. The LA found that respondents did not actually receive the memoranda allegedly issued by petitioners, and that the same were mere afterthought to conceal the illegal dismissal. The dispositive portion of the Decision reads: WHEREFORE, premises all considered, respondents (petitioners herein) are hereby ordered, jointly and severally: a. To reinstate within ten (10) days herein complainants to their former positions without loss of seniority rights with full backwages from actual dismissal to actual reinstatement; b. To declare the respondents (petitioners herein) guilty of unfair labor practice for terminating complainants due to their union activities, which is union-busting, and to pay a fine of Ten Thousand Pesos (P 10,000.00) pursuant to Article 288 of the Labor Code, as amended, payable to the Commission; c. To pay the amount of One Hundred Fifty Thousand [Pesos] (P 150,000.00) each to complainants by way of moral and exemplary damages, plus ten percent (10%) attorney's fees of the total award, chargeable to the respondents (petitioners herein). SO ORDERED.12 Unsatisfied with the LA's decision, petitioners appealed to the National Labor Relations Commission (NLRC). On August 31, 1999, the NLRC, First Division, rendered a Decision13 remanding the case to the arbitration branch of origin for further proceedings.14 On August 3, 2000, the LA rendered a new Decision, the dispositive portion of which reads as follows: WHEREFORE, premises all considered, respondents (petitioners herein) are hereby ORDERED, jointly and severally: a. to reinstate within ten (10) days herein three (3) complainants to their former positions without loss of seniority rights with full backwages from actual dismissal to actual reinstatement; to pay complainant Soriano his unpaid wages for seven (7) days in the amount of P 1,680.00, his five (5) days incentive leave pay in the amount of P 1,200,00 (P 240x5), unpaid proportionate 13th month pay in the amount of P 4,992.00, plus other benefits; b. to cease and desist from committing unfair labor practice against the complainant and to pay a fine of Ten Thousand (P 10,000.00) Pesos pursuant to Art. 288 of the Labor Code, payable to the Commission; and c. to pay the amount of P 150,000.0015 each to the complainants by way of moral and exemplary damages, plus

Oriental Petroleum and Minerals Corporation v. Fuentes, supra, pp. 115-116. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 171118 September 10, 2012

PARK HOTEL, J's PLAYHOUSE BURGOS CORP., INC., and/or GREGG HARBUTT, General Manager, ATTY. ROBERTO ENRIQUEZ, President, and BILL PERCY, Petitioners, vs. MANOLO SORIANO, LESTER GONZALES, and YOLANDA BADILLA, Respondents. DECISION PERALTA, J.: Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to set aside the Decision1 and the Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 67766. The antecedents are as follows: Petitioner Park Hotel3 is a corporation engaged in the hotel business. Petitioners Gregg Harbutt4 (Harbutt) and Bill Percy5 (Percy) are the General Manager and owner, respectively, of Park Hotel. Percy, Harbutt and Atty. Roberto Enriquez are also the officers and stockholders of Burgos Corporation (Burgos),6 a sister company of Park Hotel. Respondent Manolo Soriano (Soriano) was hired by Park Hotel in July 1990 as Maintenance Electrician, and then transferred to Burgos in 1992. Respondent Lester Gonzales (Gonzales) was employed by Burgos as Doorman, and later promoted as Supervisor. Respondent Yolanda Badilla (Badilla) was a bartender of J's Playhouse operated by Burgos. In October of 1997, Soriano, Gonzales and Badilla7 were dismissed from work for allegedly stealing company properties. As a result, respondents filed complaints for illegal dismissal, unfair labor practice, and payment of moral and exemplary damages and attorney's fees, before the Labor Arbiter (LA). In their complaints, respondents alleged that the real reason for their dismissal was that they were organizing a union for the company's employees. On the other hand, petitioners alleged that aside from the charge of theft, Soriano and Gonzales have violated various company rules and regulations8 contained in several memoranda issued to them. After dismissing respondents, Burgos filed a case for qualified theft against Soriano and Gonzales before the Makati City Prosecutor's Office, but the case was dismissed for insufficiency of evidence. In his Affidavit,9 Soriano claimed that on October 4, 1997, he was barred from entering the company premises and that the following day,

ten percent (10%) attorney's fees of the total award, chargeable to the respondents (petitioners herein). SO ORDERED.16 Discontented with the LA's decision, petitioners again appealed to the NLRC. On February 1, 2001, the NLRC affirmed the LA's decision and dismissed the appeal for lack of merit.17 Petitioners filed a motion for reconsideration, but it was denied for lack of merit.18 Undaunted, Park Hotel, Percy, and Harbutt filed a petition for certiorari with the CA ascribing grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the NLRC in holding Park Hotel, Harbutt and Percy jointly and severally liable to respondents. On January 24, 2005, the CA rendered a Decision19 dismissing the petition and affirming with modification the ruling of the NLRC, the dispositive portion of which states: WHEREFORE, the instant Petition is DISMISSED for lack of merit and the assailed Decision dated 1 February 2001 of the 1st Division of the NLRC is hereby AFFIRMED with MODIFICATION in that the award of damages is reduced to P 100,000.00 in favor of each of the Private Respondents, including 10% of the total amount of wages to be received as attorney's fees. SO ORDERED.20 The CA ruled that petitioners failed to observe the mandatory requirements provided by law in the conduct of terminating respondents, i.e., lack of due process and just cause. The CA also found that petitioners' primary objective in terminating respondents' employment was to suppress their right to self-organization. Petitioners filed a Motion for Reconsideration, but was denied in the Resolution21 dated January 13, 2006. Hence, the instant petition assigning the following errors: I THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND ACTED WITHOUT AUTHORITY IN FINDING PARK HOTEL, BILL PERCY AND [GREGORY] HARBUTT, TOGETHER WITH BURGOS CORPORATION AND ITS PRESIDENT, AS ONE AND THE SAME ENTITY. II THE HONORABLE COURT OF APPEALS COMMITTED ERROR WHEN IT OVERLOOKED MATERIAL CIRCUMSTANCES AND FACTS, WHICH IF TAKEN INTO ACCOUNT, WOULD ALTER THE RESULTS OF ITS DECISION, PARTICULARLY IN FINDING [THAT] THE SAID ENTITIES WERE FORMED IN PURSUANCE TO THE COMMISSION OF FRAUD. III THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND ACTED WITHOUT AUTHORITY IN FINDING PARK HOTEL, BILL PERCY AND GREGORY HARBUTT, TOGETHER WITH BURGOS CORPORATION AND ITS PRESIDENT, GUILTY OF UNFAIR LABOR PRACTICE.22 For brevity and clarity, the issues in this case may be re-stated and simplified as follows: (1) whether the respondents were validly

dismissed; and (2) if petitioners are liable, whether Park Hotel, Percy and Harbutt are jointly and severally liable with Burgos for the dismissal of respondents. Park Hotel argued that it is not liable on the ground that respondents were not its employees. On the other hand, Percy and Harbutt argued that the CA committed error in piercing the corporate veil between them and respondent corporations, thereby making them all solidarily liable to the respondents. To begin with, it is significant to note that the LA, the NLRC and the CA were unanimous in their findings that respondents were dismissed without just cause and due process. They were also in agreement that unfair labor practice was committed against respondents. We reiterate the rule that findings of fact of the Court of Appeals, particularly where it is in absolute agreement with that of the NLRC and the LA, as in this case, are accorded not only respect but even finality and are deemed binding upon this Court so long as they are supported by substantial evidence.23 The function of this Court is limited to the review of the appellate courts alleged errors of law. It is not required to weigh all over again the factual evidence already considered in the proceedings below.24In any event, we found no compelling reason to disturb the unanimous findings and conclusions of the CA, the NLRC and the LA with respect to the finding of illegal dismissal. The requisites for a valid dismissal are: (a) the employee must be afforded due process, i.e., he must be given an opportunity to be heard and defend himself; and (b) the dismissal must be for a valid cause as provided in Article 282 of the Labor Code, or for any of the authorized causes under Articles 283 and 284 of the same Code. 25 In the case before us, both elements are completely lacking. Respondents were dismissed without any just or authorized cause and without being given the opportunity to be heard and defend themselves. The law mandates that the burden of proving the validity of the termination of employment rests with the employer. Failure to discharge this evidentiary burden would necessarily mean that the dismissal was not justified and, therefore, illegal. Unsubstantiated suspicions, accusations, and conclusions of employers do not provide for legal justification for dismissing employees. In case of doubt, such cases should be resolved in favor of labor, pursuant to the social justice policy of labor laws and the Constitution.26 Anent the unfair labor practice, Article 248 (a) of the Labor Code27 considers it an unfair labor practice when an employer interferes, restrains or coerces employees in the exercise of their right to self-organization or the right to form an association.28 In order to show that the employer committed unfair labor practice under the Labor Code, substantial evidence is required to support the claim. Substantial evidence has been defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.29 In the case at bar, respondents were indeed unceremoniously dismissed from work by reason of their intent to form and organize a union. As found by the LA: The immediate impulse of respondents (petitioners herein), as in the case at bar, was to terminate the organizers. Respondents (petitioners herein) have to cripple the union at sight, to frustrate attempts of employees from joining or supporting it, preventing them, at all cost and to frustrate the employees bid to exercise their right to self organization. x x x30 Having settled that respondents were illegally dismissed and were victims of unfair labor practice, the question that comes to fore is who are liable for the illegal dismissal and unfair labor practice? A perusal of the records would show that Burgos is the respondents' employer at the time they were dismissed. Notwithstanding, the CA held that despite Soriano's transfer to Burgos in 1992, he was still an employee of Park Hotel at the time of his dismissal in 1997. The Court, however, rules that the CA's finding is clearly contrary to the evidence presented. From the documents presented by Soriano, it appears that Soriano's payroll passbook31contained withdrawals and deposits, made in 1991, and that Soriano's payslip32 issued by Park Hotel covered the period from September to October 1990. Hence, these documents

merely show that Soriano was employed by Park Hotel before he was transferred to Burgos in 1992. Nowhere in these documents does it state that Soriano continued to work for Park Hotel in 1992 and onwards. Clearly therefore, Park Hotel cannot be made liable for illegal dismissal as it no longer had Soriano in its employ at the time he was dismissed from work. As to whether Park Hotel may be held solidarily liable with Burgos, the Court rules that before a corporation can be held accountable for the corporate liabilities of another, the veil of corporate fiction must first be pierced.33 Thus, before Park Hotel can be held answerable for the obligations of Burgos to its employees, it must be sufficiently established that the two companies are actually a single corporate entity, such that the liability of one is the liability of the other. 34 A corporation is an artificial being invested by law with a personality separate and distinct from that of its stockholders and from that of other corporations to which it may be connected.35 While a corporation may exist for any lawful purpose, the law will regard it as an association of persons or, in case of two corporations, merge them into one, when its corporate legal entity is used as a cloak for fraud or illegality. This is the doctrine of piercing the veil of corporate fiction. The doctrine applies only when such corporate fiction is used to defeat public convenience, justify wrong, protect fraud, or defend crime, or when it is made as a shield to confuse the legitimate issues, or where a corporation is the mere alter ego or business conduit of a person, or where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation.36 To disregard the separate juridical personality of a corporation, the wrongdoing must be established clearly and convincingly. It cannot be presumed.37 In the case at bar, respondents utterly failed to prove by competent evidence that Park Hotel was a mere instrumentality, agency, conduit or adjunct of Burgos, or that its separate corporate veil had been used to cover any fraud or illegality committed by Burgos against the respondents. Accordingly, Park Hotel and Burgos cannot be considered as one and the same entity, and Park Hotel cannot be held solidary liable with Burgos. Nonetheless, although the corporate veil between Park Hotel and Burgos cannot be pierced, it does not necessarily mean that Percy and Harbutt are exempt from liability towards respondents. Verily, a corporation, being a juridical entity, may act only through its directors, officers and employees. Obligations incurred by them, while acting as corporate agents, are not their personal liability but the direct accountability of the corporation they represent.38 However, corporate officers may be deemed solidarily liable with the corporation for the termination of employees if they acted with malice or bad faith. 39 In the present case, the lower tribunals unanimously found that Percy and Harbutt, in their capacity as corporate officers of Burgos, acted maliciously in terminating the services of respondents without any valid ground and in order to suppress their right to self-organization. Section 3140 of the Corporation Code makes a director personally liable for corporate debts if he willfully and knowingly votes for or assents to patently unlawful acts of the corporation. It also makes a director personally liable if he is guilty of gross negligence or bad faith in directing the affairs of the corporation.1wphi1 Thus, Percy and Harbutt, having acted in bad faith in directing the affairs of Burgos, are jointly and severally liable with the latter for respondents' dismissal. In cases when an employee is unjustly dismissed from work, he shall be entitled to reinstatement without loss of seniority rights and other privileges, inclusive of allowances, and other benefits or their monetary equivalent from the time the compensation was withheld up to the time of actual reinstatement.41 In the case at bar, the Court finds that it would be best to award separation pay instead of reinstatement, in view of the passage of a long period of time since respondents' dismissal. In St. Luke's Medical Center, Inc. v. Notario,42the Court held that if reinstatement proves impracticable, and hardly in the best interest of the parties, due to the

lapse of time since the employee's dismissal, the latter should be awarded separation pay in lieu of reinstatement. In view of the foregoing, respondents are entitled to the payment of full backwages, inclusive of allowances, and other benefits or their monetary equivalent, and separation pay in lieu of reinstatement equivalent to one month salary for every year of service.43 The awards of separation pay and backwages are not mutually exclusive, and both may be given to respondents.44 The awards of moral and exemplary damages45 in favor of respondents are also in order. Moral damages may be recovered where the dismissal of the employee was tainted by bad faith or fraud, or where it constituted an act oppressive to labor, and done in a manner contrary to morals, good customs or public policy, while exemplary damages are recoverable only if the dismissal was done in a wanton, oppressive, or malevolent manner.46 The grant of attorney's fees is likewise proper. Attorney's fees may likewise be awarded to respondents who were illegally dismissed in bad faith and were compelled to litigate or incur expenses to protect their rights by reason of the oppressive acts47 of petitioners. The unjustified act of petitioners had obviously compelled respondents to institute an action primarily to protect their rights and interests which warrants the granting of the award. WHEREFORE, the Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 67766, dated January 24, 2005 and January 13, 2006, respectively, are AFFIRMED with the following MODIFICATIONS: (a) Petitioner Park Hotel is exonerated from any liability to respondents; and (b) The award of reinstatement is deleted, and in lieu thereof, respondents are awarded separation pay. The case is REMANDED to the Labor Arbiter for the purpose of computing respondents' full backwages, inclusive of allowances, and other benefits or their monetary equivalent, computed from the date of their dismissal up to the finality of the decision, and separation pay in lieu of reinstatement equivalent to one month salary for every year of service, computed from the time of their engagement up to the finality of this Decision. SO ORDERED: DIOSDADO M. PERALTA Associate Justice WE CONCUR: PRESBITERO J. VELASCO, JR. Associate Justice Chairperson ROBERTO A. ABAD Associate Justice JOSE PORTUGAL PEREZ* Associate Justice

JOSE CATRAL MENDOZA Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. PRESBITERO J. VELASCO, JR. Associate Justice Chairperson, Third Division CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. MARIA LOURDES P.A. SERENO Chief Justice

16

CA rollo, pp. 161-174. Rollo, pp. 233-234. Resolution dated August 15, 2001, id. at 262. Rollo, pp. 12-26. Id. at 26. Id. at 10. Id. at 37.

17

18

19

20

Footnotes
*

21

Designated Acting Member, per Special Order No. 1299 dated August 28, 2012.
1

22

23

Penned by Associate Justice Noel G. Tijam, with Associate Justices Jose L. Sabio, Jr. and Edgardo P. Cruz, concurring; rolla, pp. 12-26.
2

Hantex Trading Co., Inc. v. Court of Appeals, 438 Phil. 737, 743 (2002).
24

Quezon City Government v. Dacara, 460 SCRA 243, 251 (2005).

25

Id. at 10. Estacio v. Pampanga I Electric Cooperative, Inc., G.R. No. 183196, August 19, 2009, 596 SCRA 542, 563-564.
26

Represented in this case by Mr. William Victor Percy, per Secretary's Certificate dated February 2, 2006,rollo, p. 8.
4

Whose complete name is Gregory Robert Harbutt. Whose complete name is William Victor Percy.

Times Transportation Co., Inc. v. National Labor Relations Commission, G.R. Nos. 148500-01, November 29, 2006, 508 SCRA 435, 443.
27

Represented in this case by Mr. William Victor Percy, per Secretary's Certificate dated February 2, 2006,rollo, p. 8.
7

Article 248. UNFAIR LABOR PRACTICE It shall be unlawful for an employer to commit any of the following unfair labor practices: (a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization; x x x.
28

Gonzales and Badilla were dismissed on October 2, 1997 and Soriano was dismissed on October 6, 1997.
8

Standard Chartered Bank Employees Union v. Hon. Confesor, 476 Phil. 346, 367 (2004).
29

Soriano's alleged violations include: (1) dereliction of duties, (2) loitering during work time, (3) taking unscheduled day-off, (4) persistently absenting himself without leave, (5) arriving late and leaving early, and (6) leaving the work premises to buy something not in relation to his duties. With respect to Gonzales, his alleged infractions include: (1) drinking while on duty, (2) switching his day-off without the company's consent, (3) using the store house for immoral purposes, (4) having his time record punched in and out by others to cover his absences, and (5) general neglect of duties.
9

Id. LA decision dated August 3, 2000, CA rollo, p. 171.

30

31

With an indication that the addressee is Park Hotel. (CA rollo, p. 225.)
32

CA rollo, p. 226.

CA rollo, pp. 69-70.

33

Siemens Philippines, Inc. v. Domingo, G.R. No. 150488, July 28, 2008, 560 SCRA 86, 99.
34

10

Who allegedly: (1) misrepresented her time of arrival at work, (2) changed her day-off without the knowledge of her supervisors, and (3) stole the company's table cloth.
11

Id.

35

Rollo, pp. 110-119. Id. at 119. Id. at 138-142.

McLeod v. National Labor Relations Commission, G.R. No. 146667, January 23, 2007, 512 SCRA 222, 245.
36

12

Id. at 246. Lim v. Court of Appeals, 380 Phil. 60, 77 (2000).

13

37

14

The NLRC ruled that there was no substantial evidence to support either the charge of theft against respondents or the LA's conclusion that petitioners are guilty of union-busting. The NLRC likewise required additional facts to be pleaded to justify the grant of moral and exemplary damages being claimed by respondents.
15

38

Siemens Philippines, Inc. v. Domingo, supra note 33 at 100.

39

Id.

40

Broken down as follows: P 100,000.00 as moral damages and P 50,000.00 as exemplary damages. (Rollo, p. 173.)

Sec. 31. Liability of directors, trustees or officers. Directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts of the corporation or who are

guilty of gross negligence or bad faith in directing the affairs of the corporation or acquire any personal or pecuniary interest in conflict with their duty as such directors or trustees shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders or members and other persons. xxxx
41

On July 3, 2000, the initial conference was held where the Union clarified the issues cited in the NOS. On July 5, 2000, the Union held its strike vote balloting where the members voted in favor of a strike. On July 10, 2000, Bankard asked the Office of the Secretary of Labor to assume jurisdiction over the labor dispute or to certify the same to the NLRC for compulsory arbitration. On July 12, 2000, Secretary Bienvenido Laguesma (Labor Secretary) of the Department of Labor and Employment (DOLE) issued the order certifying the labor dispute to the NLRC.6 On July 25, 2000, the Union declared a CBA bargaining deadlock. The following day, the Union filed its second NOS, docketed as NS-07-26500,7 alleging bargaining in bad faith on the part of Bankard. Bankard then again asked the Office of the Secretary of Labor to assume jurisdiction, which was granted. Thus, the Order, dated August 9, 2000, certifying the labor dispute to the NLRC, was issued.8 The Union, despite the two certification orders issued by the Labor Secretary enjoining them from conducting a strike or lockout and from committing any act that would exacerbate the situation, went on strike on August 11, 2000.9 During the conciliatory conferences, the parties failed to amicably settle their dispute. Consequently, they were asked to submit their respective position papers. Both agreed to the following issues: 1. Whether job contractualization or outsourcing or contracting-out is an unfair labor practice on the part of the management. 2. Whether there was bad faith on the part of the management when it bargained with the Union.10 As regards the first issue, it was Bankards position that job contractualization or outsourcing or contracting-out of jobs was a legitimate exercise of management prerogative and did not constitute unfair labor practice. It had to implement new policies and programs, one of which was the Manpower Rationalization Program (MRP) in December 1999, to further enhance its efficiency and be more competitive in the credit card industry. The MRP was an invitation to the employees to tender their voluntary resignation, with entitlement to separation pay equivalent to at least two (2) months salary for every year of service. Those eligible under the companys retirement plan would still receive additional pay. Thereafter, majority of the Phone Center and the Service Fulfilment Division availed of the MRP. Thus, Bankard contracted an independent agency to handle its call center needs.11 As to the second issue, Bankard denied that there was bad faith on its part in bargaining with the Union. It came up with counter-offers to the Unions proposals, but the latters demands were far beyond what management could give. Nonetheless, Bankard continued to negotiate in good faith until the Memorandum of Agreement (MOA) renegotiating the provisions of the 1997-2002, Collective Bargaining Agreement (CBA) was entered into between Bankard and the Union. The CBA was overwhelmingly ratified by the Union members. For said reason, Bankard contended that the issue of bad faith in bargaining had become moot and academic.12 On the other hand, the Union alleged that contractualization started in Bankard in 1995 in the Records Communications Management Division, particularly in the mailing unit, which was composed of two (2) employees and fourteen (14) messengers. They were hired as contractual workers to perform the functions of the regular employees who had earlier resigned and availed of the MRP.13 According to the Union, there were other departments in Bankard utilizing messengers to perform work load considered for regular employees, like the Marketing Department, Voice Authorizational Department, Computer Services Department, and Records Retention Department. The Union contended that the number of regular employees had been reduced substantially through the management scheme of freeze-hiring policy on positions vacated by regular employees on the basis of cost-cutting measures and the introduction of a more drastic formula of streamlining its regular employees through the MRP.14

Aliviado v. Procter & Gamble Philippines, Inc., G.R. No. 160506, March 9, 2010, 614 SCRA 563, 588.
42

G.R. No. 152166, October 20, 2010, 634 SCRA 67, 80-81.

43

Eastern Telecommunications Phils., Inc. v. Diamse, G.R. No. 169299, June 16, 2006, 491 SCRA 239, 251.
44

Century Canning Corporation v. Ramil, G.R. No. 171630, August 9, 2010, 627 SCRA 192, 206.
45

The CA awarded the amount of PhP 100,000.00 as moral and exemplary damages, in favor of each of the respondents, which is to be broken down as follows: PhP 50,000.00 as moral damages and PhP50,000.00 as exemplary damages.
46

Timoteo H. Sarona v. National Labor Relations Commission, Royale Security Agency (Formerly Sceptre Security Agency) and Cesar S. Tan, G.R. No. 185280, January 18, 2012.
47

Aliviado v. Procter & Gamble Philippines, Inc., supra note 41. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 171664 March 6, 2013

BANKARD, INC., Petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION- FIRST DIVISION, PAULO BUENCONSEJO,BANKARD EMPLOYEES UNIONAWATU, Respondents. DECISION MENDOZA, J.: This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to review, reverse and set aside the October 20, 2005 Decision1 and the February 21, 2006 Resolution2 of the Court of Appeals {CA), in CA-G.R. SP No. 68303, which affirmed the May 31, 2001 Resolution3 and the September 24, 2001 Order4 of the National Labor Relations Commission (NLRC) in Certified Cases No. 000-18500 and 000-191-00. The Facts On June 26, 2000, respondent Bankard Employees Union-AWATU (Union) filed before the National Conciliation and Mediation Board (NCMB) its first Notice of Strike (NOS), docketed as NS-06-22500,5 alleging commission of unfair labor practices by petitioner Bankard, Inc. (Bankard), to wit: 1) job contractualization; 2) outsourcing/contracting-out jobs; 3) manpower rationalizing program; and 4) discrimination.

With regard to the second issue, the Union averred that Bankards proposals were way below their demands, showing that the management had no intention of reaching an agreement. It was a scheme calculated to force the Union to declare a bargaining deadlock.15 On May 31, 2001, the NLRC issued its Resolution16 declaring that the management committed acts considered as unfair labor practice (ULP) under Article 248(c) of the Labor Code. It ruled that: The act of management of reducing its number of employees thru application of the Manpower Rationalization Program and subsequently contracting the same to other contractual employees defeats the purpose or reason for streamlining the employees. The ultimate effect is to reduce the number of union members and increasing the number of contractual employees who could never be members of the union for lack of qualification. Consequently, the union was effectively restrained in their movements as a union on their rights to self-organization. Management had successfully limited and prevented the growth of the Union and the acts are clear violation of the provisions of the Labor Code and could be considered as Unfair Labor Practice in the light of the provisions of Article 248 paragraph (c) of the Labor Code.17 The NLRC, however, agreed with Bankard that the issue of bargaining in bad faith was rendered moot and academic by virtue of the finalization and signing of the CBA between the management and the Union.18 Unsatisfied, both parties filed their respective motions for partial reconsideration.1wphi1 Bankard assailed the NLRC's finding of acts of ULP on its part. The Union, on the other hand, assailed the NLRC ruling on the issue of bad faith bargaining. On September 24, 2001, the NLRC issued the Order19 denying both parties' motions for lack of merit. On December 28, 2001, Bankard filed a petition for certiorari under Rule 65 with the CA arguing that the NLRC gravely abused its discretion amounting to lack or excess of jurisdiction when: 1. It issued the Resolution, dated May 31, 2001, particularly in finding that Bankard committed acts of unfair labor practice; and, 2. It issued the Order dated September 24, 2001 denying Bankard's partial motion for reconsideration.20 The Union filed two (2) comments, dated January 22, 2002, through its NCR Director, Cornelio Santiago, and another, dated February 6, 2002, through its President, Paulo Buenconsejo, both praying for the dismissal of the petition and insisting that Bankard's resort to contractualization or outsourcing of contracts constituted ULP. It further alleged that Bankard committed ULP when it conducted CBA negotiations in bad faith with the Union. Ruling of the Court of Appeals The CA dismissed the petition, finding that the NLRC ruling was supported by substantial evidence. The CA agreed with Bankard that job contracting, outsourcing and/or contracting out of jobs did not per se constitute ULP, especially when made in good faith and for valid purposes. Despite Bankard's claim of good faith in resorting to job contractualization for purposes of costefficient operations and its non-interference with the employees' right to self-organization, the CA agreed with the NLRC that Bankard's acts impaired the employees right to self-organization and should be struck down as illegal and invalid pursuant to Article 248(c)21 of the Labor Code. The CA thus, ruled in this wise:

We cannot agree more with public respondent. Incontrovertible is the fact that petitioner's acts, particularly its promotion of the program enticing employees to tender their voluntary resignation in exchange for financial packages, resulted to a union dramatically reduced in numbers. Coupled with the management's policy of "freeze-hiring" of regular employees and contracting out jobs to contractual workers, petitioner was able to limit and prevent the growth of the Union, an act that clearly constituted unfair labor practice.22 In its assailed decision, the CA affirmed the May 31, 2001 Resolution and the September 24, 2001 Order of the NLRC. Aggrieved, Bankard filed a motion for reconsideration. The CA subsequently denied it for being a mere repetition of the grounds previously raised. Hence, the present petition bringing up this lone issue: THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONER BANKARD, INC. COMMITTED ACTS OF UNFAIR LABOR PRACTICE WHEN IT DISMISSED THE PETITION FOR CERTIORARI AND DENIED THE MOTION FOR RECONSIDERATION FILED BY PETITIONER.23 Ruling of the Court The Court finds merit in the petition. Well-settled is the rule that "factual findings of labor officials, who are deemed to have acquired expertise in matters within their jurisdiction, are generally accorded not only respect but even finality by the courts when supported by substantial evidence."24 Furthermore, the factual findings of the NLRC, when affirmed by the CA, are generally conclusive on this Court.25 When the petitioner, however, persuasively alleges that there is insufficient or insubstantial evidence on record to support the factual findings of the tribunal or court a quo, then the Court, exceptionally, may review factual issues raised in a petition under Rule 45 in the exercise of its discretionary appellate jurisdiction.26 This case involves determination of whether or not Bankard committed acts considered as ULP. The underlying concept of ULP is found in Article 247 of the Labor Code, to wit: Article 247. Concept of unfair labor practice and procedure for prosecution thereof. -- Unfair labor practices violate the constitutional right of workers and employees to self-organization, are inimical to the legitimate interests of both labor and management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect, disrupt industrial peace and hinder the promotion of healthy and stable labor-management relations. x x x The Court has ruled that the prohibited acts considered as ULP relate to the workers right to self-organization and to the observance of a CBA. It refers to "acts that violate the workers right to organize."27 Without that element, the acts, even if unfair, are not ULP.28 Thus, an employer may only be held liable for unfair labor practice if it can be shown that his acts affect in whatever manner the right of his employees to self-organize.29 In this case, the Union claims that Bankard, in implementing its MRP which eventually reduced the number of employees, clearly violated Article 248(c) of the Labor Code which states that: Art. 248. Unfair labor practices of employers. It shall be unlawful for an employer to commit any of the following unfair labor practice: xxxx

(c) To contract out services or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their rights to self-organization; xxxx Because of said reduction, Bankard subsequently contracted out the jobs held by former employees to other contractual employees. The Union specifically alleges that there were other departments in Bankard, Inc. which utilized messengers to perform work load considered for regular employees like the Marketing Department, Voice Authorizational Department, Computer Services Department, and Records Retention Department.30 As a result, the number of union members was reduced, and the number of contractual employees, who were never eligible for union membership for lack of qualification, increased. The general principle is that the one who makes an allegation has the burden of proving it.1avvphi1 While there are exceptions to this general rule, in ULP cases, the alleging party has the burden of proving the ULP;31 and in order to show that the employer committed ULP under the Labor Code, substantial evidence is required to support the claim.32 Such principle finds justification in the fact that ULP is punishable with both civil and/or criminal sanctions. 33 Aside from the bare allegations of the Union, nothing in the records strongly proves that Bankard intended its program, the MRP, as a tool to drastically and deliberately reduce union membership. Contrary to the findings and conclusions of both the NLRC and the CA, there was no proof that the program was meant to encourage the employees to disassociate themselves from the Union or to restrain them from joining any union or organization. There was no showing that it was intentionally implemented to stunt the growth of the Union or that Bankard discriminated, or in any way singled out the union members who had availed of the retirement package under the MRP. True, the program might have affected the number of union membership because of the employees voluntary resignation and availment of the package, but it does not necessarily follow that Bankard indeed purposely sought such result. It must be recalled that the MRP was implemented as a valid cost-cutting measure, well within the ambit of the so-called management prerogatives. Bankard contracted an independent agency to meet business exigencies. In the absence of any showing that Bankard was motivated by ill will, bad faith or malice, or that it was aimed at interfering with its employees right to self organize, it cannot be said to have committed an act of unfair labor practice.34 "Substantial evidence is more than a mere scintilla of evidence. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds equally reasonable might conceivably opine otherwise."35 Unfortunately, the Union, which had the burden of adducing substantial evidence to support its allegations of ULP, failed to discharge such burden.36 The employers right to conduct the affairs of its business, according to its own discretion and judgment, is well-recognized.37 Management has a wide latitude to conduct its own affairs in accordance with the necessities of its business.38 As the Court once said: The Court has always respected a company's exercise of its prerogative to devise means to improve its operations. Thus, we have held that management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, supervision and transfer of employees, working methods, time, place and manner of work. This is so because the law on unfair labor practices is not intended to deprive employers of their fundamental right to prescribe and enforce such rules as they honestly believe to be necessary to the proper, productive and profitable operation of their business.39 Contracting out of services is an exercise of business judgment or management prerogative. Absent any proof that management acted in

a malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an employer.40Furthermore, bear in mind that ULP is punishable with both civil and/or criminal sanctions. 41 As such, the party so alleging must necessarily prove it by substantial evidence. The Union, as earlier noted, failed to do this. Bankard merely validly exercised its management prerogative. Not shown to have acted maliciously or arbitrarily, no act of ULP can be imputed against it. WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP No. 68303, dated October 20, 2005, and its Resolution, dated February 21, 2006, are REVERSED and SET ASIDE. Petitioner Bankard, Inc. is hereby declared as not having committed any act constituting Unfair Labor Practice under Article 248 of the Labor Code. SO ORDERED. JOSE CATRAL MENDOZA Associate Justice WE CONCUR: PRESBITERO J. VELASCO, JR. Associate Justice Chairperson DISODADO M. PERALTA Associate Justice ROBERTO A. ABAD Associate Justice

MARVIC MARIO VICTOR F. LEONEN Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. PRESBITERO J. VELASCO, JR. Associate Justice Chairperson, Third Division

Footnotes
1

Rollo, pp. 31-38. Penned by Associate Justice Monin,, Arevalo-Zenarosa, with Associate Justices Andres B. Reyes, Jr. and Rosmari D.. Carandang, concurring.
2

Id. at 40-41. Id. at 69-76. Id. at 78-79. Id. at 43-44. Id. at 32. Id. at 46-47. Id. at 32-33. Id. at 33.

10

Id. at 71-72. Id. at 71. Id. at 73. Id.

31

UST Faculty Union v. UST, G.R. No. 180892, April 7, 2009, 584 SCRA 648, 656.
32

11

12

Id., citing Standard Chartered Bank Employees Union (NUBE) v. Confesor, 476 Phil. 346, 367 (2004).
33

13

Id., citing Labor Code, Art. 247.

34 14

Id. at 73-74. Id. at 74.

General Santos Coca-Cola Plant Free Workers UnionTupas v. Coca-Cola Bottlers Phil., Inc. (General Santos City), supra note 28.
35

15

16

Id. at 69-76. Id. at 75. Id. Id. at 78-79. Id. at 54-55.

17

Nia Jewelry Manufacturing of Metal Arts, Inc. v. Montecillo, G.R. No. 188169, November 28, 2011, 661 SCRA 416, 432, citing Honorable Ombudsman Simeon Marcelo v. Leopoldo Bungubung, G.R. No. 175201, April 23, 2008, 552 SCRA 589, 608.
36

18

Supra note 28.

19

37

The Coca-Cola Export Corporation v. Gacayan, G.R. No. 149433, December 15, 2010, 638 SCRA 377, 398.
38

20

21

Art. 248. UNFAIR LABOR PRACTICES OF EMPLOYERS. - It shall be unlawful for an employer to commit any of the following unfair labor practices: xxxx

Julies Bakeshop v. Arnaiz, G.R. No. 173882, February 15, 2012, 666 SCRA 101, 104.
39

Phi/com Employees Union v. Philippine Global Communications, 527 Phil. 540, 562-563 (2006).
40

(c) to contract out services or function being performed by union member when such will interfere with, restrain or coerce employees in the exercise of their right to self-organization. xxxx
22

Manila Electric Company v. Quisumbing, 383 Phil 47, 60 (2000).

41

UST Faculty Union v. UST, supra note 31. Republic of the Philippines SUPREME COURT Manila SPECIAL SECOND DIVISION

Rollo, p. 36. Id. at 17. G.R. No. 155109 March 14, 2012

23

24

Prince Transport, Inc. v. Garcia, G..R. No. 167291, January 12, 2011, 639 SCRA 312, 324.
25

Career Philippines Shipmanagement, Inc. .v. Serna, G.R. No. 172086, December 3, 2012, citing Cootauco v. MMS Phil. Maritime Services, Inc., G.R. No. 184722, March 15, 2010, 615 SCRA 529, 541.
26

Id.

27

Culili v. Eastern Telecommunications Philippines, Inc., G.R. No. 165381, February 9, 2011, 642 SCRA 338, 360, citing Tunay na Pagkakaisa ng Manggagawa sa Asia Brewery v. Asia Brewery, Inc., G.R. No. 162025, August 3, 2010, 626 SCRA 376, 388.
28

General Santos Coca-Cola Plant Free Workers UnionTupas v. Coca-Cola Bottlers Phils., Inc (General Santos City), G.R. No. 178647, February 13, 2009, 579 SCRA 414, 419, citing Philcom Employees Union v. Philippine Global Communication, 527 Phil. 540, 557 (2006).
29

Supra note 27, at 361, citing Great Pacific Life Employees Union v. Great Pacific Life Assurance Corporation, 362 Phil. 452, 464 (1999).
30

Rollo, p. 208.

C. ALCANTARA & SONS, INC., Petitioner, vs. COURT OF APPEALS, LABOR ARBITER ANTONIO M. VILLANUEVA, LABOR ARBITER ARTURO L. GAMOLO, SHERIFF OF NLRC RAB-XI-DAVAO CITY, NAGKAHIUSANG MAMUMUO SA ALSONS-SPFL (NAMAAL-SPFL), FELIXBERTO IRAG, JOSHUA BARREDO, ERNESTO CUARIO, EDGAR MONDAY, EDILBERTO DEMETRIA, HERMINIO ROBILLO, ROMULO LUNGAY, MATROIL DELOS SANTOS, BONERME MATURAN, RAUL CANTIGA, EDUARDO CAMPUSO, RUDY ANADON, GILBERTO GABRONINO, BONIFACIO SALVADOR, CIRILO MINO, ROBERTO ABONADO, WARLITO MONTE, PEDRO ESQUIERDO, ALFREDO TROPICO, DANILO MEJOS, HECTOR ESTUITA, BARTOLOME CASTILLANES, EDUARDO CAPUYAN, SATURNINO CAGAS, ALEJANDRO HARDER, EDUARDO LARENA, JAIME MONTEDERAMOS, ERMELANDO BASADRE, REYNALDO LIMPAJAN, ELPIDIO LIBRANZA, TEDDY SUELO, JOSE AMOYLIN, TRANQUILINO ORALLO, CARLOS BALDOS, MANOLITO SABELLANO, CARMELITO TOBIAS, PRIMITIVO GARCIA, JUANITO ALDEPOLLA, LUDIVICO ABAD, WENCISLAO INGHUG, RICARDO ALTO, EPIFANIO JARABAY, FELICIANO AMPER, ALEXANDER JUDILLA, ROBERTO ANDRADE, ALFREDO LESULA, JULIO ANINO, BENITO MAGPUSAO, PEDRO AQUINO, EDDIE MANSANADES, ROMEO ARANETA, ARGUILLAO MANTICA, CONSTANCIO ARNAIZ, ERNESTO HOTOY, JUSTINO ASCANO, RICARDO MATURAN, EDILBERTO YAMBAO, ANTONIO MELARGO, JESUS BERITAN, ARSENIO MELICOR, DIOSDADO BONGABONG, LAURO MONTENEGRO, CARLITO BURILLO, LEO

MORA, PABLO BUTIL, ARMANDO GUCILA, JEREMIAH CAGARA, MARIO NAMOC, CARLITO CAL, GERWINO NATIVIDAD, ROLANDO CAPUYAN, EDGARDO ORDIZ, LEONARDO CASURRA, PATROCINIO ORTEGA, FILEMON CESAR, MARIO PATAN, ROMEO COMPRADO, JESUS PATOC, RAMON CONSTANTINO, ALBERTO PIELAGO, SAMUEL DELA LLANA, NICASIO PLAZA, ROSALDO DAGONDON, TITO GUADES, BONIFACIO DINAGUDOS, PROCOPIO RAMOS, JOSE EBORAN, ROSENDO SAJOL, FRANCISCO EMPUERTO, PATRICIO SALOMON, NESTOR ENDAYA, MARIO SALVALEON, ERNESTO ESTILO, BONIFACIO SIGUE, VICENTE FABROA, JAIME SUCUAHI, CELSO HUISO, ALEX TAUTO-AN, SATURNINO YAGON, CLAUDIO TIROL, SULPECIO GAGNI, JOSE TOLERO, FERVIE GALVEZ, ALFREDO TORALBA and EDUARDO GENELSA,Respondents. x-----------------------x G.R. No. 155135 NAGKAHIUSANG MAMUMUO SA ALSONS-SPFL (NAMAAL-SPFL), FELIXBERTO IRAG, JOSHUA BARREDO, ERNESTO CUARIO, EDGAR MONDAY, EDILBERTO DEMETRIA, HERMINIO ROBILLO, ROMULO LUNGAY, MATROIL DELOS SANTOS, BONERME MATURAN, RAUL CANTIGA, EDUARDO CAMPUSO, RUDY ANADON, GILBERTO GABRONINO, BONIFACIO SALVADOR, CIRILO MINO, ROBERTO ABONADO, WARLITO MONTE, PEDRO ESQUIERDO, ALFREDO TROPICO, DANILO MEJOS, HECTOR ESTUITA, BARTOLOME CASTILLANES, EDUARDO CAPUYAN, SATURNINO CAGAS, ALEJANDRO HARDER, EDUARDO LARENA, JAIME MONTEDERAMOS, ERMELANDO BASADRE, REYNALDO LIMPAJAN, ELPIDIO LIBRANZA, TEDDY SUELO, JOSE AMOYLIN, TRANQUILINO ORALLO, CARLOS BALDOS, MANOLITO SABELLANO, CARMELITO TOBIAS, PRIMITIVO GARCIA, JUANITO ALDEPOLLA, LUDIVICO ABAD, WENCISLAO INGHUG, RICARDO ALTO, EPIFANIO JARABAY, FELICIANO AMPER, ALEXANDER JUDILLA, ROBERTO ANDRADE, ALFREDO LESULA, JULIO ANINO, BENITO MAGPUSAO, PEDRO AQUINO, EDDIE MANSANADES, ROMEO ARANETA, ARGUILLAO MANTICA, CONSTANCIO ARNAIZ, ERNESTO HOTOY, JUSTINO ASCANO, RICARDO MATURAN, EDILBERTO YAMBAO, ANTONIO MELARGO, JESUS BERITAN, ARSENIO MELICOR, DIOSDADO BONGABONG, LAURO MONTENEGRO, CARLITO BURILLO, LEO MORA, PABLO BUTIL, ARMANDO GUCILA, JEREMIAH CAGARA, MARIO NAMOC, CARLITO CAL, GERWINO NATIVIDAD, ROLANDO CAPUYAN, JUANITO NISNISAN, AURELIO CARIN, PRIMO OPLIMO, ANGELITO CASTANEDA, EDGARDO ORDIZ, LEONARDO CASURRA, PATROCINIO ORTEGA, FILEMON CESAR, MARIO PATAN, ROMEO COMPRADO, JESUS PATOC, RAMON CONSTANTINO, MANUEL PIAPE, ROY CONSTANTINO, ALBERTO PIELAGO, SAMUEL DELA LLANA, NICASIO PLAZA, ROSALDO DAGONDON, TITO GUADES, BONIFACIO DINAGUDOS, PROCOPIO RAMOS, JOSE EBORAN, ROSENDO SAJOL, FRANCISCO EMPUERTO, PATRICIO SALOMON, NESTOR ENDAYA, MARIO SALVALEON, ERNESTO ESTILO, BONIFACIO SIGUE, VICENTE FABROA, JAIME SUCUAHI, CELSO HUISO, ALEX TAUTO-AN, SATURNINO YAGON, CLAUDIO TIROL, SULPECIO GAGNI, JOSE TOLERO, FERVIE GALVEZ, ALFREDO TORALBA and EDUARDO GENELSA, Petitioners, vs. C. ALCANTARA & SONS, INC., EDITHA I. ALCANTARA, ATTY. NELIA A. CLAUDIO, CORNELIO E. CAGUIAT, JESUS S. DELA CRUZ, ROLANDO Z. ANDRES and JOSE MA. MANUEL YRASUEGUI, Respondents. x-----------------------x G.R. No. 179220 NAGKAHIUSANG MAMUMUO SA ALSONS-SPFL (NAMAAL-SPFL), AND ITS MEMBERS whose names are listed below, Petitioners, vs. C. ALCANTARA & SONS, INC., Respondent. RESOLUTION

PERALTA, J.: For resolution are the (1) Motion for Partial Reconsideration1 filed by C. Alcantara & Sons, Inc. (CASI) and (2) Motion for Reconsideration2 filed by Nagkahiusang Mamumuo sa Alsons-SPFL (the Union) and the Union officers3and their striking members4 of the Courts Decision5 dated September 29, 2010. In a Resolution6 dated December 13, 2010, the parties were required to submit their respective Comments. After several motions for extension, the parties submitted the required comments. Hence, this resolution. For a proper perspective, we state briefly the facts of the case. The negotiation between CASI and the Union on the economic provisions of the Collective Bargaining Agreement (CBA) ended in a deadlock prompting the Union to stage a strike,7 but the strike was later declared by the Labor Arbiter (LA) to be illegal having been staged in violation of the CBAs no strike-no lockout provision.8Consequently, the Union officers were deemed to have forfeited their employment with the company and made them liable for actual damages plus interest and attorneys fees, while the Union members were ordered to be reinstated without backwages there being no proof that they actually committed illegal acts during the strike.9 Notwithstanding the provision of the Labor Code mandating that the reinstatement aspect of the decision be immediately executory, the LA refused to reinstate the dismissed Union members. On November 8, 1999, the NLRC affirmed the LA decision insofar as it declared the strike illegal and ordered the Union officers dismissed from employment and liable for damages but modified the same by considering the Union members to have been validly dismissed from employment for committing prohibited and illegal acts.10 On petition for certiorari, the Court of Appeals (CA) annulled the NLRC decision and reinstated that of the LA. Aggrieved, CASI, the Union and the Union officers and members elevated the matter to this Court. The cases were docketed as G.R. Nos. 155109 and 155135. 11 During the pendency of the cases, the affected Union members (who were ordered reinstated) filed with the LA a motion for reinstatement pending appeal and the computation of their backwages. Instead of reinstating the Union members, the LA awarded separation pay and other benefits.12 On appeal, the NLRC denied the Union members claim for separation pay, accrued wages and other benefits. 13 When elevated to the CA, the appellate court held that reinstatement pending appeal applies only to illegal dismissal cases under Article 223 of the Labor Code and not to cases under Article 263.14 Hence, the petition by the Union and its officers and members in G.R. No. 179220. G.R. Nos. 155109, 155135, and 179220 were consolidated. On September 29, 2010, the Court rendered a decision the dispositive portion of which reads: WHEREFORE, the Court DENIES the petition of the Nagkahiusang Mamumuo sa Alsons-SPFL and its officers and members in G.R. No. 155135 for lack of merit, and REVERSES and SETS ASIDE the decision of the Court of Appeals in CA-G.R. SP 59604 dated March 20, 2002. The Court, on the other hand, GRANTS the petition of C. Alcantara & Sons, Inc. in G.R. 155109 and REINSTATES the decision of the National Labor Relations Commission in NLRC CA M-004996-99 dated November 8, 1999. Further, the Court PARTIALLY GRANTS the petition of the Nagkahiusang Mamumuo sa Alsons-SPFL and their dismissed members in G.R. No. 179220 and ORDERS C. Alcantara & Sons, Inc. to pay the terminated Union members backwages for four (4) months and nine (9) days and separation pays equivalent to one-half month salary for every year of service to the company up to the date of their termination, with interest of 12% per annum from the time this decision becomes final and executory until such backwages and separation pays are paid. The Court DENIES all other claims.

SO ORDERED.15 The Court agreed with the CA on the illegality of the strike as well as the termination of the Union officers, but disagreed with the CA insofar as it affirmed the reinstatement of the Union members. The Court, instead, sustained the dismissal not only of the Union officers but also the Union members who, during the illegal strike, committed prohibited acts by threatening, coercing, and intimidating non-striking employees, officers, suppliers and customers; obstructing the free ingress to and egress from the company premises; and resisting and defying the implementation of the writ of preliminary injunction issued against the strikers.16 The Court further held that the terminated Union members, who were ordered reinstated by the LA, should have been immediately reinstated due to the immediate executory nature of the reinstatement aspect of the LA decision. In view, however, of CASIs failure to reinstate the dismissed employees, the Court ordered CASI to pay the terminated Union members their accrued backwages from the date of the LA decision until the eventual reversal by the NLRC of the order of reinstatement.17 In addition to the accrued backwages, the Court awarded separation pay as a form of financial assistance to the Union members equivalent to one-half month salary for every year of service to the company up to the date of their termination.18 Not satisfied, CASI filed a Motion for Partial Reconsideration of the above decision based on the following grounds: I. IT IS RESPECTFULLY SUBMITTED THAT A PRECEDENT SETTING RULING OF THIS HONORABLE COURT IN ESCARIO V. NLRC [G.R. No. 160302, 27 SEPTEMBER 2010] PARTICULARLY ON THE PROPER APPLICATION OF ARTICLES 264 AND 279 OF THE LABOR CODE SUPPORTS THE AFFIRMATION AND NOT THE REVERSAL OF THE FINDINGS OF THE COURT OF APPEALS ["CA"], AND NEGATES THE ENTITLEMENT TO ACCRUED WAGES OF THE UNION MEMBERS WHO COMMITTED ILLEGAL ACTS DURING THE ILLEGAL STRIKE, NOTWITHSTANDING THAT THE LABOR ARBITER AWARDED THE SAME. II. IT IS RESPECTFULY SUBMITTED THAT THIS HONORABLE COURT ERRED WHEN IT RESOLVED TO GRANT SEPARATION PAY TO THE UNION MEMBERS WHO COMMITTED ILLEGAL ACTS DURING THE ILLEGAL STRIKE CONSIDERING THAT JURISPRUDENCE CITED TO JUSTIFY THE GRANT OF SEPARATION PAY DO NOT APPLY TO THE PRESENT CASE AS IT APPLIES ONLY TO DISMISSALS FOR A JUST CAUSE.19 The Union, its officers and members likewise filed their separate motion for reconsideration assailing the Courts conclusions that: (1) the strike is illegal; (2) that the officers of the Union and its appointed shop stewards automatically forfeited their employment status when they participated in the strike; (3) that the Union members committed illegal acts during the strike and are deemed to have lost their employment status; and (4) that CASI is entitled to actual damages and attorneys fees.20 They also fault the Court in not finding that: (1) CASI and its officers are guilty of acts of unfair labor practice or violation of Article 248 of the Labor Code; (2) the lockout declared by the company is illegal; (3) CASI and its officers committed acts of discrimination; (4) CASI and its officers violated Article 254 of the Labor Code; and (5) CASI and its officers are liable for actual, moral, and exemplary damages to the Union, its officers and members. 21 Simply stated, CASI only questions the propriety of the award of backwages and separation pay, while the Union, its officers and members seek the reversal of the Courts conclusions on the illegality of the strike, the validity of the termination of the Union officers and

members, and the award of actual damages and attorneys fees as well as the denial of their counterclaims against CASI. After a careful review of the records of the case, we find it necessary to reconsider the Courts September 29, 2010 decision, but only as to the award of separation pay. The LA, the NLRC, the CA and the Court are one in saying that the strike staged by the Union, participated in by the Union officers and members, is illegal being in violation of the no strike-no lockout provision of the CBA which enjoined both the Union and the company from resorting to the use of economic weapons available to them under the law and to instead take recourse to voluntary arbitration in settling their disputes.22 We, therefore, find no reason to depart from such conclusion. Article 264 (a) of the Labor Code lays down the liabilities of the Union officers and members participating in illegal strikes and/or committing illegal acts, to wit: ART. 264. PROHIBITED ACTIVITIES (a) x x x Any worker whose employment has been terminated as a consequence of an unlawful lockout shall be entitled to reinstatement with full backwages. Any Union officer who knowingly participates in an illegal strike and any worker or Union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike. Thus, the above-quoted provision sanctions the dismissal of a Union officer who knowingly participates in an illegal strike or who knowingly participates in the commission of illegal acts during a lawful strike. 23 In this case, the Union officers were in clear breach of the above provision of law when they knowingly participated in the illegal strike.24 As to the Union members, the same provision of law provides that a member is liable when he knowingly participates in the commission of illegal acts during a strike. We find no reason to reverse the conclusion of the Court that CASI presented substantial evidence to show that the striking Union members committed the following prohibited acts: a. They threatened, coerced, and intimidated non-striking employees, officers, suppliers and customers; b. They obstructed the free ingress to and egress from the company premises; and c. They resisted and defied the implementation of the writ of preliminary injunction issued against the strikers.25 The commission of the above prohibited acts by the striking Union members warrants their dismissal from employment. As clearly narrated earlier, the LA found the strike illegal and sustained the dismissal of the Union officers, but ordered the reinstatement of the striking Union members for lack of evidence showing that they committed illegal acts during the illegal strike. This decision, however, was later reversed by the NLRC. Pursuant to Article 22326 of the Labor Code and well-established jurisprudence,27 the decision of the LA reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, pending appeal.28The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation, or, at the option of the employee, merely reinstated in the payroll.29 It is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal

until reversal by the higher court.30 If the employer fails to exercise the option of re-admitting the employee to work or to reinstate him in the payroll, the employer must pay the employees salaries during the period between the LAs order of reinstatement pending appeal and the resolution of the higher court overturning that of the LA. 31 In this case, CASI is liable to pay the striking Union members their accrued wages for four months and nine days, which is the period from the notice of the LAs order of reinstatement until the reversal thereof by the NLRC.32 Citing Escario v. National Labor Relations Commission (Third Division),33 CASI claims that the award of the four-month accrued salaries to the Union members is not sanctioned by jurisprudence. In Escario, the Court categorically stated that the strikers were not entitled to their wages during the period of the strike (even if the strike might be legal), because they performed no work during the strike. The Court further held that it was neither fair nor just that the dismissed employees should litigate against their employer on the latters time.34 In this case, however, the four-month accrued salaries awarded to the Union members are not the backwages referred to in Escario. To be sure, the awards were not given as their salaries during the period of the strike. Rather, they constitute the employers liability to the employees for its failure to exercise the option of actual reinstatement or payroll reinstatement following the LAs decision to reinstate the Union members as mandated by Article 223 of the Labor Code adequately discussed earlier. In other words, such monetary award refers to the Union members accrued salaries by reason of the reinstatement order of the LA which is self-executory pursuant to Article 223.35We, therefore, sustain the award of the four-month accrued salaries.1wphi1 Finally, as regards the separation pay as a form of financial assistance awarded by the Court, we find it necessary to reconsider the same and delete the award pursuant to prevailing jurisprudence. Separation pay may be given as a form of financial assistance when a worker is dismissed in cases such as the installation of labor-saving devices, redundancy, retrenchment to prevent losses, closing or cessation of operation of the establishment, or in case the employee was found to have been suffering from a disease such that his continued employment is prohibited by law.36 It is a statutory right defined as the amount that an employee receives at the time of his severance from the service and is designed to provide the employee with the wherewithal during the period that he is looking for another employment.37 It is oriented towards the immediate future, the transitional period the dismissed employee must undergo before locating a replacement job.38 As a general rule, when just causes for terminating the services of an employee exist, the employee is not entitled to separation pay because lawbreakers should not benefit from their illegal acts.39 The rule, however, is subject to exceptions.40 The Court, in Philippine Long Distance Telephone Co. v. NLRC,41 laid down the guidelines when separation pay in the form of financial assistance may be allowed, to wit: We hold that henceforth separation pay shall be allowed as a measure of social justice only in those instances where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character. Where the reason for the valid dismissal is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit sexual relations with a fellow worker, the employer may not be required to give the dismissed employee separation pay, or financial assistance, or whatever other name it is called, on the ground of social justice. A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than punishing the erring employee for his offense. And we do not agree that the punishment is his dismissal only and that the separation pay has nothing to do with the wrong he has committed x x x.42 We had the occasion to resolve the same issue in Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations Commission.43 Following the declaration that the strike staged by the Union members is illegal, the Union officers and members were considered validly dismissed from employment for committing illegal

acts during the illegal strike. The Court affirmed the CAs conclusion that the commission of illegal acts during the illegal strike constituted serious misconduct.44 Hence, the award of separation pay to the Union officials and members was not sustained.45 Indeed, we applied social justice and equity considerations in several cases to justify the award of financial assistance. In Piero v. National Labor Relations Commission,46 the Court declared the strike to be illegal for failure to comply with the procedural requirements. We, likewise, sustained the dismissal of the Union president for participating in said illegal strike. Considering, however, that his infraction is not so reprehensible and unscrupulous as to warrant complete disregard of his long years of service, and considering further that he has no previous derogatory records, we granted financial assistance to support him in the twilight of his life after long years of service.47 The same compassion was also applied in Aparente, Sr. v. NLRC48 where the employee was declared to have been validly terminated from service after having been found guilty of driving without a valid drivers license, which is a clear violation of the companys rules and regulations.49 We, likewise, awarded financial assistance in Salavarria v. Letran College50 to the legally dismissed teacher for violation of school policy because such infraction neither amounted to serious misconduct nor reflected that of a morally depraved person. However, in a number of cases cited in Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations Commission,51 we refrained from awarding separation pay or financial assistance to Union officers and members who were separated from service due to their participation in or commission of illegal acts during the strike.52 In Pilipino Telephone Corporation v. Pilipino Telephone Employees Association (PILTEA),53the strike was found to be illegal because of procedural infirmities and for defiance of the Secretary of Labors assumption order. Hence, we upheld the Union officers dismissal without granting financial assistance. In Sukhotai Cuisine and Restaurant v. Court of Appeals,54 and Manila Diamond Hotel and Resort, Inc. (Manila Diamond Hotel) v. Manila Diamond Hotel Employees Union,55 the Union officers and members who participated in and committed illegal acts during the illegal strike were deemed to have lost their employment status and were not awarded financial assistance. In Telefunken Semiconductors Employees Union v. Court of Appeals,56 the Court held that the strikers open and willful defiance of the assumption order of the Secretary of Labor constitute serious misconduct and reflective of their moral character, hence, granting of financial assistance to them cannot be justified. In Chua v. National Labor Relations Commission,57 we disallowed the award of financial assistance to the dismissed employees for their participation in the unlawful and violent strike which resulted in multiple deaths and extensive property damage because it constitutes serious misconduct on their part. Here, not only did the Court declare the strike illegal, rather, it also found the Union officers to have knowingly participated in the illegal strike. Worse, the Union members committed prohibited acts during the strike. Thus, as we concluded in Toyota, Telefunken, Chua and the other cases cited above, we delete the award of separation pay as a form of financial assistance. WHEREFORE, premises considered, the motion for reconsideration of the Union, its officers and members are DENIED for lack of merit, while the motion for partial reconsideration filed by C. Alcantara & Sons, Inc. is PARTLY GRANTED. The Decision of the Court dated September 29, 2010 is hereby PARTLY RECONSIDERED by deleting the award of separation pay. SO ORDERED. DIOSDADO M. PERALTA Associate Justice WE CONCUR:

ANTONIO T. CARPIO Associate Justice Chairperson PRESBITERO J. VELASCO, JR. Associate Justice

JOSE CATRAL MENDOZA Associate Justice

Montenegro, Leo Mora, Ronaldo Naboya, Mario Namoc, Gerwino Natividad, Juanito Nisnisan, Primo Oplimo, Edgardo Ordiz, Patrocino Ortega, Mario Patan, Jesus Patoc, Manuel Piape, Alberto Pielago, Nicasio Plaza, Fausto Quibod, Procopio Ramos, Rosendo Sajol, Patricio Solomon, Mario Salvaleon, Bonifacio Sigue, Jaime Sucuahi, Alex Tauto-an, Claudio Tirol, Jose Tolero, Alfredo Toralba, Eusebio Tumulak, Hermes Villacarlos, Saturnino Yagon and Edilberto Yambao.
5

BIENVENIDO L. REYES Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. ANTONIO T. CARPIO Associate Justice Special Second Division, Chairperson CERTIFICATION

Rollo (G.R. No. 155109), pp. 1467-1484. Id. at 1654-1655. Id. at 1473.

The LA decision was rendered on June 29, 1999; id. at 1474.

9

Rollo (G.R. No. 155109), p. 1474. Id. at 1475. Id. Id. Id. at 1475-1476. Id. at 1476. Id. at 1482-1483. Id. at 1478-1479. Id. at 1480-1481. Id. at 1481-1482. Id. at 1486. Id. at 1511-1513. Id. at 1513-1515. Id. at 1477.

10

11

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. RENATO C. CORONA Chief Justice

12

13

14

15

16

Footnotes
1 17

Rollo (G.R. No. 155109), pp. 1485-1499.

18

Id. at 1501-1651.
19

The officers of the Union are the following: Felixberto Irag, Joshua Barredo, Edilberto Demetria, Romulo Lungay, Bonerme Maturan, Eduardo Campuso, Gilberto Gabronino, Cirilo Mino, Roberto Abonado, Fructoso Cabahog, Alfredo Tropico, Hector Estuita, Eduardo Capuyan, Alejandro Harder, Jaime Montederamos, Reynaldo Limpajan, Ernesto Cuario, Edgar Monday, Herminio Robillo, Matroil delos Santos, Raul Cantiga, Rudy Anadon, Bonifacio Salvador, Florente Seno, Warlito Monte, Pedro Esquierdo, Danilo Mejos, Bartolome Castillanes, Saturnino Cagas, Eduardo Larena, Ermelando Basadre, Elpidio Libranza.Teddy Suelo, Tranquilino Orallo, Manolito Sabellano, Primitivo Garcia, Jose Amoylin, Carlos Baldos, Carmelito Tobias and Juanito Aldepolla.
4

20

21

22

23

Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations Commission, G.R. Nos. 158786 & 158789, October 19, 2007, 537 SCRA 171, 207.
24

These are Ludivicio Abad, Ricardo Alto, Feliciano Amper, Roberto Andrade, Julio Anino, Pedro Aquino, Romeo Araneta, Constancio Arnaiz, Justino Ascano, Ernesto Baino, Jesus Beritan, Diosdado Bongabong, Carilito Cal, Rolando Capuyan, Aurelio Carin, Angelito Castaeda, Leonaro Casurra, Filemon Cesar, Romeo Comprado, Ramon Constantino, Roy Constantino, Samuel dela Llana, Rosaldo Dagondon, Bonifacio Dinagudos, Jose Eboran, Francisco Empuerto, Nestor Endaya, Ernesto Estilo, Vicente Fabroa, Ramon Fernando, Samson Fulgueras, Sulpecio Gagni, Fervie Galvez, Eduardo Genelsa, Tito Guades, Armando Gucila, Ernesto Hotoy, Wencislao Inghug, Epifanio Jarabay, Alexander Judilla, Alfredo Lesula, Benito Magpusao, Eddie Mansanades, Arguilao Mantica, Silverio Maranian, Ricardo Maturan, Antonio Melargo, Arsenio Melicor, Lauro

Id. Rollo (G.R. No. 155109), p. 1479. Article 223 Appeal x x x In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in

25

26

the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement provided herein. x x x.
27

51

Supra note 23. Id. at 225.

52

53

G.R. Nos. 160058 & 160094, June 22, 2007, 525 SCRA 361.
54

Islriz Trading/Victor Hugo Lu v. Capada, G.R. No. 168501, January 31, 2011, 641 SCRA 9; Garcia v. Philippine Airlines, Inc., G.R. No. 164856, January 20, 2009, 576 SCRA 479.
28

G.R. No. 150437, July 17, 2006, 495 SCRA 336. G.R. No. 158075, June 30, 2006, 494 SCRA 195. 401 Phil. 776 (2000). G.R. No. 105775, February 8, 1993, 218 SCRA 545. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

55

Garcia v. Philippine Airlines, Inc., supra, at 489.

56

29

Id.
57

30

Id. at 493.

31

Islriz Trading/Victor Hugo Lu v. Capada, supra note 27, at 24; College of Immaculate Conception v. National Labor Relations Commission, G.R. No.167563, March 22, 2010, 616 SCRA 299, 309; Garcia v. Philippine Airlines, Inc., supra note 27, at 493.
32

Rollo (G.R. No. 155109), p. 1481. G.R. No. 160302, September 27, 2010, 631 SCRA 261. Id. at 274.

G.R. No. 153799

September 17, 2012

33

34

35

Islriz Trading/Victor Hugo Lu v. Capada, supra note 27, at 16.

36

Gold City Integrated Port Service, Inc. v. NLRC, 315 Phil. 698, 711 (1995).
37

Id. at 712 . Id.

38

39

Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations Commission,supra note 23, at 219.
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Id. at 220. 247 Phil. 641 (1988). Id. at 649. Supra note 23. Id. Id. at 227. 480 Phil. 534 (2004). Id. at 543-544. 387 Phil. 96 (2000). Id. G.R. No. 110396, September 25, 1998, 296 SCRA 184.

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SOLIDBANK UNION, EVANGELINE J. GABRIEL, EVELYN A. SIA, TERESITA C. LUALHATI, ISAGANI P. MAKISIG, REY S. PASCUA, MA. VICTORIA M. VIDALLON, AUDREY A. ALJIBE, REY ANTHONY AMPARADO, JOSE A. ANTENOR,1 DEL CASTILLO, AUGUSTO D. ARANDIA, JR., RUTH SHIELA M. BAGADIONG, STEVE D. BERING, ALAN ROY I. BUYCO, MANOLO T. CABRERA, RACHEL2 M. CASTILLO, VICTOR O. CHUA, VIRGILIO CO, JR., LEOPOLDO DABAY, HUBERT DIMAGIBA, MA. LOURDES CECILIA EMPERADOR,3 FELIX B. ESTACIO, JR., JULIETA ESTRADA, MARICEL EVALLA, JOSE GUISADIO, ALEXANDER MARTINEZ, JOSEPHINE M. ONG, EDNA SARONG, GREGORIO S. SECRETARIO,4 ROSIE UY, ARVIN D. VALENCIA, FERMIN JOSEPH5B. VENTURA, JR., EMMANUEL C. YAPTANGCO,6 ERNESTO C. ZUIGA, ALVIN E. BARICANOSA, GEORGE MAXIMO P. BARQUEZ, MA. ELENA G. BELLO, MICHAEL MATTHEW BILLENA, NEPTALI A. CADDARAO, FERDINAND MEL S. CAPULONG,7 MA. EDNA V. DATOR, RANIEL8 DAYAO, RAGCY L. DE GUZMAN, LUIS E. DELOS SANTOS, CAROLINA DIZON, JOCELYN L. ESTROBO, MINERVA S. FALLARME, HERNANE C. FERMOCIL, RACHEL B. FETIZANAN, SAMUEL A. FLORENTINO, JOEL S. GARMINO, LESTER MARK Z. GATCHALIAN, GONZALO GUINIT, FERDINAND S. HABIJAN, JUN HERNANDEZ, MA. ANGELA JALANDONI,9MANUEL LIM, MA. LOURDES LIM, EMERSON LUNA, NOLASCO MACATANGAY, NORMAN MAACO, CHERRY LOU MANGROBANG, EDMUNDO MARASIGAN, ALLEN M. MARTINEZ, ARLENE P. NOBLE, SHIRLEY ONG, LOTIZ E. ORTIZ LUIS, PABLITO PALO, GEOFFREY PRADO, OMEGA MELANIE QUINTANO, AGNES A. RAMIREZ, RICARDO D. RAMIREZ, DANIEL O. RAQUEL, RAMON REYES, SALVACIO ROGADO, ELMOR R. ROMANA, JR., LOURDES U. SALVADOR, ELMER S. SAYLON, BENNARD SIMBULAN, MA. LOURDES ROCEL SOLIVEN, EMILY10 C. SUYAT, RAYMOND11 D. TANAY, JOCELYN Y. TAN, CANDIDO G. TISON, MA. THERESA12 O. TISON, EVELYN T. UYLANGCO, MERVIN S. BAUTISTA, LEOPOLDO DE LA ROSA, DOROTEO FROILAN and JULIETE L. JUBAC, Petitioners, vs. METROPOLITAN BANK AND TRUST COMPANY, Respondent. x-----------------------x G.R. No. 157169 METROPOLITAN BANK AND TRUST COMPANY, Petitioner, vs. SOLIDBANK UNION, EVANGELINE J. GABRIEL, EVELYN A. SIA, TERESITA C. LUALHATI, ISAGANI P. MAKISIG, REY S. PASCUA, MA. VICTORIA M. VIDALLON, AUDREY A. ALJIBE, REY ANTHONY

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AMPARADO, JOSE A. ANTENOR, AUGUSTO D. ARANDIA, JR., RUTH SHIELA M. BAGADIONG, STEVE D. BERING, ALAN ROY I. BUYCO, MANOLO T. CABRERA, RACHEL M. CASTILLO, VICTOR O. CHUA, VIRGILIO Y. CO, JR., LEOPOLDO S. DABAY, HUBERT V. DIMAGIBA, MA. LOURDES CECILIA B. EMPARADOR, FELIX B. ESTACIO, JR., JULIETA T. ESTRADA, MARICEL G. EVALLA, JOSE G. GUISADIO, ALEXANDER A. MARTINEZ, JOSEPHINE M. ONG, EDNA M. SARONG, GREGORIO S. SECRETARIO, ROSIE C. UY, ARVIN D. VALENCIA, FERMIN JOSEPH B. VENTURA, JR., EMMANUEL C. YAPTANCO, ERNESTO C. ZUIGA,13 ALVIN E. BARICANOSA, GEORGE MAXIMO P. BARQUEZ, MA. ELENA G. BELLO, MICHAEL MATTHEW B. BILLENA, LEOPE L. CABENIAN, NEPTALI A. CADDARAO, FERDINAND MEL S. CAPULING, MARGARETTE B. CORDOVA, MA. EDNA V. DATOR, RANIEL C. DAYAO, RAGCY L. DE GUZMAN, LUIS E. DELOS SANTOS, CAROLINA C. DIZON, MARCHEL S. ESQUEJO,14 JOCELYN L. ESTROBO, MINERVA S. FALLARME, HERNANE C. FERMOCIL, RACHEL B. FETIZANAN, SAMUEL A. FLORENTINO, MENCHIE R. FRANCISCO, JOEL S. GARMINO, LESTER MARK Z. GATCHALIAN, MA. GONZALO G. GUINIT, FERDINAND S. HABIJAN, JUN G. HERNANDEZ, LOURDES D. IBEAS, MA. ANGELA L. JALANDONI, JULIE T. JORNACION, MANUEL C. LIM, MA. LOURDES A. LIM, EMERSON V. LUNA, NOLASCO B. MACATANGAY, NORAMN C. MANACO, CHERRY LOU B. MANGROBANG, MARASIGAN G. EDMUNDO, ALLEN M. MARTINEZ, EMELITA C. MONTANO, ARLENE P. NOBLE, SHIRLEY A. ONG, LOTIZ E. ORTIZ LUIS, PABLITO M. PALO, GEOFFREY T. PRADO, OMEGA MELANIE M. QUINTANO, AGNES A. RAMIREZ, RICARDO D. RAMIREZ, DANIEL O. RAQUEL, RAMON B. REYES, SALVACIO N. ROGADO, ELMOR R. ROMANA, JR., LOURDES U. SALVADOR, ELMER S. SAYLON, BENHARD E. SIMBULAN, MA. TERESA S. SOLIS, MA. LOURDES ROCEL E. SOLIVEN, EMILY C. SUYAT, RAYMOND D. TANAY, JOCELYN Y. TAN, CANDIDO G. TISON, MA. THERES O. TISON, EVELYN T. UYLANGCO, MERVIN S. BAUTISTA, LEOPOLDO V. DE LA ROSA, DOROTEO S. FROILAN, JULIETE L. JUBAC, SOLID BANK CORPORATION and/or its successor-in-interest, FIRST METRO INVESTMENT CORPORATION, DEOGRACIAS N. VISTAN and EDGARDO MENDOZA, JR., Respondents. x-----------------------x G.R. No. 157327 SOLID BANK CORPORATION and/or its successor-in-interest, FIRST METRO INVESTMENT CORPORATION, DEOGRACIAS N. VISTAN and EDGARDO MENDOZA, JR., Petitioners, vs. SOLIDBANK UNION and its dismissed officers and members, namely: EVANGELINE J. GABRIEL, TERESITA C. LUALHATI, ISAGANI P. MAKISIG, REY S. PASCUA, EVELYN A. SIA, MA. VICTORIA M. VIDALLON, AUDREY A. ALJIBE, REY ANTHONY M. AMPARADO, JOSE A. ANTEENOR, AUGUSTO D. ARANDIA, JR., JANICE L. ARRIOLA, RUTH SHIELA M. BAGADIONG, STEVE D. BERING, ALAN ROY I. BUYCO, MANOLO T. CABRERA, RACHEL M. CASTILLO, VICTOR O. CHUA, VIRGILIO Y. CO, JR., LEOPOLDO S. DABAY, ARMAND V. DAYANG-HIRANG, HUBERT V. DIMAGIBA, MA. LOURDES CECILIA B. EMPARADOR, FELIX B. ESTACIO, JR., JULIETA T. ESTRADA, MARICEL G. EVALLA, JOSE G. GUISADIO, JOSE RAINARIO C. LAOANG, ALEXANDER A. MARTINEZ, JUAN ALEX C. NAMBONG, JOSEPHINE M. ONG, ARMANDO B. OROZCO, ARLENE R. RODRIGUEZ, NICOMEDES P. RUIZO, JR., DON A. SANTANA, ERNESTO R. SANTOS, JR., EDNA M. SARONG, GREGORIO S. SEECRETARIO, ELLEN M. SORIANO, ROSIE C. UY, ARVIN D. VALENCIA, FERMIN JOSSEPH B. VENTURA, JR., EMMANUEL C. YAPTANCO, ERNESTO C. ZUNIGA, ARIEL S. ABENDAN, EMMA R. ABENDAN, PAULA AGNES A. ANGELES, JACQUILINE B. BAQUIRAN, JENNIFER S. BARCENAS, ALVIN E. BARICANOSA, GEORGE MAXIMO P. BARQUEZ, MA. ELENA G. BELLO, RODERICK M. BELLO, MICHAEL MATTHEW B. BILLENA, LEOPE L. CABENIAN, NEPTALI A. CADDARAO, FERDINAND MEL S. CAPULING, MARGARETTE B. CORDOVA, MA. EDNA V. DATOR, PRANIEL C. DAYAO, RAGCY L. DE GUZMAN, LUIS E. DELOS SANTOS, CARMINA M. DEGALA, EPHRAIM RALPH A. DELFIN, KAREN M. DEOCERA, CAROLINA C. DIZON, MARCHEL S. ESQUEJJO, JOCELYN L. ESTROBO,

MINERVA S. FALLARME, HERNANE C. FERMOCIL, RACHEL B. FETIZANAN, SAMUEL A. FLORENTINO, MENCHIE R. FRANCISCO, ERNESTO U. GAMIEL,15 MACARIO RODOLFO N. GARCIA, JOEL S. GARMINO, LESTER MARK Z. GATCHALIAN, MA. JINKY P. GELERA, MA. TERESA G. GONZALES, GONZALO G. GUINIT, EMILY H. GUINO-O, FERDINAND S. HABIJAN, JUN G. HERNANDEZ, LOURDES D. IBEAS, MA. ANGELA L. JALANDDONI, JULIE T. JORNACION, MANUEL C. LIM, MA. LOURDES A. LIM, EMERSON V. LUNA, NOLASCO B. MACATANGAY, NORMAN C. MANACO, CHERRY LOU B. MANGROBANG, MARASIGAN G. EDMUNDO, ALLEN M. MARTINEZ, EMELITA C. MONTANO, ARLENE P. NOBLE, SHIRLEY A. ONG, LOTIZ E. ORTIZ LUIS, PABLITO M. PALO, MARY JAINE16 D. PATINO, GEOFFREY T. PRADO, OMEGA MELANIE M. QUINTANO, ANES A. RAMIREZ, RICARDO D. RAMIREZ, DANIEL O. RAQUEL, RAMON B. REYES, SALVACION N. ROGADO, ELMOR R. ROMANA, JR., LOURDES U. SALVADOR, ELMER S. SAYLON, BENHARD E. SIMBULAN, MA. TERESA S. SOLIS, MA. LOURDES ROCEL E. SOLIVEN, EMLY C. SUYAT, EDGAR ALLAN P. TACSUAN, RAYMONDD D. TANAY, JOCELYN Y. TAN, CANDIDO G. TISON, MA. THERESA O. TISON, EVELYN T. UYLANGCO, CION E. YAP, MA. OPHELIA C. DE GUZMAN, MA. HIDELISA P. IRA, RAYMUND MARTIN A. ANGELES, MERVIN S. BAUTISTA, ELENA R. CONDEVILLAMAR, CCHERRY T. CO, LEOPOLDO V. DE LA ROSA, DOROTEO S. FROILAN, EMMANUEL B. GLORIA, JULIETE L. JUBAC, and ROSEMARIE L. TANG, Respondents. x-----------------------x G.R. No. 157506 SOLIDBANK UNION, EVANGELINE J. GABRIEL, EVELYN A. SIA, TERESITA C. LUALHATI, ISAGANI P. MAKISIG, REY S. PASCUA, MA. VICTORIA M. VIDALLON, AUDREY A. ALJIBE, REY ANTHONY AMPARADO, JOSE A. ANTENOR, AUGUSTO D. ARANDIA, JR., RUTH SHIELA M. BAGADIONG, STEVE D. BERING, ALAN ROY I. BUYCO, MANOLO T. CABRERA, RACHEL M. CASTILLO, VICTOR O. CHUA, VIRGILIO Y. CO, JR., LEOPOLDO S. DABAY, HUBERT V. DIMAGIBA, MA. LOURDES CECILIA B. EMPERADOR, FELIX B. ESTACIO, JR., JULIETA T. ESTRADA, MARICEL G. EVALLA, JOSE G. GUISADIO, ALEXANDER A. MARTINEZ, JOSEPHINE M. ONG, EDNA M. SARONG, GREGORIO S. SECRETARIO, ARVIN D. VALENCIA, FERMIN JOSEPH B. VENTURA, JR., EMMANUEL C. YAPTANGCO, ERNESTO C. ZUIGA, ALVIN E. BARICANOSA, GEORGE MAXIMO P. BARQUEZ, MA. ELENA G. BELLO, MICHAEL MATTHEW B. BILLENA, NEPTALI A. CADDARAO, FERDINAND MEL S. CAPULONG, MA. EDNA V. DATOR, RANIEL C. DAYAO, RAGCY L. DE GUZMAN, LUIS E. DELOS SANTOS, CAROLINA C. DIZON, JOCELYN L. ESTROBO, MINERVA S. FALLARME, HERNANE C. FERMOCIL, RACHEL B. FETIZANAN, SAMUEL A. FLORENTINO, JOEL S. GARMINO, LESTER MARK Z. GATCHALIAN, GONZALO GUINIT, FERDINAND S. HABIJAN, JUN G. HERNANDEZ, MA. ANGELA L. JALANDONI, MA. LOURDES A. LIM, EMERSON V. LUNA, NOLASCO B. MACATANGAY, NORMAN C. MAACO, CHERRY LOU MANGROBANG, EDMUNDO G. MARASIGAN, ALLEN M. MARTINEZ, ARLENE P. NOBLE, SHIRLEY A. ONG, LOTIZ E. ORTIZ LUIS, PABLITO M. PALO, GEOFFREY T. PRADO, OMEGA MELANIE M. QUINTANO, AGNES A. RAMIREZ, RICARDO D. RAMIREZ, DANIEL O. RAQUEL, RAMON B. REYES, SALVACIO N. ROGADO, ELMOR R. ROMANA, JR., LOURDES U. SALVADOR, ELMER S. SA YLON, BENNARD E. SIMBULAN, MA. LOURDES ROCEL E. SOLIVEN, EMILY C. SUYAT, RAYMOND D. TANAY, .JOCELYN Y. TAN, CANDIDO G. TISON, MA. THERESA O. TISON, EVELYN T. UYLANGCO, MERVIN S. BAUTISTA, LEOPOLDO V. DE LA ROSA, DOROTEO S. FROILAN and JULIETE L. JUBAC, Petitioners. vs. METROPOLITAN BANK AND TRUST COMPANY, Respondent. DECISION DEL CASTILLO, J.:

The issues presented in these consolidated petitions have been squarely resolved by this Court in its November 15, 2010 Decision in Solidbank Corporation v. Gamier,17 The said Decision constitutes res judicata in these consolidated petitions. These petitions for review on certiorari assail the conflicting Decision of the Court of Appeals (CA) in CA-G.R. SP Nos. 68054 and 68998. In CA-G.R. SP No. 68054, the CAs Second Division ruled that the public demonstration conducted by the employees on April 3, 2000 after the Secretary of Labor assumed jurisdiction over the labor dispute was a valid exercise of their constitutional rights to freedom of expression, to peaceful assembly, and to petition the government for redress of their grievances and, hence, their dismissal from employment was illegal. Said division of the CA thus set aside the ruling of the National Labor Relations Commissions (NLRCs) Second Division and reinstated the Decision18 dated March 16, 2001 of Labor Arbiter Luis D. Flores (Labor Arbiter Flores). In CA-G.R. SP No. 68998, however, the Special Third Division of the CA held that the employees staged an illegal strike. It also held that Metropolitan Bank and Trust Company (Metrobank) could not be held jointly and solidarily liable with Solidbank Corporation (Solidbank) and First Metro Investment Corporation (First Metro) because each of them have separate and distinct legal personalities. Factual Antecedents Solidbank Union (Union) was a legitimate labor organization and the duly certified sole bargaining representative of all rank-and-file employees of Solidbank. On November 17, 1999, the Union and Solidbank negotiated for a new economic package for the remaining two years of the 1997-2001 collective bargaining agreement (CBA). However, the parties reached an impasse. Thus, on January 18, 2000, then Secretary of Labor Bienvenido E. Laguesma (Secretary Laguesma) assumed jurisdiction over the dispute and enjoined the parties from holding a strike or lockout or any activity which might exacerbate the situation.19 Thereaftter, on March 24, 2000, Secretary Laguesma issued an Order20 disposing as follows: WHEREFORE, premises considered, judgment is hereby issued: a. Directing Solidbank Corporation and Solidbank Union to conclude their Collective Bargaining Agreement for the years 2000 and 2001, incorporating the dispositions above set forth; b. Dismissing the unfair labor practice charge against Solidbank Corporation; c. Directing Solidbank to deduct or check-off from the employees lump sum payment an amount equivalent to seven percent (7%) of their economic benefits for the first (1st) year, inclusive of signing bonuses, and to remit or turn over the said sum to the Unions aut horized representative, subject to the requirements of check-off; d. Directing Solidbank to recall the show-cause memos issued to employees who participated in the mass actions if such memos were in fact issued. SO ORDERED.
21

Solidbank also filed its Motion for Reconsideration. With respect to the mass demonstration conducted by its employees, however, Solidbank perceived the same to be an illegal strike, a deliberate abandonment of work calculated to paralyze its operations. Thus, Solidbank issued a memorandum22 informing all the participants in the mass demonstration that they had put their jobs at risk. In another memorandum, Solidbank informed the employees that the bank was willing to take back those who would report for work on April 6, 2000. About 513 of the striking employees obliged with the second memorandum. With regard to the 199 employees who did not comply with the aforesaid memorandum, another memorandum23 was issued requiring them to explain within 24 hours from notice thereof why they should not be dismissed from employment. Pending receipt of explanations, Solidbank placed the concerned employees under preventive suspension status. On April 17, 2000, Solidbank dismissed all 199 employees.24 Eventually, however, it re-admitted 70 employees, bringing down the number of dismissed employees to 129. On varying dates, some 21 employees executed a Release, Waiver, and Quitclaim25 in favor of Solidbank. On May 8, 2000, Secretary Laguesma issued an Order26 denying the motions for reconsideration separately filed by Solidbank and the Union. Meanwhile, First Metro and Solidbank entered into a merger agreement, with Solidbank as the surviving entity and First Metro ceasing to exist as a corporation. However, the surviving corporation was renamed First Metro Investment Corporation. Subsequently, Metrobank bought all banking-related assets and liabilities of Solidbank (renamed First Metro), which ceased operations on August 31, 2000. Proceedings before the Labor Arbiter On July 21, 2000, the Union, together with its members who were dismissed by Solidbank (hereinafter collectively referred to as complainants), filed, thru E. R. Jabla Law Offices, a Complaint for illegal dismissal27 against Solidbank, its President and Chief Executive Officer Deogracias N. Vistan (Vistan), Senior Vice-President Diwata Castanos (Castanos), and First Metro.This complaint was subsequently amended by dropping 3228 individual complainants and Castanos and by impleading Metrobank and its Assistant VicePresident for Human Resources Edgardo Mendoza, Jr. (Mendoza) as party respondents. Complainants contended that the mass demonstration they conducted was not a strike but was a legitimate exercise of their constitutional rights to freedom of expression, to peaceful assembly and to petition the government for redress of their grievances. On September 29, 2000, Sycip Salazar Hernandez and Gatmaitan, representing the respondents in the Amended Complaint, filed a Position Paper with Motion to Dismiss (with respect to several individual complainants).29 Said law firm asserted that Solidbank validly terminated the employment of those who participated in the strike which was illegal. And since the dismissal of said employees was based on justifiable cause, the Unions claim of unfair labor practice had no leg to stand on. Said counsel further pointed out that on August 31, 2000, Solidbank ceased its banking operations. Consequently, pursuant to Article 283 of the Labor Code,30 all of its employees were terminated from employment on said date. Ruling of the Labor Arbiter On March 16, 2001, Labor Arbiter Flores rendered his Decision31 declaring the disputed April 3, 2000 incident not a strike but a mere expression of the employees displeasure over the Secretarys ruling; that the 24-hour deadline imposed by Solidbank within which the employees should submit their written explanation was not sufficient to give them reasonable opportunity to refute the charges

Displeased with Secretary Laguesmas ruling, about 712 union members and officers skipped work in the morning of April 3, 2000 (a Monday) and trooped to his office in Intramuros, Manila, not only to accompany their lawyer in filing the Unions Motion for Reconsideration but also to stage a brief public demonstration. Other rank and file employees in the provincial branches of Solidbank also absented themselves from work that day.

against them; and that Solidbank was guilty of unfair labor practice for using union membership as one of the bases for recalling or terminating employment. Accordingly, he awarded full backwages and attorneys fees in favor of the employees. The dispositive portion of the Labor Arbiters Decision reads as follows: WHEREFORE, premises considered, judgment is hereby rendered declaring complainants dismissal as illegal and unjustified and ordering the respondents Solid Bank Corporation and/or its successorin-interest First Metro Investment Corporation and/or Metropolitan Bank and Trust Company and/or Deogracias Vistan and/or Edgardo Mendoza to reinstate complainants to their former positions. Concomitantly, said respondents are hereby ordered to jointly and severally pay the complainants their full backwages and other employees benefits from the time of their dismissal up to the date of their actual reinstatement; payment of ten (10%) percent attorneys fees; payment of ONE HUNDRED FIFTY THOUSAND PESOS (P 150,000.00) each as moral damages and ONE HUNDRED THOUSAND PESOS (P 100,000.00) each as exemplary damages which are computed, at the date of this decision in the amount of THIRTY THREE MILLION SEVEN HUNDRED NINETY FOUR THOUSAND TWO HUNDRED TWENTY TWO PESOS and 80/100 (P 33,794,222.80), by the Computation and Examination Unit of this branch and becomes an integral part of this Decision. SO ORDERED.32 Then on April 26, 2001, complainants filed an Urgent Motion for the Issuance of A Writ of Execution33 seeking the immediate enforcement of the Labor Arbiters Decision insofar as the reinstatement aspect was concerned. Proceedings before the National Labor Relations Commission Solidbank and Metrobank separately filed their appeal. In its Memorandum of Appeal,34 Solidbank imputed to Labor Arbiter Flores grave abuse of discretion in concluding that the concerted action of the complainants was a mere expression of displeasure and not a strike in defiance of Secretary Laguesmas assumption order. Solidbank likewise alleged that the Labor Arbiter erred in holding that it was guilty of unfair labor practice; that complainants were denied due process of law; that the 21 individual complainants who voluntarily settled their claims against the bank were still entitled to the avails of the suit; that complainants were entitled to damages and attorneys fees; and, that the officers of the bank were solidarily liable with it. Metrobank, for its part, argued that it had a separate and distinct personality from Solidbank and First Metro and, hence, could not be held solidarily liable with said entities. It also claimed that the labor tribunal did not acquire jurisdiction over its person because it was not served with summons. Metrobank stressed that it never engaged the services of Sycip Salazar Hernandez and Gatmaitan and only learned of the pending case when it was informed by First Metro about it. For these reasons, Metrobank contended that the assailed Decision of the Labor Arbiter was null and void insofar as it was concerned. Metrobank likewise claimed that the complaint should have been outrightly dismissed for violating the rule against forum shopping, as six35 of the complainants had earlier filed illegal dismissal cases. Moreover, each of the complainants failed to sign the certificate of nonforum shopping. It also echoed the contentions of Solidbank contained in the latters Memorandum of Appeal. On May 21, 2001, the Labor Arbiter issued a Partial Writ of Execution,36 ordering the reinstatement of the dismissed employees to their former positions. Whereupon, Metrobank filed a Motion37 seeking to restrain the enforcement of said writ. Solidbank likewise filed an Urgent Motion (to Quash or Recall Writ of Execution),38 claiming that the positions previously held by the complainants were no longer available because Solidbank had already ceased operations.

The complainants thereafter filed their Answer (To RespondentsAppellants Memoranda of Appeal).39 On July 23, 2001, the NLRCs Second Division rendered its Decision40 finding the dismissal of the complainants valid. It opined that the mass action held on April 3, 2000 was a strike within the contemplation of Article 212(o)41of the Labor Code and in violation of the Secretary of Labors January 18, 2000 assumption order. Notably, however, the NLRC Second Division still awarded separation benefits in favor of the complainants on equitable grounds. The NLRC Second Division likewise ruled that Solidbank did not interfere with complainants right to self-organization and, hence, did not commit unfair labor practice. It also dismissed the complaint with respect to complainant Jose A. Antenor for violating the rule against forum shopping, as well as with respect to the 21 individual complainants who already executed Release, Waiver and Quitclaim. The Second Division of the NLRC disposed as follows: WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby VACATED and SET ASIDE and a new one entered dismissing the complaint for illegal dismissal and unfair labor practice for lack of merit. As equitable relief, respondents are hereby ordered to pay complainants separation benefits as provided under the CBA at least one (1) month pay for every year of service whichever is higher [sic]. SO ORDERED.42 The banks and the complainants filed their respective motions for reconsideration but these were all denied by the NLRC in its Resolution43 dated September 28, 2001. On November 29, 2001, Labor Arbiter Flores issued an Order and an Alias Partial Writ of Execution directing the banks to pay complainants their accrued wages and other employees benefits computed from the date of his Decision up to the date of the reversal thereof by the NLRC Second Division on July 23, 2001. Incidentally, other similarly situated employees44 filed their separate complaints for illegal dismissal against Solidbank, which were consolidated and assigned to Labor Arbiter Potenciano Canizares, Jr. (Canizares). On November 14, 2000, Labor Arbiter Canizares issued a Decision dismissing the complaints. In a Decision dated January 31, 2002, however, the NLRCs Third Division reversed the ruling of the Labor Arbiter and ruled in favor of said complainants. Thus: WHEREFORE, the decision appealed from is hereby SET ASIDE and a new one entered finding the respondent Solidbank Corporation liable for the illegal dismissal of complainants Ernesto U. Gamier, Elena P. Condevillamar, Janice L. Arriola and Maria Ophelia C. De Guzman, and ordering the respondent bank to reinstate the complainants to their former positions without loss of seniority rights and to pay full backwages reckoned from the time of their illegal dismissal up to the time of their actual/payroll reinstatement. Should reinstatement not be feasible, respondent bank is further ordered to pay in accordance with the provisions of the subsisting Collective Bargaining Agreement. All other claims are DISMISSED for lack of merit. SO ORDERED.45 Proceedings before the Court of Appeals</p> From the conflicting Decisions of the Second and Third Divisions of the NLRC stemmed five interrelated petitions for certiorari separately filed by the parties before the CA. CA-G.R. SP Nos. 67730 and 70820

CA-G.R. SP No. 67730 was a petition for certiorari filed by Solidbank, Vistan and Mendoza seeking to nullify the July 23, 2001 Decision of the NLRCs Second Division insofar as it ordered Solidbank to pay separation pay. CA-G.R. SP No. 70820, on the other hand, was another petition for certiorari filed by Solidbank praying for the reversal of the January 31, 2002 Decision of the NLRCs Third Division. These cases were consolidated and assigned to the CAs Twelfth Division. In its March 10, 2003 Decision,46 the CA Twelfth Division denied both petitions on the ground that the mass action staged by the complainants was a legitimate exercise of their right to free expression. Its dispositive portion reads: WHEREFORE, the twin petitions are hereby DENIED. The dismissal of private respondents are hereby declared to be illegal. Consequently, petitioner is ordered to reinstate private respondents to their former position, consonant with the Decision of this Court in CA-G.R. SP No. 68054. SO ORDERED.47 Solidbank then filed with this Court petitions for review on certiorari questioning the above-mentioned Decision of the CA Twelfth Division. These petitions docketed as G.R. Nos. 159460 and 159461 were consolidated and raffled to the Third Division of this Court. On November 15, 2010, the Courts Third Division rendered its Decision which, as mentioned in our opening paragraph, constitutes res judicata in these consolidated petitions. CA-G.R. SP No. 68054 In their petition for certiorari in CA-G.R. SP No. 68054, complainants, thru Atty. Potenciano A. Flores, Jr., assailed the July 23, 2001 Decision of the NLRCs Second Division. On August 29, 2002, the Second Division of the CA rendered its Decision48 finding the April 3, 2000 mass demonstration a valid exercise of complainants right to petition the government for redress of their grievances. Thus: WHEREFORE, premises considered, the instant petition for certiorari is GRANTED. The Labor Arbiters decision, except with respect to the award of moral and exemplary damages which are heretofore lowered to PhP 50,000.00 and PhP 25,000.00, respectively, is hereby REINSTATED. SO ORDERED.49 Solidbank and Metrobank separately moved for reconsideration,50 which drew complainants Consolidated Comment.51 In a Resolution52 dated January 30, 2003, the CA denied both motions. The August 29, 2002 Decision of the CAs Second Division was assailed by Metrobank and Solidbank before this Court in two separate petitions for review on certiorari G.R. No. 157169 and G.R. No. 157327, respectively. CA-G.R. SP No. 68349 Atty. Emmanuel R. Jabla (Atty. Jabla), in collaboration with Attys. Federico C. Leynes and Jose C. Espinas, and in representation of five individual complainants, initiated CA-G.R. SP No. 68349.53 However, on April 24, 2002, the CAs Special Tenth Division issued a Resolution54 outrightly dismissing the petition on the following grounds: (i) there was no proof that the signatories in the verification and certification against forum shopping were authorized to sign the same; (ii) violation of the rule against forum shopping; and, (iii) noncompliance with Section 11, Rule 13 of the Rules of Court. 55 A motion for reconsideration was filed, but the same was denied in a Resolution56 dated October 16, 2002.

Subsequently, said five complainants still represented by Jabla Damian and Associates filed with this Court a Motion for Extension of Time to File Petition for Review on Certiorari,57 only to withdraw it afterwards. Accordingly, on February 5, 2003, this Court declared the case terminated.58 CA-G.R. SP No. 68998 CA-G.R. SP No. 68998 was a petition for certiorari with prayer for injunctive relief filed by Metrobank seeking to nullify the Decision of the Second Division of the NLRC insofar as it awarded separation benefits in favor of the complainants. During the pendency of said petition, the NLRC issued on January 9, 2002 a Notice of Garnishment59 for the implemention of Labor Arbiter Floress March 16, 2001 Decision against Solidbank, First Metro or Metrobank. On January 14, 2002, the Fourth Division of the CA, thru Justice Bernardo P. Abesamis, issued a Resolution60granting Metrobanks request for a temporary restraining order. Then on February 20, 2002, upon Metrobanks filing of a Supplemental Motion, the Special Fourth Division of the CA issued another Resolution61 granting Metrobanks prayer for the issuance of a writ of preliminary injunction. It enjoined the implementation of Labor Arbiter Floress Decision,62 November 29, 2001 Order and Alias Partial Writ of Execution, as well as the NLRC Second Divisions July 23, 2001 Decision63 and September 28, 2001 Resolution.64 In view of this turn of events, and believing that they can no longer expect fair and impartial justice, complainants filed a Motion to Inhibit Justice Bernardo P. Abesamis.65 They averred that the issuance of the two resolutions granting Metrobanks prayer for injunctive relief was a blatant display of Justice Abesamiss bias and prejudice, if not gross ignorance of the law. Complainants also sought reconsideration of the above-mentioned resolutions on the ground that the reinstatement aspect of Labor Arbiter Floress Decision was immediately executory.1wphi1 In a Resolution66 dated May 30, 2002, however, the CAs Third Division denied both motions, ratiocinating that the Labor Codes provision on the executory nature of the reinstatement aspect, even pending appeal, is not applicable to cases pending with the CA. With regard to complainants motion to inhibit, the CA opined that the reasons stated therein do not constitute grounds for disqualification or inhibition of judges. With the denial of their motion for reconsideration to set aside the CAs resolutions granting injunctive relief, complainants filed with this Court on July 18, 2002 a petition for review on certiorari. This was docketed as G.R. No. 153799. Pending resolution of G.R. No. 153799, the CAs Special Third Division rendered its Decision67 in CA-G.R. SP No. 68998 in favor of Metrobank. It held that since Metrobank was not duly served with summons, the Decisions of the labor tribunals insofar as said bank is concerned are null and void. In addition, the CA Special Third Division ruled that complainants are not entitled to separation pay because the mass demonstration they conducted on April 3, 2000 violated Secretary Laguesmas assumption order. Moreover, even as suming that complainants are entitled to separation pay, the CA opined that Metrobank cannot be held solidarily liable because there was no merger between Metrobank and Solidbank. Metrobank, which has a separate and distinct personality of its own, merely bought the banking-related assets and liabilities of Solidbank. The dispositive portion of the July 26, 2002 Decision of the CA Special Third Division in CA-G.R. SP No. 68998 reads: WHEREFORE, premises considered, the instant petition is hereby GIVEN DUE COURSE and GRANTED. The Decision of the National

Labor Relations Commission dated July 23, 2001 with respect to the portion reading: "the decision of the Labor Arbiter is hereby VACATED and SET ASIDE and a new one entered dismissing the complaint for illegal dismissal and unfair labor practice for lack of merit", is AFFIRMED; and the portion of the same decision which reads: "As equitable relief, respondents are hereby ordered to pay complainants separation benefits as provided under the CBA at least one (1) month pay for every year of service whichever is higher" [sic], is REVERSED and SET ASIDE. SO ORDERED.68 Complainants filed a Motion for Reconsideration69 but the same was denied in the Resolution70 dated March 6, 2003. This prompted complainants to file with this Court a Petition for Review on Certiorari, which was docketed as G.R. No. 157506. Issues G.R. No. 153799 Citing Article 223 of the Labor Code,71 complainants contend that the reinstatement aspect of Labor Arbiter Floress ruling is immediately executory, even pending appeal. In resisting the petition, Metrobank counter-argues that complainants resort to a petition for review on certiorariunder Rule 45 of the Rules of Court is improper because it is available only to correct judgment or final order or resolution of the CA. Here, what complainants are assailing are interlocutory resolutions of the CA granting Metrobanks prayer for injunctive relief. Also, with the promulgation of the CA Special Third Divisions Decision in CA-G.R. SP No. 68998 on July 26, 2002, this petition (G.R. No. 153799) has become moot and academic.72 Metrobank likewise argues that at the time the controversy reached the CA, the Decision of Labor Arbiter Flores was no longer on appeal. Therefore, the CAs Special Third Division was correct in holding that the provision of Article 223 of the Labor Code was then no longer applicable. Furthermore, Metrobank asserts that the labor tribunals did not acquire jurisdiction over its person and that it cannot be held solidarily liable with Solidbank and First Metro. G.R. No. 157506 In their petition, complainants contend, among others, that the April 3, 2000 mass demonstration was a legitimate exercise of their constitutional rights to freedom of expression, to peaceful assembly and to petition the government for redress of wrong; that Metrobank was not deprived of its right to due process, and that it should be held solidarily liable with its co-petitioners by reason of corporate affinity; that the Decision in CA-G.R. SP No. 68998 violated several constitutional provisions relative to labor; that the punishment of dismissal imposed upon the 129 employees is not commensurate to their half-day absence from work; that they believed in good faith that the April 3, 2000 mass demonstration was an ordinary protest action directed against Secretary Laguesma; and that Solidbank is guilty of illegal dismissal for hastily and unceremoniously carrying out their mass dismissal from work. Complainants further state that Solidbank did not reinstate the 129 employees because of their membership in the union, which amounts to interference with the employees right to self-organization and, hence, constitutes unfair labor practice; that Solidbank is equally guilty of illegal lockout for refusing to admit them back to work; that the 24 hours given them to show cause was unreasonably short; and worse, their preventive suspension practically prevented them from submitting their explanation because they were barred entry to the banks premises.

Finally, complainants seek reinstatement of the award of damages granted them by Labor Arbiter Flores. They claim that Solidbank violated Article 277(b) of the Labor Code requiring employers to observe and comply with the two-notice rule and to conduct an inquiry before dismissing their employees. Hence, in view of these wrongful omissions in effecting their dismissal, Vistan and Mendoza should be held jointly and severally liable with Solidbank, First Metro and Metrobank. G.R. Nos. 157169 and 157327 Metrobank and Solidbank separately filed their respective petitions for review on certiorari assailing the August 29, 2002 Decision73 of the CAs Second Division in CA-G.R. SP No. 68054. On April 9, 2003, these petitions docketed as G.R. Nos. 157169 and 157327 were consolidated.74 In G.R. No. 157169, Metrobank maintains that the April 3, 2000 mass demonstration was an illegal strike; that the person against whom the mass action is directed as well as the true intention of the complainants in staging the mass action, is immaterial and has no bearing in determining whether said mass action is an illegal strike; that once the Secretary of Labor assumed jurisdiction over the dispute, the striking employees were prohibited from committing acts that would exacerbate the situation; and the mass action did not only take place in front of the office of Secretary Laguesma but also in front of Solidbanks Binondo branch and in the provinces.75 Metrobank likewise insists that the CA Second Division should have outrightly dismissed CA-G.R. SP No. 68054 because complainants violated the rule against forum shopping. For Metrobank, the following circumstances indubitably constitute forum shopping: 7.24 Attys. Emmanuel R. Jabla, Federico C. Leynes and Jose C. Espinas continue to represent Solidbank Union and its Members, despite the fact that Atty. Potenciano A. Flores, Jr. filed a similar but allegedly separate Petition with the Court of Appeals docketed as CAG.R. SP No. 68054. It might be important to restate that the petition in CA-G.R. SP No. 68349 was already dismissed by the Court of Appeals primarily on the ground of forum shopping and such dismissal was declared final and executory by this Honorable Supreme Court in its Resolution in G.R. 156097 dated 05 February 2003. Nevertheless, Attys. Emmanuel R. Jabla, Federico C. Leynes and Jose C. Espinas were not disturbed by such adverse decision because they are now using to the benefit of Solidbank Union and its dismissed Members/employees the favorable decision obtained by Atty. Potenciano Flores, Jr. in CA-G.R. SP No. 68054. x x x xxxx 7.25 Furthermore, the Unions president, Evangeline J. Gabriel, after signing and verifying the Petition in CA-G.R. SP No. 68054 prepared by Atty. Potenciano Flores, verified several pleadings prepared by Attys. Emmanuel R. Jabla, Federico C. Leynes and Jose C. Espinas. xxxx 7.26 If Attys. Emmanuel R. Jabla, Federico C. Leynes and Jose C. Espinas do not recognize Atty. Potenciano Flores as the counsel of Solidbank Union and its Members/Employees, then they should not recognize much less benefit from the favorable Decision obtained by Atty. Potenciano Flores in CA-G.R. SP No. 68054.76 Metrobank likewise contends that complainants are not entitled to moral damages because the same are recoverable only where the dismissal or suspension of the employee was attended with bad faith and fraud; or constituted an act oppressive to labor; or was done in a manner contrary to morals, good customs or public policy. This, according to Metrobank, is absent in this case. Metrobank also points out that the Second Division of the CA grievously erred in reinstating the Decision of Labor Arbiter Flores with

respect to those who (i) were excluded as party complainants, (ii) were found guilty of forum shopping, or (iii) have executed quitclaims. Metrobank claims that several Union members/ employees can no longer benefit from the reinstatement aspect of said Labor Arbiters Decision, considering that 3277 of them were dropped from the original list of complainants, and that the NLRC had long ago considered the case dismissed insofar as they were concerned. In addition, there were 2178 employees who executed Release, Waiver and Quitclaim documents discharging Solidbank, its parent company, and affiliate or subsidiary companies, from any action, claim or other obligations arising from their employment with Solidbank. Thus, the NLRC dismissed the complaint with respect to said 21 employees. This was never questioned by the complainants in any of the cases that reached the CA. Moreover, there were 3579 individuals who were not included as partypetitioners in CA-G.R. SP No. 68054. But with the reinstatement of Labor Arbiter Floress Decision, these 35 individuals will benefit therefrom despite the fact that they did not appeal Labor Arbiter Floress Decision to the NLRC. Furthermore, additional 2180 Union members were included as complainants in G.R. No. 157506 despite their non-inclusion as party complainants in CA-G.R. SP No. 68998. Citing People v. Velez,81 Metrobank asserts that said 21 new complainants are not real parties in interest in this case and, hence, the same should be dismissed insofar as they are concerned. Metrobank prays for the reversal of the August 29, 2002 Decision of the CAs Second Division in CA-G.R. SP No. 68054. With regard to G.R. No. 157327,82 Solidbank claims that the CAs Second Division erred in exercising certiorarijurisdiction over the NLRC because, as can be readily seen from its Decision, there is nothing which says that the Second Division of the NLRC acted with grave abuse of discretion amounting to lack or excess of jurisdiction in arriving at its conclusion. On the contrary, the NLRCs Second Division Decision is supported by substantial evidence and, hence, should be respected and accorded finality. Solidbank stresses that complainants unjustified stoppage of work was actually an illegal strike and violated Article 264(a). Hence, for knowingly participating in an illegal activity, complainants are deemed to have lost their employment status. Solidbank avers that the Second Division of the CA overlooked the fact that it had already ceased banking operations since August 31, 2000. Hence, it is legally impossible for it to comply with said courts Decision ordering the reinstatement of complainants to their former position. Solidbank cries denial of due process claiming that it was not given the opportunity to file its comment on complainants petition for certiorari. It alleges that on January 24, 2002 it filed a Manifestation83 informing the CA that there are two identical petitions for certiorari (CA-G.R. SP No. 68054 and CA-G.R. SP No. 68349) filed by the complainants and that while it was furnished a copy of the petition in CA-G.R. SP No. 68349, complainants did not serve it with a copy of the petition in CA-G.R. SP No. 68054. Acting on Solidbanks Manifestation, the CAs Special Second Division issued a Resolution84 dated June 14, 2002 dismissing CA-G.R. SP No. 68054 on the ground of forum shopping. Nonetheless, upon complainants motion, the CA reinstated the petition and forthwith declared it submitted for decision, oblivious of the fact that Solidbank was not served with a copy of the petition in CA-G.R. SP No. 68054 nor given a chance to comment thereon.85 To date, complainants have yet to furnish Solidbank with a copy of said petition. Worse, the CA, relying on complainants allegations, sent its notices, orders, and resolutions to Solidbanks former principal office at 777 Paseo de Roxas, 1226 Makati City instead of at its new office address at First Metro Investment Corporation, 2nd Floor, GT Tower International, Ayala Avenue corner H. V. dela Costa St., Makati City. Solidbank agrees with Metrobank in claiming that the CAs Second Division erred in ordering the reinstatement of Labor Arbiter Floress Decision with respect to the 2186 complainants who had previously

executed Release, Waiver and Quitclaim in the presence of Mr. Reynaldo R. Ubaldo, a labor representative of the Labor Relations Division of DOLE. In seeking to delete the award of damages, Solidbank invokes the principle of damnum absque injuria. It contends that the law affords no remedy for damages resulting from an act which does not amount to a legal injury or wrong. In the present case, since the dismissal of complainants is not a wrong but in accordance with law and settled jurisprudence, complainants are not entitled to damages. Finally, in urging this Court to set aside the Decision of the CAs Second Division, Solidbank posits that to sustain the CA would create an absurd situation wherein the extraordinary authority of the Secretary of Labor under Article 263(g) of the Labor Code would be rendered nugatory. On September 4, 2003, complainants filed thru Jabla Damian and Associates a Manifestation and Motion87alleging, among others, that per attached Board Resolution88 dated August 25, 2003 complainants terminated the services of Atty. Potenciano A. Flores, Jr. (Atty. Flores) as their counsel for loss of trust and confidence. This drew Atty. Floress Comment/Counter-Manifestation and Opposition to Motion,89 claiming that what were stated in the Manifestation and Motion were "malicious, grossly misleading and twisted allegations." Atty. Flores did not dispute the fact that the original counsel of complainants was Jabla Damian and Associates, who appeared before the labor tribunals. However, on October 20, 2001, the Union, through its President, wrote Atty. Jabla a letter terminating his services as counsel for the Union and sent him (Atty. Flores) a copy of their Kasunduan Bilang Abogado. Accordingly, complainants filed a Manifestation dated March 13, 2002 informing the CA in CA-G.R. SP No. 67730 that their counsel was Atty. Flores and that they did not hire or engage the services of Atty. Jabla to represent them in said case. Atty. Flores likewise averred that none of the complainants ever approached him to withdraw his appearance from any of the cases he handled for the Union. With respect to the Board Resolution alluded to by Jabla Damian and Associates, Atty. Flores posited that it was not valid because of the six members composing the Union Board, only one of them affixed her signature thereto.90 Atty. Flores averred that 8.05.5 These lawyers did not represent the union, its officers and members, in the proceedings before the two (2) divisions of the Court of Appeals chaired by Justices Rodrigo V. Cosico and Romeo Brawner. Therefore, it is unethical for them to file a motion for issuance of an alias writ of execution with the said labor arbiter relying on the decisions rendered by the two (2) divisions of the Court of Appeals wherein they did not participate or exert any effort to reinstate the decision of Labor Arbiter Luis Dizon Flores. Yet, they assisted the signatories to the said "Board Resolution" in the immoral scheme to ease out the undersigned counsel from participating in the executorial stage of the case at bar.91 The counsels bickering did not end with Atty. Floress Comment/Counter-Manifestation. In its Reply,92 Jabla Damian and Associates retaliated by claiming that complainants never sent any word terminating its legal services. Said law firm also alleged that: 5. Had the Union officers made clear their intention of terminating Atty. Jablas services, or had there been a valid notice and substitution of counsel, the undersigned counsels would not have gone to great lengths to file complainants petition for certiorari in the Court of Appeals in CA.-G.R. SP No. 68349 which they felt obligated to do, lest they would be accused of being remiss in their professional duties as counsel. 6. At the time they filed their petition in the Court of Appeals, undersigned counsels were unaware that some individual respondents had already gone to Atty. Flores to engage his services in filing their petition for certiorari with the Court of Appeals which was eventually docketed therein as CA-G.R. SP No. 68054. 7. Their belated discovery of this separate petition filed by Atty. Flores in behalf of some respondents constrained the undersigned counsels

to withdraw their appeal to the Supreme Court from the decision of the Court of Appeals in CA-G.R. SP No. 68349 for fear that, in addition to the reasons cited in their motion to withdraw, pursuing the same could only confuse the docket or adversely affect the other proceeding in CAG.R. SP No. 68054 which case had been filed earlier. 8. There is therefore no truth to Atty. Floress allegation that the period for its filing lapsed that is why the undersigned counsels withdrew their petition for review with the Supreme Court. 9. Assuming without admitting that Atty. Flores did send a Notice of Appearance and Urgent Manifestation and Motion to Atty. Jabla at his former office at Suite 2106 Cityland Condominium 10, Tower 1, H. V. dela Costa Street corner Ayala Avenue, Makati City, this was only in connection with the petition for certiorari filed by petitioner Solidbank Corporation in CA-G.R. SP No. 67730. There was no similar notice in the petition filed by petitioner Metropolitan Bank & Trust Company in CA-G.R. SP-UDK-4431 (68998) and in CA-G.R. SP No. 153799 [sic], the very petition filed by Atty. Flores himself in behalf of some of the respondents. 10. Finally, it is improper for Atty. Flores to boast of his victory in the Court of Appeals as if the same is a product of his uncommon brilliance. A cursory reading of Atty. Floress petition will reveal that it contains nothing but a repetition or restatement of the arguments raised by the undersigned counsels before the labor arbiter below. x x x93 Jabla Damian and Associates also accused Atty. Flores of violating Canon 11 of the Canons of Professional Responsibility for not conducting himself with courtesy, fairness and candor towards his professional colleagues.94 Then on January 18, 2005, complainant Jose Antenor filed his own Memorandum95 alleging among others that of the 19 employees of Solidbank Bacolod City Branch who joined the nationwide expression of displeasure he was the only one who was dismissed. He also claims that his suspension and eventual dismissal were not based on just or authorized cause; that he was not accorded procedural due process; and that he is entitled to full backwages. Our Ruling At balance, supposedly, in these consolidated cases is the managements right to discipline its employees who, without its permission, joined a public demonstration to protest the ruling of the Secretary of Labor vis--vis the employees constitutional rights to freedom of expression, to peaceful assembly and to petition the government for redress of their grievances. This issue, however, had already been resolved and passed upon by this Court in its November 15, 2010 Decision in G.R. Nos. 159460 and 159461,96 which reversed and set aside the March 10, 2003 Decision of the CAs Twelfth Division in CA-G.R. SP Nos. 67730 and 70820. In G.R. Nos. 159460 and 159461, the Courts Third Division resolved the following issues: "(1) whether the protest rally and concerted work abandonment/ boycott staged by the respondents violated the Order dated January 18, 2000 of the Secretary of Labor; (2) whether the respondents were validly terminated; and (3) whether the respondents are entitled to separation pay or financial assistance."97 In said November 15, 2010 Decision, this Court ruled that complainants concerted mass action was actually a strike and not a legitimate exercise of their right to freedom of expression;98 that complainants violated the January 18, 2000 Order of Secretary Laguesma;99 that the union officers dismissal was valid;100 and that petitioners therein failed to present proof that the union members participated in the commission of an illegal act during the said strike;101 hence, their dismissal was unjustified.102 This Court likewise specified the individual rights and liabilities of all the parties, including those who were dropped from the original complaint;103 had executed Release, Waiver and Quitclaim;104 did not appeal to the CA but, with the reinstatement of the Labor Arbiters Decision, will still benefit from the appellate courts Decision;105 and were included in the appeal though not impleaded as parties in the original complaint.106

The Courts Third Division likewise held in its November 15, 2010 Decision in G.R. Nos. 159460and 159461 that since reinstatement was no longer feasible due to the considerable lapse of time and the closure of Solidbank, respondents therein were awarded separation pay equivalent to one-month salary for every year of service. For those employees who executed quitclaims, their separation pay should be net of the amounts they had already received.107 As regards Metrobank, the Courts Third Division held that it cannot be held solidarily liable with Solidbank because it is not Solidbanks successor-in-interest.108 Vistan and Mendoza were likewise not held solidarily liable with Solidbank, there being no showing that they acted with malice, ill-will, or bad faith.109 The dispositive portion of the said November 15, 2010 Decision reads: WHEREFORE, the petitions are PARTLY GRANTED. The Decision dated March 10, 2003 of the Court of Appeals in CA-G.R. SP Nos. 67730 and 70820 is hereby SET ASIDE. Petitioner Solidbank Corporation (now FMIC) is hereby ORDERED to pay each of the above-named individual respondents, except union officers who are hereby declared validly dismissed, separation pay equivalent to one (1) month salary for every year of service. Whatever sums already received from petitioners under any release, waiver or quitclaim shall be deducted from the total separation pay due to each of them. The NLRC is hereby directed to determine who among the individual respondents are union members entitled to the separation pay herein awarded, and those union officers who were validly dismissed and hence excluded from the said award. No costs. SO ORDERED.110 The Decision of this Court in G.R. Nos. 159460 and 159461, therefore, constitutes res judicata to the present consolidated cases. "Res judicata means a matter adjudged; a thing judicially acted upon or decided; a thing or matter settled by judgment."111 It denotes "that a final judgment or decree on the merits by a court of competent jurisdiction is conclusive of the rights of the parties or their privies in all later suits on all points and matters determined in the former suit."112 For res judicata, in its concept as a bar by former judgment to apply, the following must be present: 1. The former judgment or order is final; 2. It is rendered by a court having jurisdiction over the subject matter and the parties; 3. It is a judgment or an order on the merits; and, 4. There is between the first and the second action identity of parties, identity of subject matter, and identity of causes of action.113 The Decision of this Court in G.R. Nos. 159460 and 159461 became final and executory on May 20, 2011. It is a decision based on the merits of the case and rendered by this Court in the exercise of its appellate jurisdiction after the parties invoked its jurisdiction. There is also, between the two sets of consolidated cases, identity of the parties, subject matter and causes of action. The parties in G.R. Nos. 159460 and 159461 are also impleaded as parties in these consolidated cases. And while some of the parties herein are not included in G.R. Nos. 159460 and 159461, the same are only few. In any event, it is well-settled that only substantial, and not absolute, identity of the parties is required for res judicata to lie. "There is substantial identity of the parties when there is a community of interest between a party in the first case and a party in the second case albeit the latter was not impleaded in the first case."114 With regard to identity of causes of action, it has been held that there is identity of causes of action when the same evidence will sustain both

actions or when the facts essential to the maintenance of the two actions are identical.115 Here, the bone of contention in both sets of consolidated cases boils down to the nature and consequences of complainants April 3, 2000 mass action. The antecedent facts that gave rise to all the cases were the same. Necessarily, therefore, the same evidence would sustain all actions. Such similarity in the evidence required to sustain all actions is also borne out by the identity of the issues involved in all these cases. While the parties have presented a plethora of arguments which we earlier discussed at length, the same nonetheless boil down to the same crucial issues formulated in G.R. Nos. 159460 and 159461. G.R. No. 153799 is also barred by res judicata. It should be recalled that in G.R. No. 153799, the complainants assailed the Resolutions dated January 14, 2002116 and February 20, 2002117 of the CAs Fourth Division granting Metrobanks request for injunctive reliefs. They claimed that the reinstatement aspect of the Labor Arbiters Decision is immediately executory. Hence, they are entitled to backwages from the time the Labor Arbiter promulgated his Decision until it was reversed by the NLRC. As discussed above, however, the November 15, 2010 Decision of this Court in G.R. Nos. 159460 and 159461 already adjudicated the respective rights and liabilities of the parties. Said Decision pronouncing the monetary awards to which the parties herein are entitled became final and executory on May 20, 2011. Under the rule on immutability of judgment, this Court cannot alter or modify said Decision. It is a well-established rule that once a judgment has become final and executory, it is no longer susceptible to any modification. 118 On a final note, we find it lamentable that while complainants are embroiled in a perturbing legal battle, their counsels still manage to quibble over money, unabashedly unmindful that their bickering would only further muddle the already complicated issues in these cases. If any one of them truly believes that the other is guilty of unethical conduct, then he should bring the appropriate action before the proper forum. WHEREFORE, these consolidated petitions are DISMISSED. No costs. SO ORDERED. MARIANO C. DEL CASTILLO Associate Justice WE CONCUR:
16

CERTIFICATION I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. MARIA LOURDES P. A. SERENO Chief Justice

Footnotes
1

Also spelled as Anteenor in some parts of the records. Also spelled as Rache in some parts of the records. Also spelled as Emparador in some parts of the records. Also spelled as Seecretario in some parts of the records. Also spelled as Josseph in some parts of the records. Also spelled as Yaptanco in some parts of the records. Also spelled as Capuling in some parts of the records. Also spelled as Praniel in some parts of the records. Also spelled as Jalanddoni in some parts of the records. Also spelled as Emly in some parts of the records. Also spelled as Raymondd in some parts of the records. Also spelled as Theres in some parts of the records. Also spelled as Zuniga in some parts of the records. Also spelled as Esquejjo in some parts of the records. Also spelled as Gamier in some parts of the records. Also spelled as Jane in some parts of the records.

10

11

12

13

14

15

ANTONIO T. CARPIO Associate Justice Chairperson ARTURO D. BRION Associate Justice JOSE PORTUGAL PEREZ Associate Justice

17

G.R. No. 159460 and 159461, November 15, 2010, 634 SCRA 554; penned by Associate Justice Martin S. Villarama, Jr. and concurred in by Associate Justices Conchita Carpio Morales, Arturo D. Brion, Lucas P. Bersamin and Maria Lourdes P. A. Sereno, now Chief Justice.
18

ESTELA M. PERLAS-BERNABE Associate Justice ATTESTATION

Records (G.R. No. 153799), Vol. I, pp. 436-453. See Order of even date, id. at 50-51. Id. at 52-58. Id. at 57-58. See sample copy, id. at 181. See sample copy, id. at 180.

19

20

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. ANTONIO T. CARPIO Associate Justice Chairperson

21

22

23

24

See sample memorandum of even date, id. at 179. See sample copies, id. at 105-120.
42

25

(o) "Strike" means any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute. Records (G.R. No. 153799), Vol. I, p. 393. Id. at 397-401.

26

Rollo (G.R. No. 157169), pp. 1028-1029.

43

27

Docketed as NLRC Case No. 30-07-02920-00; records (G.R. No. 153799), Vol. I, pp. 2-6.
28

44

Namely: 1) Janice L. Arriola; 2) Rachel M. Castillo; 3) Armand V. Dayanhirang; 4) Hubert V. Dimagiba; 5) Juan Alex C. Nambong; 6) Armando B. Orozco; 7) Arlene R. Rodriquez; 8) Don A. Santana; 9) Ernesto R. Santos, Jr.; 10) Ellen M. Soriano; 11) Arvin D. Valencia; 12) Emmanuel C. Yaptangco; 13) Jacquiline B. Baquiran; 14) Jennifer S. Barcenas; 15) Alvin F. Baricanosa; 16) Ferdinand Mel S. Capulong; 17) Ma. Edna V. Dator; 18) Ragcy L. De Guzman; 19) Karen M. Deocera; 20) Ernesto U. Gamiel; 21) Ma. Jinky P. Gelera; 22) Gonzalo G. Guinit; 23) Emily H. Guinoo; 24) Lourdes D. Ibeas; 25) Ma. Angela L. Jalandoni; 26) Allen M. Martinez; 27) Jocelyn Y. Tan; 28) Cion E. Yap; 29) Ma. Ophelia C. De Guzman; 30) Elena R. Condevillamar; 31) Emmanuel B. Gloria and 32) Rosemarie L. Tang.
29

Namely, Ernesto U. Gamier, Elena R. Condevillamar, Janice Arriola and Maria Ophelia C. de Guzman.
45

See March 1, 2003 Decision of the CAs Twelfth Division, rollo (G.R. No. 153799), pp. 485-499; penned by Associate Justice Romeo A. Brawner and concurred in by Associate Justices Bienvenido L. Reyes and Danilo B. Pine. See also Solidbank Corporation v. Gamier, supra note 17 at 567-568.
46

See March 1, 2003 Decision of the CAs Twelfth Division, id.

47

Id. at 498.

48

Records (G.R. No. 153799), Vol. I, pp. 27-49.

30

Article 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of laborsaving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. x x x
31

CA rollo (GA-G.R. SP No. 68054), pp. 565-579; penned by Associate Justice Rodrigo V. Cosico and concurred in by Associate Justices Buenaventura J. Guerrero and Perlita J. Tria Tirona.
49

Id. at 846.

50

See Motion for Partial Reconsideration, id. at 877-915, and Motion for Reconsideration, id. at 916-931.
51

Id. at 954-987. Id. at 1370.

52

Records (G.R. No. 153799), Vol. I, pp. 436-453.

53

32

Id. at 452-453. Id. at 462-464. Records (G.R. No. 153799), Vol. II, pp. 16-64.

A petition for certiorari under Rule 65 of the Rules of Court.

54

33

34

Rollo (G.R. No. 157169), pp. 752-755; penned by Associate Justice Remedios A. Salazar-Fernando and concurred in by Associate Justices Eliezer R. Delos Santos and Edgardo F. Sundiam.
55

35

Namely, Jose A. Antenor (RAB Case No. 05-10414-00), Elena R. Condevillamar and Janice L. Arriola (NLRC NCR Case No. 30-05-03002-00), Ma. Ophelia De Guzman (NLRC Case No. 30-05-02253-00), Rosemarie L. Tang (SUB-RAB05-05-00147-00), Juan Alex C. Nambong (NLRC NCR Case No. 30-04-01808-00), and Ernesto Gamier (NLRC NCR Case No. 30-04-01891-00).
36

Section 11. Priorities in modes of service and filing. Whenever practicable, the service and filing of pleadings and other papers shall be done personally. Except with respect to papers emanating from the court, a resort to other modes must be accompanied by a written explanation why the service or filing was not done personally. A violation of this Rule may be cause to consider the paper as not filed.
56

CA rollo (CA-G.R. SP No. 68998), Vol. II, pp. 597-599. Records (G.R. No. 153799), Vol. I, pp. 204-215. CA rollo (CA-G.R. SP No. 68998), Vol. II, pp. 600-607.

CA rollo (CA-G.R. SP No. 68054), pp. 1365-1366.

37

57

38

Docketed as G.R. No. 156097; rollo (G.R. No. 157169), pp. 757-761.
58

39

Id. at 762.

Records (G.R No. 153799), Vol. I, pp. 122-150.

59

40

Id. at 379-394; penned by Commissioner Victoriano R. Calaycay and concurred in by Presiding Commissioner Raul T. Aquino and Commissioner Angelita A. Gacutan.
41

CA rollo (CA-G.R. SP No. 68998), Vol. IV, p. 1485. Annex "A" of Metrobank's Supplemental Motion for the Issuance of Temporary Restraining Order and Writ of Preliminary Injunction, id. at 1479-1484.
60

Article 212. Definitions. x x x

Id. at 1477-1478; penned by Associate Justice Bernardo P. Abesamis and concurred in by Associate Justices Eubulo G. Verzola and Perlita J. Tria Tirona.

61

Id. at 1516-1520; penned by Associate Justice Bernardo P. Abesamis and concurred in by Associate Justices Bienvenido L. Reyes and Perlita J. Tria Tirona.
62

To discourage frivolous or dilatory appeals, the Commission or the Labor Arbiter shall impose reasonable penalty, including fines or censures, upon the erring parties. In all cases, the appellant shall furnish a copy of the memorandum of appeal to the other party who shall file an answer not later than ten (10) calendar days from receipt thereof. The Commission shall decide all cases within twenty (20) calendar days from receipt of the answer of the appellee. The decision of the Commission shall be final and executory after ten (10) calendar days from receipt thereof by the parties. Any law enforcement agency may be deputized by the Secretary of Labor and Employment or the Commission in the enforcement of decisions, awards, or orders. (Emphasis supplied.)
72

Records (G.R. No. 153799), Vol. I, pp. 436-453. Id. at 379-394. Id. at 397-401. CA rollo (CA-G.R. SP No. 68998), Vol. IV, pp. 1587-1609.

63

64

65

66

Id. at 1716-1720; penned by Associate Justice Bernardo P. Abesamis and concurred in by Associate Justices Eubulo G. Verzola and Josefina Guevara-Salonga.
67

Id. at 1722-1732; penned by Associate Justice Bernardo P. Abesamis and concurred in by Associate Justices Josefina Guevara-Salonga and Amelita G. Tolentino.
68

Id. at 1732. Id. at 2081-2165 .

See Metrobank's Memorandum, rollo (G.R. No. 153799), pp. 687-721.

73

69

70

Id. Vol. V, at 2303-2307.

71

Article 223. APPEAL - Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of the following grounds: (a) If there is prima facie evidence of grave abuse of discretion on the part of the Labor Arbiter; (b) If the decision, order or award was secured through fraud or coercion, including graft and corruption; (c) If made purely on questions of law; and (d) If serious errors in the findings of facts are raised which would cause grave or irreparable damage or injury to the appellant. In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal.The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement provided herein.

CA rollo (CA-G.R. SP No. 68054), pp. 835-846; penned by Associate Justice Rodrigo V. Cosico and concurred in by Associate Justices Buenaventura J. Guerrero and Perlita J. Tria Tirona.
74

Rollo (G.R. No. 157169), p. 1101.

75

"35. Disappointed and dissatisfied with the said order which they viewed as grossly disadvantageous to them, seven hundred [twelve] (712) regular rank and file employees of the bank, including individual petitioners herein, skipped their work in the morning of April 3, 2000 and they trooped to the office of said Secretary located at Intramuros, Manila, and staged a rally and demonstration to express their complaints, protests and indignation over the actuation of the Secretary. The occasion turned into a peaceful and orderly picketing in front of the said office. Other rank and file employees in the provincial branches of the bank, e.g., Cebu, Iloilo, Bacolod and Naga, followed suit and absented themselves from work." CA rollo (CA-G.R. SP No. 68054), p. 19.
76

Rollo (G.R. No. 157169), pp. 42-44.

77

Namely: 1) Janice L. Arriola; 2) Rachel M. Castillo; 3) Armand V. Dayanghirang; 4) Hubert V. Dimagiba; 5) Juan Alex C. Nambong; 6) Armando B. Orozco; 7) Arlene R. Rodriquez; 8) Don A. Santana; 9) Ernesto R. Ramos, Jr.; 10) Ellen M. Soriano; 11) Arvin D. Valencia; 12) Emmanuel C. Yaptangco; 13) Jacquiline B. Baquiran; 14) Jennifer S. Barcenas; 15) Alvin F. Baricanosa; 16) Ferdinand Mel S. Capulong; 17) Ma. Edna V. Dator; 18) Ragcy L. De Guzman; 19) Karen M. Deocera; 20) Ernesto U. [Gamiel]; 21) Ma. Jinky P. Gelera; 22) Gonzalo G. Guinit; 23) Emily H. Ginoo; 24) Lourdes D. Ibeas; 25) Ma. Angela L. Jalandoni; 26) Allen M. Martinez; 27) Jocelyn Y. Tan; 28) Cion E. Yap; 29) Ma. Ophelia C. De Guzman; 30) Elena R. Condevillamar; 31) Emmanuel R. Gloria; and, 32) Rosemarie L. Tan.
78

Namely: 1) Raymond Martin A. Angeles; 2) Lester Mark Z. Gatchalian; 3) Doroteo S. Froilan; 4) Armando B. Orozco; 5) Ma. Lourdes Cecilia B. Emperador; 6) Arvin D. Valencia; 7) Ragcy L. De Guzman; 8) Gonzalo G. Guinit; 9) Ferdinand Mel S. Capulong; 10) Allen M. Martinez; 11) Ma. Edna V. Dator; 12) Paula Agnes A. Angeles; 13) Audrey A. Aljibe; 14) Ma. Teresa G. Gonzales; 15) Nolasco B. Macatangay; 16) Arlene R. Rodriquez; 17) Hubert V. Dimagiba; 18) Ma. Jinky

R. Gelera; 19) Alvin E. Baricanosa; 20) Rachel M. Castillo; and, 21) Emmanuel C. Yaptangco.
79

90

Note that Annexes "A" and "B," the supposed proof of Atty. Flores, were not attached to his Comment/CounterManifestation and Opposition to Motion.
91

Namely: 1) Armand V. Dayanghirang; 2) Jose Rainario C. Laong; 3) Juan Alex C. Nambong; 4) Armando B. Orozco; 5) Arlene R. Rodriguez; 6) Nicomedes P. Ruizo, Jr.; 7) Don A. Santana; 8) Ernesto R. Santos, Jr.; 9) Ellen M. Soriano; 10) Ariel S. Abendan; 11) Emma R. Abendan; 12) Paula Agnes A. Angeles; 13) Jacquiline B. Baquiran; 14) Jennifer S. Barcenas; 15) Roderick M. Bello; 16) Carmina M. Degala; 17) Ephraim Ralph A. Delfin; 18) Karen M. Deocera; 19) Ernesto U. Gamiel; 20) Macario Rodolfo N. Garcia; 21) Jinky P. Galera; 22) Ma. Teresa G. Gonzales; 23) Emily H. Guinoo; 24) Janice L. Arriola; 25) Mary Jane D. Patino; 26) Margarette Cordova; 27) Cion E. Yap; 28) Ma. Ophelia C. De Guzman; 29) M. Hidelisa P. Ira; 30) Raymund Martin A. Angeles; 31) Elena R. Condevillamar; 32) Cherry T. Co; 33) Emmanuel B. Gloria; 34) Rosemarie L. Tang; and, 35) Lourdes D. Ibeas.
80

Rollo (G.R. No. 157327), p. 711. Id. at 773-779. Id. at 774-776. Id. at 924. Id. at 996-1006. Solidbank Corporation v. Gamier, supra note 17. Id. at 574. Id. at 575. Id. at 576-577. Id. at 579. Id. at 580. Id. Supra note 77. Supra note 78. Supra note 79. Supra note 80. Solidbank Corporation v. Gamier, supra note 17 at 582. Id. at 583. Id. at 583-585. Id. at 585.

92

93

94

95

96

97

Namely: 1) Ma. Edna V. Dator; 2) Ma. Angela Jalandoni; 3) Ma. Lourdes Emparador; 4) Doroteo Froilan; 5) Ma. Theresa O. Tison; 6) Jocelyn Y. Tan; 7) Hubert V. Dimagiba; 8) Emmanuel C. Yaptanco; 9) Rachel M. Castillo; 10) Jennifer S. Barcenas; 11) Audrey A. Aljibe; 12) Ragcy L. De Guzman; 13) Jose A. Antenor; 14) Gonzalo Guinit; 15) Arvin Valencia; 16) Nolasco Macatangay; 17) Alvin E. Baricanosa; 18) Allen M. Martinez; 19) Mel S. Capulong; 20) Agnes A. Ramirez; and, 21) Lester Mark Z. Gatchalian.
81

98

99

100

101

445 Phil. 784 (2003).

102

82

Captioned as "Solidbank Corporation and/or its successorin-interest First Metro Investment Corporation, Deogracias N. Vistan and Edgardo Mendoza, Jr. v. Solidbank Union, et al."
83

103

104

CA rollo (CA-G.R. SP No. 68054), pp. 521-525. Id. at 683-684.

105

84

106

85

See Resolution dated July 25, 2002, id. at 706-707. The dispositive portion thereof reads: WHEREFORE, premises considered, the instant petition for certiorari is hereby REINSTATED and, with the submission of the required pleadings, the same is now submitted for decision. SO ORDERED.

107

108

109

110

111 86

Supra note 77. Rollo (G.R. No. 157327), pp. 611-616.

87

88

Signed by Evangeline J. Gabriel, President, and with the conformity of: 1) Julie T. Jornacion; 2) Augusto D. Arandia, Jr; 3) Roderick M. Bello; 4) Ma. Elena G. Bello; 5) Jocelyn Y. Tan; 6) Jose G. Guisado; 7) Felix Estacio, Jr.; 8) Manuel Lim; 9) Ma. Lourdes A. Lim; 10) Fermin Joseph B. Ventura; 11) Armand V. Dayang-Hirang; 12) Neptali Caddarao; 13) Salvacion N. Rogado; 14) Joel S. Garmino; 15) Ernesto Gamier; 16) Leope Cabenian; 17) Candido Tison; 18) Ma. Theresa Tison; 19) Elena Condevillamar; 20) Janice Arriola; 21) Margarette B. Cordova; 22) Mary Jane Patino; 23) Jennifer S. Barcenas; 24) Macario Rodolfo N. Garcia; 25) Carmina M. Degala; and, 26) Doroteo S. Froilan, id. at 617619.
89

Heirs of Panfilo F. Abalos v. Bucal, G.R. No. 156224, February 19, 2008, 546 SCRA 252, 271; Alamayri v. Pabale, G.R. No. 151243, April 30, 2008, 553 SCRA 146, 157; Garcia v. Philippine Airlines, G.R. No. 162868, July 14, 2008, 558 SCRA 171, 186-187; Layos v. Fil-Estate Golf and Development, Inc., G.R. No. 150470, August 6, 2008, 561 SCRA 75, 102.
112

Taganas v. Hon. Emuslan, 457 Phil. 305, 311 (2003). Id. at 311-312.

113

114

Sempio v. Court of Appeals, 348 Phil. 627, 636 (1998), citing Santos v. Court of Appeals, G.R. No. 101818, September 21, 1993, 226 SCRA 630, 637.
115

Escareal v. Philippine Airlines, Inc., 495 Phil, 107, 119 (2005).

116

Id. at 696-719.

Supra note 60.

117

Supra note 61.

118

Airline Pilots Association of the Philippines v. Philippine Airlines, Inc., G.R. No. 168382, June 6, 2011, 650 SCRA 545, 547. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 196830 February 29, 2012

CESAR V. GARCIA, CARLOS RAZON, ALBERTO DE GUZMAN, TOMAS RAZON, OMER E. PALO, RIZALDE VALENCIA, ALLAN BASA, JESSIE GARCIA,JUANITO PARAS, ALEJANDRO ORAG, ROMMEL PANGAN, RUEL SOLIMAN, and CENEN CANLAPAN, represented by SERENO, and CESAR V. GARCIA, Petitioners, vs. KJ COMMERCIAL and REYNALDO QUE, Respondents. DECISION CARPIO, J.: The Case This is a petition1 for review on certiorari under Rule 45 of the Rules of Court. The petition challenges the 29 April 2011 Decision2 of the Court of Appeals in CA-G.R. SP No. 115851, affirming the 8 February3 and 25 June4 2010 Resolutions of the National Labor Relations Commission (NLRC) in NLRC-LAC-No. 12-004061-08. The NLRC set aside the 30 October 2008 Decision5 of the Labor Arbiter in NLRC Case No. RAB-III-02-9779-06. The Facts Respondent KJ Commercial is a sole proprietorship. It owns trucks and engages in the business of distributing cement products. On different dates, KJ Commercial employed as truck drivers and truck helpers petitioners Cesar V. Garcia, Carlos Razon, Alberto De Guzman, Tomas Razon, Omer E. Palo, Rizalde Valencia, Allan Basa, Jessie Garcia, Juanito Paras, Alejandro Orag, Rommel Pangan, Ruel Soliman, and Cenen Canlapan (petitioners). On 2 January 2006, petitioners demanded for a P40 daily salary increase. To pressure KJ Commercial to grant their demand, they stopped working and abandoned their trucks at the Northern Cement Plant Station in Sison, Pangasinan. They also blocked other workers from reporting to work. On 3 February 2006, petitioners filed with the Labor Arbiter a complaint6 for illegal dismissal, underpayment of salary and nonpayment of service incentive leave and thirteenth month pay. The Labor Arbiters Ruling In his 30 October 2008 Decision, the Labor Arbiter held that KJ Commercial illegally dismissed petitioners. The Labor Arbiter held: After a careful examination and evaluation of the facts and evidences adduced by both parties, we find valid and cogent reasons to declare that these complainants were illegally dismissed from their work to be entitled to their separation in lieu of reinstatement equivalent to their salary for one (1) month for every year of service and backwages from the time that they were terminated on January 2, 2006 up to the date of this Decision.

We carefully examined the defense set up by the respondents that these complainants were not terminated from their employment but were the one [sic] who abandoned their work by staging strike and refused to perform their work as drivers of the trucks owned by the respondents on January 2, 2006, vis--vis, he [sic] allegations and claims of the complainants that when they asked for an increase of their salary for P40.00, they were illegally dismissed from their employment without due process, and we gave more credence and value to the allegations of the complainants that they were illegally dismissed from their employment without due process and did not abandoned [sic] their work as the respondents wanted to project. We examined the narration of facts of the respondents in their Position Paper and Supplemental Position Paper and we concluded that these complainants were actually terminated on January 2, 2006 and did not abandoned [sic] their jobs as claimed by the respondents when the respondents, in their Position Paper, admitted that their cement plant was shutdown on January 3, 2006 and when it resumed its operation on January 7, 2006, they ordered the other drivers to get the trucks in order that the hauling of the cements will not incur further delay and that their business will not be prejudiced. Granting for the sake of discussion that indeed these complainants abandoned their work on January 2, 2006, why then that [sic] the cement plant was shutdown on January 3, 2006 and resumed operation on January 7, 2006, when there are fifty (50) drivers of the respondents and only thirteen (13) of them were allegedly stopped from working. Further, if these complainants actually abandoned their work, as claimed by the respondents, they miserably failed to show by substantial evidence that these complainants deliberately and unjustifiably refused to resume their employment. xxxx The acts of these complainants in filing this instant case a month after they were terminated from their work is more than sufficient evidence to prove and show that they do not have the intention of abandoning their work. While we acknowledged the offer of the respondents for these complainants to return back to work during the mandatory conference, the fact that these complainants were illegally terminated and prevented from performing their work as truck drivers of the respondents and that there was no compliance with the substantive and procedural due process of terminating an employee, their subsequent offer to return to work will not cure the defect that there was already illegal dismissal committed against these complainants. 7 KJ Commercial appealed to the NLRC. It filed before the NLRC a motion to reduce bond and posted a P50,000 cash bond. The NLRCs Ruling In its 9 March 2009 Decision,8 the NLRC dismissed the appeal. The NLRC held: Filed with respondents-appellants Appeal Memorandum is a Motion to Reduce Appeal Bond and a cash bond ofP50,000.00 only. x x x We find no merit on [sic] the respondents-appellants Motion. It must be stressed that under Section 6, Rule VI of the 2005 Revised Rules of this Commission, a motion to reduce bond shall only be entertained when the following requisites concur: 1. The motion is founded on meritorious ground; and 2. A bond of reasonable amount in relation to the monetary award is posted. We note that while respondents-appellants claim that they could not possibly produce enough cash for the required appeal bond, they are unwilling to at least put up a property to secure a surety bond. Understandably, no surety agency would normally accept a surety obligation involving a substantial amount without a guarantee that it would be indemnified in case the surety bond posted is forfeited in

favor of a judgment creditor. Respondents-appellants insinuation that no surety company can finish the processing of a surety bond in ten days time is not worthy of belief as it is contrary to ordinary business experience. What is obvious is that respondents-appellants are not willing to accept the usual conditions of a surety agreement that is why no surety bond could be processed. The reduction of the required bond is not a matter of right o[n] the part of the movant but lies within the sound discretion of the NLRC upon showing of meritorious grounds x x x. In this case, we find that the instant motion is not founded on a meritorious ground. x x x Moreover, we note that the P50,000.00 cash bond posted by respondents-appellants which represents less than two (2) percent of the monetary award is dismally disproportionate to the monetary award of P2,612,930.00 and that the amount of bond posted by respondents-appellants is not reasonable in relation to the monetary award. x x x A motion to reduce bond that does not satisfy the conditions required under NLRC Rules shall not stop the running of the period to perfect an appeal x x x. Conversely, respondents-appellants failed to perfect an appeal for failure to post the required bond.9 KJ Commercial filed a motion10 for reconsideration and posted a P2,562,930 surety bond. In its 8 February 2010 Resolution, the NLRC granted the motion and set aside the Labor Arbiters 30 October 2008 Decision. The NLRC held: x x x [T]his Commission opts to resolve and grant the Motion for Reconsideration filed by respondent-appellant seeking for reconsideration of Our Decision promulgated on March 9, 2009 dismissing the Appeal for non-perfection, there being an honest effort by the appellants to comply with putting up the full amount of the required appeal bond. Moreover, considering the merit of the appeal, by granting the motion for reconsideration, the paramount interest of justice is better served in the resolution of this case. xxxx Going over the record of the case, this Commission noted that in respondents Supplemental Position Paper, in denying complainants imputation of illegal dismissal, respondents categorically alleged "..[.] that complainants were not illegally dismissed but on January 2, 2006, they abandoned their work by means of []work stoppage[] or they engaged in an []illegal strike[] when they demanded for a higher rate..[.] that while their respective assigned trucks were all in the cement plant ready to be loaded, complainants paralyzed respondents hauling or trucking operation by staging a work stoppage at the premises of KJ Commercial compound by further blocking their codrivers not to report for work." We have observed that despite these damaging allegations, complainants never bothered to dispute nor contradicted these material allegations. Complainants silence on these material allegations consequently lends support to respondentsappellants[] contention that complainants were never dismissed at all but had stopped driving the hauler truck assigned to each of them when their demand for salary increase in the amount they wish was not granted by respondents-appellants. Moreover, contrary to the findings of the Labor Arbiter, the purported shutdown of the cement plant being cited by the Labor Arbiter a quo as the principal cause of complainants purported dismissal cannot be attributed to respondents because it was never established by evidence that respondents were the owner [sic] of the cement plant where complainants as truck drivers were hauling cargoes of cement with trucks owned by respondents whose business is confined to that of a cement distributor and cargo truck hauler. Based on the undisputed account of respondents-appellants, it appears that the cement plant was compelled to shut down because the hauling or trucking operation was paralyzed due to complainants resort to work stoppage by refusing to drive their hauler trucks despite the order of the management for them to get the trucks which blockaded the cement plant. Furthermore, a perusal of the complainants position paper and amended position paper failed to allege the overt acts showing how they were in fact dismissed on 02 January 2006. The complainants

had not even alleged that they were specifically told that they were dismissed after they demanded for a salary increase or any statement to that effect. Neither had they alleged that they were prevented from reporting for work. This only shows there was never a dismissal to begin with. xxxx We cannot affirm the Labor Arbiters conclusions absent showing a fact of termination or circumstances under which the dismissal was effected. Though only substantial evidence is required in proceedings before the Labor Arbiter to support a litigants claim, the same still requires evidence separate and different, and something which supports the allegations affirmatively made. The complainants claim that they were dismissed on 02 January 2006, absent proof thereof or any supporting evidence thereto is at best self serving.11 Petitioners filed a motion for reconsideration. In its 25 June 2010 Resolution, the NLRC denied the motion for lack of merit. The NLRC held: We stress that it is within the power and discretion of this Commission to grant or deny a motion to reduce appeal bond. Having earlier denied the motion to reduce bond of the respondents-appellants, this Commission is not precluded from reconsidering its earlier Decision on second look when it finds meritorious ground to serve the ends of justice. Settled is the norm in the matter of appeal bonds that letterperfect rules must yield to the broader interest of substantial justice x x x. In this case, the Decision of the Labor Arbiter had not really become final and executory as respondents timely filed a Memorandum of Appeal with a Motion to Reduce Appeal Bond and a partial appeal bond. Although the respondents[] appeal was dismissed, in the earlier decision, the same Decision was later reconsidered on considerations that the Labor Arbiter committed palpable errors in his findings and the monetary awards to the appellees are secured by a partial bond and then later, by an appeal bond for the full amount of the monetary awards.12 Petitioners filed with the Court of Appeals a petition13 for certiorari under Rule 65 of the Rules of Court. The Court of Appeals Ruling In its 29 April 2011 Decision, the Court of Appeals dismissed the petition and affirmed the NLRCs 8 February and 25 June 2010 Resolutions. The Court of Appeals held: After scrupulously examining the contrasting positions of the parties, and the conflicting decisions of the labor tribunals, We find the records of the case bereft of evidence to substantiate the conclusions reached by the Labor Arbiter that petitioners were illegally dismissed from employment. While petitioners vehemently argue that they were unlawfully separated from work, records are devoid of evidence to show the fact of dismissal. Neither was there any evidence offered by petitioners to prove that they were no longer allowed to perform their duties as truck drivers or they were prevented from entering KJ Commercials premises, except for their empty and general allegations that they were illegally dismissed from employment. Such bare and sweeping statement contains nothing but empty imputation of a fact that could hardly be given any evidentiary weight by this Court. At the very least, petitioners should have detailed or elaborated the circumstances surrounding their dismissal or substantiate their claims by submitting evidence to butress such contention. Without a doubt, petitioners allegation of illegal dismissal has no leg to stand on. Accordingly, they should not expect this Court to swallow their asseveration hook, line and sinker in the absence of supporting proof. Allegation that one was illegally dismissed from work is not a magic word that once invoked will automatically sway this Court to rule in favor of the party invoking it. There must first be substantial evidence to prove that indeed there was illegal dismissal before the employer bears the burden to prove the contrary.14

Hence, the present petition. The Issue Petitioners raise as issue that the Labor Arbiters 30 October 2008 Decision became final and executory; thus, the NLRCs 8 February and 25 June 2010 Resolutions and the Court of Appeals 29 April 2011 Decision are void for lack of jurisdiction. Petitioners claim that KJ Commercial failed to perfect an appeal since the motion to reduce bond did not stop the running of the period to appeal. The Courts Ruling The petition is unmeritorious. When petitioners filed with the Court of Appeals a petition for certiorari, they did not raise as issue that the Labor Arbiters 30 October 2008 Decision had become final and executory. They enumerated the issues in their petition: GROUNDS FOR THE PETITION I. THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION WHEN IT REVERSED THE DECISION OF THE LABOR ARBITER A QUO AND PRONOUNCED THAT THE PETITIONERS WERE NOT ILLEGALLY DISMISSED DESPITE CLEAR AND SUBSTANTIAL EVIDENCE ON THE RECORDS SHOWING THAT COMPLAINANTS WERE REGULAR EMPLOYEES TO BE ENTITLED TO SECURITY OF TENURE AND WERE ILLEGALLY DISMISSED FROM THEIR EMPLOYMENT. II. THE NLRC HAS COMMITTED GRAVE ABUSE OF DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION WHEN IT GIVE [sic] MUCH WEIGHT TO PRIVATE RESPONDENTS[] BASELESS ALLEGATIONS IN ITS [sic] MOTION FOR RECONSIDERATION WHEN IT [sic] ALLEGED THAT COMPLAINANTS HAD ABANDONED THEIR WORK BY MEANS OF "WORK STOPPAGE" OR THEY ENGAGED IN AN "ILLEGAL STRIKE" WHEN THEY DEMANDED FOR A HIGHER RATE. III. THE NLRC GRAVELY ERRED TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION WHEN IT CONCLUDED THAT "COMPLAINANTS PARALYZED HAULING OR TRUCKING OPERATION BY STAGING A WORK STOPPAGE AT THE PREMISES OF KJ COMMERCIAL COMPOUND BY FURTHER BLOCKING THEIR CODRIVERS NOT TO REPORT FOR WORK" WITHOUT A SINGLE EVIDENCE TO SUPPORT SUCH ALLEGATIONS OF PRIVATE RESPONDENTS. IV. THE NLRC GRAVELY ERRED WHEN IT CONCLUDED THAT THE PRINCIPAL CAUSE OF COMPLAINANTS DISMISSAL WAS DUE TO THE PURPORTED SHUTDOWN OF THE CEMENT PLANT CITED BY THE LABOR ARBITER IN HIS DECISION.15 Accordingly, the Court of Appeals limited itself to the resolution of the enumerated issues. In its 29 April 2011 Decision, the Court of Appeals held:

Hence, petitioners seek recourse before this Court via this Petition for Certiorari challenging the NLRC Resolutions and raising the following issues: I. THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION WHEN IT REVERSED THE DECISION OF THE LABOR ARBITER A QUO AND PRONOUNCED THAT PETITIONERS WERE NOT ILLEGALLY DISMISSED DESPITE CLEAR AND SUBSTANTIAL EVIDENCE ON THE RECORDS SHOWING THAT PETITIONERS WERE REGULAR EMPLOYEES TO BE ENTITLED TO SECURITY OF TENURE AND WERE ILLEGALLY DISMISSED FROM THEIR EMPLOYMENT. II. THE NLRC HAS COMMITTED GRAVE ABUSE OF DISCRETION TANTAMOUNT TO LACK OR EXCESS OF JURISDICTION WHEN IT GAVE MUCH WEIGHT TO PRIVATE RESPONDENTS BASELESS ALLEGATIONS IN ITS [sic] MOTION FOR RECONSIDERATION WHEN IT [sic] ALLEGED THAT PETITIONERS HAD ABANDONED THEIR WORK BY MEANS OF "WORK STOPPAGE" OR THEY ENGAGED IN AN "ILLEGAL STRIKE" WHEN THEY DEMANDED FOR A HIGHER RATE. III. THE NLRC GRAVELY ERRED WHEN IT CONCLUDED THAT "PETITIONERS PARALYZED HAULING AND TRUCKING OPERATION BY STAGING A WORK STOPPAGE AT THE PREMISES OF KJ COMMERCIAL COMPOUND BY FURTHER BLOCKING THEIR CODRIVERS NOT TO REPORT FOR WORK" WITHOUT A SINGLE EVIDENCE TO SUPPORT SUCH ALLEGATIONS OF PRIVATE RESPONDENTS. IV. THE NLRC GRAVELY ERRED WHEN IT CONCLUDED THAT THE PRINCIPAL CAUSE OF PETITIONERS DISMISSAL WAS DUE TO THE PURPORTED SHUTDOWN OF THE CEMENT PLANT CITED BY THE LABOR ARBITER IN HIS DECISION.16 Petitoners cannot, for the first time, raise as issue in their petition filed with this Court that the Labor Arbiters 30 October 2008 Decision had become final and executory. Points of law, theories and arguments not raised before the Court of Appeals will not be considered by this Court. Otherwise, KJ Commercial will be denied its right to due process. In Tolosa v. National Labor Relations Commission,17 the Court held: Petitioner contends that the labor arbiters monetary award has already reached finality, since private respondents were not able to file a timely appeal before the NLRC. This argument cannot be passed upon in this appeal, because it was not raised in the tribunals a quo. Well-settled is the rule that issues not raised below cannot be raised for the first time on appeal. Thus, points of law, theories, and arguments not brought to the attention of the Court of Appeals need not and ordinarily will not be considered by this Court. Petitioners allegation cannot be accepted by this Court on its face; to do so would be tantamount to a denial of respondents right to due process. Furthermore, whether respondents were able to appeal on time is a question of fact that cannot be entertained in a petition for review under Rule 45 of the Rules of Court. In general, the jurisdiction of this Court in cases brought before it from the Court of Appeals is limited to

a review of errors of law allegedly committed by the court a quo.18(Emphasis supplied) KJ Commercials filing of a motion to reduce bond and delayed posting of the P2,562,930 surety bond did not render the Labor Arbiters 30 October 2008 Decision final and executory. The Rules of Procedure of the NLRC allows the filing of a motion to reduce bond subject to two conditions: (1) there is meritorious ground, and (2) a bond in a reasonable amount is posted. Section 6 of Article VI states: No motion to reduce bond shall be entertained except on meritorious grounds and upon the posting of a bond in a reasonable amount in relation to the monetary award. The mere filing of the motion to reduce bond without compliance with the requisites in the preceding paragraph shall not stop the running of the period to perfect an appeal. The filing of a motion to reduce bond and compliance with the two conditions stop the running of the period to perfect an appeal. In McBurnie v. Ganzon,19 the Court held: x x x [T]he bond may be reduced upon motion by the employer, this is subject to the conditions that (1) the motion to reduce the bond shall be based on meritorious grounds; and (2) a reasonable amount in relation to the monetary award is posted by the appellant, otherwise the filing of the motion to reduce bond shall not stop the running of the period to perfect an appeal.20 The NLRC has full discretion to grant or deny the motion to reduce bond,21 and it may rule on the motion beyond the 10-day period within which to perfect an appeal. Obviously, at the time of the filing of the motion to reduce bond and posting of a bond in a reasonable amount, there is no assurance whether the appellants motion is indeed based on "meritorious ground" and whether the bond he or she posted is of a "reasonable amount." Thus, the appellant always runs the risk of failing to perfect an appeal. Section 2, Article I of the Rules of Procedure of the NLRC states that, "These Rules shall be liberally construed to carry out the objectives of the Constitution, the Labor Code of the Philippines and other relevant legislations, and to assist the parties in obtaining just, expeditious and inexpensive resolution and settlement of labor disputes." In order to give full effect to the provisions on motion to reduce bond, the appellant must be allowed to wait for the ruling of the NLRC on the motion even beyond the 10-day period to perfect an appeal. If the NLRC grants the motion and rules that there is indeed meritorious ground and that the amount of the bond posted is reasonable, then the appeal is perfected. If the NLRC denies the motion, the appellant may still file a motion for reconsideration as provided under Section 15, Rule VII of the Rules. If the NLRC grants the motion for reconsideration and rules that there is indeed meritorious ground and that the amount of the bond posted is reasonable, then the appeal is perfected. If the NLRC denies the motion, then the decision of the labor arbiter becomes final and executory. In the present case, KJ Commercial filed a motion to reduce bond and posted a P50,000 cash bond. When the NLRC denied its motion, KJ Commercial filed a motion for reconsideration and posted the full P2,562,930 surety bond. The NLRC then granted the motion for reconsideration. In any case, the rule that the filing of a motion to reduce bond shall not stop the running of the period to perfect an appeal is not absolute. The Court may relax the rule. In Intertranz Container Lines, Inc. v. Bautista,22 the Court held: Jurisprudence tells us that in labor cases, an appeal from a decision involving a monetary award may be perfected only upon the posting of a cash or surety bond. The Court, however, has relaxed this requirement under certain exceptional circumstances in order to resolve controversies on their merits. These circumstances include: (1) fundamental consideration of substantial justice; (2) prevention of

miscarriage of justice or of unjust enrichment; and (3) special circumstances of the case combined with its legal merits, and the amount and the issue involved.23 In Rosewood Processing, Inc. v. NLRC,24 the Court held: The perfection of an appeal within the reglementary period and in the manner prescribed by law is jurisdictional, and noncompliance with such legal requirement is fatal and effectively renders the judgment final and executory. The Labor Code provides: ART. 223. Appeal. Decisions, awards or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from. Indisputable is the legal doctrine that the appeal of a decision involving a monetary award in labor cases may be perfected "only upon the posting of a cash or surety bond." The lawmakers intended the posting of the bond to be an indispensable requirement to perfect an employers appeal. However, in a number of cases, this Court has relaxed this requirement in order to bring about the immediate and appropriate resolution of controversies on the merits. Some of these cases include: "(a) counsels reliance on the footnote of the notice of the decision of the labor arbiter that the aggrieved party may appeal within ten (10) working days; (b) fundamental consideration of substantial justice; (c) prevention of miscarriage of justice or of unjust enrichment, as where the tardy appeal is from a decision granting separation pay which was already granted in an earlier final decision; and (d) special circumstances of the case combined with its legal merits or the amount and the issue involved." In Quiambao vs. National Labor Relations Commission, this Court ruled that a relaxation of the appeal bond requirement could be justified by substantial compliance with the rule. In Globe General Services and Security Agency vs. National Labor Relations Commission, the Court observed that the NLRC, in actual practice, allows the reduction of the appeal bond upon motion of the appellant and on meritorious grounds; hence, petitioners in that case should have filed a motion to reduce the bond within the reglementary period for appeal. That is the exact situation in the case at bar. Here, petitioner claims to have received the labor arbiters Decision on April 6, 1993. On April 16, 1993, it filed, together with its memorandum on appeal and notice of appeal, a motion to reduce the appeal bond accompanied by a surety bond for fifty thousand pesos issued by Prudential Guarantee and Assurance, Inc. Ignoring petitioners motion (to reduce bond), Respondent Commission rendered its assailed Resolution dismissing the appeal due to the late filing of the appeal bond. The solicitor general argues for the affirmation of the assailed Resolution for the sole reason that the appeal bond, even if it was filed on time, was defective, as it was not in an amount "equivalent to the monetary award in the judgment appealed from." The Court disagrees. We hold that petitioners motion to reduce the bond is a substantial compliance with the Labor Code. This holding is consistent with the norm that letter-perfect rules must yield to the broader interest of substantial justice.25 In Ong v. Court of Appeals,26 the Court held that the bond requirement on appeals may be relaxed when there is substantial compliance with

the Rules of Procedure of the NLRC or when the appellant shows willingness to post a partial bond. The Court held that, "While the bond requirement on appeals involving monetary awards has been relaxed in certain cases, this can only be done where there was substantial compliance of the Rules or where the appellants, at the very least, exhibited willingness to pay by posting a partial bond."27 In the present case, KJ Commercial showed willingness to post a partial bond.1wphi1 In fact, it posted a P50,000 cash bond. In Ong, the Court held that, "Petitioner in the said case substantially complied with the rules by posting a partial surety bond of fifty thousand pesos issued by Prudential Guarantee and Assurance, Inc. while his motion to reduce appeal bond was pending before the NLRC."28 Aside from posting a partial bond, KJ Commercial immediately posted the full amount of the bond when it filed its motion for reconsideration of the NLRCs 9 March 2009 Decision. In Dr. Postigo v. Philippine Tuberculosis Society, Inc.,29 the Court held: x x x [T]he respondent immediately submitted a supersedeas bond with its motion for reconsideration of the NLRC resolution dismissing its appeal. In Ong v. Court of Appeals, we ruled that the aggrieved party may file the appeal bond within the ten-day reglementary period following the receipt of the resolution of the NLRC to forestall the finality of such resolution. Hence, while the appeal of a decision involving a monetary award in labor cases may be perfected only upon the posting of a cash or surety bond and the posting of the bond is an indispensable requirement to perfect such an appeal, a relaxation of the appeal bond requirement could be justified by substantial compliance with the rule.30 WHEREFORE, the Court DENIES the petition and AFFIRMS the 29 April 2011 Decision of the Court of Appeals in CA-G.R. SP No. 115851. SO ORDERED.

RENATO C. CORONA Chief Justice

Footnotes
1

Rollo, pp. 11-41.

Id. at 48-55. Penned by Associate Justice Samuel H. Gaerlan, with Associate Justices Rosmari D. Carandang and Ramon R. Garcia concurring.
3

Id. at 149-157. Penned by Presiding Commissioner Herminio V. Suelo, with Commissioners Angelo Ang Palana and Numeriano D. Villena concurring.
4

Id. at 163-167. Id. at 102-119. Penned by Labor Arbiter Mariano L. Bactin. Id. at 62. Id. at 108-111. Id. at 132-136. Id. at 133-135. Id. at 137-138. Id. at 150-156. Id. at 166. Id. at 168-188. Id. at 53. Id. at 174-176. Id. at 51-52. 449 Phil. 271 (2003). Id. at 284-285.

10

11

ANTONIO T. CARPIO Associate Justice WE CONCUR: ARTURO D. BRION Associate Justice MARIA LOURDES P. A. SERENO Associate Justice

12

13

14

15

JOSE PORTUGAL PEREZ Associate Justice

16

17

BIENVENIDO L. REYES Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. ANTONIO T. CARPIO Associate Justice Chairperson CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

18

19

G.R. Nos. 178034, 178117, 186984 and 186985, 18 September 2009, 600 SCRA 658.
20

Id. at 669. Id. at 671. G.R. No. 187693, 13 July 2010, 625 SCRA 75. Id. at 84. 352 Phil. 1013 (1998). Id. at 1028-1031.

21

22

23

24

25

26

482 Phil. 170 (2004). Id. at 181. Id. at 181-182. 515 Phil. 601 (2006). Id. at 607-608. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

27

28

level. The committee recommended that he proceed to the next level of the grievance procedure, as it was unable to reach a decision on the matter. Consequently, on 20 April 2007, Delada lodged a Complaint before the National Conciliation and Mediation Board. On 25 May 2007, the parties agreed to submit the following issues for voluntary arbitration: I. Whether or not the transfer of the union president from head waiter at Rotisserie to head waiter at seasons restaurant is valid and justified; II. Whether or not the preventive suspension of the complainant is valid and justified; III. Whether or not the preventive suspension of the complainant is a valid ground to strike; IV. Whether or not the respondent may be held liable for moral and exemplary damages and attorneys fees; and V. Whether or not the complainant may be held liable for moral and exemplary damages and attorneys fees. 2 While respondents Complaint concerning the validity of his transfer was pending before the Panel of Voluntary Arbitrators (PVA), MPH continued with the disciplinary action against him for his refusal to report to his new post at Seasons Coffee Shop. Citing security and safety reasons, petitioner also placed respondent on a 30-day preventive suspension. On 8 June 2007, MPH issued a Decision, which found him guilty of insubordination based on his repeated and willful disobedience of the transfer order. The Decision imposed on Delada the penalty of 90-day suspension. He opposed the Decision, arguing that MPH had lost its authority to proceed with the disciplinary action against him, since the matter had already been included in the voluntary arbitration. On 14 December 2007, the PVA issued a Decision and ruled that the transfer of Delada was a valid exercise of management prerogative. According to the panel, the transfer order was done in the interest of the efficient and economic operations of MPH, and that there was no malice, bad faith, or improper motive attendant upon the transfer of Delada to Seasons Coffee Shop. They found that the mere fact that he was the Union President did not "put color or ill motive and purpose" to his transfer. On the contrary, the PVA found that the real reason why he refused to obey the transfer order was that he asked for additional monetary benefits as a condition for his transfer. Furthermore, the panel ruled that his transfer from Rotisserie to Seasons Coffee Shop did not prejudice or inconvenience him. Neither did it result in diminution of salaries or demotion in rank. The PVA thus pronounced that Delada had no valid and justifiable reason to refuse or even to delay compliance with the managements directive. The PVA also ruled that there was no legal and factual basis to support petitioners imposition of preventive suspension on Delada. According to the panel, the mere assertion of MPH that "it is not far-fetched for Henry Delada to sabotage the food to be prepared and served to the respondents dining guest and employees because of the hostile relationship then existing" was more imagined than real. It also found that MPH went beyond the 30-day period of preventive suspension prescribed by the Implementing Rules of the Labor Code when petitioner proceeded to impose a separate penalty of 90-day suspension on him. Furthermore, the PVA ruled that MPH lost its authority to continue with the administrative proceedings for insubordination and willful disobedience of the transfer order and to impose the penalty of 90-day suspension on respondent. According to the panel, it acquired exclusive jurisdiction over the issue when the parties submitted the aforementioned issues before it. The panel reasoned that the joint submission to it of the issue on the validity of the transfer order encompassed, by necessary implication, the issue of respondents insubordination and willful disobedience of the transfer order. Thus, MPH effectively relinquished its power to impose disciplinary action on Delada.3

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G.R. No. 189947

January 25, 2012

MANILA PAVILION HOTEL, owned and operated by ACESITE (PHILS.) Hotel Corporation, Petitioner, vs. HENRY DELADA, Respondent. DECISION SERENO, J.: Before the Court is a Petition for Review on Certiorari filed under Rule 45 of the Revised Rules of Court, assailing the 27 July 2009 Decision and 12 October 2009 Resolution of the Court of Appeals (CA).1 Facts The present Petition stems from a grievance filed by respondent Henry Delada against petitioner Manila Pavilion Hotel (MPH). Delada was the Union President of the Manila Pavilion Supervisors Association at MPH. He was originally assigned as Head Waiter of Rotisserie, a finedining restaurant operated by petitioner. Pursuant to a supervisory personnel reorganization program, MPH reassigned him as Head Waiter of Seasons Coffee Shop, another restaurant operated by petitioner at the same hotel. Respondent declined the inter-outlet transfer and instead asked for a grievance meeting on the matter, pursuant to their Collective Bargaining Agreement (CBA). He also requested his retention as Head Waiter of Rotisserie while the grievance procedure was ongoing. MPH replied and told respondent to report to his new assignment for the time being, without prejudice to the resolution of the grievance involving the transfer. He adamantly refused to assume his new post at the Seasons Coffee Shop and instead continued to report to his previous assignment at Rotisserie. Thus, MPH sent him several memoranda on various dates, requiring him to explain in writing why he should not be penalized for the following offenses: serious misconduct; willful disobedience of the lawful orders of the employer; gross insubordination; gross and habitual neglect of duties; and willful breach of trust. Despite the notices from MPH, Delada persistently rebuffed orders for him to report to his new assignment. According to him, since the grievance machinery under their CBA had already been initiated, his transfer must be held in abeyance. Thus, on 9 May 2007, MPH initiated administrative proceedings against him. He attended the hearings together with union representatives. Meanwhile, the parties failed to reach a settlement during the grievance meeting concerning the validity of MPHs transfer order. Respondent then elevated his grievance to the Peers Resources Development Director. Still, no settlement between the parties was reached. Respondent appealed the matter to the Grievance Committee

As to the other issues, the panel found that there was no valid justification to conduct any strike or concerted action as a result of Deladas preventive suspension. It also ruled that since the 30-day preventive suspension and the penalty of 90-day suspension was invalid, then MPH was liable to pay back wages and other benefits. The CA affirmed the Decision of the PVA and denied petitioners Motion for Reconsideration. Consequently, MPH filed the instant Petition. Issue Despite the various issues surrounding the case, MPH limited its appeal to the following: I. Whether MPH retained the authority to continue with the administrative case against Delada for insubordination and willful disobedience of the transfer order. II. Whether MPH is liable to pay back wages. Discussion Petitioner argues that it did not lose its authority to discipline Delada notwithstanding the joint submission to the PVA of the issue of the validity of the transfer order. According to petitioner, the specific issue of whether respondent could be held liable for his refusal to assume the new assignment was not raised before the PVA, and that the panels ruling was limited to the validity of the transfer order. Thus, petitioner maintains that it cannot be deemed to have surrendered its authority to impose the penalty of suspension. In Sime Darby Pilipinas, Inc. v. Deputy Administrator Magsalin, 4 we ruled 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. In that case, the specific issue presented was "the issue of performance bonus." We then held that the arbitrator had the authority to determine not only the issue of whether or not a performance bonus was to be granted, but also the related question of the amount of bonus, were it to be granted. We then said that there was no indication at all that the parties to the arbitration agreement had regarded "the issue of performance bonus" as a two-tiered issue, only one aspect of which was being submitted to arbitration; thus, we held that the failure of the parties to specifically limit the issues to that which was stated allowed the arbitrator to assume jurisdiction over the related issue. A more recent case is Ludo & Luym Corporation v. Saornido.5 In that case, we recognized that voluntary arbitrators are generally expected to decide only those questions expressly delineated by the submission agreement; that, nevertheless, they can assume that they have the necessary power to make a final settlement on the related issues, since arbitration is the final resort for the adjudication of disputes. Thus, we ruled that even if the specific issue brought before the arbitrators merely mentioned the question of "whether an employee was discharged for just cause," they could reasonably assume that their powers extended beyond the determination thereof to include the power to reinstate the employee or to grant back wages. In the same vein, if the specific issue brought before the arbitrators referred to the date of regularization of the employee, law and jurisprudence gave them enough leeway as well as adequate prerogative to determine the entitlement of the employees to higher benefits in accordance with the finding of regularization. Indeed, to require the parties to file another action for payment of those benefits would certainly undermine labor proceedings and contravene the constitutional mandate providing full protection to labor and speedy labor justice. Consequently, could the PVA herein view that the issue presented before it the question of the validity of the transfer order necessarily included the question of respondent Deladas insubordination and willful disobedience of the transfer order?

Pursuant to the doctrines in Sime Darby Pilipinas and Ludo & Luym Corporation, the PVA was authorized to assume jurisdiction over the related issue of insubordination and willful disobedience of the transfer order. Nevertheless, the doctrine in the aforementioned cases is inapplicable to the present Petition. In those cases, the voluntary arbitrators did in fact assume jurisdiction over the related issues and made rulings on the matter. In the present case, however, the PVA did not make a ruling on the specific issue of insubordination and willful disobedience of the transfer order. The PVA merely said that its disagreement with the 90-day penalty of suspension stemmed from the fact that the penalty went beyond the 30-day limit for preventive suspension: But to us, what militates against the validity of Deladas preventive suspension is the fact that it went beyond the 30-day period prescribed by the Implementing Rules of the Labor Code (Section 4, Rules XIV, Book V). The preventive suspension of Delada is supposed to expire on 09 June 2007, but without notifying Delada, the MPH proceeded to impose a separate penalty of 90-days suspension to him which took effect only on 18 June 2007, or way beyond the 30-day rule mandated by the Rules. While the intention of the MPH is to impose the 90-day suspension as a separate penalty against Delada, the former is already proscribed from doing so because as of 05 June 2007, the dispute at hand is now under the exclusive jurisdiction of the panel of arbitrators. In fact, by its own admission, the MPH categorically stated in its Position Paper that as of 25 May 2007, or before the suspension order was issued, MPH and Delada had already formulated and submitted the issues for arbitration. For all legal intents and purposes, therefore, the MPH has now relinquished its authority to suspend Delada because the issue at this juncture is now within the Panels ambit of jurisdiction. MPHs authority to impose disciplinary action to Delada must now give way to the jurisdiction of this panel of arbitrators to rule on the issues at hand. By necessary implication, this Panel is thus constrained to declare both the preventive suspension and the separate suspension of 90-days meted to Delada to be not valid and justified.6 First, it must be pointed out that the basis of the 30-day preventive suspension imposed on Delada was different from that of the 90-day penalty of suspension. The 30-day preventive suspension was imposed by MPH on the assertion that Delada might sabotage hotel operations if preventive suspension would not be imposed on him. On the other hand, the penalty of 90-day suspension was imposed on respondent as a form of disciplinary action. It was the outcome of the administrative proceedings conducted against him. Preventive suspension is a disciplinary measure resorted to by the employer pending investigation of an alleged malfeasance or misfeasance committed by an employee.7 The employer temporarily bars the employee from working if his continued employment poses a serious and imminent threat to the life or property of the employer or of his coworkers.8 On the other hand, the penalty of suspension refers to the disciplinary action imposed on the employee after an official investigation or administrative hearing is conducted.9 The employer exercises its right to discipline erring employees pursuant to company rules and regulations.10 Thus, a finding of validity of the penalty of 90day suspension will not embrace the issue of the validity of the 30-day preventive suspension. In any event, petitioner no longer assails the ruling of the CA on the illegality of the 30-day preventive suspension.11 It can be seen that, unlike in Sime Darby Pilipinas and Ludo & Luym Corporation, the PVA herein did not make a definitive ruling on the merits of the validity of the 90-day suspension. The panel only held that MPH lost its jurisdiction to impose disciplinary action on respondent. Accordingly, we rule in this case that MPH did not lose its authority to discipline respondent for his continued refusal to report to his new assignment. In relation to this point, we recall our Decision in Allied Banking Corporation v. Court of Appeals.12 In Allied Banking Corporation,13 employer Allied Bank reassigned respondent Galanida from its Cebu City branch to its Bacolod and Tagbilaran branches. He refused to follow the transfer order and instead filed a Complaint before the Labor Arbiter for constructive dismissal. While the case was pending, Allied Bank insisted that he report to his new assignment. When he continued to refuse, it directed him to explain in writing why no disciplinary action should be meted out to him. Due to his continued refusal to report to his new assignment,

Allied Bank eventually terminated his services. When the issue of whether he could validly refuse to obey the transfer orders was brought before this Court, we ruled thus: The refusal to obey a valid transfer order constitutes willful disobedience of a lawful order of an employer.1wphi1Employees may object to, negotiate and seek redress against employers for rules or orders that they regard as unjust or illegal. However, until and unless these rules or orders are declared illegal or improper by competent authority, the employees ignore or disobey them at their peril. For Galanidas continued refusal to obey Allied Bank's transfer orders, we hold that the bank dismissed Galanida for just cause in accordance with Article 282(a) of the Labor Code. Galanida is thus not entitled to reinstatement or to separation pay. (Emphasis supplied, citations omitted).14 It is important to note what the PVA said on Deladas defiance of the transfer order: In fact, Delada cannot hide under the legal cloak of the grievance machinery of the CBA or the voluntary arbitration proceedings to disobey a valid order of transfer from the management of the hotel. While it is true that Deladas transfer to Seasons is the subject of the grievance machinery in accordance with the provisions of their CBA, Delada is expected to comply first with the said lawful directive while awaiting the results of the decision in the grievance proceedings. This issue falls squarely in the case of Allied Banking Corporation vs. Court of Appeals x x x.15 Pursuant to Allied Banking, unless the order of MPH is rendered invalid, there is a presumption of the validity of that order. Since the PVA eventually ruled that the transfer order was a valid exercise of management prerogative, we hereby reverse the Decision and the Resolution of the CA affirming the Decision of the PVA in this respect. MPH had the authority to continue with the administrative proceedings for insubordination and willful disobedience against Delada and to impose on him the penalty of suspension. As a consequence, petitioner is not liable to pay back wages and other benefits for the period corresponding to the penalty of 90-day suspension. WHEREFORE, the Petition is GRANTED. The Decision and the Resolution of the Court of Appeals are hereby MODIFIED. We rule that petitioner Manila Pavilion Hotel had the authority to continue with the administrative proceedings for insubordination and willful disobedience against Delada and to impose on him the penalty of suspension. Consequently, petitioner is not liable to pay back wages and other benefits for the period corresponding to the penalty of 90-day suspension. SO ORDERED. MARIA LOURDES P. A. SERENO Associate Justice WE CONCUR: ANTONIO T. CARPIO Associate Justice Chairperson JOSE PORTUGAL PEREZ Associate Justice BIENVENIDO L. REYES Associate Justice

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the Opinion of the Courts Division. ANTONIO T. CARPIO Associate Justice Chairperson, Second Division CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, I certify that the conclusions in the above decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. RENATO C. CORONA Chief Justice

Footnotes
*

Designated as Acting Member of the Second Division vice Associate Justice Arturo D. Brion per Special Order No. 1174 dated January 9, 2012.
1

Both the Decision and the Resolution in CA-G.R. SP No. 101931 were penned by Associate Justice Sixto C. Marella Jr. and concurred in by Associate Justices Rebecca de Guia-Salvador and Japar B. Dimaampao.
2

Decision of PVA, pp. 1-2; rollo, pp. 66-67. Decision of PVA, p. 13; rollo p. 78.

Sime Darby Pilipinas, Inc. v. Deputy Administrator Magsalin, 259 Phil. 658 (1989).
5

Ludo & Luym Corporation v. Saornido, 443 Phil. 554 (2003).

6

Decision of PVA, p. 13; rollo, p. 78.

Gatbonton v. National Labor Relations Commission, 515 Phil. 387 (2006).

8

Id.

See Deles v. National Labor Relations Commission, 384 Phil. 271 (2000).
10

Id. Petition of MPH, p. 21; rollo, p. 34. 461 Phil. 517 (2003). Id. Id. Decision of PVA, p. 11; rollo, p. 76.

11

12

13

ESTELA M. PERLAS-BERNABE* Associate Justice ATTESTATION

14

15

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 181995 July 16, 2012

petitioner filed a complaint for non-payment of retirement pay, moral damages, exemplary damages and attorneys fees against PAL. 8 On February 6, 1998, the Labor Arbiter (LA) rendered a Decision, 9the pertinent portions of which read: From the foregoing, it is manifestly clear that an employees retirement benefits under any collective bargaining agreement shall not be less than those provided under the New Retirement Pay Law and if such benefits are less, the employee shall pay the difference between the amount due the employee and that provided under the CBA or individual agreement or retirement plan (Par. 3.2, Sec. 3, rules Implementing the New Retirement Pay Law). Thus, applying the pertinent CBA provision in correlation with the New Retirement Pay Law, complainant should receive the following amount, to wit: 22.5 x 26 yrs. x P138,447.00= P2,700,301.50 If we were to follow the PALs computation of petitioners retirement pay, the latters retirement benefits in the amount of P125,000.00 based on Section 2, Article VII of the Retirement Plan of the CBA at P5,000.00 per every year of service would be much less than his monthly salary of P138,477.00 at the time of his retirement. This was never envisioned by the law. Instead, it is the clear intention of our law makers to provide a bigger and better retirement pay or benefits under existing laws and/or existing CBA or other agreements. xxxx

BIBIANO C. ELEGIR, Petitioner, vs. PHILIPPINE AIRLINES, INC., Respondent. DECISION REYES, J.: This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul and set aside the Decision1 dated August 6, 2007 of the Court of Appeals (CA) in CA-G.R. SP No. 79111, which reversed and set aside the Decision2 dated March 18, 2002 and Order3 dated June 30, 2003 of the National Labor Relations Commission (NLRC) in NLRC NCR Case No. 00-08-06135-97 and NLRC NCR CA No. 015030-98. Factual Antecedents As culled from the records, the instant case stemmed from the following factual antecedents: Petitioner Bibiano C. Elegir (petitioner) was hired by Philippine Airlines, Inc. (PAL) as a commercial pilot, specifically designated as HS748 Limited First Officer, on March 16, 1971.4 In 1995, PAL embarked on a refleeting program and acquired new and highly sophisticated aircrafts. Subsequently, it sent an invitation to bid to all its flight deck crew, announcing the opening of eight (8) B747-400 Captain positions that were created by the refleeting program. The petitioner, who was then holding the position of A-300 Captain, submitted his bid and was fortunately awarded the same. 5 The petitioner, together with seven (7) other pilots, was sent for training at Boeing in Seattle, Washington, United States of America on May 8, 1995, to acquire the necessary skills and knowledge in handling the new aircraft. He completed his training on September 19, 1995.6 On November 5, 1996, after rendering twenty-five (25) years, eight (8) months and twenty (20) days of continuous service, the petitioner applied for optional retirement authorized under the Collective Bargaining Agreement (CBA) between PAL and the Airline Pilots Association of the Philippines (ALPAP), in which he was a member of good standing. In response, PAL asked him to reconsider his decision, asseverating that the company has yet to recover the full value of the costs of his training. It warned him that if he leaves PAL before he has rendered service for at least three (3) years, it shall be constrained to deduct the costs of his training from his retirement pay.7 On November 6, 1996, the petitioner went on terminal leave for thirty (30) days and thereafter made effective his retirement from service. Upon securing his clearance, however, he was informed that the costs of his training will be deducted from his retirement pay, which will be computed at the rate of P 5,000.00 per year of service. The petitioner, through his counsel, sent PAL a correspondence, asserting that his retirement benefits should be based on the computation stated in Article 287 of the Labor Code, as amended by Republic Act (R.A.) No. 7641, and that the costs of his training should not be deducted therefrom. In its Reply dated August 4, 1997, PAL refused to yield to the petitioners demand and maintained that his retirement pay should be based on PAL-ALPAP Retirement Plan of 1967 (PAL-ALPAP Retirement Plan) and that he should reimburse the company with the proportionate costs of his training. Thus, on August 27, 1997, the

WHEREFORE, in view of the foregoing, we find PAL liable to the petitioner for the payment of his retirement benefits as follows:

Retirement Benefits (22.5 x 26 years x P138,477.00) Accrued Trip Leave Accrued Vacation Leave 1996 Unutilized days off Nov. 96 Prod. Allow. (net) Unpaid Salary 12/1/-5/96 1996 w/tax refund 13th month backpay for the year 1988-1991 TOTAL

P 2,700,301.50 760,299.37 386,546.44 105,089.46 1,726.92 22,416.65 2,464.42 171,262.50 P 4,150,106.20

plus legal interest of 12% per annum from November 06, 1996. Finally, ten percent (10%) of all sums owing to petitioner is hereby adjudged as attorneys fees. SO ORDERED.10 The LA ratiocinated that PAL had no right to withhold the payment of the petitioners retirement benefits simply because he retired from service before the lapse of three (3) years. To begin with, there was no document evidencing the fact that the petitioner was required to stay with PAL for three (3) years from the completion of his training or that he was bound to reimburse the company of the costs of his training should he retire from service before the completion of the period. The LA likewise dismissed the theory espoused by PAL that the petitioner s submission of his bid for the new position which necessarily requires

training created an innominate contract of du ut facias between him and the company since their relationship is governed by the CBA between the management and the ALPAP.11 On appeal, the NLRC took a different stance and modified the decision of the LA in its Decision dated March 18, 2002, which pertinently states: Considering that [petitioner] was only fifty-two (52) years when he opted to retire on November 6, 1996, he was, strictly, not yet qualified to receive the benefits provided under said Article 287 of the Labor Code, as amended by R.A. 7641. However, petitioner is eligible for retirement under the CBA between respondent PAL and ALPAP, as he had already served for more than 25 years with said respondent. This is covered by the provision in the first paragraph of Article 287 of the Labor Code which states that an employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract, inasmuch as the CBA in question does not provide for any retirement age, but limited itself to the number of years of service or flying hours of the employee concerned. Consequently, anytime that an employee of respondent PAL reaches twenty (20) years of service or 20,000 (flying) hours as a pilot of PAL, then his age at that precise time would be considered as the retirement age, as far as he is concerned. The retirement benefits of petitioner should, therefore, be computed in accordance with both Article 287 of the Labor Code and the Retirement Plan in the CBA of PAL and ALPAP. On the second issue, we rule that petitioner is under obligation to reimburse a portion of the expenses incurred for his training as B747400 Captain. It would be grossly unfair and unjust to PAL if the petitioner would be allowed to reap the fruits of this training, which upgraded his knowledge and skills that would enable him to demand higher pay, if he would not be made to return said benefits in the form of service for a reasonable period of time, say three (3) years as PALs company policy demands. x x x xxxx Thus, with the adjudged reimbursement for training expenses of P921,281.71 (sic), the awards due to petitioner shall be, as follows:

TOTAL RETIREMENT PAY STILL PAYABLE

IN VIEW OF THE FOREGOING, the decision of the Labor Arbiter should be MODIFIED by increasing the awards to the petitioner to ONE MILLION FOUR HUNDRED SIXTY SIX THOUSAND SEVEN HUNDRED SIXTY-NINE and 84/100 (P1,466,769.84) PESOS as computed above. SO ORDERED.12 Both PAL and petitioner filed their respective motions for partial reconsideration from the decision of the NLRC. In its Motion for Partial Reconsideration,13 PAL asseverated that the decision of the NLRC, directing the computation of the petitioners retirement benefits based on Article 287 of the Labor Code, instead of the CBA, was inconsistent with the disposition of this Court in Philippine Airlines, Inc. v. Airline Pilots Association of the Philippines.14 It emphasized that in said case, this Court sustained PALs position and directed the payment of retirement benefits of the complainant pilot in accordance with the PAL-ALPAP Retirement Plan. However, in an Order15 dated June 30, 2003, the NLRC denied PALs motion for reconsideration. Unyielding, PAL filed a petition for certiorari with the CA. In said petition, PAL emphasized that the petitioners case should be decided in light of the ruling in Philippine Airlines, Inc., where this Court held that the computation of the retirement pay of a PAL pilot who retired before reaching the retirement age of sixty (60) should be based on the PAL-ALPAP Retirement Plan or at the rate of P5,000.00 for every year of service.16 In its Decision dated August 6, 2007, the CA ruled that the petitioners retirement pay should be computed in accordance with PAL-ALPAP Retirement Plan and the PAL Pilots Retirement Benefit Plan as was held in Philippine Airlines, Inc. It held, thus: The present case squarely falls within the state of facts upon which the ruling in Philippine Airlines, Inc., vs. Airline Pilots Association of the Philippines was enunciated. Petitioner herein applies for retirement at an age below 60. A distinction was made between a pilot who retires at the age of sixty and another who retires earlier. The Supreme Court was explicit when it declared: "A pilot who retires after twenty years of service or after flying 20,000 hours- would still be in the prime of his life and at the peak of his career, P1,800,201.00 compared to one who retires at the age of 60 years old." 23,074.50 Furthermore, petitioner would not be getting less if his retirement pay is 386,546.44 computed on the PAL-ALPAP retirement plan rather than the formula provided by the Labor Code. Petitioner did not refute that he already 138,477.00 got retirement benefits from another retirement plan the PAL 105,089.48 Pilots Retirement Plan. It appearing that the retirement benefits 1,726.92 amounting to P1,800,201.00 being the main bone of contention herein, this Court proceeds to compute the balance of Capt. Elegirs retirement - as 22,416.63 benefits follows: 2,464.42 Retirement Pay (P5,000 x 25 years) [P] 2,479.996.39 Trip Leave Pay Vacation Leave Pay 1996 Unutilized Day-Off Productivity Allowance for 1996 Unpaid Salary for December 1-5, 1996 1996 Withholding Tax Refund

Retirement Pay (P138,477.00 divided by 2 times 26) Service Incentive Leave (P138,477.00 divided by 30 x 5) Accrued Trip Leave 13th Month Pay 1996 Unutilized days off Nov. 1996 Productive Allowance (net) Unpaid salary 12/1-5/96 1996 w/ tax refund TOTAL LESS: Reimbursement of training expenses 1996 13thmonth pay overpayment 1996 Christmas bonus overpayment PESALA 981,281.71 19,837.16 11,539.75 567.93

P125,000.00 757,564.04 385,155.76 104,711.38 1,726.92 22,335.00 2,464.42

P1,398,957.52 Less Accountabilities: Training Cost 1996 13th Month Pay Overpayment 1996 Christmas Bonus PESALA BALANCE P981,281.71 19,837.16 11,539.75 567.93 1,013,226.55 P 385,730.97

asseverating that the retirement of Collantes constituted illegal dismissal and union busting. The Secretary of Labor assumed jurisdiction and eventually upheld PALs action of retiring Collantes as a valid exercise of its option under Section 2, Article VII of the PALALPAP Retirement Plan. It further directed for the computation of Collantes retirement benefits on the basis of Article 287 of the Labor Code.20 Acting on Collantes petition for certiorari, the CA held that the pilots retirement benefits should be based on Article 287 of the Labor Code and not on the PAL-ALPAP Retirement Plan. On appeal to this Court, we reversed the CA and ruled that Collantes retirement benefits should be computed based on the PAL-ALPAP Retirement Plan and the PAL Pilots Retirement Benefit Plan and not on Article 287 of the Labor Code since the benefits under the two (2) plans are substantially higher than the latter. The dispositive portion of the decision reads: WHEREFORE, in view of all the foregoing, the petition is GRANTED. The March 2, 2000 Decision and the June 19, 2000 Resolution of the Court of Appeals in CA-G.R. SP No. 54403 are REVERSED and SET ASIDE. The Order of the Secretary of Labor in NCMB-NCR-N.S. 12514-97 dated June 13, 1998, is MODIFIED as follows: The retirement benefits to be awarded to Captain Albino Collantes shall be based on the 1967 PAL-ALPAP Retirement Plan and the PAL Pilots Retirement Benefit Plan. The directive contained in subparagraph (2) of the dispositive portion thereof, which required petitioner to consult the pilot involved before exercising its option to retire him, is DELETED. The said Order is AFFIRMED in all other respects. SO ORDERED.21 (Emphasis supplied) It bears reiterating that there are only two retirement schemes at point in this case: (1) Article 287 of the Labor Code, and; (2) the PAL-ALPAP Retirement Plan and the PAL Pilots Retirement Benefit Plan. The two retirement schemes are alternative in nature such that the retired pilot can only be entitled to that which provides for superior benefits. Article 287 of the Labor Code states:

pursuant to the ruling in G.R. No. 143686. xxxx WHEREFORE, the petition is GRANTED. The Decision of public respondent dated March 18, 2002 and its Order of June 30, 2003 are REVERSED and SET ASIDE. The retirement benefits of petitioner Capt. Bibiano Elegir shall be based on the 1967 PAL-ALPAP Retirement Plan andthe PAL Pilots Retirement Benefit Plan and the balance still due him, pegged at P385,730.97. SO ORDERED.17 (Citation omitted and emphasis supplied) The petitioner filed a motion for reconsideration but the same was denied in a Resolution18 dated February 21, 2008. Aggrieved, the petitioner appealed to this Court. Essentially, we are called upon to rule on the following issues: 1. Whether the petitioners retirement benefits should be computed based on Article 287 of the Labor Code or on PALs retirement plans; 2. Whether the petitioner should reimburse PAL with the proportionate costs of his training; and 3. Whether interest should be imposed on the monetary award in favor of the petitioner. The Ruling of this Court The petitioners retirement pay should be computed based on PALs retirement plans. The petitioner maintains that it is Article 287 of the Labor Code which should be applied in the computation of his retirement pay since the same provides for higher benefits. He contends that the CA erroneously resorted to the ruling in Philippine Airlines, Inc. since the circumstances in the said case, which led this Court to rule in favor of the applicability of PALs retirement plans in computing retirement benefits, are unavailing in the present case. Specifically, he pointed out that the pilot in Philippine Airlines, Inc. retired at the age of forty-five (45), while he opted to retire at fifty-two (52). He further emphasized that the ruling was anchored on a finding that the retirement benefits that the pilot would get under Article 287 of the Labor Code are less than those he would get under PALs retirement plans.19 Apparently, the petitioner failed to appreciate the heart behind the ruling in Philippine Airlines, Inc. To recapitulate, the case stemmed from PALs unilateral act of retiring airline pilot Captain Albino Collantes (Collantes) under the authority of Section 2, Article VII of the PAL-ALPAP Retirement Plan. Thereafter, ALPAP filed a Notice of Strike with the Department of Labor and Employment (DOLE),

Art. 287. Retirement. - Any employee may be retired upon reaching the retirement age established in the collective bargaining agreement or other applicable employment contract. In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have earned under existing laws and any collective bargaining agreement and other agreements: provided, however, that an employees retirement benefits under any collective bargaining and other agreements shall not be less than those provided herein. In the absence of a retirement plan or agreement plan providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared as the compulsory retirement age, who has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. Unless the parties provide for broader inclusions, the term one-half (1/2) month salary shallmean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves. x x x (Emphasis supplied) It can be clearly inferred from the language of the foregoing provision that it is applicable only to a situation where (1) there is no CBA or other applicable employment contract providing for retirement benefits for an employee, or (2) there is a CBA or other applicable employment contract providing for retirement benefits for an employee, but it is below the requirement set by law. The rationale for the first situation is to prevent the absurd situation where an employee, deserving to receive retirement benefits, is denied them through the nefarious scheme of employers to deprive employees of the benefits due them

under existing labor laws. On the other hand, the second situation aims to prevent private contracts from derogating from the public law. 22 The primary application of existing CBA in computing retirement benefits is implied in the title of R.A. No. 7641 which amended Article 287 of the Labor Code. The complete title of R.A. No. 7641 reads: "An Act Amending Article 287 of Presidential Decree No. 442, As Amended, otherwise known as the Labor Code of the Philippines, By Providing for Retirement Pay to Qualified Private Sector in the Absence of Any Retirement Plan in the Establishment."23 Emphasis must be placed on the fact that the purpose of the amendment is not merely to establish precedence in application or accord blanket priority to existing CBAs in computing retirement benefits. The determining factor in choosing which retirement scheme to apply is still superiority in terms of benefits provided. Thus, even if there is an existing CBA but the same does not provide for retirement benefits equal or superior to that which is provided under Article 287 of the Labor Code, the latter will apply. In this manner, the employee can be assured of a reasonable amount of retirement pay for his sustenance. Consistent with the purpose of the law, the CA correctly ruled for the computation of the petitioners retirement benefits based on the two (2) PAL retirement plans because it is under the same that he will reap the most benefits. Under the PAL-ALPAP Retirement Plan, the petitioner, who qualified for late retirement after rendering more than twenty (20) years of service as a pilot, is entitled to a lump sum payment of P125,000.00 for his twenty-five (25) years of service to PAL. Section 2, Article VII of the PAL-ALPAP Retirement Plan provides: Section 2. Late Retirement. Any member who remains in the service of the company after his normal retirement date may retire either at his option or at the option of the Company, and when so retired he shall be entitled either: (a) to a lump sum payment of P5,000.00 for each completed year of service rendered as a pilot, or (b) to such termination pay benefits to which he may be entitled under existing laws, whichever is the greater amount.24 Apart from the abovementioned benefit, the petitioner is also entitled to the equity of the retirement fund under PAL Pilots Retirement Benefit Plan, which pertains to the retirement fund raised from contributions exclusively from PAL of amounts equivalent to 20% of each pilots gross monthly pay. Each pilot stands to receive the full amount of the contribution upon his retirement which is equivalent to 240% of his gross monthly income for every year of service he rendered to PAL. This is in addition to the amount of not less than P100,000.00 that he shall receive under the PAL-ALPAP Retirement Plan.25 In sum, therefore, the petitioner will receive the following retirement benefits: (1) P125,000.00 (25 years x P5,000.00) for his 25 years of service to PAL under the PAL-ALPAP Retirement Plan, and; (2) 240% of his gross monthly salary for every year of his employment or, more specifically, the summation of PALs monthly contribution of an amount equivalent to 20% of his actual monthly salary, under the PAL Pilots Retirement Benefit Plan. As stated in the records, the petitioner already received the amount due to him under the PAL Pilots Retirement Benefit Plan.26 As much as we would like to demonstrate with specificity the amount of the petitioners entitlement under said plan, we are precluded from doing so because there is no record of the petitioners salary, including increments thereto, attached to the records of this case. To reiterate, the benefit under the PAL Pilots Retirement Benefit Plan pertains to the totality of PALs monthly contribution for every pilot, which amounts to 20% of the actual monthly salary. Necessarily, the computation of this benefit requires a record of the petitioners salary, which was unfortunately not submitted by either of the parties. At any rate, the petitioner did not dispute the fact that he already received his

entitlement under the PAL Pilots Retirement Benefit Plan nor did he question the propriety of the amount tendered. Thus, we can reasonably assume that he received the rightful amount of his entitlement under the plan. On the other hand, under Article 287 of the Labor Code, the petitioner would only be receiving a retirement pay equivalent to at least one-half (1/2) of his monthly salary for every year of service, a fraction of at least six (6) months being considered as one whole year. To stress, one-half (1/2) month salary means 22.5 days: 15 days plus 2.5 days representing one-twelfth (1/12) of the 13th month pay and the remaining 5 days for service incentive leave.27 Comparing the benefits under the two (2) retirement schemes, it can readily be perceived that the 22.5 days worth of salary for every year of service provided under Article 287 of the Labor Code cannot match the 240% of salary or almost two and a half worth of monthly salary per year of service provided under the PAL Pilots Retirement Benefit Plan, which will be further added to the P125,000.00 to which the petitioner is entitled under the PAL-ALPAP Retirement Plan. Clearly then, it is to the petitioners advantage that PALs retirement plans were applied in the computation of his retirement benefits. The petitioner should reimburse PAL with the costs of his training. As regards the issue of whether the petitioner should be obliged to reimburse PAL with the costs of his training, the ruling in Almario v. Philippine Airlines, Inc.28 is controlling. Essentially, in the mentioned case, this Court recognized the right of PAL to recoup the costs of a pilots training in the form of service for a period of at least three (3) years. This right emanated from the CBA between PAL and ALPAP, which must be complied with good faith by the parties. Thus: "The CBA is the law between the contracting parties the collective bargaining representative and the employer-company. Compliance with a CBA is mandated by the expressed policy to give protection to labor. In the same vein, CBA provisions should be "construed liberally rather than narrowly and technically, and the courts must place a practical and realistic construction upon it, giving due consideration to the context in which it is negotiated and purpose which it is intended to serve." This is founded on the dictum that a CBA is not an ordinary contract but one impressed with public interest. It goes without saying, however, that only provisions embodied in the CBA should be so interpreted and complied with. Where a proposal raised by a contracting party does not find print in the CBA, it is not a part thereof and the proponent has no claim whatsoever to its implementation." In N.S. Case No. 11-506-87, "In re Labor Dispute at the Philippine Airlines, Inc.," the Secretary of the Department of Labor and Employment (DOLE), passing on the failure of PAL and ALPAP to agree on the terms and conditions for the renewal of their CBA which expired on December 31, 1987 and construing Section 1 of Article XXIII of the 1985-1987 CBA, held: xxxx Section 1, Article XXIII of the 1985-1987 CBA provides: Pilots fifty-five (55) years of age or over who have not previously qualified in any Company turbo-jet aircraft shall not be permitted to bid into the Companys turbo-jet operations. Pilots fifty-five (55) years of age or over who have previously qualified in the companys turbo-jet operations may be by-passed at Company option, however, any such pilot shall be paid the by-pass pay effective upon the date a junior pilot starts to occupy the bidded position. x x x PAL x x x proposed to amend the provision in this wise: The compulsory retirement age for all pilots is sixty (60) years. Pilots who reach the age of fifty-five (55) years and over without having previously qualified in any Company turbo-jet aircraft shall not be permitted to occupy any position in the Companys turbo-jet fleet. Pilots

fifty-four (54) years of age and over are ineligible for promotion to any position in Group I. Pilots reaching the age of fifty-five (55) shall be frozen in the position they currently occupy at that time and shall be ineligible for any further movement to any other positions. PALs contention is basically premised on prohibitive training costs. The return on this investment in the form of the pilot promoted is allegedly five (5) years. Considering the pilots age, the chances of full recovery are asserted to be quite slim. ALPAP opposed the proposal and argued that the training cost is offset by the pilots maturity, expertise and experience. By way of compromise, we rule that a pilot should remain in the position where he is upon reaching age fifty-seven (57), irrespective of whether or not he has previously qualified in the Companys turbo-jet operations. The rationale behind this is that a pilot who will be compulsorily retired at age sixty (60) should no longer be burdened with training for a new position. But if a pilot is only at age fifty-five (55), and promotional positions are available, he should still be considered and promoted if qualified, provided he has previously qualified in any company turbo-jet aircraft. In the latter case, the prohibitive training costs are more than offset by the maturity, expertise, and experience of the pilot. Thus, the provision on age limit should now read: Pilots fifty-seven (57) years of age shall be frozen in their positions.1wphi1 Pilots fifty-five (55) [sic] years of age provided they have previously qualified in any company turbo-jet aircraft shall be permitted to occupy any position in the companys turbo-jet fleet.29 (Citations omitted and emphasis supplied) Further, we considered PALs act of sending its crew for training as an investment which expects an equitable return in the form of service within a reasonable period of time such that a pilot who decides to leave the company before it is able to regain the full value of the investment must proportionately reimburse the latter for the costs of his training. We ratiocinated: It bears noting that when Almario took the training course, he was about 39 years old, 21 years away from the retirement age of 60. Hence, with the maturity, expertise, and experience he gained from the training course, he was expected to serve PAL for at least three years to offset "the prohibitive costs" thereof. The pertinent provision of the CBA and its rationale aside, contrary to Almarios claim, Article 22 of the Civil Code which reads: "Art. 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him," applies. This provision on unjust enrichment recognizes the principle that one may not enrich himself at the expense of another. An authority on Civil Law writes on the subject, viz: "Enrichment of the defendant consists in every patrimonial, physical, or moral advantage, so long as it is appreciable in money. It may consist of some positive pecuniary value incorporated into the patrimony of the defendant, such as: (1) the enjoyment of a thing belonging to the plaintiff; (2) the benefits from service rendered by the plaintiff to the defendant; (3) the acquisition of a right, whether real or personal; (4) the increase of value of property of the defendant; (5) the improvement of a right of the defendant, such as the acquisition of a right of preference; (6) the recognition of the existence of a right in the defendant; and (7) the improvement of the conditions of life of the defendant. x x x x"

Admittedly, PAL invested for the training of Almario to enable him to acquire a higher level of skill, proficiency, or technical competence so that he could efficiently discharge the position of A-300 First Officer. Given that, PAL expected to recover the training costs by availing of Almarios services for at least three years. The expectation of PAL was not fully realized, however, due to Almarios resignation after only eight months of service following the completion of his training course. He cannot, therefore, refuse to reimburse the costs of training without violating the principle of unjust enrichment.30 (Citation omitted and emphasis supplied) After perusing the records of this case, we fail to find any significant fact or circumstance that could warrant a departure from the established jurisprudence. The petitioner admitted that as in Almario, the prevailing CBA between PAL and ALPAP at the time of his retirement incorporated the same stipulation in Section 1, Article XXIII of the 1985-1987 CBA31 which provides: Pilots fifty-seven (57) years of age shall be frozen in their positions. Pilots fifty-five (55) [sic] years of age provided they have previously qualified in any company turbo-jet aircraft shall be permitted to occupy any position in the companys turbo-jet fleet.32 As discussed in Almario, the above provision initially set the age of fifty-five (55) years as the reckoning point when a pilot becomes disqualified to bid for a higher position. The age of disqualification was set at 55 years old to enable PAL to fully recover the costs of the pilots training within a period of five (5) years before the pilot reaches the compulsory retirement age of sixty (60). The DOLE Secretary however lowered the age to fifty-seven (57), thereby cutting the supposed period of recovery of investment to three (3) years. The DOLE Secretary justified the amendment in that the "prohibitive training costs are more than offset by the maturity, expertise and the experience of the pilot."33 By carrying over the same stipulation in the present CBA, both PAL and ALPAP recognized that the companys effort in sending pilots for training abroad is an investment which necessarily expects a reasonable return in the form of service for a period of at least three (3) years. This stipulation had been repeatedly adopted by the parties in the succeeding renewals of their CBA, thus validating the impression that it is a reasonable and acceptable term to both PAL and ALPAP. Consequently, the petitioner cannot conveniently disregard this stipulation by simply raising the absence of a contract expressly requiring the pilot to remain within PALs employ within a period of 3 years after he has been sent on training. The supposed absence of contract being raised by the petitioner cannot stand as the CBA clearly covered the petitioners obligation to render service to PAL within 3 years to enable it to recoup the costs of its investment. Further, to allow the petitioner to leave the company before it has fulfilled the reasonable expectation of service on his part will amount to unjust enrichment. Pertinently, Article 22 of the New Civil Code states: Art. 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him. There is unjust enrichment when a person unjustly retains a benefit at the loss of another, or when a person retains the money or property of another against the fundamental principles of justice, equity and good conscience. Two conditions must concur: (1) a person is unjustly benefited; and (2) such benefit is derived at the expense of or with damages to another. The main objective of the principle of unjust enrichment is to prevent one from enriching oneself at the expense of another. It is commonly accepted that this doctrine simply means that a person shall not be allowed to profit or enrich himself inequitably at anothers expense.34 The enrichment may consist of a patrimonial, physical, or moral advantage, so long as it is appreciable in money. 35 It must have a correlative prejudice, disadvantage or injury to the plaintiff which may consist, not only of the loss of the property or the deprivation of its enjoyment, but also of the non-payment of compensation for a prestation or service rendered to the defendant

without intent to donate on the part of the plaintiff, or the failure to acquire something what the latter would have obtained.36 As can be gathered from the facts, PAL invested a considerable amount of money in sending the petitioner abroad to undergo training to prepare him for his new appointment as B747-400 Captain. In the process, the petitioner acquired new knowledge and skills which effectively enriched his technical know-how. As all other investors, PAL expects a return on investment in the form of service by the petitioner for a period of 3 years, which is the estimated length of time within which the costs of the latters training can be fully recovered. The petitioner is, thus, expected to work for PAL and utilize whatever knowledge he had learned from the training for the benefit of the company. However, after only one (1) year of service, the petitioner opted to retire from service, leaving PAL stripped of a necessary manpower. Undeniably, the petitioner was enriched at the expense of PAL. After undergoing the training fully shouldered by PAL, he acquired a higher level of technical competence which, in the professional realm, translates to a higher compensation. To prove this point, his monthly salary of P125,692.00 was increased to P131,703.00 while he was still undergoing training. After his training, his salary was further increased to P137,977.00.37 Further, his training broadened his opportunities for a better employment as in fact he was able to transfer to another airline company immediately after he left PAL.38 To allow the petitioner to simply leave the company without reimbursing it for the proportionate amount of the expenses it incurred for his training will only magnify the financial disadvantage sustained by PAL. Reason and fairness dictate that he must return to the company a proportionate amount of the costs of his training. Award of interest not warranted under the circumstances. The petitioner claims that the CA should have imposed interest on the monetary award in his favor. To support his claim, he cited the case of Eastern Shipping Lines, Inc. v. Court of Appeals,39 where this Court summarized the rules in the imposition of the proper interest rates: I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be held liable for damages. The provisions under Title XVIII on "Damages" of the Civil Code govern in determining the measure of recoverable damages. II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows: 1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code. 2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art.

1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged. 3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.40 (Citations omitted and emphasis supplied) The petitioner, however, took the foregoing guidelines out of context and entertained a misplaced supposition that all judgments which include a monetary award must be imposed with interest. The jurisprudential guideline clearly referred to breach of an obligation consisting of a forbearance of money, goods or credit before the imposition of a legal interest of 12% can be warranted. Such essential element is nowhere to be found in the facts of this case. Even granting that an interest of 6% may be imposed in cases of breached obligations not constituting loan or forbearance of money, loan or credit, such depends upon the discretion of the court. If at all, the monetary award in favor of the petitioner will earn legal interest from the time the judgment becomes final and executory until the same is fully satisfied, regardless of the nature of the breached obligation. The imposition is justified considering that the interim period from the finality of judgment, awarding a monetary claim and until payment thereof, is deemed to be equivalent to a forbearance of credit.41 WHEREFORE, in view of the foregoing disquisitions, the petition is DENIED. The Decision dated August 6, 2007 of the Court of Appeals in CA-G.R. SP No. 79111 is AFFIRMED. The Labor Arbiter is hereby DIRECTED to compute Bibiano C. Elegir's retirement pay based on the 1967 PAL-ALPAP Retirement Plan and the PAL Pilots' Retirement Benefit Plan, crediting Philippine Airlines, Inc. for the amount it had already paid the petitioner under the mentioned plans. SO ORDERED. BIENVENIDO L. REYES Associate justice WE CONCUR: ANTONIO T. CARPIO Senior Associate Justice Chairperson, Second Division ARTURO D. BRION Associate Justice JOSE PORTUGAL PEREZ Associate Justice

MARIA LOURDES P.A. SERENO Associate justice CERTIFICATION I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Cout1's Division. ANTONIO T. CARPIO Senior Associate Justice (Per Section 12, R.A. 296, The Judiciary Act of 1948, as Amended)

24

Rollo, p. 119. Supra note 14, at 363. Rollo, p. 36. Capitol Wireless, Inc. v. Confesor, 332 Phil. 78, 89 (1996). G.R. No. 170928, September 11, 2007, 532 SCRA 614.

25

Footnotes
26 1

Penned by Associate Justice Arcangelita M. RomillaLontok, with Associate Justices Mariano C. del Castillo (now a member of this Court) and Romeo F. Barza, concurring; rollo, pp. 29-37.
2

27

28

Penned by Presiding Commissioner Roy V. Seeres, with Commissioners Vicente S.E. Veloso (inhibited) and Alberto R. Quimpo, concurring; id. at 111-125.
3

29

Id. at 623-625, citing Samahang Manggagawa sa Top Form Mfg. v. NLRC, 356 Phil. 480, 490-491 (1998).
30

Penned by Presiding Commissioner Roy V. Seeres, with Commissioners Romeo L. Go and Vicente S.E. Veloso (inhibited), concurring; id. at 137.
4

Id. at 627-628, citing Tolentino, COMMENTARIES AND JURISPRUDENCE, Vol. I, pp. 80-81, 83, 2nd Ed.
31

Id. at 625. Id. at 624. Id.

Id. at 70.
32

Id. at 50-51.
33

Id.
34

Id. at 71. Id. at 41-42. Id. at 70-77. Id. at 74-77. Id. at 75-76. Id. at 121-124. Id. at 126-131. 424 Phil. 356 (2002). Rollo, pp. 137-138. Id. at 149. Id. at 35-37.

Grandteq Industrial Steel Products, Inc. v. Margallo, G.R. No. 181393, July 28, 2009, 594 SCRA 223, 238, citing Hulst v. PR Builders, Inc., G.R. No. 156364, September 3, 2007, 532 SCRA 74, 96.
35

Tolentino, CIVIL CODE OF THE PHILIPPINES, COMMENTARIES AND JURISPRUDENCE, Vol. I, p. 78.
36

10

Id. at 80. Rollo, p. 91. Id. at 93. G.R. No. 97412, July 12, 1994, 234 SCRA 78. Id. at 95-97.

11

37

12

38

13

39

14

40

15

41

16

Suatengco v. Reyes, G.R. No. 162729, December 17, 2008, 574 SCRA 187.

17

18

Penned by Associate Justice Arcangelita M. RomillaLontok, with Associate Justices Mariano C. del Castillo (now a member of this Court) and Romeo F. Barza, concurring; id. at 39.
19

Id. at 16-17. Supra note 14, at 359. Id. at 365.

20

21

22

Obusan v. Philippine National Bank, G.R. No. 181178, July 26, 2010, 625 SCRA 542, citing Oxales v. United Laboratories, Inc., G.R. No. 152991, July 21, 2008, 559 SCRA 26, 42.
23

Oxales v. United Laboratories, Inc., G.R. No. 152991, July 21, 2008, 559 SCRA 26, 45.