LABOR RELATIONS

STRIKE
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 193789

September 19, 2012

ALEX Q. NARANJO, DONNALYN DE GUZMAN, RONALD V.

CRUZ, ROSEMARIE P. PIMENTEL, and ROWENA B.
BARDAJE, Petitioners,
vs.
BIOMEDICA HEALTH CARE, INC. and CARINA "KAREN" J.
MOTOL, Respondents.
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 seeks to annul the June
25, 20101
Decision and September 20, 20102 Resolution of the Court of Appeals (CA)
in CA-G.R. SP No. 108205, finding that petitioners were validly dismissed.
The CA Decision overturned the Decision dated November 21, 20083 of the
National Labor Relations Commission (NLRC) and reinstated the Decision
dated March 31, 20084 of Labor Arbiter Ligerio V. Ancheta.
WHEREFORE, in view of the foregoing, judgment is hereby rendered
modifying the assailed Decision of the Labor Arbiter dated March 31, 2008;

(a) DECLARING the Complainants to have been illegally dismissed

for lack of just cause;
(b) ORDERING Respondents jointly and solidarily to pay
Complainants separation pay in lieu of reinstatement computed on the
basis of one (1) month pay for every year of service from date of
employment up to November 29, 2006 (the date of complainants
illegal dismissal);
(c) ORDERING Respondents jointly and solidarily to pay
Complainants backwages from November 29, 2006 up to the finality
of this Decision;
(d) ORDERING the Respondents jointly and solidarily to pay
Complainants the following:
1. Unpaid salary for the period 08-15 November 2006;
2. Pro-rated 13th month pay for 2006;
3. Service Incentive Leave for 2006 (except for complainant
Bardaje );
4. Unpaid commissions based on their sales for the years 2005
and 2006; and
5. Nominal damages in the amount of PhP 30,000 each.
(e) ORDERING the Respondents jointly and solidarily to pay
Complainants attorney's fees in the amount of I 0% of the total award
of monetary claims.
All other claims and counterclaims are dismissed for lack of factual and
legal basis.
The NLRC is ordered to recompute the monetary awards due to petitioners
based on the aforelisted dispositions deducting from the awards to Naranjo

and Pimentel their cash advances of PhP 4,750.00 and PhP 4,500.00,
respectively.
SO ORDERED.
No costs.
SO ORDERED.
FIRST DIVISION
[G.R. No. 142824. December 19, 2001]
INTERPHIL LABORATORIES EMPLOYEES UNION-FFW, ENRICO
GONZALES
and
MA.
THERESA
MONTEJO, petitioners, vs. INTERPHIL
LABORATORIES,
INC., AND HONORABLE LEONARDO A. QUISUMBING,
SECRETARY OF LABOR AND EMPLOYMENT, respondents.
DECISION
KAPUNAN, J.:
Assailed in this petition for review on certiorari are the decision,
promulgated on 29 December 1999, and the resolution, promulgated on 05
April 2000, of the Court of Appeals in CA-G.R. SP No. 50978.
Culled from the questioned decision, the facts of the case are as follows:
Interphil Laboratories Employees Union-FFW is the sole and exclusive
bargaining agent of the rank-and-file employees of Interphil Laboratories,
Inc., a company engaged in the business of manufacturing and packaging
pharmaceutical products. They had a Collective Bargaining Agreement
(CBA) effective from 01 August 1990 to 31 July 1993.
Prior to the expiration of the CBA or sometime in February 1993,
Allesandro G. Salazar,[1] Vice-President-Human Resources Department of
respondent company, was approached by Nestor Ocampo, the union

president, and Hernando Clemente, a union director. The two union officers
inquired about the stand of the company regarding the duration of the CBA
which was set to expire in a few months. Salazar told the union officers that
the matter could be best discussed during the formal negotiations which
would start soon.
In March 1993, Ocampo and Clemente again approached Salazar. They
inquired once more about the CBA status and received the same reply from
Salazar. In April 1993, Ocampo requested for a meeting to discuss the
duration and effectivity of the CBA. Salazar acceded and a meeting was held
on 15 April 1993 where the union officers asked whether Salazar would be
amenable to make the new CBA effective for two (2) years, starting 01
August 1993. Salazar, however, declared that it would still be premature to
discuss the matter and that the company could not make a decision at the
moment. The very next day, or on 16 April 1993, all the rank-and-file
employees of the company refused to follow their regular two-shift work
schedule of from 6:00 a.m. to 6:00 p.m., and from 6:00 p.m. to 6:00 a.m. At
2:00 p.m. and 2:00 a.m., respectively, the employees stopped working and
left their workplace without sealing the containers and securing the raw
materials they were working on. When Salazar inquired about the reason
for their refusal to follow their normal work schedule, the employees told
him to "ask the union officers." To minimize the damage the overtime
boycott was causing the company, Salazar immediately asked for a meeting
with the union officers. In the meeting, Enrico Gonzales, a union director,
told Salazar that the employees would only return to their normal work
schedule if the company would agree to their demands as to the effectivity
and duration of the new CBA. Salazar again told the union officers that the
matter could be better discussed during the formal renegotiations of the
CBA. Since the union was apparently unsatisfied with the answer of the
company, the overtime boycott continued. In addition, the employees started
to engage in a work slowdown campaign during the time they were working,
thus substantially delaying the production of the company.[2]
On 14 May 1993, petitioner union submitted with respondent company
its CBA proposal, and the latter filed its counter-proposal.

On 03 September 1993, respondent company filed with the National

Labor Relations Commission (NLRC) a petition to declare illegal petitioner
unions overtime boycott and work slowdown which, according to
respondent company, amounted to illegal strike. The case, docketed NLRCNCR Case No. 00-09-05529-93, was assigned to Labor Arbiter Manuel R.
Caday.
On 22 October 1993, respondent company filed with the National
Conciliation and Mediation Board (NCMB) an urgent request for preventive
mediation aimed to help the parties in their CBA negotiations. [3] The parties,
however, failed to arrive at an agreement and on 15 November 1993,
respondent company filed with Office of the Secretary of Labor and
Employment a petition for assumption of jurisdiction.
On 24 January 1994, petitioner union filed with the NCMB a Notice of
Strike citing unfair labor practice allegedly committed by respondent
company. On 12 February 1994, the union staged a strike.
On 14 February 1994, Secretary of Labor Nieves Confesor issued an
assumption order[4] over the labor dispute. On 02 March 1994, Secretary
Confesor issued an order directing respondent company to immediately
accept all striking workers, including the fifty-three (53) terminated union
officers, shop stewards and union members back to work under the same
terms and conditions prevailing prior to the strike, and to pay all the unpaid
accrued year end benefits of its employees in 1993.[5] On the other hand,
petitioner
union
was
directed
to
strictly
and immediately comply with the return to work orders issued by (the)
Office x x x.[6] The same order pronounced that (a)ll pending cases which are
direct offshoots of the instant labor dispute are hereby subsumed herewith.[7]
In the interim, the case before Labor Arbiter Caday continued. On 16
March 1994, petitioner union filed an Urgent Manifestation and Motion to
Consolidate the Instant Case and to Suspend Proceedings seeking the
consolidation of the case with the labor dispute pending before the Secretary
of Labor. Despite objection by respondent company, Labor Arbiter Caday
held in abeyance the proceedings before him. However, on 06 June 1994,

Acting Labor Secretary Jose S. Brillantes, after finding that the issues raised
would require a formal hearing and the presentation of evidentiary matters,
directed the Labor Arbiters Caday and M. Sol del Rosario to proceed with
the hearing of the cases before them and to thereafter submit their report and
recommendation to his office.
On 05 September 1995, Labor Arbiter Caday submitted his
recommendation to the then Secretary of Labor Leonardo A. Quisumbing.
[8]
Then Secretary Quisumbing approved and adopted the report in his Order,
dated 13 August 1997, hence:
WHEREFORE, finding the said Report of Labor Arbiter Manuel R. Caday
to be supported by substantial evidence, this Office hereby RESOLVES to
APPROVE and ADOPT the same as the decision in this case, and judgment
is hereby rendered:
(1) Declaring the overtime boycott and work slowdown as illegal strike;
(2) Declaring the respondent union officers namely:
Nestor Ocampo - President
Carmelo Santos - Vice-President
Marites Montejo - Treasurer/Board Member
Rico Gonzales - Auditor
Rod Abuan - Director
Segundino Flores - Director
Hernando Clemente - Director
who spearheaded and led the overtime boycott and work slowdown, to
have lost their employment status; and

(3) Finding the respondents guilty of unfair labor practice for

violating the then existing CBA which prohibits the union or
any employee during the existence of the CBA from staging a
strike or engaging in slowdown or interruption of work and
ordering them to cease and desist from further committing the
aforesaid illegal acts.
Petitioner union moved for the reconsideration of the order but its
motion was denied. The union went to the Court of Appeals via a petition
for certiorari. In the now questioned decision promulgated on 29 December
1999, the appellate court dismissed the petition. The unions motion for
reconsideration was likewise denied.
Hence, the present recourse where petitioner alleged:
THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS,
LIKE THE HONORABLE PUBLIC RESPONDENT IN THE
PROCEEDINGS BELOW, COMMITTED GRAVE ABUSE OF
DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF
JURISDICTION WHEN IT COMPLETELY DISREGARDED PAROL
EVIDENCE RULE IN THE EVALUATION AND APPRECIATION OF
EVIDENCE PROFERRED BY THE PARTIES.
THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS
COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO
LACK AND/OR EXCESS OF JURISDICTION, WHEN IT DID NOT
DECLARE PRIVATE RESPONDENTS ACT OF EXTENDING
SUBSTANTIAL SEPARATION PACKAGE TO ALMOST ALL
INVOLVED OFFICERS OF PETITIONER UNION, DURING THE
PENDENCY OF THE CASE, AS TANTAMOUNT TO CONDONATION,
IF INDEED, THERE WAS ANY MISDEED COMMITTED.
THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS
COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO
LACK AND/OR EXCESS OF JURISDICTION WHEN IT HELD THAT
THE SECRETARY OF LABOR AND EMPLOYMENT HAS

JURISDICTION OVER A CASE (A PETITION TO DECLARE STRIKE

ILLEGAL) WHICH HAD LONG BEEN FILED AND PENDING BEFORE
THE LABOR ARBITER.[9]
We sustain the questioned decision.
On the matter of the authority and jurisdiction of the Secretary of Labor
and Employment to rule on the illegal strike committed by petitioner union,
it is undisputed that the petition to declare the strike illegal before Labor
Arbiter Caday was filed long before the Secretary of Labor and Employment
issued the assumption order on 14 February 1994. However, it cannot be
denied that the issues of overtime boycott and work slowdown amounting to
illegal strike before Labor Arbiter Caday are intertwined with the labor
dispute before the Labor Secretary. In fact, on 16 March 1994, petitioner
union even asked Labor Arbiter Caday to suspend the proceedings before
him and consolidate the same with the case before the Secretary of
Labor.When Acting Labor Secretary Brillantes ordered Labor Arbiter Caday
to continue with the hearing of the illegal strike case, the parties acceded and
participated in the proceedings, knowing fully well that there was also a
directive for Labor Arbiter Caday to thereafter submit his report and
recommendation to the Secretary. As the appellate court pointed out, the
subsequent participation of petitioner union in the continuation of the
hearing was in effect an affirmation of the jurisdiction of the Secretary of
Labor.
The appellate court also correctly held that the question of the Secretary
of Labor and Employments jurisdiction over labor-related disputes was
already settled in International Pharmaceutical, Inc. vs. Hon. Secretary of
Labor and Associated Labor Union (ALU)[10] where the Court declared:
In the present case, the Secretary was explicitly granted by Article 263(g) of
the Labor Code the authority to assume jurisdiction over a labor dispute
causing or likely to cause a strike or lockout in an industry indispensable to
the national interest, and decide the same accordingly. Necessarily, this
authority to assume jurisdiction over the said labor dispute must include and

extend to all questions and controversies arising therefrom, including cases

over which the labor arbiter has exclusive jurisdiction.
Moreover, Article 217 of the Labor Code is not without, but contemplates,
exceptions thereto. This is evident from the opening proviso therein reading
(e)xcept as otherwise provided under this Code x x x. Plainly, Article 263(g)
of the Labor Code was meant to make both the Secretary (or the various
regional directors) and the labor arbiters share jurisdiction, subject to certain
conditions. Otherwise, the Secretary would not be able to effectively and
efficiently dispose of the primary dispute. To hold the contrary may even
lead to the absurd and undesirable result wherein the Secretary and the labor
arbiter concerned may have diametrically opposed rulings. As we have said,
(i)t is fundamental that a statute is to be read in a manner that would breathe
life into it, rather than defeat it.
In fine, the issuance of the assailed orders is within the province of the
Secretary as authorized by Article 263(g) of the Labor Code and Article
217(a) and (5) of the same Code, taken conjointly and rationally construed to
subserve the objective of the jurisdiction vested in the Secretary.[11]
Anent the alleged misappreciation of the evidence proffered by the
parties, it is axiomatic that the factual findings of the Labor Arbiter, when
sufficiently supported by the evidence on record, must be accorded due
respect by the Supreme Court.[12] Here, the report and recommendation of
Labor Arbiter Caday was not only adopted by then Secretary of Labor
Quisumbing but it was likewise affirmed by the Court of Appeals. We see no
reason to depart from their findings.
Petitioner union maintained that the Labor Arbiter and the appellate
court disregarded the parol evidence rule [13] when they upheld the allegation
of respondent company that the work schedule of its employees was from
6:00 a.m. to 6:00 p.m. and from 6:00 p.m. to 6:00 a.m. According to
petitioner union, the provisions of their CBA on working hours clearly stated
that the normal working hours were from 7:30 a.m. to 4:30 p.m. [14] Petitioner
union underscored that the regular work hours for the company was only
eight (8) hours. It further contended that the Labor Arbiter as well as the

Court of Appeal should not have admitted any other evidence contrary to
what was stated in the CBA.
The reliance on the parol evidence rule is misplaced. In labor cases
pending before the Commission or the Labor Arbiter, the rules of evidence
prevailing in courts of law or equity are not controlling. [15] Rules of
procedure and evidence are not applied in a very rigid and technical sense in
labor cases.[16] Hence, the Labor Arbiter is not precluded from accepting and
evaluating evidence other than, and even contrary to, what is stated in, the
CBA.
In any event, the parties stipulated:
Section 1. Regular Working Hours - A normal workday shall consist of not
more than eight (8) hours. The regular working hours for the Company shall
be from 7:30 A.M. to 4:30 P.M.The schedule of shift work shall be
maintained; however the company may change the prevailing work time at
its discretion, should such change be necessary in the operations of the
Company. All employees shall observe such rules as have been laid down by
the company for the purpose of effecting control over working hours.[17]
It is evident from the foregoing provision that the working hours may be
changed, at the discretion of the company, should such change be necessary
for its operations, and that the employees shall observe such rules as have
been laid down by the company. In the case before us, Labor Arbiter Caday
found that respondent company had to adopt a continuous 24-hour work
daily schedule by reason of the nature of its business and the demands of its
clients. It was established that the employees adhered to the said work
schedule since 1988. The employees are deemed to have waived the eighthour schedule since they followed, without any question or complaint, the
two-shift schedule while their CBA was still in force and even prior
thereto. The two-shift schedule effectively changed the working hours
stipulated in the CBA. As the employees assented by practice to this
arrangement, they cannot now be heard to claim that the overtime boycott is
justified because they were not obliged to work beyond eight hours.

As Labor Arbiter Caday elucidated in his report:

Respondents' attempt to deny the existence of such regular overtime
schedule is belied by their own awareness of the existence of the regular
overtime schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M. of
the following day that has been going on since 1988. Proof of this is the case
undisputedly filed by the union for and in behalf of its members, wherein it
is claimed that the company has not been computing correctly the night
premium and overtime pay for work rendered between 2:00 A.M. and 6:00
A.M. of the 6:00 P.M. to 6:00 A.M. shift.(tsn pp. 9-10, testimony of
Alessandro G. Salazar during hearing on August 9, 1994). In fact, the union
Vice-President Carmelo C. Santos, demanded that the company make a
recomputation of the overtime records of the employees from 1987 (Exh.
"P"). Even their own witness, union Director Enrico C. Gonzales, testified
that when in 1992 he was still a Quality Control Inspector at the Sucat Plant
of the company, his schedule was sometime at 6:00 A.M. to 6:00 P.M.,
sometime at 6:00 A.M. to 2:00 P.M., at 2:00 P.M. to 10:00 P.M. and
sometime at 6:00 P.M. to 6:00 A.M., and when on the 6 to 6 shifts, he
received the commensurate pay (t.s.n. pp. 7-9, hearing of January 10,
1994). Likewise, while in the overtime permits, dated March 1, 6, 8, 9 to 12,
1993, which were passed around daily for the employees to sign, his name
appeared but without his signatures, he however had rendered overtime
during those dates and was paid because unlike in other departments, it has
become a habit to them to sign the overtime schedule weekly (t.s.n. pp. 2631, hearing of January 10, 1994). The awareness of the respondent union, its
officers and members about the existence of the regular overtime schedule of
6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M. of the following day will
be further shown in the discussion of the second issue.[18]
As to the second issue of whether or not the respondents have engaged in
"overtime boycott" and "work slowdown" from April 16, 1993 up to March
7, 1994, both amounting to illegal strike, the evidence presented is equally
crystal clear that the "overtime boycott" and "work slowdown" committed
by the respondents amounted to illegal strike.

As undisputably testified to by Mr. Alessandro G. Salazar, the company's

Vice-President-Human Resources Department, sometime in February, 1993,
he was approached by the union President Nestor Ocampo and Union
Director Hernando Clemente who asked him as to what was the stand of the
company regarding the duration of the CBA between the company and
which was set to expire on July 31, 1993. He answered that the matter could
be best discussed during the formal renegotiations which anyway was to
start soon. This query was followed up sometime in March, 1993, and his
answer was the same. In early April, 1993, the union president requested for
a meeting to discuss the duration and effectivity of the CBA. Acceding to
the request, a meeting was held on April 15, 1993 wherein the union officers
asked him if he would agree to make the new CBA effective on August 1,
1993 and the term thereof to be valid for only two (2) years. When he
answered that it was still premature to discuss the matter, the very next day,
April 16, 1993, all the rank and file employees of the company refused to
follow their regular two-shift work schedule of 6:00 A.M. to 6:00 P.M. and
6:00 P.M. to 6:00 A.M., when after the 8-hours work, they abruptly stopped
working at 2:00 P.M. and 2:00 A.M., respectively, leaving their place of
work without sealing the containers and securing the raw materials they
were working on. When he saw the workers leaving before the end of their
shift, he asked them why and their reply was "asked (sic) the union
officers." Alarmed by the overtime boycott and the damage it was causing
the company, he requested for a meeting with the union officers. In the
meeting, he asked them why the regular work schedule was not being
followed by the employees, and union Director Enrico Gonzales, with the
support of the other union officers, told him that if management would agree
to a two-year duration for the new CBA and an effectivity date of August 1,
1993, all employees will return to the normal work schedule of two 12-hour
shifts. When answered that the management could not decide on the matter
at the moment and to have it discussed and agreed upon during the formal
renegotiations, the overtime boycott continued and the employees at the
same time employed a work slowdown campaign during working hours,
causing considerable delay in the production and complaints from the
clients/customers (Exh. "O", Affidavit of Alessandro G. Salazar which
formed part of his direct testimony). This testimonial narrations of Salazar

was, as earlier said, undisputed because the respondents' counsel waived his
cross examination (t.s.n. p. 15, hearing on August 9, 1994).
Aside from the foregoing undisputed testimonies of Salazar, the testimonies
of other Department Managers pointing to the union officers as the
instigators of the overtime boycott and work slowdown, the testimony of
Epifanio Salumbides (Exh. "Y") a union member at the time the concerted
activities of the respondents took place, is quoted hereunder:
2. Noon Pebrero 1993, ipinatawag ng Presidente ng Unyon na si Nestor
Ocampo ang lahat ng taga-maintenance ng bawat departamento upang
dumalo sa isang miting. Sa miting na iyon, sinabi ni Rod Abuan, na isang
Direktor ng Unyon, na mayroon ilalabas na memo ang Unyon na nag-uutos
sa mga empleyado ng Kompanya na mag-imbento ng sari-saring dahilan
para lang hindi sila makapagtrabaho ng "overtime". Sinabihan rin ako ni
Tessie Montejo na siya namang Treasurer ng Unyon na 'Manny, huwag ka na
lang pumasok sa Biyernes para hindi ka masabihan ng magtrabaho ng
Sabado at Linggo' na siya namang araw ng "overtime" ko. x x x
3. Nakalipas ang dalawaang buwan at noong unang bahagi ng Abril 1993,
miniting kami ng Shop Stewards namin na sina Ariel Abenoja, Dany
Tansiongco at Vicky Baron. Sinabihan kami na huwag ng mag-ovetime pag
nagbigay ng senyas ang Unyon ng "showtime."
4. Noong umaga ng ika-15 ng Abril 1993, nagsabi na si Danny Tansiongco
ng "showtime". Dahil dito wala ng empleyadong nag-overtime at sabaysabay silang umalis, maliban sa akin.Ako ay pumasok rin noong Abril 17 at
18, 1993 na Sabado at Linggo.
5. Noong ika-19 ng Abril 1993, ako ay ipinatawag ni Ariel Abenoja Shop
Steward, sa opisina ng Unyon. Nadatnan ko doon ang halos lahat ng
opisyales ng Unyon na sina:
Nestor Ocampo ----- Presidente
Carmelo Santos ----- Bise-Presidente

Nanding Clemente -- Director

Tess Montejo------- Chief Steward
Segundo Flores ------ Director
Enrico Gonzales ----- Auditor
Boy Alcantara ------- Shop Steward
Rod Abuan ----------- Director
at marami pang iba na hindi ko na maala-ala. Pagpasok ko, ako'y pinaligiran
ng mga opisyales ng Unyon. Tinanong ako ni Rod Aguan kung bakit ako
"nag-ovetime" gayong "Binigyan ka na namin ng instruction na huwag
pumasok, pinilit mo pa ring pumasok." "Management ka ba o
Unyonista." Sinagot ko na ako ay Unyonista. Tinanong niya muli kung bakit
ako pumasok.Sinabi ko na wala akong maibigay na dahilan para lang hindi
pumasok at "mag-overtime." Pagkatapos nito, ako ay pinagmumura ng mga
opisyales ng Unyon kaya't ako ay madaliang umalis.
x x x"
Likewise, the respondents' denial of having a hand in the work slowdown
since there was no change in the performance and work efficiency for the
year 1993 as compared to the previous year was even rebuffed by their
witness M. Theresa Montejo, a Quality Control Analyst. For on crossexamination, she (Montejo) admitted that she could not answer how she was
able to prepare the productivity reports from May 1993 to February 1994
because from April 1993 up to April 1994, she was on union leave. As such,
the productivity reports she had earlier shown was not prepared by her since
she had no personal knowledge of the reports (t.s.n. pp. 32-35, hearing of
February 27, 1995). Aside from this admission, the comparison made by the
respondents was of no moment, because the higher production for the years
previous to 1993 was reached when the employees regularly rendered
overtime work. But undeniably, overtime boycott and work slowdown from

April 16, 1993 up to March 7, 1994 had resulted not only in financial losses
to the company but also damaged its business reputation.
Evidently, from all the foregoing, respondents' unjustified unilateral
alteration of the 24-hour work schedule thru their concerted activities of
"overtime boycott" and "work slowdown" from April 16, 1993 up to March
7, 1994, to force the petitioner company to accede to their unreasonable
demands, can be classified as a strike on an installment basis, as correctly
called by petitioner company. xxx[19]
It is thus undisputed that members of the union by their own volition
decided not to render overtime services in April 1993.[20] Petitioner union
even admitted this in its Memorandum, dated 12 April 1999, filed with the
Court of Appeals, as well as in the petition before this Court, which both
stated that "(s)sometime in April 1993, members of herein petitioner, on
their own volition and in keeping with the regular working hours in the
Company x x x decided not to render overtime".[21] Such admission
confirmed the allegation of respondent company that petitioner engaged in
overtime boycott and work slowdown which, to use the words of Labor
Arbiter Caday, was taken as a means to coerce respondent company to yield
to its unreasonable demands.
More importantly, the overtime boycott or work slowdown by the
employees constituted a violation of their CBA, which prohibits the union or
employee, during the existence of the CBA, to stage a strike or engage in
slowdown or interruption of work.[22] In Ilaw at Buklod ng Manggagawa vs.
NLRC,[23] this Court ruled:
x x x (T)he concerted activity in question would still be illicit because
contrary to the workers explicit contractual commitment that there shall be
no strikes, walkouts, stoppage or slowdown of work, boycotts, secondary
boycotts, refusal to handle any merchandise, picketing, sit-down strikes of
any kind, sympathetic or general strikes, or any other interference with any
of the operations of the COMPANY during the term of xxx (their collective
bargaining) agreement.

What has just been said makes unnecessary resolution of SMCs argument
that the workers concerted refusal to adhere to the work schedule in force for
the last several years, is a slowdown, an inherently illegal activity essentially
illegal even in the absence of a no-strike clause in a collective bargaining
contract, or statute or rule. The Court is in substantial agreement with the
petitioners concept of a slowdown as a strike on the installment plan; as a
willful reduction in the rate of work by concerted action of workers for the
purpose of restricting the output of the employer, in relation to a labor
dispute; as an activity by which workers, without a complete stoppage of
work, retard production or their performance of duties and functions to
compel management to grant their demands. The Court also agrees that such
a slowdown is generally condemned as inherently illicit and unjustifiable,
because while the employees continue to work and remain at their positions
and accept the wages paid to them, they at the same time select what part of
their allotted tasks they care to perform of their own volition or refuse
openly or secretly, to the employers damage, to do other work; in other
words, they work on their own terms. x x x.[24]
Finally, the Court cannot agree with the proposition that respondent
company, in extending substantial separation package to some officers of
petitioner union during the pendency of this case, in effect, condoned the
illegal acts they committed.
Respondent company correctly postured that at the time these union
officers obtained their separation benefits, they were still considered
employees of the company. Hence, the company was merely complying with
its legal obligations.[25] Respondent company could have withheld these
benefits pending the final resolution of this case. Yet, considering perhaps
the financial hardships experienced by its employees and the economic
situation prevailing, respondent company chose to let its employees avail of
their separation benefits. The Court views the gesture of respondent
company as an act of generosity for which it should not be punished.
WHEREFORE, the petition is DENIED DUE COURSE and the 29
December 1999 decision of the Court of Appeals is AFFIRMED.

SO ORDERED.
Davide, Jr., C.J., (Chairman), Pardo, and Ynares-Santiago, JJ., concur.
Puno, J., on official leave.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 163942

November 11, 2008

NATIONAL UNION OF WORKERS IN THE HOTEL RESTAURANT

AND ALLIED INDUSTRIES (NUWHRAIN-APL-IUF) DUSIT HOTEL
NIKKO CHAPTER, petitioner,
vs.
THE HONORABLE COURT OF APPEALS (Former Eighth Division),
THE NATIONAL LABOR RELATIONS COMMISSION (NLRC),
PHILIPPINE HOTELIERS INC., owner and operator of DUSIT
HOTEL NIKKO and/or CHIYUKI FUJIMOTO, and ESPERANZA V.
ALVEZ, respondents.
x----------------------------------------x
G.R. No. 166295

November 11, 2008

NUWHRAIN-DUSIT HOTEL NIKKO CHAPTER, petitioner,

vs.
SECRETARY OF LABOR AND EMPLOYMENT and PHILIPPINE
HOTELIERS, INC., respondents.
DECISION
VELASCO, JR., J.:

In G.R. No. 163942, the Petition for Review on Certiorari under Rule 45 of
the National Union of Workers in the Hotel Restaurant and Allied Industries
Dusit Hotel Nikko Chapter (Union) seeks to set aside the January 19, 2004
Decision1 and June 1, 2004 Resolution2 of the Court of Appeals (CA) in CAG.R. SP No. 76568 which affirmed the October 9, 2002 Decision3 of the
National Labor Relations Commission (NLRC) in NLRC NCR CC No.
000215-02.
In G.R. No. 166295, the Petition for Certiorari under Rule 65 of the Union
seeks to nullify the May 6, 2004 Decision4 and November 25, 2004
Resolution5 of the CA in CA-G.R. SP No. 70778 which affirmed the January
31, 20026 and March 15, 20027 Orders of the Secretary of Labor and
Employment, Patricia A. Sto. Tomas (Secretary).
Evolution of the Present Petitions
The Union is the certified bargaining agent of the regular rank-and-file
employees of Dusit Hotel Nikko (Hotel), a five star service establishment
owned and operated by Philippine Hoteliers, Inc. located in Makati City.
Chiyuki Fuijimoto and Esperanza V. Alvez are impleaded in their official
capacities as the Hotel's General Manager and Director of Human
Resources, respectively.
On October 24, 2000, the Union submitted its Collective Bargaining
Agreement (CBA) negotiation proposals to the Hotel. As negotiations
ensued, the parties failed to arrive at mutually acceptable terms and
conditions. Due to the bargaining deadlock, the Union, on December 20,
2001, filed a Notice of Strike on the ground of the bargaining deadlock with
the National Conciliation and Mediation Board (NCMB), which was
docketed as NCMB-NCR-NS-12-369-01. Thereafter, conciliation hearings
were conducted which proved unsuccessful. Consequently, a Strike
Vote8 was conducted by the Union on January 14, 2002 on which it was
decided that the Union would wage a strike.
Soon thereafter, in the afternoon of January 17, 2002, the Union held a
general assembly at its office located in the Hotel's basement, where some

members sported closely cropped hair or cleanly shaven heads. The next
day, or on January 18, 2002, more male Union members came to work
sporting the same hair style. The Hotel prevented these workers from
entering the premises claiming that they violated the Hotel's Grooming
Standards.
In view of the Hotel's action, the Union staged a picket outside the Hotel
premises. Later, other workers were also prevented from entering the Hotel
causing them to join the picket. For this reason the Hotel experienced a
severe lack of manpower which forced them to temporarily cease operations
in three restaurants.
Subsequently, on January 20, 2002, the Hotel issued notices to Union
members, preventively suspending them and charging them with the
following offenses: (1) violation of the duty to bargain in good faith; (2)
illegal picket; (3) unfair labor practice; (4) violation of the Hotel's Grooming
Standards; (5) illegal strike; and (6) commission of illegal acts during the
illegal strike. The next day, the Union filed with the NCMB a second Notice
of Strike on the ground of unfair labor practice and violation of Article
248(a) of the Labor Code on illegal lockout, which was docketed as NCMBNCR-NS-01-019-02. In the meantime, the Union officers and members
submitted their explanations to the charges alleged by the Hotel, while they
continued to stage a picket just inside the Hotel's compound.
On January 26, 2002, the Hotel terminated the services of twenty-nine (29)
Union officers and sixty-one (61) members; and suspended eighty-one (81)
employees for 30 days, forty-eight (48) employees for 15 days, four (4)
employees for 10 days, and three (3) employees for five days. On the same
day, the Union declared a strike. Starting that day, the Union engaged in
picketing the premises of the Hotel. During the picket, the Union officials
and members unlawfully blocked the ingress and egress of the Hotel
premises.
Consequently, on January 31, 2002, the Union filed its third Notice of Strike
with the NCMB which was docketed as NCMB-NCR-NS-01-050-02, this
time on the ground of unfair labor practice and union-busting.

On the same day, the Secretary, through her January 31, 2002 Order,
assumed jurisdiction over the labor dispute and certified the case to the
NLRC for compulsory arbitration, which was docketed as NLRC NCR CC
No. 000215-02. The Secretary's Order partly reads:
WHEREFORE, in order to have a complete determination of the
bargaining deadlock and the other incidents of the dispute, this Office
hereby consolidates the two Notices of Strike - NCMB-NCR-NS-12369-01 and NCMB-NCR-NS-01-019-02 - and CERTIFIES the entire
labor dispute covered by these Notices and the intervening events, to
the NATIONAL LABOR RELATIONS COMMISSION for
compulsory arbitration pursuant to Article 263 (g) of the Labor Code,
as amended, under the following terms:
xxxx
d. the Hotel is given the option, in lieu of actual reinstatement, to
merely reinstate the dismissed or suspended workers in the payroll in
light of the special circumstances attendant to their reinstatement;
xxxx
SO ORDERED. (Emphasis added.)
Pursuant to the Secretary's Order, the Hotel, on February 1, 2002, issued an
Inter-Office Memorandum,9 directing some of the employees to return to
work, while advising others not to do so, as they were placed under payroll
reinstatement.
Unhappy with the Secretary's January 31, 2002 Order, the Union moved for
reconsideration, but the same was denied per the Secretary's subsequent
March 15, 2002 Order. Affronted by the Secretary's January 31, 2002 and
March 15, 2002 Orders, the Union filed a Petition for Certiorari with the CA
which was docketed as CA-G.R. SP No. 70778.
Meanwhile, after due proceedings, the NLRC issued its October 9, 2002
Decision in NLRC NCR CC No. 000215-02, in which it ordered the Hotel

and the Union to execute a CBA within 30 days from the receipt of the
decision. The NLRC also held that the January 18, 2002 concerted action
was an illegal strike in which illegal acts were committed by the Union; and
that the strike violated the "No Strike, No Lockout" provision of the CBA,
which thereby caused the dismissal of 29 Union officers and 61 Union
members. The NLRC ordered the Hotel to grant the 61 dismissed Union
members financial assistance in the amount of month's pay for every year
of service or their retirement benefits under their retirement plan whichever
was higher. The NLRC explained that the strike which occurred on January
18, 2002 was illegal because it failed to comply with the mandatory 30-day
cooling-off period10 and the seven-day strike ban,11 as the strike occurred
only 29 days after the submission of the notice of strike on December 20,
2001 and only four days after the submission of the strike vote on January
14, 2002. The NLRC also ruled that even if the Union had complied with the
temporal requirements mandated by law, the strike would nonetheless be
declared illegal because it was attended by illegal acts committed by the
Union officers and members.
The Union then filed a Motion for Reconsideration of the NLRC's Decision
which was denied in the February 7, 2003 NLRC Resolution. Unfazed, the
Union filed a Petition for Certiorari under Rule 65 with the CA, docketed as
CA-G.R. SP No. 76568, and assailed both the October 9, 2002 Decision and
the February 7, 2003 Resolution of the NLRC.
Soon thereafter, the CA promulgated its January 19, 2004 Decision in CAG.R. SP No. 76568 which dismissed the Union's petition and affirmed the
rulings of the NLRC. The CA ratiocinated that the Union failed to
demonstrate that the NLRC committed grave abuse of discretion and
capriciously exercised its judgment or exercised its power in an arbitrary and
despotic manner.
For this reason, the Union filed a Motion for Reconsideration which the CA,
in its June 1, 2004 Resolution, denied for lack of merit.
In the meantime, the CA promulgated its May 6, 2004 Decision in CA-G.R.
SP No. 70778 which denied due course to and consequently dismissed the

Union's petition. The Union moved to reconsider the Decision, but the CA
was unconvinced and denied the motion for reconsideration in its November
25, 2004 Resolution.
Thus, the Union filed the present petitions.
The Union raises several interwoven issues in G.R. No. 163942, most
eminent of which is whether the Union conducted an illegal strike. The
issues presented for resolution are:
-AWHETHER OR NOT THE UNION, THE 29 UNION OFFICERS
AND 61 MEMBERS MAY BE ADJUDGED GUILTY OF STAGING
AN ILLEGAL STRIKE ON JANUARY 18, 2002 DESPITE
RESPONDENTS' ADMISSION THAT THEY PREVENTED SAID
OFFICERS AND MEMBERS FROM REPORTING FOR WORK
FOR ALLEGED VIOLATION OF THE HOTEL'S GROOMING
STANDARDS
-BWHETHER OR NOT THE 29 UNION OFFICERS AND 61
MEMBERS MAY VALIDLY BE DISMISSED AND MORE THAN
200 MEMBERS BE VALIDLY SUSPENDED ON THE BASIS OF
FOUR (4) SELF-SERVING AFFIDAVITS OF RESPONDENTS
-CWHETHER OR NOT RESPONDENTS IN PREVENTING UNION
OFFICERS AND MEMBERS FROM REPORTING FOR WORK
COMMITTED AN ILLEGAL LOCK-OUT12
In G.R. No. 166295, the Union solicits a riposte from this Court on whether
the Secretary has discretion to impose "payroll" reinstatement when he
assumes jurisdiction over labor disputes.

The Court's Ruling

The Court shall first dispose of G.R. No. 166295.
According to the Union, there is no legal basis for allowing payroll
reinstatement in lieu of actual or physical reinstatement. As argued, Art.
263(g) of the Labor Code is clear on this point.
The Hotel, on the other hand, claims that the issue is now moot and any
decision would be impossible to execute in view of the Decision of the
NLRC which upheld the dismissal of the Union officers and members.
The Union's position is untenable.
The Hotel correctly raises the argument that the issue was rendered moot
when the NLRC upheld the dismissal of the Union officers and members. In
order, however, to settle this relevant and novel issue involving the breadth
of the power and jurisdiction of the Secretary in assumption of jurisdiction
cases, we now decide the issue on the merits instead of relying on mere
technicalities.
We held in University of Immaculate Concepcion, Inc. v. Secretary of Labor:
With respect to the Secretary's Order allowing payroll reinstatement
instead of actual reinstatement for the individual respondents herein,
an amendment to the previous Orders issued by her office, the same is
usually not allowed. Article 263(g) of the Labor Code aforementioned
states that all workers must immediately return to work and all
employers must readmit all of them under the same terms and
conditions prevailing before the strike or lockout. The phrase "under
the same terms and conditions" makes it clear that the norm is actual
reinstatement. This is consistent with the idea that any work stoppage
or slowdown in that particular industry can be detrimental to the
national interest.13
Thus, it was settled that in assumption of jurisdiction cases, the Secretary
should impose actual reinstatement in accordance with the intent and spirit

of Art. 263(g) of the Labor Code. As with most rules, however, this one is
subject to exceptions. We held in Manila Diamond Hotel Employees' Union
v. Court of Appeals that payroll reinstatement is a departure from the rule,
and special circumstances which make actual reinstatement impracticable
must be shown.14 In one case, payroll reinstatement was allowed where the
employees previously occupied confidential positions, because their actual
reinstatement, the Court said, would be impracticable and would only serve
to exacerbate the situation.15 In another case, this Court held that the NLRC
did not commit grave abuse of discretion when it allowed payroll
reinstatement as an option in lieu of actual reinstatement for teachers who
were to be reinstated in the middle of the first term.16 We held that the NLRC
was merely trying its best to work out a satisfactory ad hoc solution to a
festering and serious problem.17
The peculiar circumstances in the present case validate the Secretary's
decision to order payroll reinstatement instead of actual reinstatement. It is
obviously impracticable for the Hotel to actually reinstate the employees
who shaved their heads or cropped their hair because this was exactly the
reason they were prevented from working in the first place. Further, as with
most labor disputes which have resulted in strikes, there is mutual
antagonism, enmity, and animosity between the union and the management.
Payroll reinstatement, most especially in this case, would have been the only
avenue where further incidents and damages could be avoided. Public
officials entrusted with specific jurisdictions enjoy great confidence from
this Court. The Secretary surely meant only to ensure industrial peace as she
assumed jurisdiction over the labor dispute. In this case, we are not ready to
substitute our own findings in the absence of a clear showing of grave abuse
of discretion on her part.
The issues raised in G.R. No. 163942, being interrelated, shall be discussed
concurrently.
To be determined whether legal or not are the following acts of the Union:
(1) Reporting for work with their bald or cropped hair style on
January 18, 2002; and

(2) The picketing of the Hotel premises on January 26, 2002.

The Union maintains that the mass picket conducted by its officers and
members did not constitute a strike and was merely an expression of their
grievance resulting from the lockout effected by the Hotel management. On
the other hand, the Hotel argues that the Union's deliberate defiance of the
company rules and regulations was a concerted effort to paralyze the
operations of the Hotel, as the Union officers and members knew pretty well
that they would not be allowed to work in their bald or cropped hair style.
For this reason, the Hotel argues that the Union committed an illegal strike
on January 18, 2002 and on January 26, 2002.
We rule for the Hotel.
Art. 212(o) of the Labor Code defines a strike as "any temporary stoppage of
work by the concerted action of employees as a result of an industrial or
labor dispute."
In Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National
Labor Relations Commission, we cited the various categories of an illegal
strike, to wit:
Noted authority on labor law, Ludwig Teller, lists six (6) categories of
an illegal strike, viz.:
(1) [when it] is contrary to a specific prohibition of law, such as strike
by employees performing governmental functions; or
(2) [when it] violates a specific requirement of law[, such as Article
263 of the Labor Code on the requisites of a valid strike]; or
(3) [when it] is declared for an unlawful purpose, such as inducing the
employer to commit an unfair labor practice against non-union
employees; or

(4) [when it] employs unlawful means in the pursuit of its objective,
such as a widespread terrorism of non-strikers [for example,
prohibited acts under Art. 264(e) of the Labor Code]; or
(5) [when it] is declared in violation of an existing injunction[, such as
injunction, prohibition, or order issued by the DOLE Secretary and the
NLRC under Art. 263 of the Labor Code]; or
(6) [when it] is contrary to an existing agreement, such as a no-strike
clause or conclusive arbitration clause.18
With the foregoing parameters as guide and the following grounds as basis,
we hold that the Union is liable for conducting an illegal strike for the
following reasons:
First, the Union's violation of the Hotel's Grooming Standards was clearly a
deliberate and concerted action to undermine the authority of and to
embarrass the Hotel and was, therefore, not a protected action. The
appearances of the Hotel employees directly reflect the character and wellbeing of the Hotel, being a five-star hotel that provides service to top-notch
clients. Being bald or having cropped hair per se does not evoke negative or
unpleasant feelings. The reality that a substantial number of employees
assigned to the food and beverage outlets of the Hotel with full heads of hair
suddenly decided to come to work bald-headed or with cropped hair,
however, suggests that something is amiss and insinuates a sense that
something out of the ordinary is afoot. Obviously, the Hotel does not need to
advertise its labor problems with its clients. It can be gleaned from the
records before us that the Union officers and members deliberately and in
apparent concert shaved their heads or cropped their hair. This was shown by
the fact that after coming to work on January 18, 2002, some Union
members even had their heads shaved or their hair cropped at the Union
office in the Hotel's basement. Clearly, the decision to violate the company
rule on grooming was designed and calculated to place the Hotel
management on its heels and to force it to agree to the Union's proposals.

In view of the Union's collaborative effort to violate the Hotel's Grooming

Standards, it succeeded in forcing the Hotel to choose between allowing its
inappropriately hair styled employees to continue working, to the detriment
of its reputation, or to refuse them work, even if it had to cease operations in
affected departments or service units, which in either way would disrupt the
operations of the Hotel. This Court is of the opinion, therefore, that the act of
the Union was not merely an expression of their grievance or displeasure
but, indeed, a calibrated and calculated act designed to inflict serious
damage to the Hotel's finances or its reputation. Thus, we hold that the
Union's concerted violation of the Hotel's Grooming Standards which
resulted in the temporary cessation and disruption of the Hotel's operations
is an unprotected act and should be considered as an illegal strike.
Second, the Union's concerted action which disrupted the Hotel's operations
clearly violated the CBA's "No Strike, No Lockout" provision, which reads:
ARTICLE XXII - NO STRIKE/WORK STOPPAGE AND
LOCKOUT
SECTION 1. No Strikes
The Union agrees that there shall be no strikes, walkouts,
stoppage or slow-down of work, boycott, refusal to handle
accounts, picketing, sit-down strikes, sympathy strikes or any
other form of interference and/or interruptions with any of the
normal operations of the HOTEL during the life of this
Agreement.
The facts are clear that the strike arose out of a bargaining deadlock in the
CBA negotiations with the Hotel. The concerted action is an economic strike
upon which the afore-quoted "no strike/work stoppage and lockout"
prohibition is squarely applicable and legally binding.19
Third, the Union officers and members' concerted action to shave their heads
and crop their hair not only violated the Hotel's Grooming Standards but also
violated the Union's duty and responsibility to bargain in good faith. By

shaving their heads and cropping their hair, the Union officers and members
violated then Section 6, Rule XIII of the Implementing Rules of Book V of
the Labor Code.20 This rule prohibits the commission of any act which will
disrupt or impede the early settlement of the labor disputes that are under
conciliation. Since the bargaining deadlock is being conciliated by the
NCMB, the Union's action to have their officers and members' heads shaved
was manifestly calculated to antagonize and embarrass the Hotel
management and in doing so effectively disrupted the operations of the
Hotel and violated their duty to bargain collectively in good faith.
Fourth, the Union failed to observe the mandatory 30-day cooling-off
period and the seven-day strike ban before it conducted the strike on
January 18, 2002. The NLRC correctly held that the Union failed to observe
the mandatory periods before conducting or holding a strike. Records reveal
that the Union filed its Notice of Strike on the ground of bargaining
deadlock on December 20, 2001. The 30-day cooling-off period should have
been until January 19, 2002. On top of that, the strike vote was held on
January 14, 2002 and was submitted to the NCMB only on January 18,
2002; therefore, the 7-day strike ban should have prevented them from
holding a strike until January 25, 2002. The concerted action committed by
the Union on January 18, 2002 which resulted in the disruption of the Hotel's
operations clearly violated the above-stated mandatory periods.
Last, the Union committed illegal acts in the conduct of its strike. The
NLRC ruled that the strike was illegal since, as shown by the
pictures21 presented by the Hotel, the Union officers and members formed
human barricades and obstructed the driveway of the Hotel. There is no
merit in the Union's argument that it was not its members but the Hotel's
security guards and the police officers who blocked the driveway, as it can
be seen that the guards and/or police officers were just trying to secure the
entrance to the Hotel. The pictures clearly demonstrate the tense and highly
explosive situation brought about by the strikers' presence in the Hotel's
driveway.

Furthermore, this Court, not being a trier of facts, finds no reason to alter or
disturb the NLRC findings on this matter, these findings being based on
substantial evidence and affirmed by the CA.22 Factual findings of labor
officials, who are deemed to have acquired expertise in matters within their
respective jurisdictions, are generally accorded not only respect but even
finality, and bind us when supported by substantial evidence.23 Likewise, we
are not duty-bound to delve into the accuracy of the factual findings of the
NLRC in the absence of clear showing that these were arrived at arbitrarily
and/or bereft of any rational basis.24
What then are the consequent liabilities of the Union officers and members
for their participation in the illegal strike?
Regarding the Union officers and members' liabilities for their participation
in the illegal picket and strike, Art. 264(a), paragraph 3 of the Labor Code
provides that "[a]ny 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 x x x." The law makes a
distinction between union officers and mere union members. Union officers
may be validly terminated from employment for their participation in an
illegal strike, while union members have to participate in and commit illegal
acts for them to lose their employment status.25 Thus, it is necessary for the
company to adduce proof of the participation of the striking employees in
the commission of illegal acts during the strikes.26
Clearly, the 29 Union officers may be dismissed pursuant to Art. 264(a), par.
3 of the Labor Code which imposes the penalty of dismissal on "any union
officer who knowingly participates in an illegal strike." We, however, are
of the opinion that there is room for leniency with respect to the Union
members. It is pertinent to note that the Hotel was able to prove before the
NLRC that the strikers blocked the ingress to and egress from the Hotel. But
it is quite apparent that the Hotel failed to specifically point out the
participation of each of the Union members in the commission of illegal acts

during the picket and the strike. For this lapse in judgment or diligence, we
are constrained to reinstate the 61 Union members.
Further, we held in one case that union members who participated in an
illegal strike but were not identified to have committed illegal acts are
entitled to be reinstated to their former positions but without
backwages.27 We then held in G & S Transport Corporation v. Infante:
With respect to backwages, the principle of a "fair day's wage for a
fair day's labor" remains as the basic factor in determining the award
thereof. If there is no work performed by the employee there can be
no wage or pay unless, of course, the laborer was able, willing and
ready to work but was illegally locked out, suspended or dismissed or
otherwise illegally prevented from working. While it was found that
respondents expressed their intention to report back to work, the latter
exception cannot apply in this case. In Philippine Marine Officer's
Guild v. Compaia Maritima, as affirmed in Philippine Diamond
Hotel and Resort v. Manila Diamond Hotel Employees Union, the
Court stressed that for this exception to apply, it is required that the
strike be legal, a situation that does not obtain in the case at bar.28
In this light, we stand by our recent rulings and reinstate the 61 Union
members without backwages.
WHEREFORE, premises considered, the CA's May 6, 2004 Decision in
CA-G.R. SP No. 70778 is hereby AFFIRMED.
The CA's January 19, 2004 Decision in CA-G.R. SP No. 76568 is
hereby SET ASIDE. The October 9, 2002 Decision of the NLRC in NLRC
NCR CC No. 000215-02 is hereby AFFIRMED withMODIFICATIONS,
as follows:
The 29 Union officials are hereby declared to have lost their employment
status, to wit:

1. LEO ANTONIO ATUTUBO

2. EDWIN E. BALLESTEROS
3. LORETTA DIVINA DE LUNA
4. INISUSAN DE VELEZ
5. DENNIS HABER
6. MARITES HERNANDEZ
7. BERNARD HUGO
8. NORZAMIA INTAL
9. LAURO JAVIER
10. SHANE LAUZ
11. MAY BELEN LEANO
12. EDGAR LINGHON
13. MILAGROS LOPEZ
14. JOSE MUZONES
15. RAY NERVA
16. JESUS NONAN
17. MARLYN OLLERO
18. CATHY ORDUNA
19. REYNALDO RASING
20. JUSTO TABUNDA
21. BARTOLOME TALISAYON
22. JUN TESORO
23. LYNDON TESORO
24. SALVADOR TIPONES
25. SONNY UY
26. WILFREDO VALLES, JR.
27. MEL VILLAHUCO
28. EMMA Q. DANAO
29. JORDAN ALEJANDRO
The 61 Union members are hereby REINSTATED to their former positions
without backwages:
1. DANILO AGUINALDO
2. CLARO ABRANTE

3. FELIX ARRIESGADO
4. DAN BAUTISTA
5. MA. THERESA BONIFACIO
6. JUAN BUSCANO
7. ELY CHUA
8. ALLAN DELAGON
9. FRUMENCIO DE LEON
10. ELLIE DEL MUNDO
11. EDWIN DELOS CIENTOS
12. SOLOMON DIZON
13. YLOTSKI DRAPER
14. ERLAND COLLANTES
15. JONAS COMPENIDO
16. RODELIO ESPINUEVA
17. ARMANDO ESTACIO
18. SHERWIN FALCES
19. JELA FRANZUELA
20. REY GEALOGO
21. ALONA GERNOMINO
22. VINCENT HEMBRADOR
23. ROSLYN IBARBIA
24. JAIME IDIOMA, JR.
25. OFELIA LLABAN
26. RENATON LUZONG
27. TEODULO MACALINO
28. JAKE MACASAET
29. HERNANIE PABILONIA
30. HONORIO PACIONE
31. ANDREA VILLAFUERTE
32. MARIO PACULAN
33. JULIO PAJINAG
34. JOSELITO PASION
35. VICENTE PASIOLAN
36. HAZEL PENA
37. PEDRO POLLANTE

38. EDUARDO RAMOS

39. IMELDA RASIN
40. DELFIN RAZALAN
41. EVANGELINE REYES
42. RODOLFO REYES
43. BRIGILDO RUBIO
44. RIO SALCEDO
45. JUANITO SANCHEZ
46. MA. THERESA SANCHEZ
47. DONATO SAN AGUSTIN
48. RICARDO SOCORRO
49. VALERIO SOLIS
50. DOMINADOR SUAREZ
51. ORLANDO TABUGOCA
52. HELEN TALEON
53. ROBERT TANEGRA
54. LOURDES TAYAG
55. ROLANDO TOLENTINO
56. REYNALDO TRESNADO
57. RICHARD SABLADA
58. MAE YAP-DIANGCO
59. GILBERTO VEDASTO
60. DOMINGO VIDAROZAGA
61. DAN VILLANUEVA
In view of the possibility that the Hotel might have already hired regular
replacements for the afore-listed 61 employees, the Hotel may opt to
pay SEPARATION PAY computed at one (1) month's pay for every year of
service in lieu of REINSTATEMENT, a fraction of six (6) months being
considered one year of service.
SO ORDERED.
SECOND DIVISION
[G.R. No. 147080. April 26, 2005]

CAPITOL MEDICAL CENTER, INC., petitioner, vs. NATIONAL

LABOR RELATIONS COMMISSION, JAIME IBABAO, JOSE
BALLESTEROS,
RONALD
CENTENO,
NARCISO
SARMIENTO, EDUARDO CANAVERAL, SHERLITO DELA
CRUZ, SOFRONIO COMANDAO, MARIANO GALICIA,
RAMON MOLOD, CARMENCITA SARMIENTO, HELEN
MOLOD, ROSA COMANDAO, ANGELITO CUIZON, ALEX
MARASIGAN, JESUS CEDRO, ENRICO ROQUE, JAY
PERILLA,
HELEN
MENDOZA,
MARY
GLADYS
GEMPEROSO, NINI BAUTISTA, ELENA MACARUBBO,
MUSTIOLA SALVACION DAPITO, ALEXANDER MANABE,
MICHAEL EUSTAQUIO, ROSE AZARES, FERNANDO
MANZANO, HENRY VERA CRUZ, CHITO MENDOZA,
FREDELITA TOMAYAO, ISABEL BRUCAL, MAHALKO
LAYACAN, RAINIER MANACSA, KAREN VILLARENTE,
FRANCES ACACIO, LAMBERTO CONTI, LORENA BEACH,
JUDILAH
RAVALO,
DEBORAH
NAVE,
MARILEN
CABALQUINTO, EMILIANA RIVERA, MA. ROSARIO
URBANO, ROWENA ARILLA, CAPITOL MEDICAL CENTER
EMPLOYEES
ASSOCIATION-AFW, GREGORIO
DEL
PRADO, ARIEL ARAJA, and JESUS STA. BARBARA,
JR.,respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for review of the Decision [1] of the Court of Appeals
(CA) in CA-G.R. SP No. 57500 and its Resolution denying the motion for
reconsideration thereof.
The Antecedents[2]
Whether the respondent Capitol Medical Center Employees AssociationAlliance of Filipino Workers (the Union, for brevity) was the exclusive
bargaining agent of the rank-and-file employees of the petitioner Capitol

Medical Center, Inc. had been the bone of contention between the Union and
the petitioner. The petitioners refusal to negotiate for a collective bargaining
agreement (CBA) resulted in a union-led strike on April 15, 1993.
The Union had to contend with another union the Capitol Medical
Center Alliance of Concerned Employees (CMC-ACE) which demanded for
a certification election among the rank-and-file employees of the petitioner.
Med-Arbiter Brigida Fadrigon granted the petition, and the matter was
appealed to the Secretary of Labor and Employment (SOLE).
Undersecretary Bienvenido E. Laguesma rendered a Resolution on
November 18, 1994 granting the appeal. He, likewise, denied the motion
filed by the petitioner and the CMC-ACE. The latter thereafter brought the
matter to the Court which rendered judgment on February 4, 1997 affirming
the resolution of Undersecretary Laguesma, thus:
1. Dismissing the petition for certification election filed by the Capitol
Medical Center Alliance of Concerned Employees-United Filipino Services
Workers for lack of merit; and
2. Directing the management of the Capitol Medical Center to negotiate a
CBA with the Capitol Medical Center Employees Association-Alliance of
Filipino Workers, the certified bargaining agent of the rank-and-file
employees.[3]
The decision of the Court became final and executory. Thereafter, in a
Letter dated October 3, 1997 addressed to Dr. Thelma N. Clemente, the
President and Director of the petitioner, the Union requested for a meeting to
discuss matters pertaining to a negotiation for a CBA, conformably with the
decision of the Court.[4] However, in a Letter to the Union dated October 10,
1997, Dr. Clemente rejected the proposed meeting, on her claim that it was a
violation of Republic Act No. 6713 and that the Union was not a legitimate
one. On October 15, 1997, the petitioner filed a Petition for the Cancellation
of the Unions Certificate of Registration with the Department of Labor and
Employment (DOLE) on the following grounds:

3) Respondent has failed for several years to submit annually its annual
financial statements and other documents as required by law. For this reason,
respondent has long lost its legal personality as a union.
4) Respondent also engaged in a strike which has been declared illegal by
the National Labor Relations Commission.[5]
Apparently unaware of the petition, the Union reiterated its proposal for
CBA negotiations in a Letter dated October 16, 1997 and suggested the date,
time and place of the initial meeting. The Union further reiterated its plea in
another Letter[6] dated October 28, 1997, to no avail.
Instead of filing a motion with the SOLE for the enforcement of the
resolutions of Undersecretary Laguesma as affirmed by this Court, the
Union filed a Notice of Strike on October 29, 1997 with the National
Conciliation and Mediation Board (NCMB), serving a copy thereof to the
petitioner. The Union alleged as grounds for the projected strike the
following acts of the petitioner: (a) refusal to bargain; (b) coercion on
employees; and (c) interference/ restraint to self-organization.[7]
A series of conferences was conducted before the NCMB (National
Capital Region), but no agreement was reached. On November 6, 1997, the
petitioner even filed a Letter with the Board requesting that the notice of
strike be dismissed;[8] the Union had apparently failed to furnish the
Regional Branch of the NCMB with a copy of a notice of the meeting where
the strike vote was conducted.
On November 20, 1997, the Union submitted to the NCMB the
minutes[9] of the alleged strike vote purportedly held on November 10, 1997
at the parking lot in front of the petitioners premises, at the corner of Scout
Magbanua Street and Panay Avenue, Quezon City. It appears that 178 out of
the 300 union members participated therein, and the results were as follows:
156 members voted to strike; 14 members cast negative votes; and eight
votes were spoiled.[10]

On November 28, 1997, the officers and members of the Union staged a
strike. Subsequently, on December 1, 1997, the Union filed an ex
parte motion with the DOLE, praying for its assumption of jurisdiction over
the dispute. The Union likewise prayed for the imposition of appropriate
legal sanctions, not limited to contempt and other penalties, against the
hospital director/president and other responsible corporate officers for their
continuous refusal, in bad faith, to bargain collectively with the Union, to
adjudge the same hospital director/president and other corporate officers
guilty of unfair labor practices, and for other just, equitable and expeditious
reliefs in the premises.[11]
On December 4, 1997, the SOLE issued an Order, assuming jurisdiction
over the ongoing labor dispute. The decretal portion of the order reads:
WHEREFORE, this Office now assumes jurisdiction over the labor disputes
at Capitol Medical Center pursuant to Article 263(g) of the Labor Code, as
amended. Consequently, all striking workers are directed to return to work
within twenty-four (24) hours from the receipt of this Order and the
management to resume normal operations and accept back all striking
workers under the same terms and conditions prevailing before the strike.
Further, parties are directed to cease and desist from committing any act that
may exacerbate the situation.
Moreover, parties are hereby directed to submit within 10 days from receipt
of this Order proposals and counter-proposals leading to the conclusion of
the collective bargaining agreements in compliance with aforementioned
Resolution of the Office as affirmed by the Supreme Court.
SO ORDERED.[12]
In obedience to the order of the SOLE, the officers and members of the
Union stopped their strike and returned to work.
For its part, the petitioner filed a petition [13] to declare the strike illegal
with the National Labor Relations Commission (NLRC), docketed as NLRC
NCR Case No. 00-12-08644-97. In its position paper, the petitioner

appended the affidavit of Erwin Barbacena, the overseer of the property

across the hospital which was being used as a parking lot, at the corner of
Scout Magbanua Street and Panay Avenue, Quezon City. Also included were
the affidavits of Simon J. Tingzon and Reggie B. Barawid, the petitioners
security guards assigned in front of the hospital premises. They attested to
the fact that no secret balloting took place at the said parking lot from 6:00
a.m. to 7:00 p.m. of November 10, 1997. [14] The petitioner also appended the
affidavit of Henry V. Vera Cruz, who alleged that he was a member of the
Union and had discovered that signatures on the Statements of Cash Receipt
Over Disbursement submitted by the Union to the DOLE purporting to be
his were not his genuine signatures;[15] the affidavits of 17 of its employees,
who declared that no formal voting was held by the members of the Union
on the said date, were also submitted. The latter employees also declared
that they were not members of any union, and yet were asked to sign
documents purporting to be a strike vote attendance and unnumbered strike
vote ballots on different dates from November 8 to 11, 1997.
In their position paper, the respondents appended the joint affidavit of
the Union president and those members who alleged that they had cast their
votes during the strike vote held on November 10, 1997.[16]
In the meantime, on September 30, 1998, the Regional Director of the
DOLE rendered a Decision denying the petition for the cancellation of the
respondent Unions certificate of registration. The decision was affirmed by
the Director of the Bureau of Labor Relations on December 29, 1998.
In a parallel development, Labor Arbiter Facundo L. Leda rendered a
Decision on December 23, 1998 in NLRC NCR Case No. 00-12-08644-97
in favor of the petitioner, and declared the strike staged by the respondents
illegal. The fallo of the decision reads:
1. Declaring as illegal the strike staged by the respondents from November
28, 1997 to December 5, 1997;
2. Declaring respondent Jaime Ibabao, in his capacity as union president, the
other union officers, and respondents Ronald Q. Centeno, Michael Eustaquio

and Henry Vera Cruz to have lost their employment status with petitioner;
and
3. Ordering the above respondents to pay, jointly and severally, petitioner the
amount of Two Hundred Thousand Pesos (P200,000.00) by way of damages.
[17]

The Labor Arbiter ruled that no voting had taken place on November 10,
1997; moreover, no notice of such voting was furnished to the NCMB at
least twenty-four (24) hours prior to the intended holding of the strike vote.
According to the Labor Arbiter, the affidavits of the petitioners 17
employees who alleged that no strike vote was taken, and supported by the
affidavit of the overseer of the parking lot and the security guards, must
prevail as against the minutes of the strike vote presented by the
respondents. The Labor Arbiter also held that in light of Article 263(9) of the
Labor Code, the respondent Union should have filed a motion for a writ of
execution of the resolution of Undersecretary Laguesma which was affirmed
by this Court instead of staging a strike.
The respondents appealed the decision to the NLRC which rendered a
Decision[18] on June 14, 1999, granting their appeal and reversing the
decision of the Labor Arbiter. The NLRC also denied the petitioners petition
to declare the strike illegal. In resolving the issue of whether the union
members held a strike vote on November 10, 1997, the NLRC ruled as
follows:
We find untenable the Labor Arbiters finding that no actual strike voting
took place on November 10, 1997, claiming that this is supported by the
affidavit of Erwin Barbacena, the overseer of the parking lot across the
hospital, and the sworn statements of nineteen (19) (sic) union members.
While it is true that no strike voting took place in the parking lot which he is
overseeing, it does not mean that no strike voting ever took place at all
because the same was conducted in the parking lot immediately/directly
fronting, not across, the hospital building (Annexes 1-J, 1-K to 1-K-6).
Further, it is apparent that the nineteen (19) (sic) hospital employees, who
recanted their participation in the strike voting, did so involuntarily for fear

of loss of employment, considering that their Affidavits are uniform and pro
forma (Annexes H-2 to H-19).[19]
The NLRC ruled that under Section 7, Rule XXII of DOLE Order No. 9,
Series of 1997, absent a showing that the NCMB decided to supervise the
conduct of a secret balloting and informed the union of the said decision, or
that any such request was made by any of the parties who would be affected
by the secret balloting and to which the NCMB agreed, the respondents were
not mandated to furnish the NCMB with such notice before the strike vote
was conducted.[20]
The petitioner filed a motion for the reconsideration of the decision, but
the NLRC denied the said motion on September 30, 1999.[21]
The petitioner filed a petition for certiorari with the CA assailing the
decision and resolution of the NLRC on the following allegation:
PUBLIC RESPONDENT NATIONAL LABOR RELATIONS
COMMISSION (NLRC) COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION, ACTED CAPRICIOUSLY, AND CONTRAVENED THE
LAW AND ESTABLISHED JURISPRUDENCE IN REVERSING THE
LABOR ARBITERS DECISION DATED DECEMBER 23, 1998 (ANNEX
E) AND IN UPHOLDING THE LEGALITY OF THE STRIKE STAGED
BY PRIVATE RESPONDENTS FROM NOVEMBER 28, 1997 TO
DECEMBER 5, 1997.[22]
On September 29, 2000, the CA rendered judgment dismissing the
petition and affirming the assailed decision and resolution of the NLRC.
The petitioner filed the instant petition for review on certiorari under
Rule 45 of the Rules of Court on the following ground:
THE COURT OF APPEALS GRAVELY ERRED IN UPHOLDING THE
NLRCS FINDING THAT RESPONDENTS COMPLIED WITH THE
LEGAL REQUIREMENTS FOR STAGING THE SUBJECT STRIKE.[23]

The petitioner asserts that the NLRC and the CA erred in holding that the
submission of a notice of a strike vote to the Regional Branch of the NCMB
as required by Section 7, Rule XXII of the Omnibus Rules Implementing the
Labor Code, is merely directory and not mandatory. The use of the word
shall in the rules, the petitioner avers, indubitably indicates the mandatory
nature of the respondent Unions duty to submit the said notice of strike vote.
The petitioner contends that the CA erred in affirming the decision of the
NLRC which declared that the respondents complied with all the
requirements for a lawful strike. The petitioner insists that, as gleaned from
the affidavits of the 17 union members and that of the overseer, and contrary
to the joint affidavit of the officers and some union members, no meeting
was held and no secret balloting was conducted on November 10, 1997.
The petitioner faults the CA and the NLRC for holding that a meeting for
a strike vote was held on the said date by the respondents, despite the fact
that the NLRC did not conduct an ocular inspection of the area where the
respondents members allegedly held the voting. The petitioner also points
out that it adduced documentary evidence in the form of affidavits executed
by 17 members of the respondent union which remained unrebutted. The
petitioner also posits that the CA and the NLRC erred in reversing the
finding of the Labor Arbiter; furthermore, there was no need for the
respondent union to stage a strike on November 28, 1997 because it had
filed an urgent motion with the DOLE for the enforcement and execution of
the decision of this Court in G.R. No. 118915.
The petition is meritorious.
We agree with the petitioner that the respondent Union failed to comply
with the second paragraph of Section 10, Rule XXII of the Omnibus Rules
of the NLRC which reads:
Section 10. Strike or lockout vote. A decision to declare a strike must be
approved by a majority of the total union membership in the bargaining unit
concerned obtained by secret ballot in meetings or referenda called for the
purpose. A decision to declare a lockout must be approved by a majority of

the Board of Directors of the employer, corporation or association or the

partners obtained by a secret ballot in a meeting called for the purpose.
The regional branch of the Board may, at its own initiative or upon the
request of any affected party, supervise the conduct of the secret balloting. In
every case, the union or the employer shall furnish the regional branch of the
Board and notice of meetings referred to in the preceding paragraph at least
twenty-four (24) hours before such meetings as well as the results of the
voting at least seven (7) days before the intended strike or lockout, subject to
the cooling-off period provided in this Rule.
Although the second paragraph of Section 10 of the said Rule is not
provided in the Labor Code of the Philippines, nevertheless, the same was
incorporated in the Omnibus Rules Implementing the Labor Code and has
the force and effect of law.[24]
Aside from the mandatory notices embedded in Article 263, paragraphs
(c) and (f) of the Labor Code, a union intending to stage a strike is mandated
to notify the NCMB of the meeting for the conduct of strike vote, at least
twenty-four (24) hours prior to such meeting. Unless the NCMB is notified
of the date, place and time of the meeting of the union members for the
conduct of a strike vote, the NCMB would be unable to supervise the
holding of the same, if and when it decides to exercise its power of
supervision. In National Federation of Labor v. NLRC,[25] the Court
enumerated the notices required by Article 263 of the Labor Code and the
Implementing Rules, which include the 24-hour prior notice to the NCMB:
1) A notice of strike, with the required contents, should be filed with the
DOLE, specifically the Regional Branch of the NCMB, copy furnished the
employer of the union;
2) A cooling-off period must be observed between the filing of notice and
the actual execution of the strike thirty (30) days in case of bargaining
deadlock and fifteen (15) days in case of unfair labor practice. However, in
the case of union busting where the unions existence is threatened, the
cooling-off period need not be observed.

4) Before a strike is actually commenced, a strike vote should be taken by

secret balloting, with a 24-hour prior notice to NCMB. The decision to
declare a strike requires the secret-ballot approval of majority of the total
union membership in the bargaining unit concerned.
5) The result of the strike vote should be reported to the NCMB at least
seven (7) days before the intended strike or lockout, subject to the coolingoff period.
A union is mandated to notify the NCMB of an impending dispute in a
particular bargaining unit via a notice of strike. Thereafter, the NCMB,
through its conciliator-mediators, shall call the parties to a conference at the
soonest possible time in order to actively assist them in exploring all
possibilities for amicable settlement. In the event of the failure in the
conciliation/mediation proceedings, the parties shall be encouraged to
submit their dispute for voluntary arbitration. However, if the parties refuse,
the union may hold a strike vote, and if the requisite number of votes is
obtained, a strike may ensue. The purpose of the strike vote is to ensure that
the decision to strike broadly rests with the majority of the union members
in general and not with a mere minority, and at the same time, discourage
wildcat strikes, union bossism and even corruption. [26] A strike vote report
submitted to the NCMB at least seven days prior to the intended date of
strike ensures that a strike vote was, indeed, taken. In the event that the
report is false, the seven-day period affords the members an opportunity to
take the appropriate remedy before it is too late.[27] The 15 to 30 day coolingoff period is designed to afford the parties the opportunity to amicably
resolve the dispute with the assistance of the NCMB conciliator/mediator,
[28]
while the seven-day strike ban is intended to give the DOLE an
opportunity to verify whether the projected strike really carries the
imprimatur of the majority of the union members.[29]
The requirement of giving notice of the conduct of a strike vote to the
NCMB at least 24 hours before the meeting for the said purpose is designed
to (a) inform the NCMB of the intent of the union to conduct a strike vote;
(b) give the NCMB ample time to decide on whether or not there is a need to

supervise the conduct of the strike vote to prevent any acts of violence
and/or irregularities attendant thereto; and (c) should the NCMB decide on
its own initiative or upon the request of an interested party including the
employer, to supervise the strike vote, to give it ample time to prepare for
the deployment of the requisite personnel, including peace officers if need
be. Unless and until the NCMB is notified at least 24 hours of the unions
decision to conduct a strike vote, and the date, place, and time thereof, the
NCMB cannot determine for itself whether to supervise a strike vote
meeting or not and insure its peaceful and regular conduct. The failure of a
union to comply with the requirement of the giving of notice to the NCMB
at least 24 hours prior to the holding of a strike vote meeting will render the
subsequent strike staged by the union illegal.
In this case, the respondent Union failed to comply with the 24-hour
prior notice requirement to the NCMB before it conducted the alleged strike
vote meeting on November 10, 1997. As a result, the petitioner complained
that no strike vote meeting ever took place and averred that the strike staged
by the respondent union was illegal.
Conformably to Article 264 of the Labor Code of the Philippines [30] and
Section 7, Rule XXII of the Omnibus Rules Implementing the Labor Code,
[31]
no labor organization shall declare a strike unless supported by a majority
vote of the members of the union obtained by secret ballot in a meeting
called for that purpose. The requirement is mandatory and the failure of a
union to comply therewith renders the strike illegal. [32] The union is thus
mandated to allege and prove compliance with the requirements of the law.
In the present case, there is a divergence between the factual findings of
the Labor Arbiter, on the one hand, and the NLRC and the CA, on the other,
in that the Labor Arbiter found and declared in his decision that no secret
voting ever took place in the parking lot fronting the hospital on November
10, 1997 by and among the 300 members of the respondent Union. Erwin
Barbacena, the overseer of the only parking lot fronting the hospital, and
security guards Simon Tingzon and Reggie Barawid, declared in their
respective affidavits that no secret voting ever took place on November 10,

1997; 17 employees of the petitioner also denied in their respective

statements that they were not members of the respondent Union, and were
asked to merely sign attendance papers and unnumbered votes. The NLRC
and the CA declared in their respective decisions that the affidavits of the
petitioners 17 employees had no probative weight because the said
employees merely executed their affidavits out of fear of losing their jobs.
The NLRC and the CA anchored their conclusion on their finding that the
affidavits of the employees were uniform and pro forma.
We agree with the finding of the Labor Arbiter that no secret balloting to
strike was conducted by the respondent Union on November 10, 1997 at the
parking lot in front of the hospital, at the corner of Scout Magbanua Street
and Panay Avenue, Quezon City. This can be gleaned from the affidavit of
Barbacena and the joint affidavit of Tingzon and Barawid, respectively:
1. That I am working as an overseer of a parking lot owned by Mrs.
Madelaine Dionisio and located right in front of the Capitol Medical Center,
specifically at the corner of Scout Magbanua Street and Panay Avenue,
Quezon City;
2. That on November 10, 1997, during my entire tour of duty from 6:00 a.m.
to 6:00 p.m., no voting or election was conducted in the aforementioned
parking space for employees of the Capitol Medical Center and/or their
guests, or by any other group for that matter.[33]
1. That I, Simon J. Tingzon, am a security officer of Veterans Philippine
Scout Security Agency (hereinafter referred to as VPSSA), assigned, since
July 1997 up to the present, as Security Detachment Commander at Capitol
Medical Center (hereinafter referred to as CMC) located at Scout Magbanua
corner Panay Avenue, Quezon City;
2. That my (Tingzon) functions as such include over-all in charge of security
of all buildings and properties of CMC, and roving in the entire premises
including the parking lots of all the buildings of CMC;

3. That I, Reggie B. Barawid, am a security guard of VPSSA, assigned, since

June 1997 up to the present, as security guard at CMC;
4. That my (Barawid) functions as such include access control of all persons
coming in and out of CMCs buildings and properties. I also sometimes
guard the parking areas of CMC;
5. That on November 10, 1997, both of us were on duty at CMC from 7:00
a.m. to 7:00 p.m., with me (Barawid) assigned at the main door of the CMCs
Main Building along Scout Magbanua St.;
6. That on said date, during our entire tour of duty, there was no voting or
election conducted in any of the four parking spaces for CMC personnel and
guests.[34]
The allegations in the foregoing affidavits belie the claim of the
respondents and the finding of the NLRC that a secret balloting took place
on November 10, 1997 in front of the hospital at the corner of Scout
Magbanua Street and Panay Avenue, Quezon City. The respondents failed to
prove the existence of a parking lot in front of the hospital other than the
parking lot across from it. Indeed, 17 of those who purportedly voted in a
secret voting executed their separate affidavits that no secret balloting took
place on November 10, 1997, and that even if they were not members of the
respondent Union, were asked to vote and to sign attendance papers. The
respondents failed to adduce substantial evidence that the said affiants were
coerced into executing the said affidavits. The bare fact that some portions
of the said affidavits are similarly worded does not constitute substantial
evidence that the petitioner forced, intimidated or coerced the affiants to
execute the same.
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED.
The Decisions of the Court of Appeals and NLRC are SET ASIDE AND
REVERSED. The Decision of the Labor Arbiter is REINSTATED. No costs.
SO ORDERED.

Puno, (Chairman),
JJ., concur.

Austria-Martinez,

Tinga, and Chico-Nazario,

SECOND DIVISION
A. SORIANO AVIATION,
Petitioner,

- versus -

G.R. No. 166879

Present:
CARPIO,* J.,
CORONA,**
CARPIO MORALES, J., Acting
Chairperson,
DEL CASTILLO, and
ABAD, JJ.

EMPLOYEES ASSOCIATION
OF A. SORIANO AVIATION,
JULIUS S. VARGAS IN HIS
CAPACITY
AS UNION
PRESIDENT,
REYNALDO
ESPERO, JOSEFINO ESPINO,
GALMIER
BALISBIS,
GERARDO
BUNGABONG,
LAURENTE
BAYLON,
JEFFREY NERI, ARTURO
INES, REYNALDO BERRY,
RODOLFO RAMOS, OSWALD
ESPION, ALBERT AGUILA,
RAYMOND
BARCO,
REYNANTE
AMIMITA, Promulgated:
SONNY BAWASANTA, MAR
August 14, 2009
NIMUAN
AND
RAMIR
LICUANAN,
Respondents.
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CARPIO MORALES, J.:

On May 22, 1997, A. Soriano Aviation (petitioner or the company) which is
engaged in providing transportation of guests to and from Amanpulo and El
Nidoresorts in Palawan, and respondent Employees Association of A.
Soriano Aviation (the Union), the duly-certified exclusive bargaining agent
of the rank and file employees of petitioner, entered into a Collective
Bargaining Agreement (CBA) effective January 1, 1997 up to December 31,
1999. The CBA included a No-Strike, No-Lock-out clause.
On May 1 & 12, and June 12, 1997, which were legal holidays and
peak season for the company, eight mechanics-members of respondent
Union, its herein co-respondents Albert Aguila (Aguila), Reynante Amimita
(Amimita), Galmier Balisbis (Balisbis), Raymond Barco (Barco), Gerardo
Bungabong (Bungabong), Josefino Espino (Espino), Jeffrey Neri (Neri) and
Rodolfo Ramos, Jr. (Ramos), refused to render overtime work.
Petitioner treated the refusal to work as a concerted action which is a
violation of the No-Strike, No-Lockout clause in the CBA. It thus meted the
workers a 30-day suspension. It also filed on July 31, 1997 a complaint for
illegal strike against them, docketed as NLRC Case No. 07-05409-97, which
was later dismissed at its instance in order to give way to settlement, without
prejudice to its re-filing should settlement be unavailing.
The attempted settlement between the parties having been futile, the
Union filed a Notice of Strike with the National Conciliation and Mediation
Board (NCMB) on October 3, 1997, attributing to petitioner the following
acts: (1) union busting, (2) illegal dismissal of union officer, (3) illegal
suspension of eight mechanics, (4) violation of memorandum of agreement,
(5) coercion of employees and interrogation of newly-hired mechanics with
regard to union affiliation, (6) discrimination against the aircraft mechanics,

(7) harassment through systematic fault-finding, (8) contractual labor, and

(9) constructive dismissal of the Union President, Julius Vargas (Vargas).
As despite conciliation no amicable settlement of the dispute was
arrived at, the Union went on strike on October 22, 1997.
Meanwhile, pursuant to its reservation in NLRC Case No. 07-0540997, petitioner filed a Motion to Re-Open the Case which was granted by
Labor Arbiter Manuel P. Asuncion by Order of October 21, 1997.
By Decision[1] dated September 28, 1998 rendered in petitioners
complaint in NLRC Case No. 07-05409-97, the Labor Arbiter declared that
the newly implemented work-shift schedule was a valid exercise of
management prerogative and the refusal of herein individual respondents to
work on three consecutive holidays was a form of protest by the Union,
hence, deemed a concerted action. Noting that the Union failed to comply
with the formal requirements prescribed by the Labor Code in the holding of
strike, the strike was declared illegal.
The Union appealed to the NLRC which dismissed it in a per
curiam Decision[2] dated September 14, 1999, and the subsequent motion for
reconsideration was denied by Resolution dated November 11, 1999.
In the interim or on June 16, 1998, eight months into the second strike,
petitioner filed a complaint against respondents before the Labor Arbiter,
praying for the declaration as illegal of the strike on account of their alleged
pervasive and widespread use of force and violence and for the loss of their
employment, citing the following acts committed by them: publicly shouting
of foul and vulgar words to company officers and non-striking employees;
threatening of officers and non-striking employees with bodily harm and
dousing them with water while passing by the strike area; destruction of or
inflicting of damage to company property, as well as private property of
company officers; and putting up of placards and streamers containing
vulgar and insulting epithets including imputing crime on the company.

By Decision[3] of June 15, 2000, Labor Arbiter Ramon Valentin C. Reyes

declared the second strike illegal. Taking judicial notice of the September
28, 1998 Decision of Labor Arbiter Asuncion, he noted that as the Union
went on the first strike on a non-strikeable issue the questioned change of
work schedule, it violated the No-Strike, No-Lockout clause in the CBA and,
in any event, the Union failed to comply with the requirements for a valid
strike.
The Labor Arbiter went on to hold that the Union deliberately resorted
to the use of violent and unlawful acts in the course of the second strike,
hence, the individual respondents were deemed to have lost their
employment.
On appeal, the National Labor Relations Commission (NLRC)
affirmed in toto the Labor Arbiters decision, by Resolution [4] dated October
31, 2001. It held that even if the strike were legal at the onset, the
commission of violent and unlawful acts by individual respondents in the
course thereof rendered it illegal.
Its motion for reconsideration having been denied by
Resolution[5] dated December 14, 2001, the Union appealed to the Court of
Appeals.
By the assailed Decision of April 16, 2004, [6] the appellate court
reversed and set aside the NLRC ruling, holding that the acts of violence
committed by the Union members in the course of the strike were not, as
compared to the acts complained of in Shell Oil Workers Union v. Shell
Company of the Philippines,[7] First City Interlink Transportation Co., Inc.,
v. Roldan-Confesor[8] and Maria Cristina Fertilizer Plant Employees
Association v. Tandaya, [9] (this case was applied by the Labor Arbiter in his
Decision of September 28, 2008) where the acts of violence resulted in loss
of employment, concluded that the acts in the present case were not as
serious or pervasive as in these immediately-cited cases to call for loss of
employment of the striking employees.
Specifically, the appellate court noted that at the time petitioner filed
its complaint in June 1998, almost eight months had already elapsed from

the commencement of the strike and, in the interim, the alleged acts of
violence were committed only during nine non-consecutive days, viz: one
day in October, two days in November, four days in December, all in 1997,
and two days in January 1998. To the appellate court, these incidents did not
warrant the conversion of an otherwise legal strike into an illegal one, and
neither would it result in the loss of employment of the strikers. For, so the
appellate court held, the incidents consisted merely of name-calling and
using of banners imputing negligence and criminal acts to the company and
its officers, which do not indicate a degree of violence that could be
categorized as grave or serious to warrant the loss of employment of the
individual strikers found to be responsible.
By Resolution of January 25, 2005, the appellate court denied petitioners
motion for reconsideration, hence, the present petition.

Petitioner insists that, contrary to the appellate courts finding, the questioned
acts of the strikers were of a serious character, widespread and pervasive;
and that the Unions imputation of crime and negligence on its part, and the
prolonged strike resulted in its loss of goodwill and business, particularly the
termination of its lease and air-service contract with Amanpulo, the loss of
its after-sales repair service agreement with Bell Helicopters, the loss of its
accreditation as the Beechcraft service facility, and the decision of El Nido to
put up its own aviation company.
Apart from the acts of violence committed by the strikers, petitioner bases
its plea that the strike should be declared illegal on the violation of the NoStrike-No-Lockout clause in the CBA, the strike having arisen from nonstrikeable issues. Petitioner proffers that what actually prompted the holding
of the strike was the implementation of the new shift schedule, a valid
exercise of management prerogative.
In issue then is whether the strike staged by respondents is illegal due to the
alleged commission of illegal acts and violation of the No Strike-No
Lockout clause of the CBA and, if in the affirmative, whether individual
respondents are deemed to have lost their employment status on account
thereof.

The Court rules in the affirmative.

The Court notes that, as found by the Labor Arbiter in NLRC Case
No. 07-05409-97, the first strike or the mechanics refusal to work on 3
consecutive holidays was prompted by their disagreement with the
management-imposed new work schedule. Having been grounded on a nonstrikeable issue and without complying with the procedural requirements,
then the same is a violation of the No Strike-No Lockout Policy in the
existing CBA. Respecting the second strike, where the Union complied with
procedural requirements, the same was not a violation of the No Strike- No
Lockout provisions, as a No Strike-No Lockout provision in the Collective
Bargaining Agreement (CBA) is a valid stipulation but may be invoked only
by employer when the strike is economic in nature or one which is
conducted to force wage or other concessions from the employer that are not
mandated to be granted by the law. It would be inapplicable to prevent a
strike which is grounded on unfair labor practice. [10] In the present case,
the Union believed in good faith that petitioner committed unfair labor
practice when it went on strike on account of the 30-day suspension meted
to the striking mechanics, dismissal of a union officer and perceived unionbusting, among others. As held in Malayang Samahan ng mga
Manggaggawa sa M. Greenfield v. Ramos:[11]
On the submission that the strike was illegal for being grounded
on a non-strikeable issue, that is, the intra-union conflict
between the federation and the local union, it bears reiterating
that when respondent company dismissed the union officers,
the issue was transformed into a termination dispute and
brought respondent company into the picture. Petitioners
believed in good faith that in dismissing them upon request by
the federation, respondent company was guilty of unfair labor
practice in that it violated the petitioners right to selforganization. The strike was staged to protest respondent
companys act of dismissing the union officers. Even if the
allegations of unfair labor practice are subsequently found
out to be untrue, the presumption of legality of the strike
prevails. (Emphasis supplied)

Be that as it may, the Court holds that the second strike became
invalid due to the commission of illegal action in its course.

It is hornbook principle that the exercise of the right of private sector

employees to strike is not absolute. Thus Section 3 of Article XIII of the
Constitution provides:
SECTION 3. x x x
It shall guarantee the rights of all workers to selforganization, collective bargaining and negotiations and
peaceful concerted activities, including the right to strike
in accordance with law. They shall be entitled to security of
tenure, humane conditions of work, and a living wage. They
shall also participate in policy and decision-making processes
affecting their rights and benefits as may be provided by
law. (Emphasis and underscoring supplied)

Indeed, even if the purpose of a strike is valid, the strike may still be
held illegal where the means employed are illegal. Thus, the employment of
violence, intimidation, restraint or coercion in carrying out concerted
activities which are injurious to the right to property renders a strike
illegal. And so is picketing or the obstruction to the free use of property or
the comfortable enjoyment of life or property, when accompanied by
intimidation, threats, violence, and coercion as to constitute nuisance.[12]
Apropos is the following ruling in Sukhothai Cuisine v. Court of
Appeals:[13]
Well-settled is the rule that even if the strike were to be
declared valid because its objective or purpose is lawful,
the strike may still be declared invalid where the means
employed are illegal. Among such limits are the prohibited
activities under Article 264 of the Labor Code, particularly
paragraph (e), which states that no person engaged in picketing
shall:

a)
b)
c)

commit any act of violence, coercion,

or intimidation or
obstruct the free ingress to or egress
from the employer's premises for lawful
purposes, or
obstruct public thoroughfares.

The following acts have been held to be prohibited

activities: where the strikers shouted slanderous and
scurrilous words against the owners of the vessels; where
the strikers used unnecessary and obscene language or
epithets to prevent other laborers to go to work, and
circulated libelous statements against the employer which
show actual malice; where the protestors used abusive and
threatening language towards the patrons of a place of
business or against co-employees, going beyond the mere
attempt to persuade customers to withdraw their patronage;
where the strikers formed a human cordon and blocked all the
ways and approaches to the launches and vessels of the vicinity
of the workplace and perpetrated acts of violence and coercion
to prevent work from being performed; and where the strikers
shook their fists and threatened non-striking employees
with bodily harm if they persisted to proceed to the
workplace. Permissible activities of the picketing workers
do not include obstruction of access of customers. (emphasis
supplied)
The appellate court found in the present case, as in fact it is not
disputed, that the acts complained of were the following:[14]
1.

On 29 October 1997, while Robertus M. Cohen,

personnel manager of the Company, was eating at the
canteen, petitioner Rodolfo Ramos shouted insults and
other abusive, vulgar and foul-mouthed word with the
use of a megaphone, such as, sige, ubusin mo yung
pagkain, kapal ng mukha mo; that when he left the
canteen to go back to his office he was splashed with
water from behind so that his whole back was

drenched; that when he confronted that strikers at the

picket line accompanied by three (3) security guards, to
find out who was responsible, he was told by petitioner
Oswald Espion who was then holding a thick piece of
wood approximately two (2) feet long to leave.
2.

On the same day, 29 October 1997, petitioners

Julius Vargas, Jeffrey Neri, and Rodolfo Ramos, together
with Jose Brin, shouted to Capt. Ben Hur Gomez, the
chief operating officer of the Company, in this
wise, Matanda
ka
na,
balatuba
ka
pa
rin. Mangungurakot ka sa kompanya!

3.

In the morning of 11 November

Ramos was reported to have shouted
Cruz, the Mechanical and Engineering
Company, Max, mag-resign ka na,
bunganga mo!

4.

In the afternoon of the same day, 11 November

1997, petitioner Jeffrey Neri was said to have shouted
these words Max, mag-resign ka na, ang baho ng
bunganga mo! to Mr. Maximo Cruz;

`
5.

1997, petitioner
to Mr. Maximo
Manager of the
ang baho ng

On 12 November 1997. petitioners Julius Vargas,

Jeffrey Neri, Oswald Espion, Raymond Barco, together
with Jose Brin, were reported to have shouted to Capt.
Gomez and Mr. Maximo Cruz, Matanda ka na, balatuba
ka pa rin! Max, ang baho ng bunganga mo, kasing
baho ng ugali mo!

6.

On the same day, 12 November 1997, petitioner

Oswald Espion was said to have shouted to the nonstriking
employees
and
officers
of
the
Company, putang-ina ninyo!

7.

Also, on 12 November 1997, petitioner Oswald

Espion was reported to have thrown gravel and sand to
the car owned by Celso Villamor Gomez, lead man of
the Company, as the said car was traveling along

company premises near the picket line; (apart from the

marks of mud, gravel and sand found on the entire body
of the car, no heavy damages, however, appears to have
been sustained by the car).
8.

On 08 December 1997, petitioners Julius Vargas,

Rey Espero, Rey Barry, Galmier Balisbis, Rodolfo
Ramos, Sonny Bawasanta and Arturo Ines, together with
Jose Brin, shouted, Max, ang sama mo talaga, lumabas
ka dito at pipitpitin ko ang mukha mo! Cohen, inutil ka
talaga. Nagpahaba ka pa ng balbas para kang
tsonggo! Cohen, lumabas ka dito at hahalikan kita.

9.

On 10 December 1997, petitioners Vargas and

Espion were reported to have shouted to Mr. Maximino
Cruz, Hoy, Max Cruz, wala kang alam dyan, huwag
kang poporma-porma dyan! and then flashed the dirty
finger at him;

10.

On 15 December 1997, petitioner Neri was said to

have shouted to non-striking employees at the
canteen, Hoy, mga iskerol, kain lang ng kain, mga
putangina ninyo!

11.

Also on 15 December 1997, petitioners Vargas,

Neri, Espion, Mar Nimuan, Ramir Licuanan, Albert
Aguila and Sonny Bawasanta, together with Jose
Brin,splashed water over Edmund C. Manibog, Jr.,
security guard of the Company;

12.

On 20 December 1997, the strikers admittedly lit

and threw firecrackers purportedly outside the
Company premises, as part of a noise barrage, while
the Company was having its Christmas party inside
the Company premises;

13.

On 14 January 1998, when Chris A. Oballas,

collector of the Company, boarded a public utility
jeepney where Jose Brin, a striker, was also passenger,
Jose Brin was said to have shouted to the other

passengers and driver of the jeepney, Mga pasahero,

driver, itong tao ito sherol, ang kapal ng mukha. Iyong
pinagtrabahuhan namin kinakain nito, ibenebent[a]
kami nito, hudas ito! Mga pasahero, tingnan niyo,
hindi
makatingin-tingin
sa
akin,
hindi
makapagsalita. Hoy, tingin ka sa akin, napahiya ka sa
mga ginagawa mo ano? and, that when Chris Oballas
was alighting from the jeepney, he was kicked on his
leg by Jose Brin; and,
14.

On 15 January 1998, while Julio Tomas, Avionics

Technician of the Company, and his girlfriend, Elizabeth
Gali, also an employee of the Company, were waiting for
their ride, several union members shouted to Elizabeth
Gali, Beth iwanan mo na yang taong yan, walang
kwentang tao yan! Beth, paano na yung pinagsamahan
natin? irked, Julio Tomas upon boarding the passenger
jeepney with his girlfriend threw a P2.00 coin in the
direction of the picketers, the coin hit the windshield of a
privately-owned jeepney belonging to petitioner Espion
which was parked alongside the premises of the strike
area; The act of Tomas, provoked the petitioners Espion
and Amimita to follow Tomas, who when left alone
inside the tricycle after his girlfriend took a separate
tricycle to her home, was approached by petitioners
Espion and Amimita; petitioner Espion then threw
a P2.00 coin at him, and while pointing a baseball bat to
his face shouted, Huwag mong uulitin yung ginawa mo
kundi tatamaan ka sa akin! (Emphasis and italics in the
original)

The Court notes that the placards and banners put up by the striking
workers in the company premises read: ANDRES SORIANO AVIATION,
INC. CAUGHT IN THE ACT, ATTEMPTING TO BRIBE GOVERNMENT
OFFICIALS BEWARE, NOW A NAME YOU CAN TRASH, ASAI
DETERIORATING SAFETY RECORD KILLS 2 DEAD + VARIOUS (IN
PLANE CRASH) FLIGHT MISHAPS BEWARE, FLY AT YOUR OWN
RISK, ANDRES SORIANO AVIATION, INC. DETERIORATING

SAFETY RECORD KILLS INNOCENT PEOPLE IN PLANE CRASH,

THE CAUSE: UNTRAINED MECHANICS DOING AIRCRAFT
RELEASE, THE RESULT: SLIPSHOD MAINTENANCE AND SLOPPY
PLANE INSPECTION,WANNA FLY BLIND?, BENHUR GOMEZ
DRAGS COMPANY TO DEBT AND SHAMEFUL EXPERIENCE
(MAHIYA KA NAMAN, OY!), A. SORIANO AVIATION, INC., DEAD
PEOPLE IN PLANE CRASH, ELY BONIFACIO (MASAKIT ANG
TOTOO) MAGNANAKAW NG PIYESA, PALITAN NA RIN! TINGNAN
NYO KUNG NAGNANAKAW, MEKANIKO DE EROPLANO Y
HUELGA UN VIAJE DE PELIGRO, AIRCRAFT MANAGEMENT
BULOK; A. SORIANO AVIATION KILLS PEOPLE FOR LAX
OVERSIGHT OF SAFETY PROC. (ELY BONIFACIO-PATALSIKIN NA
RIN, MANDARAMBONG MUKHANG KWARTA, SAAN MO DINALA
ANG DORNIER SPECIAL TOOLS? IKAW HA!), ELY BONIFACIO
KAWATAN BANTAY SALAKAY, AMANPULO AND EL NIDO GUESTS,
BEWARE OF ASAI FLIGHTS, AIRCRAFT MECHANICS STILL ON
STRIKE, GOING TO BORACAY AND EL NIDO IS GOOD BUT FLYING
WITH A. SORIANO AVIATION? THINK TWICE! ACHTUNG: A
SORIANO AVIATION DEAD PEOPLE IN PLANE CRASH INSURANCE
ENTITLEMENTS DENIED DUE TO CAR VIOLATIONS, UNDRESS
SORIANO AVIATION, INC. UNRELIABLE FIXED BASED OPERATOR
KILLS PEOPLE FOR LAX OVERSIGHT OF SAFETY PROCEDURES.
It cannot be gainsaid that by the above-enumerated undisputed acts,
the Union committed illegal acts during the strike. The Union members
repeated name-calling, harassment and threats of bodily harm directed
against company officers and non-striking employees and, more
significantly, the putting up of placards, banners and streamers with vulgar
statements imputing criminal negligence to the company, which put to doubt
reliability of its operations, come within the purview of illegal acts under
Art. 264 and jurisprudence.
That the alleged acts of violence were committed in nine nonconsecutive days during the almost eight months that the strike was ongoing does not render the violence less pervasive or widespread to be

excusable. Nowhere in Art. 264 does it require that violence must be

continuous or that it should be for the entire duration of the strike.
The appellate court took against petitioner its filing of its complaint to
have the strike declared illegal almost eight months from the time it
commenced. Art. 264 does not, however, state for purposes of having a
strike declared as illegal that the employer should immediately report the
same. It only lists what acts are prohibited. It is thus absurd to expect an
employer to file a complaint at the first instance that an act of violence is
alleged to be committed, especially, as in the present case, when an earlier
complaint to have the refusal of the individual respondents to work overtime
declared as an illegal strike was still pending an issue resolved in its favor
only on September 25, 1998.
The records show that the Union went on strike on October 22, 1997,
and the first reported harassment incident occurred on October 29, 1997,
while the last occurred in January, 1998. Those instances may have been
sporadic, but as found by the Labor Arbiter and the NLRC, the display of
placards, streamers and banners even up to the time the appeal was being
resolved by the NLRC works against the Unions favor.
The acts complained of including the display of placards and banners
imputing criminal negligence on the part of the company and its officers,
apparently with the end in view of intimidating the companys clientele, are,
given the nature of its business, that serious as to make the second strike
illegal. Specifically with respect to the putting up of those banners and
placards, coupled with the name-calling and harassment, the same indicates
that it was resorted to to coerce the resolution of the dispute the very evil
which Art. 264 seeks to prevent.
While the strike is the most preeminent economic weapon of workers
to force management to agree to an equitable sharing of the joint product of
labor and capital, it exerts some disquieting effects not only on the
relationship between labor and management, but also on the general peace
and progress of society and economic well-being of the State. [15] If such

weapon has to be used at all, it must be used sparingly and within the bounds
of law in the interest of industrial peace and public welfare.

As to the issue of loss of employment of those who participated in the illegal

strike, Sukhothai[16] instructs:
In the determination of the liabilities of the individual
respondents, the applicable provision is Article 264(a) of the
Labor Code:
Art. 264. Prohibited Activities (a) x x x
xxxx
x x x x Any union officer who knowingly participates
in an illegal strike and any worker or union officer who
knowingly participates in the commission ofillegal acts
during an illegal 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.
xxxx
In Samahang Manggagawa sa Sulpicio Lines, Inc.NAFLU v. Sulpicio Lines, Inc., this Court explained that the
effects of such illegal strikes, outlined in Article 264, make a
distinction between workers and union officers who participate
therein: an ordinary striking worker cannot be terminated for
mere participation in an illegal. There must be proof that he
or she committed illegal acts during a strike. A union
officer, on the other hand, may be terminated from work
when he knowingly participates in an illegal strike, and like
other workers, when he commits an illegal act during an
illegal strike. In all cases, the striker must be identified. But

proof beyond reasonable doubt is not required. Substantial

evidence available under the attendant circumstances, which
may justify the imposition of the penalty of dismissal, may
suffice.[17] (Emphasis supplied)

The liability for prohibited acts has thus to be determined on an

individual basis. A perusal of the Labor Arbiters Decision, which was
affirmed in toto by the NLRC, shows that on account of the staging of the
illegal strike, individual respondents were all deemed to have lost their
employment, without distinction as to their respective participation.
Of the participants in the illegal strike, whether they knowingly
participated in the illegal strike in the case of union officers or knowingly
participated in the commission of violent acts during the illegal strike in the
case of union members, the records do not indicate. While respondent Julius
Vargas was identified to be a union officer, there is no indication if he
knowingly participated in the illegal strike. The Court not being a trier of
facts, the remand of the case to the NLRC is in order only for the purpose of
determining the status in the Union of individual respondents and their
respective liability, if any.
WHEREFORE, the
petition
is GRANTED. The Court
of
Appeals Decision and Resolution dated April 16, 2004 and January 25,
2005, respectively, areREVERSED and SET ASIDE. The Resolutions
dated October 31, 2001 and December 14, 2001 of the National Labor
Relations Commission affirming the Decision of the Labor Arbiter in
NLRC-NCR
Case
No.
00-06-04890-98 are AFFIRMED with
the MODIFICATION in light of the foregoing discussions.
The case is accordingly REMANDED to the National Labor
Relations Commission for the purpose of determining the Union status and
respective liabilities, if any, of the individual respondents.
SO ORDERED.

G.R. No. 203332, June 18, 2014

FLORENCIO LIBONGCOGON, FELIPE VILLAREAL AND
ALFONSO CLAUDIO, Petitioners, v.PHIMCO INDUSTRIES,
INC., Respondent.
DECISION
BRION, J.:
We resolve the present petition for review on certiorari1 which seeks to
nullify the amended decision2dated August 30, 2012 of the Court of Appeals
in CA-G.R. 115295.
The Antecedents
The Phimco Industries, Inc. (PHIMCO) is a domestic corporation engaged in
the production of matches. The Phimco Labor Association (PILA) is the
exclusive collective bargaining representative of the PHIMCO regular rankand-file employees. Due to a bargaining deadlock with PHIMCO, PILA
staged a strike on April 21, 1995.
The National Labor Relations Commission (NLRC) issued a temporary
restraining order on June 23, 1995, but the strike continued, with the strikers
blocking the company's points of ingress and egress. Three days later or, on
June 26, 1995, PHIMCO served dismissal notices on the strikers for the
alleged illegal acts they committed during the strike. Consequently, PILA
filed a complaint for illegal dismissal and unfair labor practice against
PHIMCO (illegal dismissal case) under NLRC NCR Case No. 00-07-0470595. PHIMCO, for its part, filed a petition to declare the strike illegal (illegal
strike case), docketed as NLRC Case No. 00-08-06031-95.
Then Acting Secretary Jose Brillantes of the Department of Labor and
Employment assumed jurisdiction over the strike and issued a return-towork order. PILA ended its strike and PHIMCO resumed its operations.
Later, PHIMCO laid off 21 of its employees and implemented a retirement
program covering 53 other employees. Twenty-two out of the 53 questioned

the legality of their retirement. Further, PILA found out that seven other
workers who were also dismissed on June 26, 1995Florencio
Libongcogon, Felipe Villareal, Mario Perea, Angelito Dejan, Mariano
Rosales, Roger Caber, and Alfonso Claudio - were not included in the illegal
dismissal case.
In view of these developments, PILA filed another complaint (NLRC NCR
Case No. 00-07-04723-97) against PHIMCO with the following causes of
action: (1) the illegal dismissal of the 7 employees; (2) the forced retirement
of 53 employees; and (3) the lay-off of 21 employees.
The Compulsory Arbitration Rulings and Related Incidents
In a decision3 dated August 5, 1998, Labor Arbiter (LA) Felipe P. Pati
dismissed NLRC Case No. 00-07-04723-97. PILA filed an appeal which the
NLRC dismissed through its decision4 dated July 30, 1999. PILA sought
relief from the CA through a petition for certiorari (CA-G.R. SP No. 57988).
The CA Special 12th Division rendered a decision5 on February 27, 2001
partly granting the petition. It found the 7 employees to have been illegally
dismissed. It ruled that as ordinary union members, the 7 must have been
shown to have committed illegal acts during the strike to warrant their
dismissal, but there was no such showing. Having been illegally dismissed,
the 7 were entitled to reinstatement, full backwages inclusive of allowances,
and other benefits, computed from June 26, 1995 up to the time of their
actual reinstatement.
Thereafter, PHIMCO appealed to this Court through a petition for review
on certiorari which the Court denied in its Resolution6 dated October 3,
2001. The resolution became final and executory on December 4,
2001.7 PILA then filed a motion for the computation of backwages and
benefits of the 7 union members, the CA decision in CA-G.R. SP No. 57988
likewise having become final and executory.
On October 18, 2002, the NLRC NCR Arbitration Branch submitted a
computation of the backwages for June 26, 1995 to October 2, 2002 in the
total amount of P519,907.10 for each of the 7 employees. The amount of
P174,305.84 received by Caber (for which he executed a quitclaim), was
deducted from the computation of his backwages. On January 7, 2003, LA
Pati ordered the issuance of a writ of execution in favor of Libongcogon,

Villareal, Claudio, Peria and Dejan, excluding Caber and Rosales who
passed away and whose heirs had received financial assistance from the
company for which they executed the corresponding quitclaims and release.
PHIMCO appealed, but the NLRC denied the appeal, as well as PHIMCO's
subsequent motion for reconsideration.
On March 6, 2004, Dejan moved for the dismissal of the case as far as he
was concerned, manifesting that he voluntarily executed a quitclaim and
release in the company's favor (before LA Pati) in consideration of
P164,025.85. PILA moved for execution of the CA ruling.
PHIMCO, on the other hand, filed a motion for the computation of the
backwages of Libongcogon, Villareal and Claudio, claiming that their
former positions no longer existed as of June 26, 1995, making their
reinstatement physically impossible. It argued that under Section 4(b), Rule
I, Book VI of the Omnibus Rules Implementing the Labor Code, its
obligation to the three employees was only to pay them separation pay up to
June 26, 1995.
Accompanying PHIMCO's motion for computation was a certification
issued by its Chief Accountant, Nestor Sebastian, stating that in 1993, the
company shifted to the buying of splints (palito) and skillets (match boxes)
instead of buying logs and making the materials in the company itself. In the
middle of June 1995, PHIMCO stopped the splint and skillet processing in
its Sta. Ana factory, resulting in the abolition on June 26, 1995 of the jobs of
Perea, Villareal and Claudio. Later, PHIMCO closed one match automatic
line due to reduced sales of matches. The closure also resulted in the
abolition of the jobs of eleven (11) other employees, including Libongcogon.
Through a supplement to the motion for computation, PHIMCO maintained
that the separation pay of the remaining four employees should be as
follows: Libongcogon, P71,289.00; Villareal, P113,556.00; Perea,
P143,809.00; and Claudio, P35,385.00.
In an order8 dated March 28, 2005, LA Aliman D. Mangandog, who took
over the case due to LA Pati's inhibition from further handling the dispute,
upheld PHIMCO's position and declared that the reinstatement of the 7
union members had been rendered impossible because of the abolition of
their positions in 1995. Further, LA Mangandog noted that three of the 7 had
withdrawn their claims against the company (Caber and Rosales [who died

during the pendency of the case] and Dejan). He ordered PHIMCO to pay
Libongcogon, Villareal, Perea and Claudio separation pay of one month's
salary for every year of service from date of their employment up to June
1995, plus financial assistance of one-half month's pay for each of them.
After receipt of copy of LA Mangandog's order, Perea moved to withdraw
his claim against PHIMCO, stating that he voluntarily executed a quitclaim
and release in favor of the company in consideration of P143,711.32. PILA
filed a motion for reconsideration of the order which the NLRC treated as an
appeal.
On June 30, 2009, the NLRC issued a resolution9 reversing LA Mangandog's
ruling. It declared that PHIMCO had not shown any clear basis to modify
the CA decision of February 27, 200110 ordering the reinstatement of the 7
dismissed union members, which had long become final and executory. It
considered LA Mangandog's order which modified the CA decision a nullity.
It then remanded the records of the case to its Regional Arbitration Branch
for the issuance of a writ of execution to strictly enforce the CA decision of
February 27, 2001.
PHIMCO moved for reconsideration. On July 21, 2010, the NLRC issued
another resolution11modifying its resolution of June 30, 2009. It dismissed
the case with prejudice with respect to Rosales, Caber, Dejan and Perea as
they or their heirs executed quitclaims in favor of PHIMCO. It again
remanded the records to its arbitration branch for the issuance of a writ of
execution in the following amounts: (1) P827,842.23 for Libongcogon; (2)
P1,061,512.70 for Villareal; and (3) P811,835.47 for Claudio.
Undaunted, PHIMCO appealed to the CA on grounds that the NLRC
committed grave abuse of discretion when (1) it took cognizance of the 7
employees' motion for reconsideration despite its non-compliance with the
requirements for perfecting an appeal; (2) ordered the reinstatement of two
of the 7 who were already deceased and two who filed motions to dismiss
the case; and (3) ruled that they were entitled to backwages and accrued
salaries from June 26, 1995 to December 31, 2004.
With respect to the procedural question, PHIMCO argued that the NLRC
should not have accepted the employees' appeal since it failed to comply
with the requirements for perfection of an appeal. It pointed out that the
appeal lacked a verification and certification of non-forum shopping and was

not accompanied by an appeal fee. On the merits of the case, PHIMCO

reiterated its argument that the former positions of the 7 employees were
already abolished and the machines that they were using were dismantled as
early as June 1995, rendering their reinstatement a legal impossibility. Under
such a situation, it maintained, their backwages should be computed only up
to the date their positions were abolished.
PHIMCO further argued that the March 28, 2005 resolution12 of LA
Mangandog did not modify the February 27, 2005 decision13 of the CA in
CA-G.R. SP No. 57988. The Mangandog resolution, it explained, simply
applied Section 4, Rule 1, Book VI of the Omnibus Rules Implementing the
Labor Code, requiring the payment of separation pay in case the
establishment where the employee is to be reinstated has closed or has
ceased operations or where his or her former position no longer exists at the
time of reinstatement, for reasons not attributable to the fault of the
employer.
The CA Decision
In its first assailed decision,14 the CA denied the petition and upheld the
NLRC rulings. It found that the NLRC committed no grave abuse of
discretion when it accepted the employees' motion for reconsideration as an
appeal. It stressed that the circumstances obtaining in the case warrant a
liberal application of the rules of procedure considering the seriousness of
the issue that had to be resolved, involving no less the alteration by LA
Mangandog of a final and executory decision of the CA. Further, it sustained
the NLRC's dismissal of the complaint with respect to Rosales, Caber, Dejan
and Perea, as they or their heirs executed quitclaims in PHIMCO's favor.
The CA emphasized that the decision of its Special 12th Division in CA-G.R.
SP No. 57988 became final and executory on December 4, 2001; thus, there
is nothing more left to be done but to enforce it. It rejected PHIMCO's
argument that since there were no more positions the remaining 3 employees
could go back to, its only obligation was to give them separation pay. At any
rate, it opined, even on the assumption that the employees' positions had
been abolished in June 1995, that this circumstance would not justify a
modification of the NLRC's final and executory reinstatement order
inasmuch as (1) the abolition of the workers' positions occurred before the
judgment had attained finality; and (2) the issue was raised only during the
execution stage.

PHIMCO moved for reconsideration of the CA decision. It argued in the

main that independent of the issue on the abolition of the employees'
positions, their reinstatement should not have been upheld in view of the
ruling of this Court in G.R. No. 170830, Phimco Industries, Inc. v. Phimco
Industries Labor Association (PILA)15 (illegal strike case) promulgated on
August 11, 2010, as well as the Court's Resolution in G.R. No.
192875, Phimco Industries Labor Association (PILA) et al, v. Phimco
Industries, Inc.16 (illegal dismissal case) issued on January 19, 2011.
PHIMCO maintained that in the illegal strike case, the Court's 3rd Division
ruled that the company had a just cause to dismiss the affected union
members as they committed illegal acts during the strike. In the illegal
dismissal case, on the other hand, the Court's 2nd Division took into
consideration the 3rd Division's ruling in the illegal strike case which, it
noted, had already become final and executory. Accordingly, the 2nd Division
denied PILA's petition seeking (1) the reinstatement of the striking
employees; and (2) the reversal of the decision of the CA 17th Division in
CA-G.R. No. 83569 declaring the dismissal of the concerned employees
valid.
PILA, for its part, argued that the procedural issue had already been passed
upon by the CA in its decision of December 9, 2011 and PHIMCO had not
presented any fresh argument to warrant a reconsideration. On the merits of
the case, PILA maintained that since the reinstatement order of the CA
Special 12th Division had become final and executory long before this
Court's decision in G.R. No. 170830 and its resolution in G.R. No. 192875
were rendered, the rulings of the Court should not have affected the
dismissed employees.
The CA Amended Decision
Through its amended decision of August 30, 201217 (on further
reconsideration), the CA granted PHIMCO's motion for reconsideration,
although it reaffirmed its finding that the NLRC committed no grave abuse
of discretion in issuing its assailed resolutions of June 30, 2009 and July 21,
2010 as they were rendered in line with the ruling of the CA Special 12th
Division in CA-G.R. SP No. 57988.
Invoking this Court's ruling in David v. CA,18 the CA held that while the

judgment in CA-G.R. SP No. 57988 (sought to be enforced by the

challenged NLRC resolutions) had attained finality, there were facts and/or
events which transpired after the judgment was issued, which presented a
supervening cause that rendered the final and executory decision no longer
enforceable. The "supervening cause" CA had in mind referred
principally to this Court's (3rd Division) ruling in the illegal strike case
(G.R. No. 170830) promulgated on August 11, 2010 that PILA's
members were validly dismissed as they committed unlawful acts during
the strike. It also cited the Court's (2nd Division) resolution in the illegal
dismissal case (G.R. No. 192875) issued on January 19, 2011 recognizing
that the Court's decision in the illegal strike case had already become final
and executory. The Court, in effect, denied PILA's prayer in G.R. No.
192875 to have the dismissed union members who participated in the
strike reinstated, thereby acknowledging that they had been validly
dismissed.
The CA took note that PHIMCO was able to identify the union members
who participated and committed illegal acts (illegally blocking ingress to
and egress from the company premises during the strike) through the
affidavits of company employees and its personnel manager, as well as
through photographs of the strike scene, as stated in the Court's decision in
the illegal strike case.19The identified union members included
Libongcogon, Villareal and Claudio, the remaining employees who were
contesting their dismissal.
By amending its decision dated December 9, 2011, reversed the assailed
NLRC resolutions in so far as they pertain to the reinstatement or payment
of accrued wages, 13th month pay and service incentive leave pay of
Libongcogon, Villareal and Claudio.
The Petition
Aggrieved, Libongcogon, Villareal and Claudio now appeal to this Court on
grounds that the CA committed grave abuse of discretion when (1) it set
aside its previous decision and granted PHIMCO's motion for
reconsideration and petition for certiorari despite its clear finding that the
NLRC committed no grave abuse of discretion in its assailed resolutions;
and (2) it applied in the present case the decisions of this Court in G.R. No.
170830 and G.R. No. 192875.

The petitioners bewail the CA's grant of certiorari to the company, which it
had denied in its decision of December 9, 2011 (when it found that the
NLRC did not commit any grave abuse of discretion in its appealed rulings).
They find no justification for the CA's change of mind considering that even
in its amended decision of August 30, 2012, the appellate court reiterated its
opinion that the NLRC committed no grave abuse of discretion in its
assailed resolutions of June 30, 200920 and July 21, 2010.21 They contend
that the CA amended decision had no legal basis on both substantive and
procedural grounds; it ran counter to both the basic tenet of a Rule 65
petition for certiorari, and rewarded PHIMCO for unduly derailing the
enforcement of a final and executory decision rendered way back in 2001.
The three dismissed employees were surprised that despite the lack of any
grave abuse of discretion in the NLRC resolutions, the CA reversed its
previous decision and set aside said resolutions "merely by reason of the
Hon. Supreme Court's subsequent decisions in G.R. No. 170830 and G.R.
No. 192875 which the appellate court considered as supervening
events,"22 in relation to its decision of February 27, 2001 decreeing their
reinstatement. They submit that this Court's decisions were not raised by
PHIMCO in its petition for certiorari before the CA and thus cannot be
made a basis of the appellate court's decision. They maintain that the present
case is separate and distinct from the cases in G.R. No 170830 and G.R. No.
192875 which was decided more than a decade ahead of the decisions of the
Court invoked by the CA in its amended decision.
The petitioners entreat the Court to rectify the situation "if only to forestall a
bad precedent to debase the sanctity of final and executory
judgments."23 They urge that the doctrine of immutability of final
judgments be respected in their case They tell the Court that the
"supervening event" PHIMCO raised at this point in the proceedings does
not fall under any of the exceptions to the doctrine and these are: the
correction of clerical errors, the so called nunc pro tune entries which cause
no prejudice to any party, void judgments, and circumstances which
transpire after the finality of the decision and which render the execution
unjust and inequitable.24cralawred
The Case for PHIMCO
In its Comment (on the petition),25 the respondent PHIMCO asks for the
dismissal of the petition on grounds that: (1) the CA is correct in relying on

the decisions of this Court in the illegal strike case (G.R. No. 170830) and
the illegal dismissal case (G.R. No. 192875) as basis for its amended
decision; and (2) the rule on "commonality of interests" is applicable to the
petitioners.
PHIMCO takes exception to the petitioners' claim that it never raised with
the CA the issue of "supervening event." It contends that right after the filing
of its Petition for Certiorari with Prayer for the Issuance of a Writ of
Preliminary Injunction and/or Temporary Restraining Order dated August 9,
2010 with the CA, it filed an Urgent Motion for the Issuance of a Temporary
Restraining Order (dated August 16, 2010)26 to enjoin the enforcement of the
assailed NLRC resolutions.
PHIMCO maintains that when the CA denied its urgent motion, it filed on
October 4, 2010 a Motion for Reconsideration with a Reply to the comment
of the employees27 where it first attempted to raise the "supervening event"
issue by manifesting before the CA that this Court's decision in the illegal
strike case (G.R. No. 170830) positively identified the petitioners
Libongcogon, Villareal and Claudio as among the union members who
participated in the strike and who committed illegal acts during the strike. It
adds that for this reason, the Court declared in the illegal strike case
that they had been validly dismissed.
Thereafter, several other related incidents ensued where it again called
attention to the "supervening event" issue, one such incident being the filing
of the parties' memoranda28 on its petition. PHIMCO submits that the entry
of the Court's ruling in the strike case in the Book of Entries of
Judgments29put an end to the issue of petitioners' illegal dismissal as upheld
by the Court in its decision in the illegal dismissal case (G.R. No. 192875).
Under the circumstances, PHIMCO explains, the CA correctly yielded to the
pronouncements of the Court in the two cases on the ground of res
judicata as the two cases and the present one had identity of parties and
issues. It thus maintains that the CA correctly considered in its amended
decision of August 30, 2012 the Court's rulings in the illegal strike and
illegal dismissal cases as supervening events which rendered the execution
of the NLRC resolution dated July 21, 201030 unjust and inequitable.
Finally, PHIMCO argues that there is commonality of interests between the
petitioners and the respondents in the illegal strike case as found by LA

Mangandog since their rights and obligations originate from the same source
their status as PHIMCO employees and PILA members and, their
participation in the illegal strike.
The Court's Ruling
We now resolve the core issue of whether the CA committed a reversible
error or grave abuse of discretion in relying on this Court's rulings in
the illegal strike case (G.R. No. 170830) and the illegal dismissal case
(G.R. No. 192875) as basis for its amended decision of August 30, 2012.
The doctrine of immutability of final
judgments
The petitioners contend that the CA contravened the doctrine
of immutability of final judgmentswhen it issued its amended decision of
August 30, 2012 nullifying the final and executory decision of its Special
12th Division declaring their dismissal illegal. They insist that the CA ruling
had become immutable and unalterable and may no longer be modified in
any respect, even if the modification is meant to correct erroneous
conclusions of fact and law, regardless of whether it will be made by the
court that rendered it or by the highest court of the land. They invoke the
Court's pronouncement inSilliman University v. Fontelo-Paalan,31 in
support of their position. They submit that for this reason, even the Court's
rulings in the illegal strike case and the illegal dismissal case cannot alter the
fact that they had been illegally dismissed.
We disagree with the petitioners.
As the petitioners themselves acknowledge, the doctrine of immutability of
final judgmentsadmits of certain exceptions as explained in Hulst v. PR
Builders, Inc.,32 which they cite to prove their case. One recognized
exception is the existence of a supervening cause or event which renders the
enforcement of a final and executory decision unjust and inequitable. In this
particular case, a supervening event transpired, which must be considered in
the execution of the CA decision in CA-G.R. SP No. 57988 in order not to
create an injustice to or an inequitable treatment of workers who, like the
petitioners, participated in a strike where this Court found the commission of
illegal acts by the strikers, among them the petitioners.

As the CA pointed out in its amended decision, the evidence in the illegal
strike case clearly identified the petitioners as among the union members
who, in concert with the other identified union members, blocked the points
of ingress and egress of PHIMCO through a human blockade and the
mounting of physical obstructions in front of the company's main
gate.33 This is a prohibited act under the law.34 "For participating in illegally
blocking ingress to and egress from company premises, this Court's 3rd
Division declared in the illegal strike case these union members dismissed
for their illegal acts in the conduct of the union's strike."35cralawred
As we earlier stated, the ruling of the Court's 3rd Division in the illegal
strike case (which attained finality on November 20, 201036) became the
basis of the Court's 2nd Division in rejecting PILA's prayer for the
reinstatement of the dismissed union members in the illegal dismissal case,
thereby recognizing the validity of their dismissal. Considering that the
petitioners had been positively identified to be among the union members
who committed illegal acts during the strike, these petitioners were therefore
validly dismissed. It was in this context that the CA opined that the Court's
rulings in the illegal strike case and in the illegal dismissal case constituted
an intervening cause or event that made the CA Special 12th Division's final
and executory decision in CA-G.R. SP No. 57988 unenforceable.
A strike is a concerted union action for purposes of collective bargaining or
for the workers' mutual benefit and protection.37 It is manifested in a work
stoppage whose main objective is to paralyze the operations of the employer
establishment. Because of its potential adverse consequences to the striking
workers and the employer, as well as the community, a strike enjoys
recognition and respect only when it complies with the conditions laid down
by law. One of these conditions, as far as union members are concerned, is
the avoidance of illegal acts during the strike38 such as those committed by
the petitioners, in concert with the other union members, during the
PHIMCO strike in 1995.39cralawred
The petitioners were in the same footing as the other union members who
were identified to have committed illegal acts during the strike and whose
dismissal was upheld by this Court in the illegal strike and illegal dismissal
cases. Nevertheless, they would want to be spared from liability for the
illegal acts they committed during the strike by invoking the doctrine
of immutability of final judgments. This is unfair, as the CA saw it,
stressing that it would create an iniquitous situation in relation to the union

members who lost their employment because of the illegal acts they
committed during the strike.
We appreciate the CA's concern. The petitioners were also respondents in
the illegal strike case,40yet through the expedient of filing an illegal dismissal
case separate from the main illegal dismissal action filed by PILA involving
all the other union members dismissed by the company, they would go scot
free for their commission of illegal acts during the strike.
It should be recalled that the CA Special 12th Division declared the
petitioners to have been illegally dismissed when it issued its February 27,
2001 decision based on its finding that there was no showing at the time that
they committed illegal acts during the strike. This Court's decision in the
illegal strike case proved otherwise, inasmuch as the petitioners were
positively found to have committed illegal acts during the strike.
Considering the substantial financial losses suffered by the company on
account of the strike, it would indeed be unjust to the company and the
dismissed union members to allow the reinstatement of the petitioners and to
reward them with backwages and other monetary benefits. We thus find no
reversible error or grave abuse of discretion in the CA amended decision.
We stress as our last point that the fact that the decision has become final
does not necessarily preclude its modification or alteration; even with the
finality of judgment, when its execution becomes impossible or unjust due to
supervening facts, it may be modified or altered to harmonize it with
demands of justice and the altered material circumstances not existing when
the decision was originally issued.41cralawred
In fine, we find the petition without merit.
WHEREFORE, premises considered, the petition is DISMISSED for lack
of merit. The amended decision dated August 30, 2012 of the Court of
Appeals is AFFIRMED.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. Nos. 164302-03

January 24, 2007

SANTA ROSA COCA-COLA PLANT EMPLOYEES UNION,

DONRICO V. SEBASTIAN, EULOGIO G. BATINO, SAMUEL A.
ATANQUE, MANOLO C. ZABALJAUREGUI, DIONISIO TENORIO,
EDWIN P. RELLORES, LUIS B. NATIVIDAD, MYRNA PETINGCO,
FELICIANO TOLENTINO, RODOLFO A. AMANTE, JR., CIPRIANO
C. BELLO, RONALDO T. ESPINO, EFREN GALAN, and JUN
CARMELITO SANTOS, Petitioners,
vs.
COCA-COLA BOTTLERS PHILS., INC., Respondent.
DECISION
CALLEJO, SR., J.:
This is a petition for review on certiorari of the Decision1 of the Court of
Appeals (CA) in CA-G.R. SP Nos. 74174 and 74860, which affirmed the
ruling of the National Labor Relations Commission (NLRC) in NLRC CA
No. 030424-02, and the Labor Arbiter in NLRC Case No. RAB-IV-1011579-99-L.
The Antecedents
The Sta. Rosa Coca-Cola Plant Employees Union (Union) is the sole and
exclusive bargaining representative of the regular daily paid workers and the
monthly paid non-commission-earning employees of the Coca-Cola Bottlers
Philippines, Inc. (Company) in its Sta. Rosa, Laguna plant. The individual
petitioners are Union officers, directors, and shop stewards.
The Union and the Company had entered into a three-year Collective
Bargaining Agreement (CBA) effective July 1, 1996 to expire on June 30,
1999. Upon the expiration of the CBA, the Union informed the Company of
its desire to renegotiate its terms. The CBA meetings commenced on July
26, 1999, where the Union and the Company discussed the ground rules of

the negotiations. The Union insisted that representatives from the Alyansa ng
mga Unyon sa Coca-Cola be allowed to sit down as observers in the CBA
meetings. The Union officers and members also insisted that their wages be
based on their work shift rates. For its part, the Company was of the view
that the members of the Alyansa were not members of the bargaining unit.
The Alyansa was a mere aggregate of employees of the Company in its
various plants; and is not a registered labor organization. Thus, an impasse
ensued.2
On August 30, 1999, the Union, its officers, directors and six shop stewards
filed a "Notice of Strike" with the National Conciliation and Mediation
Board (NCMB) Regional Office in Southern Tagalog, Imus, Cavite. The
petitioners relied on two grounds: (a) deadlock on CBA ground rules; and
(b) unfair labor practice arising from the companys refusal to bargain. The
case was docketed as NCMB-RBIV-NS-08-046-99.3
The Company filed a Motion to Dismiss4 alleging that the reasons cited by
the Union were not valid grounds for a strike. The Union then filed an
Amended Notice of Strike on September 17, 1999 on the following grounds:
(a) unfair labor practice for the companys refusal to bargain in good faith;
and (b) interference with the exercise of their right to self-organization.5
Meanwhile, on September 15, 1999, the Union decided to participate in a
mass action organized by the Alyansa ng mga Unyon sa Coca-Cola in front
of the Companys premises set for September 21, 1999. 106 Union
members, officers and members of the Board of Directors, and shop
stewards, individually filed applications for leave of absence for September
21, 1999. Certain that its operations in the plant would come to a complete
stop since there were no sufficient trained contractual employees who would
take over, the Company disapproved all leave applications and notified the
applicants accordingly.6 A day before the mass action, some Union members
wore gears, red tag cloths stating "YES KAMI SA STRIKE" as headgears
and on the different parts of their uniform, shoulders and chests.
The Office of the Mayor issued a permit to the Union, allowing it "to
conduct a mass protest action within the perimeter of the Coca-Cola plant on
September 21, 1999 from 9:00 a.m. to 12:00 noon."7 Thus, the Union
officers and members held a picket along the front perimeter of the plant on
September 21, 1999. All of the 14 personnel of the Engineering Section of
the Company did not report for work, and 71 production personnel were also

absent. As a result, only one of the three bottling lines operated during the
day shift. All the three lines were operated during the night shift with
cumulative downtime of five (5) hours due to lack of manning, complement
and skills requirement. The volume of production for the day was short by
60,000 physical case[s] versus budget.8
On October 13, 1999, the Company filed a "Petition to Declare Strike
Illegal"9 alleging, inter alia, the following: there was a deadlock in the CBA
negotiations between the Union and Company, as a result of which a Notice
of Strike was filed by the Union; pending resolution of the Notice of Strike,
the Union members filed applications for leave on September 21, 1999
which were disapproved because operations in the plant may be disrupted;
on September 20, 1999, one day prior to the mass leave, the Union staged a
protest action by wearing red arm bands denouncing the alleged anti-labor
practices of the company; on September 21, 1999, without observing the
requirements mandated by law, the Union picketed the premises of the
Company in clear violation of Article 262 of the Labor Code; because of the
slowdown in the work, the Company suffered losses amounting
toP2,733,366.29; the mass/protest action conducted on September 21, 1999
was clearly a strike; since the Union did not observe the requirements
mandated by law, i.e., strike vote, cooling-off period and reporting
requirements, the strike was therefore illegal; the Union also violated the
provision of the CBA on the grievance machinery; there being a direct
violation of the CBA, the Unions action constituted an unfair labor practice;
and the officers who knowingly participated in the commission of illegal
acts during the strike should be declared to have lost their employment
status. The Company prayed that judgment be rendered as follows:
1. Declaring the strike illegal;
2. Declaring the officers of respondent Union or the individual
respondents to have lost their employment status;
3. Declaring respondent Union, its officers and members guilty of
unfair labor practice for violation of the CBA; and
4. Ordering the respondents to pay petitioner the following claims for
damages:
a. Actual Damages in the amount of P 4,733,366.29

b. Moral Damages in the amount of Five (5) Million Pesos; and

c. Exemplary Damages in the amount of Two (2) Million
Pesos.10
The Union filed an Answer with a Motion to Dismiss and/or to Suspend
Proceedings11 alleging therein that the mass action conducted by its officers
and members on September 21, 1999 was not a strike but just a valid
exercise of their right to picket, which is part of the right of free expression
as guaranteed by the Constitution; several thousands of workers nationwide
had launched similar mass protest actions to demonstrate their continuing
indignation over the ill effects of martial rule in the Philippines.12 It pointed
out that even the officers and members of the Alyansa ng mga Unyon sa
Coca-Cola had similarly organized mass protest actions. The Union insisted
that officers and members filed their applications for leave for September
21, 1999 knowing fully well that there were no bottling operations scheduled
on September 21 and 22, 1999; they even secured a Mayors permit for the
purpose. The workers, including the petitioners, merely marched to and fro
at the side of the highway near one of the gates of the Sta. Rosa Plant, the
loading bay for public vehicles. After 3 hours, everyone returned to work
according to their respective shifting schedules. The Union averred that the
petition filed by the Company was designed to harass and its officers and
members in order to weaken the Unions position in the on-going collective
bargaining negotiations.
In a letter to the Union President dated October 26, 1999, the NCMB stated
that based on their allegations, the real issue between the parties was not the
proper subject of a strike, and should be the subject of peaceful and
reasonable dialogue. The NCMB recommended that the Notice of Strike of
the Union be converted into a preventive mediation case. After conciliation
proceedings failed, the parties were required to submit their respective
position papers.13 In the meantime, the officers and directors of the Union
remained absent without the requisite approved leaves. On October 11,
1999, they were required to submit their explanations why they should not
be declared AWOL.14
On November 26, 1999, the Labor Arbiter rendered a Decision15 granting the
petition of the Company. He declared that the September 21, 1999 mass
leave was actually a strike under Article 212 of the Labor Code for the
following reasons: based on the reports submitted by the Production and

Engineering Department of the Company, there was a temporary work

stoppage/slowdown in the company;16 out of the usual three (3) lines for
production for the day shift, only one line operated by probationary
employees was functional and there was a cumulative downtime of five (5)
hours attributed to the lack of manning complement and skills requirement.
The Labor Arbiter further declared:
x x x [T]he September 21, 1999 activity of the union and the individual
respondents herein fell within the foregoing definition of a strike. Firstly, the
union itself had admitted the fact that on the date in question, respondent
officers, together with their union members and supporters from the Alyansa
ng mga Unyon sa Coca-Cola, did not report for their usual work. Instead,
they all assembled in front of the Sta. Rosa Plant and picketed the premises.
Very clearly, there was a concerted action here on the part of the respondents
brought about a temporary stoppage of work at two out of three bottling
lines at the Sta. Rosa Plant. According to Edwin Jaranilla, the Engineering
Superintendent (Annex H, petition), all of his departments 14 engineering
personnel did not report for work on September 21, 1999, and that only Line
2 operated on the day shift. Honorio Tacla, the Production Superintendent,
testified (Annex H-1), that 71 production personnel were likewise absent
from their respective work stations on September 21, 1999, and that only
Line 2 operated on the day shift. Similarly, Federico Borja, Physical
Distribution Superintendent, stated under oath (Annex H-2) that 12
personnel from his department did not report for work on September 21,
1999, and that no forklift servicing was done on Lines 1 and 3. From the
foregoing testimonies, it is evident that respondents concerted activity
resulted in a temporary stoppage of work at the Sta. Rosa Plant of the
company. Thirdly, such concerted activity by respondents was by reason of a
labor dispute. Earlier, the union had filed a Notice of Strike against the
company on account of a disagreement with the latter regarding CBA ground
rules, i.e., the demand of the Union for Alyansa members from other plants
to attend as observers during the CBA negotiation, and for the members of
the negotiating panel to be paid their wages based on their work shift rate.
Moreover, on September 20, 1999, one day before respondents mass leave
from work and concerted action, they had worn red tag cloth materials on
different parts of their uniform which contained the words, "YES kami sa
strike"; "Protesta kami"; "Sahod, karapatan, manggagawa ipaglaban"; and
"Union busting itigil." (Annexes G, G-1, G-2 & G-3). These indicated that
the concerted action taken by respondents against CCBPI was a result of or
on account of a labor dispute.17

According to the Labor Arbiter, the strike conducted by the Union was
illegal since there was no showing that the Union conducted a strike vote,
observed the prescribed cooling-off period, much less, submitted a strike
vote to the DOLE within the required time. Consequently, for knowingly
participating in the illegal strike, the individual petitioners were considered
to have lost their employment status.18
The Union appealed the decision to the NLRC. On July 31, 2002, the NLRC
affirmed the decision of the Labor Arbiter with the modification that Union
Treasurer Charlita M. Abrigo, who was on bereavement leave at the time,
should be excluded from the list of those who participated in the illegal
strike. She was thus ordered reinstated to her former position with full
backwages and benefits.19
The Union and its officers, directors and the shop stewards, filed a petition
for certiorari in the CA. The case was docketed as CA-G.R. SP No. 74174.
Another petition was filed by Ricky G. Ganarial and Almira Romo, docketed
as CA-G.R. SP No. 74860. The two cases were consolidated in the 6th
Division of the CA.
Petitioners alleged the following in their respective petitions:
I
THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION FOR HAVING
DECLARED PETITIONERS TO HAVE LOST THEIR EMPLOYMENT
WHEN FACTS WOULD SHOW PETITIONERS WERE NOT AFFORDED
DUE PROCESS
II
THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN DECLARING THE
PEACEFUL PICKETING CONDUCTED BY THE UNION AS ILLEGAL
STRIKE DESPITE ABSENCE OF SUBSTANTIAL EVIDENCE ON THE
INTENT TO CREATE TEMPORARY WORK STOPPAGE
III

THE NLRC COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OF JURISDICTION IN DECLARING THAT
PETITIONERS HAVE LOST THEIR EMPLOYMENT FOR
KNOWINGLY PARTICIPATING IN AN ILLEGAL STRIKE DESPITE
THE FACT THAT PETITIONERS ARE NOT ELECTED OFFICERS OF
THE UNION AND ARE MERE SHOP STEWARDS AND DESPITE THE
FACT THAT THERE WAS NO PROOF THAT THEY COMMITTED
ILLEGAL ACTS.20
The petitioners, likewise, raised the following, to wit:
WHETHER OR NOT PUBLIC RESPONDENT NLRC HAS GRAVELY
ABUSED ITS DISCRETION AMOUNTING TO EXCESS OR LACK OF
JURISDICTION IN AFFIRMING THE DECISION OF THE LABOR
ARBITER A QUO WHO COMMITTED SERIOUS ERRORS IN HIS
FINDINGS OF FACTS WHEN HE DECLARED THAT THE STRIKE
CONDUCTED BY THE RESPONDENTS ON SEPTEMBER 21, 1999 IS
ILLEGAL.
WHETHER OR NOT PUBLIC RESPONDENT NLRC HAS GRAVELY
ABUSED ITS DISCRETION AMOUNTING TO EXCESS OR LACK OF
JURISDICTION IN AFFIRMING THE DECISION OF THE LABOR
ARBITER A QUO WHO COMMITTED SERIOUS ERRORS IN HIS
FINDINGS OF FACTS WHEN HE DECLARED THAT INDIVIDUAL
RESPONDENTS (NOW PETITIONERS), INCLUDING SIX (6) UNION
SHOP STEWARDS, ARE CONSIDERED TO HAVE LOST THEIR
EMPLOYMENT STATUS (EXCEPT CHARLITA ABRIGO) FOR
KNOWINGLY PARTICIPATING IN SAID ILLEGAL STRIKE.21
On September 10, 2003, the CA rendered judgment dismissing the petition
for lack of merit. It also declared that petitioners, in CA-G.R. SP No. 74860,
were guilty of forum shopping.
Petitioners filed a motion for reconsideration which the appellate court
denied; hence, the instant petition was filed based on the following grounds:
(1) THE HONORABLE COURT OF APPEALS HAS GRAVELY
ABUSED ITS DISCRETION IN DISMISSING THE PETITION
BEFORE IT FOR LACK OF MERIT WHEN IT IS CLEAR FROM
THE EVIDENCE ON RECORD THAT THE SUBJECT MASS
ACTION WAS A VALID EXERCISE OF THE WORKERS

CONSTITUTIONAL RIGHT TO PICKET WHICH IS PART OF

THE RIGHT TO FREE EXPRESSION.
(2) THE NLRC GRAVELY ABUSED ITS DISCRETION IN
AFFIRMING THE DECISION OF THE LABOR ARBITER A QUO
WHEN IT CONCLUDED THAT AS A CONSEQUENCE OF THE
ILLEGALITY OF THE STRIKE, THE DISMISSAL OF THE
OFFICERS OF THE UNION IS JUSTIFIED AND VALID, IS NOT
IN ACCORD WITH FACTS AND EVIDENCE ON RECORD.
(3) EVEN ASSUMING ARGUENDO THAT THE PROTEST MASS
ACTION STAGED BY PETITIONERS ON SEPTEMBER 21, 1999
CONSTITUTES A STRIKE, THE NLRC SERIOUSLY ERRED
WHEN IT AFFIRMED THE LABOR ARBITERS DECISION
DECLARING THE FORFEITURE OF EMPLOYMENT STATUS
OF UNION OFFICERS AND SHOP STEWARDS (WHO HAVE
NOT COMMITTED ANY ILLEGAL ACT DURING THE
CONDUCT OF THE SAID MASS ACTION) FOR HAVING
KNOWINGLY PARTICIPATED IN AN ILLEGAL STRIKE.22
The threshold issues in these cases are: (a) whether the September 21, 1999
mass action staged by the Union was a strike; (b) if, in the affirmative,
whether it was legal; and (c) whether the individual officers and shop
stewards of petitioner Union should be dismissed from their employment.
On the first and second issues, petitioners maintain that the September 21,
1999 mass protest action was not a strike but a picket, a valid exercise of
their constitutional right to free expression and assembly.23 It was a peaceful
mass protest action to dramatize their legitimate grievances against
respondent. They did not intend to have a work stoppage since they knew
beforehand that no bottling operations were scheduled on September 21,
1999 pursuant to the Logistics Planning Services Mega Manila Production
Plan dated September 15, 1999.24Thus, they applied for leaves of absences
for September 21, 1999 which, however, were not approved. They also
obtained a mayors permit to hold the picket near the highway, and they
faithfully complied with the conditions set therein. The protesting workers
were merely marching to and fro at the side of the highway or the loading
bay near one of the gates of the Company plant, certainly not blocking in
any way the ingress or egress from the Companys premises. Their request to
hold their activity was for four (4) hours, which was reduced to three (3)

hours. Thereafter, they all went back to work. The bottling operations of the
Company was not stopped, even temporarily. Since petitioner Union did not
intend to go on strike, there was no need to observe the mandatory legal
requirements for the conduct of a strike.
Petitioners also point out that members belonging to the IBM-KMU at the
San Fernando Coca-Cola bottling plant staged simultaneous walkout from
their work assignments for two consecutive days, on October 7 and 8, 1999.
However, the Secretary of Labor and Employment (SOLE) declared that the
walkout was considered a mass action, not a strike, and the officers of the
IBM-KMU were only meted a three-day suspension. Respondent accepted
the decision of the SOLE and no longer appealed the decision. Petitioners
insist that this should, likewise, apply in the resolution of the issue of
whether petitioners staged a strike or not, and whether the penalty of
dismissal from the employment with the respondent is just and equitable.
Petitioners also insist that they were denied the right to due process because
the decision of the Labor Arbiter was implemented even while their appeal
was pending in the NLRC. The decision of the Labor Arbiter against them
was to become final and executory only until after the NLRC shall have
resolved their appeal with finality.
On the third issue, petitioners aver that even assuming that they had indeed
staged a strike, the penalty of dismissal is too harsh. They insist that they
acted in good faith. Besides, under Article 264 of the Labor Code, the
dismissal of the Union officers who participated in an illegal strike is
discretionary on the employer. Moreover, six (6) of the petitioners were shop
stewards who were mere members of the Union and not officers thereof.
In its comment on the petition, respondent avers that the issues raised by
petitioners are factual; hence, inappropriate in a petition for review on
certiorari. Besides, the findings of the Labor Arbiter had been affirmed by
the NLRC and the CA, and are, thus, conclusive on this Court.
Respondent further avers that the law offers no discretion as to the proper
penalty that should be imposed against a Union official participating in an
illegal strike. Contrary to the contention of petitioners, shop stewards are
also Union officers. To support its claim, respondent cited Samahan ng
Manggagawa sa Moldex Products, Inc. v. National Labor Relations
Commission,25 International Brotherhood of Teamsters, Chauffeurs,

Warehousemen and Helpers of America v. Hoffa;26 and Coleman v.

Brotherhood of Railway and Steamship Clerks, etc.27
The petition is denied for lack of merit.
The ruling of the CA that petitioners staged a strike on September 21, 1999,
and not merely a picket is correct.
It bears stressing that this is a finding made by the Labor Arbiter which was
affirmed by the NLRC28 and the CA.29 The settled rule is that the factual
findings and conclusions of tribunals, as long as they are based on
substantial evidence, are conclusive on this Court.30 The raison detre is that
quasi-judicial agencies, like the Labor Arbiter and the NLRC, have acquired
a unique expertise since their jurisdictions are confined to specific matters.
Besides, under Rule 45 of the Rules of Court, the factual issues raised by the
petitioner are inappropriate in a petition for review on certiorari. Whether
petitioners staged a strike or not is a factual issue.
Petitioners failed to establish that the NLRC committed grave abuse of its
discretion amounting to excess or lack of jurisdiction in affirming the
findings of the Labor Arbiter that petitioners had indeed staged a strike.
Article 212(o) of the Labor Code defines strike as a temporary stoppage of
work by the concerted action of employees as a result of an industrial or
labor dispute. In Bangalisan v. Court of Appeals,31 the Court ruled that "the
fact that the conventional term strike was not used by the striking
employees to describe their common course of action is inconsequential,
since the substance of the situation, and not its appearance, will be deemed
to be controlling."32 The term "strike" encompasses not only concerted work
stoppages, but also slowdowns, mass leaves, sit-downs, attempts to damage,
destroy or sabotage plant equipment and facilities, and similar activities.33
Picketing involves merely the marching to and fro at the premises of the
employer, usually accompanied by the display of placards and other signs
making known the facts involved in a labor dispute.34 As applied to a labor
dispute, to picket means the stationing of one or more persons to observe
and attempt to observe. The purpose of pickets is said to be a means of
peaceable persuasion.35
A labor dispute includes any controversy or matter concerning terms or
conditions of employment or the association or representation of persons in

negotiating, fixing, maintaining, changing or arranging the terms and

conditions of employment, regardless of whether the disputants stand in the
proximate relation of employer and employee.36
That there was a labor dispute between the parties, in this case, is not an
issue. Petitioners notified the respondent of their intention to stage a strike,
and not merely to picket. Petitioners insistence to stage a strike is evident in
the fact that an amended notice to strike was filed even as respondent moved
to dismiss the first notice. The basic elements of a strike are present in this
case: 106 members of petitioner Union, whose respective applications for
leave of absence on September 21, 1999 were disapproved, opted not to
report for work on said date, and gathered in front of the company premises
to hold a mass protest action. Petitioners deliberately absented themselves
and instead wore red ribbons, carried placards with slogans such as: "YES
KAMI SA STRIKE," "PROTESTA KAMI," "SAHOD, KARAPATAN NG
MANGGAGAWA IPAGLABAN," "CBA-WAG BABOYIN," "STOP
UNION BUSTING." They marched to and fro in front of the companys
premises during working hours. Thus, petitioners engaged in a concerted
activity which already affected the companys operations. The mass
concerted activity constituted a strike.
The bare fact that petitioners were given a Mayors permit is not conclusive
evidence that their action/activity did not amount to a strike. The Mayors
description of what activities petitioners were allowed to conduct is
inconsequential. To repeat, what is definitive of whether the action staged by
petitioners is a strike and not merely a picket is the totality of the
circumstances surrounding the situation.
A strike is the most powerful of the economic weapons of workers which
they unsheathe to force management to agree to an equitable sharing of the
joint product of labor and capital. It is a weapon that can either breathe life
to or destroy the Union and its members in their struggle with management
for a more equitable due to their labors.37 The decision to declare a strike
must therefore rest on a rational basis, free from emotionalism, envisaged by
the tempers and tantrums of a few hot heads, and finally focused on the
legitimate interests of the Union which should not, however, be antithetical
to the public welfare, and, to be valid, a strike must be pursued within legal
bounds. The right to strike as a means of attainment of social justice is never
meant to oppress or destroy the employer.38

Since strikes cause disparity effects not only on the relationship between
labor and management but also on the general peace and progress of society,
the law has provided limitations on the right to strike. For a strike to be
valid, the following procedural requisites provided by Art. 263 of the Labor
Code must be observed: (a) a notice of strike filed with the DOLE 30 days
before the intended date thereof, or 15 days in case of unfair labor practice;
(b) strike vote approved by a majority of the total union membership in the
bargaining unit concerned obtained by secret ballot in a meeting called for
that purpose, (c) notice given to the DOLE of the results of the voting at
least seven days before the intended strike. These requirements are
mandatory and the failure of a union to comply therewith renders the strike
illegal.39 It is clear in this case that petitioners totally ignored the statutory
requirements and embarked on their illegal strike. We quote, with approval,
the ruling of the CA which affirmed the decisions of the NLRC and of the
Labor Arbiter:
Since it becomes undisputed that the mass action was indeed a strike, the
next issue is to determine whether the same was legal or not. Records reveal
that the said strike did not comply with the requirements of Article 263 (F)
in relation to Article 264 of the Labor Code, which specifically provides,
thus:
ART. 263. STRIKES, PICKETING, AND LOCKOUTS
xxx xxx xxx xxx
(f) A decision to declare a strike must be approved by a majority of the total
union membership in the bargaining unit concerned, obtained by secret
ballot in meetings or referenda called for that purpose. A decision to declare
a lockout must be approved by a majority of the board of directors of the
corporation or association or of the partners in a partnership, obtained by
secret ballot in a meeting called for that purpose. The decision shall be valid
for the duration of the dispute based on substantially the same grounds
considered when the strike or lockout vote was taken. The Ministry may at
its own initiative or upon the request of any affected party, supervise the
conduct of the secret balloting. In every case, the union or the employer shall
furnish the Ministry the results of the voting at least seven days before the
intended strike or lockout, subject to the cooling-off period herein provided.
ART. 264. PROHIBITED ACTIVITIES

(a) No labor organization or employer shall declare a strike or lockout

without first having bargained collectively in accordance with Title VII of
this Book or without first having filed the notice required in the preceding
article or without the necessary strike or lockout vote first having been
obtained and reported to the Ministry.
No strike or lockout shall be declared after assumption of jurisdiction by the
President or the Minister or after certification or submission of the dispute to
compulsory or voluntary arbitration or during the pendency of cases
involving the same grounds for the strike or lockout.
Any worker whose employment has been terminated as a consequence or an
unlawful lockout shall be entitled to reinstatement with full backwages. Any
union officer who knowingly participates in an illegal strike and any worker
or union officer who knowingly participates in the commission of illegal acts
during a strike may be declared to have lost his employment status:
Provided, That mere participation of a worker in a lawful strike shall not
constitute sufficient ground for termination of his employment, even if a
replacement had been hired by the employer during such lawful strike.
xxx xxx xxx xxx
Applying the aforecited mandatory requirements to the case at bench, the
Labor Arbiter found, thus:
In the present case, there is no evidence on record to show that respondents
had complied with the above mandatory requirements of law for a valid
strike. Particularly, there is no showing that respondents had observed the
prescribed cooling-off period, conducted a strike vote, much less submitted a
strike vote report to the Department of Labor within the required time. This
being the case, respondents strike on September 21, 1999 is illegal. In the
recent case of CCBPI Postmix Workers Union vs. NLRC, 2999 (sic) SCRA
410, the Supreme Court had said: "It bears stressing that the strike
requirements under Article 264 and 265 of the Labor Code are mandatory
requisites, without which, the strike will be considered illegal. The evidence
(sic) intention of the law in requiring the strike notice and strike-vote report
as mandatory requirements is to reasonably regulate the right to strike which
is essential to the attainment of legitimate policy objectives embodied in the
law. Verily, substantial compliance with a mandatory provision will not
suffice. Strict adherence to the mandate of the law is required.

Aside from the above infirmity, the strike staged by respondents was,
further, in violation of the CBA which stipulated under Section 1, Article VI,
thereof that,
SECTION 1. The UNION agrees that there shall be no strike, walkout,
stoppage or slowdown of work, boycott, secondary boycott, refusal to
handle any merchandise, picketing, sitdown strikes of any kind, sympathetic
or general strike, or any other interference with any of the operations of the
COMPANY during the term of this Agreement, so long as the grievance
procedure for which provision is made herein is followed by the
COMPANY.
Here, it is not disputed that respondents had not referred their issues to the
grievance machinery as a prior step. Instead, they chose to go on strike right
away, thereby bypassing the required grievance procedure dictated by the
CBA.40
On the second and third issues, the ruling of the CA affirming the decisions
of the NLRC and the Labor Arbiter ordering the dismissal of the petitionersofficers, directors and shop stewards of petitioner Union is correct.
It bears stressing, however, that the law makes a distinction between union
members and union officers. A worker merely participating in an illegal
strike may not be terminated from employment. It is only when he commits
illegal acts during a strike that he may be declared to have lost employment
status.41 For knowingly participating in an illegal strike or participates in the
commission of illegal acts during a strike, the law provides that a union
officer may be terminated from employment.42 The law grants the employer
the option of declaring a union officer who participated in an illegal strike as
having lost his employment. It possesses the right and prerogative to
terminate the union officers from service.43
We quote, with approval, the following ruling of the Court of Appeals:
As to the imposition of the penalty provided for should an illegal strike be
declared as such, We find no legal or factual reason to digress from the
following disquisition of the Labor Arbiter, to wit:
No doubt, the strike conducted by respondents on September 21, 1999 is
illegal. Under Article 264(a) of the Labor Code, it is stated that, Any union
officer who knowingly participates in the commission of illegal acts during a

strike may be declared to have lost his employment status. xxx. In the
present case, CCBPI had already promptly notified respondents and their
members of the disapproval of their leave. In fact, in the company notice (of
the disapproval of their leave), CCBPI emphasized that "operations will
come to a complete stop on September 21, 1999 if all the applications are
approved." They were further informed that, there are no sufficiently
trained contractual employees who can take over as replacements on that
day (Annexes "C," "C-1" to "C-18"). In other words, respondents had
known beforehand that their planned mass leave would definitely result in a
stoppage of the operations of the company for September 21, 1999. Still,
respondents knowingly and deliberately proceeded with their mass action,
unmindful of the ill effects thereof on the business operations of the
company. In the case of Association of Independent Unions in the
Philippines v. NLRC, 305 SCRA 219, the Supreme Court had ruled that,
Union officers are duty-bound to guide their members to respect the law. If
instead of doing so, the officers urge the members to violate the law and
defy the duly constituted authorities, their dismissal from the service is just
penalty or sanction for their unlawful acts. The officers responsibility is
greater than that of the members.
Here, the law required respondents to follow a set of mandatory procedures
before they could go on with their strike. But obviously, rather than call on
their members to comply therewith, respondents were the first ones to
violate the same.44
Petitioners cannot find solace in the Order of the Secretary of Labor and
Employment (SOLE) in OS-A-J-0033-99, NCMB-RB 111-NS-10-44-99 and
11-51-99 involving the labor dispute between the Company and the Union
therein (the Ilaw at Buklod ng Manggagawa Local No. 1, representing the
daily paid rank and file members of the respondent, as well as the plantbased route helpers and drivers at its San Fernando Plant). In said case, the
SOLE found that the simultaneous walkout staged on October 7 and 8, 1999
was indeed a mass action, initiated by the Union leaders. The acts of the
Union leaders were, however, found to be illegal which warranted their
dismissal, were it not for the presence of mitigating factors,
i.e., the walkout was staged in support of their leaders in the course of the
CBA negotiation which was pending for more than nine (9) months; the
Plant was not fully disrupted as the Company was able to operate despite the

severe action of the Union members, with the employment of casual and
contractual workers; the Union had complied with the requirements of a
strike and refrained from staging an actual strike.45
Neither can the petitioners find refuge in the rulings of this Court in Panay
Electric Company v. NLRC46 or in Lapanday Workers Union v. NLRC.47 In
the Panay case, the Court meted the suspension of the union officers, instead
of terminating their employment status since the NLRC found no sufficient
proof of bad faith on the part of the union officers who took part in the strike
to protest the dismissal of their fellow worker, Enrique Huyan which was
found to be illegal. In Lapanday, the Court actually affirmed the dismissal of
the union officers who could not claim good faith to exculpate themselves.
The officers, in fact, admitted knowledge of the law on strike, including its
procedure in conducting the same. The Court held that the officers cannot
violate the law which was designed to promote their interests.
Finally, the contention of petitioners Elenette Moises, Almira Romo, Louie
Labayani, Ricky Ganarial, Efren Galan and Jun Carmelito Santos who were
appointed as shop stewards of the Union that they were mere members and
not the officers of petitioner Union is barren of merit.
We agree with the observation of respondent that under Section 501(a) and
(b) of the Landrum Griffin Act of 1959,48 shop stewards are officers of the
Union:
Sec. 501 (a) The officers, agents, shop stewards, and other representatives of
a labor organization occupy positions of trust in relation to such organization
and its members as a group. It is, therefore, the duty of each such person,
taking into account the special problems and functions of a labor
organization, to hold its money and property solely for the benefit of the
organization and its members and to manage, invest, and expend the same in
accordance with its constitution and bylaws and any resolutions of the
governing bodies adopted thereunder, to refrain from dealing with such
organization as an adverse party in any matter connected with his duties and
from holding or acquiring any pecuniary or personal interest which conflicts
with the interest of such organization, and to account to the organization for
any profit received by him in whatever capacity in connection with
transactions conducted by him or under his direction on behalf of the
organization. A general exculpatory resolution of a governing body

purporting to relieve any such person of liability for breach of the duties
declared by this section shall be void as against public policy.
(b) When any officer, agent, shop steward, or representative of any labor
organization is alleged to have violated the duties declared in subsection (a)
of this section and the labor organization or its governing board or officers
refuse or fail to sue or recover damages or secure an accounting or other
appropriate relief within a reasonable time after being requested to do so by
any member of the labor organization, such member may sue such officer,
agent, shop steward, or representative in any district court of the United
States or in any State court of competent jurisdiction to recover damages or
secure an accounting or other appropriate relief for the benefit of the labor
organization.49
Under said Act, Section 3(q) thereof provides, as follows:
(q) "Officer, agent, shop steward, or other representative", when used with
respect to a labor organization, includes elected officials and key
administrative personnel, whether elected or appointed (such as business
agents, heads of departments or major units, and organizers who exercise
substantial independent authority), but does not include salaried nonsupervisory professional staff, stenographic, and service personnel.50
Admittedly, there is no similar provision in the Labor Code of the
Philippines; nonetheless, petitioners who are shop stewards are considered
union officers.
Officers normally mean those who hold defined offices. An officer is any
person occupying a position identified as an office. An office may be
provided in the constitution of a labor union or by the union itself in its CBA
with the employer. An office is a word of familiar usage and should be
construed according to the sense of the thing.51
Irrefragably, under its Constitution and By-Laws, petitioner Union has
principal officers and subordinate officers, who are either elected by its
members, or appointed by its president, including the standing committees
each to be headed by a member of the Board of Directors. Thus, under
Section 1, Article VI of petitioner Unions Constitution and By-Laws, the
principal officers and other officers, as well as their functions/duties and
terms of office, are as follows:

ARTICLE VI
PRINCIPAL OFFICERS
SECTION 1. The governing body of the UNION shall be the following
officers who shall be elected through secret ballot by the general
membership:
President

Auditor

Vice-President two (2)

Public Relations Officer

Secretary

Sergeant-at-Arms

Treasurer

Board of Directors nine (9)

SECTION 2. The above officers shall administer Unions affairs, formulate

policies and implement programs to effectively carry out the objectives of
the UNION and the Labor Code of the Philippines and manage all the
monies and property of the UNION.
SECTION 3. The officers of the UNION and the members of the Board of
Directors shall hold office for a period of five (5) years from the date of their
election until their successors shall have been duly elected and qualified;
provided that they remain members of the UNION in good standing.52
Section 6, Article II of the CBA of petitioner Union and respondent defines
the position of shop steward, thus:
SECTION 6. Shop Stewards. The UNION shall certify a total of eight (8)
shop stewards and shall inform management of the distribution of these
stewards among the departments concerned.1avvphi1.net
Shop Stewards, union officers and members or employees shall not lose pay
for attending Union-Management Labor dialogues, investigations and
grievance meetings with management.53
Section 6, Rule XIX of the Implementing Rules of Book V of the Labor
Code mentions the functions and duties of shop stewards, as follows:

Section 2. Procedures in handling grievances. In the absence of a specific

provision in the collective bargaining agreement prescribing for the
procedures in handling grievance, the following shall apply:
(a) An employee shall present this grievance or complaint orally or in
writing to the shop steward. Upon receipt thereof, the shop steward
shall verify the facts and determine whether or not the grievance is
valid.
(b) If the grievance is valid, the shop steward shall immediately bring
the complaint to the employees immediate supervisor. The shop
steward, the employee and his immediate supervisor shall exert efforts
to settle the grievance at their level.
(c) If no settlement is reached, the grievance shall be referred to the
grievance committee which shall have ten (10) days to decide the
case.
Where the issue involves or arises from the interpretation or implementation
of a provision in the collective bargaining agreement, or from any order,
memorandum, circular or assignment issued by the appropriate authority in
the establishment, and such issue cannot be resolved at the level of the shop
steward or the supervisor, the same may be referred immediately to the
grievance committee.
All grievance unsettled or unresolved within seven (7) calendar days from
the date of its submission to the last step in the grievance machinery shall
automatically be referred to a voluntary arbitrator chosen in accordance with
the provisions of the collective bargaining agreement, or in the absence of
such provisions, by mutual agreement of the parties.54
Thus, a shop steward is appointed by the Union in a shop, department, or
plant serves as representative of the Union, charged with negotiating and
adjustment of grievances of employees with the supervisor of the
employer.55 He is the representative of the Union members in a building or
other workplace. Blacks Law Dictionary defines a shop steward as a union
official who represents members in a particular department. His duties
include the conduct of initial negotiations for settlement of grievances.56 He
is to help other members when they have concerns with the employer or
other work-related issues. He is the first person that workers turn to for

assistance or information. If someone has a problem at work, the steward

will help them sort it out or, if necessary, help them file a complaint.57 In the
performance of his duties, he has to take cognizance of and resolve, in the
first instance, the grievances of the members of the Union. He is empowered
to decide for himself whether the grievance or complaint of a member of the
petitioner Union is valid, and if valid, to resolve the same with the
supervisor failing which, the matter would be elevated to the Grievance
Committee.
It is quite clear that the jurisdiction of shop stewards and the supervisors
includes the determination of the issues arising from the interpretation or
even implementation of a provision of the CBA, or from any order or
memorandum, circular or assignments issued by the appropriate authority in
the establishment.1awphi1.net In fine, they are part and parcel of the
continuous process of grievance resolution designed to preserve and
maintain peace among the employees and their employer. They occupy
positions of trust and laden with awesome responsibilities.
In this case, instead of playing the role of "peacemakers" and grievance
solvers, the petitioners-shop stewards participated in the strike. Thus, like
the officers and directors of petitioner Union who joined the strike,
petitioners-shop stewards also deserve the penalty of dismissal from their
employment.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of
merit. The Decision of the Court of Appeals is AFFIRMED. No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION
G.R. Nos. 158786 &158789

Present:
QUISUMBING, J., Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.

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- versus -

G.R. Nos. 158798-99

Promulgated:
October 19, 2007

N
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x-----------------------------------------------x
TOYOTA MOTOR PHILIPPINES
CORPORATION,
Petitioner,
- versus T
O
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(
T
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P
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W
A
)
,
Respondent.
x-----------------------------------------------------------------------------------------x
DECISION
VELASCO, JR., J.:

The Case
In the instant petition under Rule 45 subject of G.R. Nos. 158786 and
158789, Toyota Motor Philippines Corporation Workers Association (Union)
and its dismissed officers and members seek to set aside the February 27,
2003 Decision[1] of the Court of Appeals (CA) in CA-G.R. SP Nos. 67100
and 67561, which affirmed the August 9, 2001 Decision[2] and September 14,
2001 Resolution[3] of the National Labor Relations Commission (NLRC),
declaring illegal the strikes staged by the Union and upholding the dismissal
of the 227 Union officers and members.
On the other hand, in the related cases docketed as G.R. Nos. 158798-99,
Toyota Motor Philippines Corporation (Toyota) prays for the recall of the
award of severance compensation to the 227 dismissed employees, which
was granted under the June 20, 2003 CA Resolution [4] in CA-G.R. SP Nos.
67100 and 67561.
In view of the fact that the parties are petitioner/s and respondent/s and viceversa in the four (4) interrelated cases, they will be referred to as simply
the Unionand Toyota hereafter.
The Facts
The Union is a legitimate labor organization duly registered with the
Department of Labor and Employment (DOLE) and is the sole and exclusive
bargaining agent of all Toyota rank and file employees.[5]
Toyota, on the other hand, is a domestic corporation engaged in the
assembly and sale of vehicles and parts. [6] It is a Board of Investments (BOI)
participant in the Car Development Program and the Commercial Vehicle
Development Program. It is likewise a BOI-preferred non-pioneer export
trader of automotive parts and is under the Special Economic Zone Act of
1995. It is one of the largest motor vehicle manufacturers in the country
employing around 1,400 workers for its plants in Bicutan and Sta. Rosa,
Laguna. It is claimed that its assets amount to PhP 5.525 billion, with net

sales of PhP 14.646 billion and provisions for income tax of PhP 120.9
million.
On February 14, 1999, the Union filed a petition for certification election
among the Toyota rank and file employees with the National Conciliation
and Mediation Board (NCMB), which was docketed as Case No. NCR-ODM-9902-001. Med-Arbiter Ma. Zosima C. Lameyra denied the petition, but,
on appeal, the DOLE Secretary granted the Unions prayer, and, through the
June 25, 1999 Order, directed the immediate holding of the certification
election.[7]
After Toyotas plea for reconsideration was denied, the certification election
was conducted. Med-Arbiter Lameyras May 12, 2000 Order certified
the Union as the sole and exclusive bargaining agent of all the Toyota rank
and file employees. Toyota challenged said Order via an appeal to the DOLE
Secretary.[8]
In the meantime, the Union submitted its Collective Bargaining Agreement
(CBA) proposals to Toyota, but the latter refused to negotiate in view of its
pending appeal. Consequently, the Union filed a notice of strike on January
16, 2001 with the NCMB, docketed as NCMB-NCR-NS-01-011-01, based
on Toyotas refusal to bargain. On February 5, 2001, the NCMB-NCR
converted the notice of strike into a preventive mediation case on the ground
that the issue of whether or not the Union is the exclusive bargaining agent
of all Toyota rank and file employees was still unresolved by the DOLE
Secretary.
In connection with Toyotas appeal, Toyota and the Union were required to
attend a hearing on February 21, 2001 before the Bureau of Labor Relations
(BLR) in relation to the exclusion of the votes of alleged supervisory
employees from the votes cast during the certification election. The February
21, 2001 hearing was cancelled and reset to February 22, 2001. On February
21, 2001, 135 Union officers and members failed to render the required
overtime work, and instead marched to and staged a picket in front of the
BLR office in Intramuros, Manila.[9] The Union, in a letter of the same date,
also requested that its members be allowed to be absent on February 22,

2001 to attend the hearing and instead work on their next scheduled rest day.
This request however was denied by Toyota.
Despite denial of the Unions request, more than 200 employees staged mass
actions on February 22 and 23, 2001 in front of the BLR and the DOLE
offices, to protest the partisan and anti-union stance of Toyota. Due to the
deliberate absence of a considerable number of employees on February 22 to
23, 2001, Toyotaexperienced acute lack of manpower in its manufacturing
and production lines, and was unable to meet its production goals resulting
in huge losses of PhP 53,849,991.
Soon thereafter, on February 27, 2001, Toyota sent individual letters to some
360 employees requiring them to explain within 24 hours why they should
not be dismissed for their obstinate defiance of the companys directive to
render overtime work on February 21, 2001, for their failure to report for
work on February 22 and 23, 2001, and for their participation in the
concerted actions which severely disrupted and paralyzed the plants
operations.[10] These letters specifically cited Section D, paragraph 6 of the
Companys Code of Conduct, to wit:
Inciting or participating in riots, disorders, alleged strikes, or
concerted actions detrimental to [Toyotas] interest.
1st offense dismissal.[11]

Meanwhile, a February 27, 2001 Manifesto was circulated by

the Union which urged its members to participate in a strike/picket and to
abandon their posts, the pertinent portion of which reads, as follows:
YANIG
sa
kanyang
komportableng
upuan
ang management ng TOYOTA. And dating takot, kimi, at
mahiyaing manggagawa ay walang takot na nagmartsa at
nagprotesta laban sa desperadong pagtatangkang baguhin ang
desisyon ng DOLE na pabor sa UNYON. Sa tatlong araw na
protesta, mahigit sa tatlong daang manggagawa ang lumahok.

xxxx
HANDA na tayong lumabas anumang oras kung
patuloy na ipagkakait ng management ang CBA. Oo maari
tayong masaktan sa welga. Oo, maari tayong magutom sa
piketlayn. Subalit may pagkakaiba ba ito sa unti-unting
pagpatay sa atin sa loob ng 12 taong makabaling likod ng
pagtatrabaho? Ilang taon na lang ay magkakabutas na ang
ating mga baga sa mga alipato at usok ng welding. Ilang taon
na lang ay marupok na ang ating mga buto sa kabubuhat. Kung
dumating na ang panahong ito at wala pa tayong CBA, paano
na? Hahayaan ba nating ang kumpanya lang ang makinabang
sa yamang likha ng higit sa isang dekadang pagpapagal natin?
HUWAG BIBITIW SA NASIMULANG TAGUMPAY!
PAIGTINGIN ANG PAKIKIBAKA PARA SA ISANG
MAKATARUNGANG CBA!
HIGIT PANG PATATAGIN ANG PAGKAKAISA NG MGA
MANGGAGAWA SA TOYOTA![12] (Emphasis supplied.)
On the next day, the Union filed with the NCMB another notice of
strike docketed as NCMB-NCR-NS-02-061-01 for union busting amounting
to unfair labor practice.
On March 1, 2001, the Union nonetheless submitted an explanation in
compliance with the February 27, 2001 notices sent by Toyota to the erring
employees. The Union members explained that their refusal to work on their
scheduled work time for two consecutive days was simply an exercise of
their constitutional right to peaceably assemble and to petition the
government for redress of grievances. It further argued that the
demonstrations staged by the employees on February 22 and 23, 2001 could
not be classified as an illegal strike or picket, and that Toyota had already
condoned the alleged acts when it accepted back the subject employees.[13]
Consequently, on March 2 and 5, 2001, Toyota issued two (2) memoranda to
the concerned employees to clarify whether or not they are adopting the
March 1, 2001 Unions explanation as their own. The employees were also
required to attend an investigative interview,[14] but they refused to do so.

On March 16, 2001, Toyota terminated the employment of 227

employees[15] for participation in concerted actions in violation of its Code of
Conduct and for misconduct under Article 282 of the Labor Code. The
notice of termination reads:
After a careful evaluation of the evidence on hand, and a
thorough assessment of your explanation, TMP has concluded
that there are overwhelming reasons to terminate your services
based on Article 282 of the Labor Code and TMPs Code of
Conduct.
Your repeated absences without permission on February
22 to 23, 2001 to participate in a concerted action against TMP
constitute abandonment of work and/or very serious misconduct
under Article 282 of the Labor Code.
The degree of your offense is aggravated by the
following circumstances:
1.

You expressed to management that you will adopt

the unions letter dated March 1, 2001, as your own
explanation to the charges contained in the Due Process
Form dated February 27, 2001. It is evident from such
explanation that you did not come to work because you
deliberately participated together with other Team
Members in a plan to engage in concerted actions
detrimental to TMPs interest. As a result of your
participation in the widespread abandonment of work by
Team Members from February 22 to 23, 2001, TMP
suffered substantial damage.
It is significant that the absences you incurred in order to
attend the clarificatory hearing conducted by the Bureau
of Labor Relations were unnecessary because the union
was amply represented in the said hearings by its counsel
and certain members who sought and were granted leave
for the purpose. Your reason for being absent is,
therefore, not acceptable; and

2.

Your participation in the organized work boycott

by Team Members on February 22 and 23 led to work
disruptions that prevented the Company from meeting its
production targets, resulting [in] foregone sales of more
than eighty (80) vehicles, mostly new-model Revos,
valued at more than Fifty Million Pesos (50,000,000.00).

The foregoing is also a violation of TMPs Code of Conduct

(Section D, Paragraph 6) to wit:
Inciting or participating in riots, disorders, illegal strikes
or concerted actions detrimental to TMPs interest.
Based on the above, TMP Management is left with no
other recourse but to terminate your employment effective upon
your receipt thereof.
[Sgd.]
JOSE MARIA ALIGADA
Deputy Division Manager[16]
In reaction to the dismissal of its union members and officers,
the Union went on strike on March 17, 2001. Subsequently, from March 28,
2001 to April 12, 2001, the Union intensified its strike by barricading the
gates of Toyotas Bicutan and Sta. Rosa plants. The strikers prevented
workers who reported for work from entering the plants. In his Affidavit, Mr.
Eduardo Nicolas III, Security Department Head, stated that:
3. On March 17, 2001, members of the Toyota Motor
Philippines Corporation Workers Association (TMPCWA), in
response to the dismissal of some two hundred twenty seven
(227) leaders and members of TMPCWA and without observing
the requirements mandated by the Labor Code, refused to report
for work and picketed TMPC premises from 8:00 a.m. to 5:00
p.m. The strikers badmouthed people coming in and hurled
invectives such as bakeru at Japanese officers of the company.
The strikers likewise pounded the officers vehicle as they tried
to enter the premises of the company.

4. On March 28, 2001, the strikers intensified their

picketing and barricaded the gates of TMPCs Bicutan and Sta.
Rosa plants, thus, blocking the free ingress/egress to and from
the premises. Shuttle buses and cars containing TMPC
employees, suppliers, dealers, customers and other people
having business with the company, were prevented by the
strikers from entering the plants.
5. As a standard operating procedure, I instructed my
men to take photographs and video footages of those who
participated in the strike. Seen on video footages taken on
various dates actively participating in the strike were union
officers Emilio C. Completo, Alexander Esteva, Joey Javellonar
and Lorenzo Caraqueo.
6. Based on the pictures, among those identified to have
participated in the March 28, 2001 strike were Grant Robert
Toral, John Posadas, Alex Sierra, Allan John Malabanan, Abel
Bersos, Ernesto Bonavente, Ariel Garcia, Pablito Adaya,
Feliciano Mercado, Charlie Oliveria, Philip Roxas, June
Lamberte, Manjolito Puno, Baldwin San Pablo, Joseph Naguit,
Federico Torres, Larry Gerola, Roderick Bayani, Allan
Oclarino, Reynaldo Cuevas, Jorge Polutan, Arman Ercillo,
Jimmy Hembra, Albert Mariquit, Ramil Gecale, Jimmy Palisoc,
Normandy Castalone, Joey Llanera, Greg Castro, Felicisimo
Escrimadora, Rodolfo Bay, Ramon Clemente, Dante Baclino,
Allan Palomares, Arturo Murillo and Robert Gonzales.
Attached hereto as Annexes 1 to 18 are the pictures taken
on March 28, 2001 at the Bicutan and Sta. Rosa plants.
7. From March 29 to 31, 2001, the strikers continued to
barricade the entrances to TMPCs two (2) plants. Once again,
the strikers hurled nasty remarks and prevented employees
aboard shuttle buses from entering the plants. Among the
strikers were Christopher Saldivar, Basilio Laqui, Sabas
Bernabise, Federico Torres, Freddie Olit, Josel Agosto, Arthur
Parilla, Richard Calalang, Ariel Garcia, Edgar Hilaga, Charlie
Oliveria, Ferdinand Jaen, Wilfredo Tagle, Alejandro Imperial,
Manjolito Puno, Delmar Espadilla, Domingo Javier, Apollo
Violeta and Elvis Tabinao.[17]

On March 29, 2001, Toyota filed a petition for injunction with a prayer for
the issuance of a temporary restraining order (TRO) with the NLRC, which
was docketed as NLRC NCR Case No. INJ-0001054-01. It sought free
ingress to and egress from its Bicutan and Sta. Rosa manufacturing
plants. Acting on said petition, the NLRC, on April 5, 2001, issued a TRO
against the Union, ordering its leaders and members as well as its
sympathizers to remove their barricades and all forms of obstruction to
ensure free ingress to and egress from the companys premises. In addition,
the NLRC rejected the Unions motion to dismiss based on lack of
jurisdiction.[18]
Meanwhile, Toyota filed a petition to declare the strike illegal with the
NLRC arbitration branch, which was docketed as NLRC NCR (South) Case
No. 30-04-01775-01, and prayed that the erring Union officers, directors,
and members be dismissed.[19]
On April 10, 2001, the DOLE Secretary assumed jurisdiction over the labor
dispute and issued an Order[20] certifying the labor dispute to the NLRC. In
said Order, the DOLE Secretary directed all striking workers to return to
work at their regular shifts by April 16, 2001. On the other hand, it
ordered Toyota to accept the returning employees under the same terms and
conditions obtaining prior to the strike or at its option, put them under
payroll reinstatement. The parties were also enjoined from committing acts
that may worsen the situation.
The Union ended the strike on April 12, 2001. The union members and
officers tried to return to work on April 16, 2001 but were told
that Toyota opted for payroll-reinstatement authorized by the Order of the
DOLE Secretary.
In the meantime, the Union filed a motion for reconsideration of the DOLE
Secretarys April 10, 2001 certification Order, which, however, was denied
by the DOLE Secretary in her May 25, 2001 Resolution. Consequently, a

petition for certiorari was filed before the CA, which was docketed as CAG.R. SP No. 64998.
In the intervening time, the NLRC, in compliance with the April 10,
2001 Order of the DOLE Secretary, docketed the case as Certified Case No.
000203-01.
Meanwhile, on May 23, 2001, at around 12:00 nn., despite the issuance of
the DOLE Secretarys certification Order, several payroll-reinstated members
of the Union staged a protest rally in front of Toyotas Bicutan Plant bearing
placards and streamers in defiance of the April 10, 2001 Order.
Then, on May 28, 2001, around forty-four (44) Union members staged
another protest action in front of the Bicutan Plant. At the same time, some
twenty-nine (29) payroll-reinstated employees picketed in front of the Santa
Rosa Plants main entrance, and were later joined by other Union members.
On June 5, 2001, notwithstanding the certification Order, the Union filed
another notice of strike, which was docketed as NCMB-NCR-NS-06-15001. On June 18, 2001, the DOLE Secretary directed the second notice of
strike to be subsumed in the April 10, 2001 certification Order.
In the meantime, the NLRC, in Certified Case No. 000203-01, ordered both
parties to submit their respective position papers on June 8, 2001. The union,
however, requested for abeyance of the proceedings considering that there is
a pending petition for certiorari with the CA assailing the validity of the
DOLE Secretarys Assumption of Jurisdiction Order.
Thereafter, on June 19, 2001, the NLRC issued an Order, reiterating its
previous order for both parties to submit their respective position papers on
or before June 2, 2001. The same Order also denied the Unions verbal
motion to defer hearing on the certified cases.
On June 27, 2001, the Union filed a Motion for Reconsideration of the
NLRCs June 19, 2001 Order, praying for the deferment of the submission of
position papers until its petition for certiorari is resolved by the CA.

On June 29, 2001, only Toyota submitted its position paper. On July
11, 2001, the NLRC again ordered the Union to submit its position paper
by July 19, 2001, with a warning that upon failure for it to do so, the case
shall be considered submitted for decision.
Meanwhile, on July 17, 2001, the CA dismissed the Unions petition
for certiorari in CA-G.R. SP No. 64998, assailing the DOLE Secretarys
April 10, 2001 Order.
Notwithstanding repeated orders to file its position paper, the Union still
failed to submit its position paper on July 19, 2001. Consequently, the
NLRC issued an Order directing the Union to submit its position paper on
the scheduled August 3, 2001 hearing; otherwise, the case shall be deemed
submitted for resolution based on the evidence on record.
During the August 3, 2001 hearing, the Union, despite several
accommodations, still failed to submit its position paper. Later that day,
the Union claimed it filed its position paper by registered mail.
Subsequently, the NLRC, in its August 9, 2001 Decision, declared the strikes
staged by the Union on February 21 to 23, 2001 and May 23 and 28, 2001 as
illegal. The decretal portion reads:

WHEREFORE, premises considered, it is hereby ordered:

(1) Declaring the strikes staged by the Union to be illegal.
(2)
Declared [sic] that the dismissal of the 227 who
participated in the illegal strike on February 21-23, 2001 is
legal.
(3) However, the Company is ordered to pay the 227 Union
members, who participated in the illegal strike severance
compensation in an amount equivalent to one month salary for

every year of service, as an alternative relief to continued

employment.
(4) Declared [sic] that the following Union officers and
directors to have forfeited their employment status for having
led the illegal strikes on February 21-23, 2001 and May 23 and
28, 2001: Ed Cubelo, Maximino Cruz, Jr., Ricky Chavez,
Joselito Hugo, Virgilio Colandog, Rommel Digma, Federico
Torres, Emilio Completo, Alexander Esteva, Joey
Javellonar, Lorenzo Caraqueo, Roderick Nieres, Antonio
Borsigue, Bayani Manguil, Jr., and Mayo Mata.[21]
SO ORDERED.[22]

The NLRC considered the mass actions staged on February 21 to 23,

2001 illegal as the Union failed to comply with the procedural requirements
of a valid strike under Art. 263 of the Labor Code.
After the DOLE Secretary assumed jurisdiction over the Toyota dispute
on April 10, 2001, the Union again staged strikes on May 23 and 28,
2001. The NLRC found the strikes illegal as they violated Art. 264 of the
Labor Code which proscribes any strike or lockout after jurisdiction is
assumed over the dispute by the President or the DOLE Secretary.
The NLRC held that both parties must have maintained the status quo
after the DOLE Secretary issued the assumption/certification Order, and
ruled that the Union did not respect the DOLE Secretarys directive.
Accordingly, both Toyota and
the Union filed
Motions
for
Reconsideration, which the NLRC denied in its September 14,
2001 Resolution.[23]Consequently, both parties questioned the August 9, 2001
Decision[24] and September 14, 2001 Resolution of the NLRC in separate
petitions for certiorari filed with the CA, which were docketed as CA-G.R.

SP Nos. 67100 and 67561, respectively. The CA then consolidated the

petitions.
In its February 27, 2003 Decision,[25] the CA ruled that the Unions
petition is defective in form for its failure to append a proper verification and
certificate of non-forum shopping, given that, out of the 227 petitioners, only
159 signed the verification and certificate of non-forum shopping. Despite
the flaw, the CA proceeded to resolve the petitions on the merits and
affirmed the assailed NLRC Decision and Resolution with a modification,
however, of deleting the award of severance compensation to the dismissed
Union members.
In justifying the recall of the severance compensation, the CA
considered the participation in illegal strikes as serious misconduct. It
defined seriousmisconduct as a transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in
character, and implies wrongful intent and not mere error in judgment. It
cited Panay Electric Company, Inc. v. NLRC,[26] where we revoked the grant
of separation benefits to employees who lawfully participated in an illegal
strike based on Art. 264 of the Labor Code, which states that any union
officer who knowingly participates in an illegal strike and any worker or
union officer who knowingly participates in the commission of illegal acts
during a strike may be declared to have lost his employment status.[27]
However, in its June 20, 2003 Resolution,[28] the CA modified
its February 27, 2003 Decision by reinstating severance compensation to the
dismissed employees based on social justice.
The Issues

Petitioner Union now comes to this Court and raises the following
issues for our consideration:
I.

Whether the mere participation of ordinary

employees in an illegal strike is enough reason to warrant
their dismissal.

II.

Whether the Union officers and members act of

holding the protest rallies in front of the BLR office and
the Office of the Secretary of Labor and Employment on
February 22 and 23, 2001 should be held as illegal
strikes. In relation hereto, whether the protests committed
on May 23 and 28, 2001, should be held as illegal strikes.
Lastly, whether the Union violated the Assumption of
Jurisdiction Order issued by the Secretary of Labor and
Employment.

III.

Whether the dismissal of 227 Union officers and

members constitutes unfair labor practice.

IV.

Whether the CA erred in affirming the Decision of

the NLRC which excluded the Unions Position Paper
which the Union filed by mail. In the same vein, whether
the Unions right to due process was violated when the
NLRC excluded their Position Paper.

V.

Whether the CA erred in dismissing the Unions

Petition for Certiorari.

Toyota, on the other hand, presents this sole issue for our
determination:
I.

Whether the Court of Appeals erred in issuing its

Resolution dated June 20, 2003, partially modifying its
Decision dated February 27, 2003, and awarding
severance compensation to the dismissed Union
members.

In sum, two main issues are brought to the fore:

(1) Whether the mass actions committed by the Union on different
occasions are illegal strikes; and
(2) Whether separation pay should be awarded to the Union members
who participated in the illegal strikes.
The Courts Ruling

The Union contends that the NLRC violated its right to due process when it
disregarded its position paper in deciding Toyotas petition to declare the
strike illegal.
We rule otherwise.
It is entirely the Unions fault that its position paper was not considered by
the NLRC. Records readily reveal that the NLRC was even too generous in
affording due process to the Union. It issued no less than three (3) orders for
the parties to submit its position papers, which the Union ignored until the
last minute. No sufficient justification was offered why the Union belatedly
filed its position paper. In Datu Eduardo Ampo v. The Hon. Court of
Appeals, it was explained that a party cannot complain of deprivation of due
process if he was afforded an opportunity to participate in the proceedings
but failed to do so. If he does not avail himself of the chance to be heard,
then it is deemed waived or forfeited without violating the constitutional
guarantee.[29] Thus, there was no violation of theUnions right to due process
on the part of the NLRC.

On a procedural aspect, the Union faults the CA for treating its petition as an
unsigned pleading and posits that the verification signed by 159 out of the
227 petitioners has already substantially complied with and satisfied the
requirements under Secs. 4 and 5 of Rule 7 of the Rules of Court.
The Unions proposition is partly correct.
Sec. 4 of Rule 7 of the Rules of Court states:
Sec. 4. Verification.Except when otherwise specifically required
by law or rule, pleadings need not be under oath, verified or
accompanied by affidavit.
A pleading is verified by an affidavit that the affiant has read
the pleading and that the allegations therein are true and correct
of his personal knowledge or based on authentic records.
A pleading required to be verified which contains a verification
based on information and belief or upon knowledge,
information and belief, or lacks a proper verification, shall be
treated as an unsigned pleading.

The verification requirement is significant, as it is intended to secure an

assurance that the allegations in the pleading are true and correct and not the
product of the imagination or a matter of speculation. [30] This requirement is
simply a condition affecting the form of pleadings, and noncompliance with
the requirement does not necessarily render it fatally defective. Indeed,
verification is only a formal and not a jurisdictional requirement.[31]
In this case, the problem is not the absence but the adequacy of the Unions
verification, since only 159 out of the 227 petitioners executed the
verification. Undeniably, the petition meets the requirement on the
verification with respect to the 159 petitioners who executed the verification,

attesting that they have sufficient knowledge of the truth and correctness of
the allegations of the petition. However, their signatures cannot be
considered as verification of the petition by the other 68 named petitioners
unless the latter gave written authorization to the 159 petitioners to sign the
verification on their behalf. Thus, in Loquias v. Office of the
Ombudsman, we ruled that the petition satisfies the formal requirements
only with regard to the petitioner who signed the petition but not his copetitioner who did not sign nor authorize the other petitioner to sign it on his
behalf.[32] The proper ruling in this situation is to consider the petition as
compliant with the formal requirements with respect to the parties who
signed it and, therefore, can be given due course only with regard to
them. The other petitioners who did not sign the verification and certificate
against forum shopping cannot be recognized as petitioners have no legal
standing before the Court. The petition should be dismissed outright with
respect to the non-conforming petitioners.
In the case at bench, however, the CA, in the exercise of sound discretion,
did not strictly apply the ruling in Loquias and instead proceeded to decide
the case on the merits.
The alleged protest rallies in front of the offices of BLR and DOLE
Secretary and at the Toyota plants constituted illegal strikes

When is a strike illegal?

Noted authority on labor law, Ludwig Teller, lists six (6) categories of
an illegal strike, viz:
(1) [when it] is contrary to a specific prohibition of law,
such as strike by employees performing governmental
functions; or

(2) [when it] violates a specific requirement of law[, such

as Article 263 of the Labor Code on the requisites of a valid
strike]; or
(3) [when it] is declared for an unlawful purpose, such as
inducing the employer to commit an unfair labor practice
against non-union employees; or
(4) [when it] employs unlawful means in the pursuit of its
objective, such as a widespread terrorism of non-strikers [for
example, prohibited acts under Art. 264(e) of the Labor Code];
or
(5) [when it] is declared in violation of an
existing injunction[, such as injunction, prohibition, or order
issued by the DOLE Secretary and the NLRC under Art. 263 of
the Labor Code]; or
(6) [when it] is contrary to an existing agreement, such as
a no-strike clause or conclusive arbitration clause.[33]
Petitioner Union contends that the protests or rallies conducted on
February 21 and 23, 2001 are not within the ambit of strikes as defined in
the Labor Code, since they were legitimate exercises of their right to
peaceably assemble and petition the government for redress of grievances.
Mainly relying on the doctrine laid down in the case of Philippine Blooming
Mills Employees Organization v. Philippine Blooming Mills Co., Inc.,[34] it
argues that the protest was not directed at Toyota but towards the
Government (DOLE and BLR). It explains that the protest is not a strike as
contemplated in the Labor Code. The Union points out that in Philippine
Blooming Mills Employees Organization, the mass action staged in
Malacaang to petition the Chief Executive against the abusive behavior of
some police officers was a proper exercise of the employees right to speak

out and to peaceably gather and ask government for redress of their
grievances.
The Unions position fails to convince us.
While the facts in Philippine Blooming Mills Employees
Organization are similar in some respects to that of the present case,
the Union fails to realize one major difference: there was no labor dispute
in Philippine Blooming Mills Employees Organization. In the present case,
there was an on-going labor dispute arising from Toyotas refusal to
recognize and negotiate with the Union, which was the subject of the notice
of strike filed by the Union on January 16, 2001.Thus, the Unions reliance
on Phililippine Blooming Mills Employees Organization is misplaced, as it
cannot be considered a precedent to the case at bar.
A strike means any temporary stoppage of work by the concerted
action of employees as a result of an industrial or labor dispute. A labor
dispute, in turn, includes any controversy or matter concerning terms or
conditions of employment or the association or representation of persons in
negotiating, fixing, maintaining, changing, or arranging the terms and
conditions of employment, regardless of whether the disputants stand in the
proximate relation of the employer and the employee.[35]
In Bangalisan v. Court of Appeals, it was explained that [t]he fact that the
conventional term strike was not used by the striking employees to describe
their common course of action is inconsequential, since the substance of the
situation and not its appearance, will be deemed controlling.[36] The term
strike has been elucidated to encompass not only concerted work stoppages,
but also slowdowns, mass leaves, sit-downs, attempts to damage, destroy, or
sabotage plant equipment and facilities, and similar activities.[37]

Applying pertinent legal provisions and jurisprudence, we rule that the

protest actions undertaken by the Union officials and members on February
21 to 23, 2001are not valid and proper exercises of their right to assemble
and ask government for redress of their complaints, but are illegal strikes in
breach of the Labor Code. The Unions position is weakened by the lack of
permit from the City of Manila to hold rallies. Shrouded as demonstrations,
they were in reality temporary stoppages of work perpetrated through the
concerted action of the employees who deliberately failed to report for work
on the convenient excuse that they will hold a rally at the BLR and DOLE
offices in Intramuros, Manila, on February 21 to 23, 2001. The purported
reason for these protest actions was to safeguard their rights against any
abuse which the med-arbiter may commit against their cause. However,
the Union failed to advance convincing proof that the med-arbiter was
biased against them. The acts of the med-arbiter in the performance of his
duties are presumed regular. Sans ample evidence to the contrary,
the Union was unable to justify the February 2001 mass actions. What
comes to the fore is that the decision not to work for two days was designed
and calculated to cripple the manufacturing arm of Toyota. It becomes
obvious that the real and ultimate goal of the Union is to coerce Toyota to
finally acknowledge the Union as the sole bargaining agent of the
company. This is not a legal and valid exercise of the right of assembly and
to demand redress of grievance.
We sustain the CAs affirmance of the NLRCs finding that the protest
rallies staged on February 21 to 23, 2001 were actually illegal strikes. The
illegality of the Unions mass actions was succinctly elaborated by the labor
tribunal, thus:
We have stated in our questioned decision that such mass
actions staged before the Bureau of Labor Relations

on February 21-23, 2001 by the union officers and members fall

squarely within the definition of a strike (Article 212 (o), Labor
Code). These concerted actions resulted in the temporary
stoppage of work causing the latter substantial losses. Thus,
without the requirements for a valid strike having been
complied with, we were constrained to consider the strike
staged on such dates as illegal and all employees who
participated in the concerted actions to have consequently lost
their employment status.
If we are going to stamp a color of legality on the two
(2) [day-] walk out/strike of respondents without filing a
notice of strike, in effect we are giving license to all the
unions in the country to paralyze the operations of their
companies/employers every time they wish to hold a
demonstration in front of any government agency. While we
recognize the right of every person or a group to peaceably
assemble and petition the government for redress of grievances,
the exercise of such right is governed by existing laws, rules
and regulations.
Although the respondent union admittedly made earnest
representations with the company to hold a mass protest before
the BLR, together with their officers and members, the denial of
the request by the management should have been heeded and
ended their insistence to hold the planned mass demonstration.
Verily, the violation of the company rule cannot be dismissed as
mere absences of two days as being suggested by the union [are
but] concerted actions detrimental to Petitioner Toyotas interest.
[38]
(Emphasis supplied.)
It is obvious that the February 21 to 23, 2001 concerted actions were
undertaken without satisfying the prerequisites for a valid strike under Art.
263 of the Labor Code. The Union failed to comply with the following
requirements: (1) a notice of strike filed with the DOLE 30 days before the
intended date of strike, or 15 days in case of unfair labor practice; [39] (2)
strike vote approved by a majority of the total union membership in the
bargaining unit concerned obtained by secret ballot in a meeting called for

that purpose; and (3) notice given to the DOLE of the results of the voting at
least seven days before the intended strike. These requirements are
mandatory and the failure of a union to comply with them renders the strike
illegal.[40] The evident intention of the law in requiring the strike notice and
the strike-vote report is to reasonably regulate the right to strike, which is
essential to the attainment of legitimate policy objectives embodied in the
law.[41] As they failed to conform to the law, the strikes on February 21, 22,
and 23, 2001 were illegal.
Moreover, the aforementioned February 2001 strikes are in blatant
violation of Sec. D, par. 6 of Toyotas Code of Conduct which prohibits
inciting or participating in riots, disorders, alleged strikes or concerted
actions detrimental to [Toyotas] interest. The penalty for the offense is
dismissal. The Union and its members are bound by the company rules, and
the February 2001 mass actions and deliberate refusal to render regular and
overtime work on said days violated these rules. In sum, the February 2001
strikes and walk-outs were illegal as these were in violation of specific
requirements of the Labor Code and a company rule against illegal strikes or
concerted actions.
With respect to the strikes committed from March 17 to April 12,
2001, those were initially legal as the legal requirements were
met. However, on March 28 to April 12, 2001, the Union barricaded the
gates of the Bicutan and Sta. Rosa plants and blocked the free ingress to and
egress from the company premises.Toyota employees, customers, and other
people having business with the company were intimidated and were refused
entry to the plants. As earlier explained, these strikes were illegal because
unlawful means were employed. The acts of the Union officers and members
are in palpable violation of Art. 264(e), which proscribes acts of violence,
coercion, or intimidation, or which obstruct the free ingress to and egress

from the company premises. Undeniably, the strikes from March 28 to April
12, 2001 were illegal.
Petitioner Union also posits that strikes were not committed on May
23 and 28, 2001. The Union asserts that the rallies held on May 23 and 28,
2001 could not be considered strikes, as the participants were the dismissed
employees who were on payroll reinstatement. It concludes that there was no
work stoppage.
This contention has no basis.
It is clear that once the DOLE Secretary assumes jurisdiction over the
labor dispute and certifies the case for compulsory arbitration with the
NLRC, the parties have to revert to the status quo ante (the state of things as
it was before). The intended normalcy of operations is apparent from
the fallo of the April 10, 2001 Order of then DOLE Secretary Patricia A.
Sto. Tomas, which reads:
WHEREFORE, PREMISES CONSIDERED, this
Office hereby CERTIFIES the labor dispute at Toyota Motors
Philippines Corporation to the [NLRC] pursuant to Article 263
(g) of the Labor Code, as amended. This Certification covers
the current labor cases filed in relation with the Toyota strike,
particularly, the Petition for Injunction filed with the National
Labor Relations Commission entitled Toyota Motor Philippines
Corporation vs. Toyota Motor Philippines Corporation
Workers Association (TMPCWA), Ed Cubelo, et al., NLRC
Injunction Case No. 3401054-01; Toyota Motor Philippines
Corporation vs. Toyota Motor Philippines Corporation
Workers Association, et al., NLRC NCR Case No. 3004-0177501, and such other labor cases that the parties may file relating
to the strike and its effects while this Certification is in effect.
As provided under Article 2634(g) of the Labor Code, all
striking workers are directed to return to work at their regular
shifts by April 16, 2001; the Company is in turn directed to

accept them back to work under the same terms and conditions
obtaining prior to the work stoppage, subject to the option of
the company to merely reinstate a worker or workers in the
payroll in light of the negative emotions that the strike has
generated and the need to prevent the further deterioration of
the relationship between the company and its workers.
Further, the parties are hereby ordered to cease and
desist from committing any act that might lead to the
worsening of an already deteriorated situation.[42] (Emphasis
supplied.)

It is explicit from this directive that the Union and its members shall
refrain from engaging in any activity that might exacerbate the tense labor
situation inToyota, which certainly includes concerted actions.
This was not heeded by the Union and the individual respondents who
staged illegal concerted actions on May 23 and 28, 2001 in contravention of
the Order of the DOLE Secretary that no acts should be undertaken by them
to aggravate the already deteriorated situation.
While it may be conceded that there was no work disruption in the
two Toyota plants, the fact still remains that the Union and its members
picketed and performed concerted actions in front of the Company
premises. This is a patent violation of the assumption of jurisdiction and
certification Order of the DOLE Secretary, which ordered the parties to
cease and desist from committing any act that might lead to the worsening of
an already deteriorated situation. While there are no work stoppages, the
pickets and concerted actions outside the plants have a demoralizing and
even chilling effect on the workers inside the plants and can be considered as
veiled threats of possible trouble to the workers when they go out of the
company premises after work and of impending disruption of operations to

company officials and even to customers in the days to come. The pictures
presented by Toyota undoubtedly show that the company officials and
employees are being intimidated and threatened by the strikers. In short,
the Union, by its mass actions, has inflamed an already volatile situation,
which was explicitly proscribed by the DOLE Secretarys Order. We do not
find any compelling reason to reverse the NLRC findings that the pickets on
May 23 and 28, 2001 were unlawful strikes.
From the foregoing discussion, we rule that the February 21 to 23,
2001 concerted actions, the March 17 to April 12, 2001 strikes, and the May
23 and 28, 2001 mass actions were illegal strikes.
Union officers are liable for unlawful strikes or illegal acts during a
strike

Art. 264 (a) of the Labor Code provides:

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.

Art. 264(a) 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.
It is clear that the responsibility of union officials is greater than that
of the members. They are tasked with the duty to lead and guide the
membership in decision making on union activities in accordance with the
law, government rules and regulations, and established labor practices. The
leaders are expected to recommend actions that are arrived at with
circumspection and contemplation, and always keep paramount the best
interests of the members and union within the bounds of law. If the
implementation of an illegal strike is recommended, then they would
mislead and deceive the membership and the supreme penalty of dismissal is
appropriate. On the other hand, if the strike is legal at the beginning and the
officials commit illegal acts during the duration of the strike, then they
cannot evade personal and individual liability for said acts.
The Union officials were in clear breach of Art. 264(a) when they
knowingly participated in the illegal strikes held from February 21 to 23,
2001, from March 17 to April 12, 2001, and on May 23 and 28, 2001. We
uphold the findings of fact of the NLRC on the involvement of said union
officials in the unlawful concerted actions as affirmed by the CA, thus:
As regards to the Union officers and directors, there is
overwhelming justification to declare their termination from
service. Having instigated the Union members to stage and
carry out all illegal strikes from February 21-23, 2001, and May
23 and 28, 2001, the following Union officers are hereby
terminated for cause pursuant to Article 264(a) of the Labor
Code: Ed Cubelo, Maximino Cruz, Jr., Ricky Chavez, Joselito
Hugo, Virgilio Colandog, Rommel Digma, Federico Torres,
Emilio Completo, Alexander Esteva, Joey Javellonar, Lorenzo

Caraqueo, Roderick Nieres, Antonio Borsigue, Bayani Manguil,

Jr., and Mayo Mata.[43]

The rule is well entrenched in this jurisdiction that factual findings of

the labor tribunal, when affirmed by the appellate court, are generally
accorded great respect, even finality.[44]
Likewise, we are not duty-bound to delve into the accuracy of the
factual findings of the NLRC in the absence of clear showing that these were
arbitrary and bereft of any rational basis.[45] In the case at bench, the Union
failed to convince us that the NLRC findings that the Union officials
instigated, led, and knowingly participated in the series of illegal strikes are
not reinforced by substantial evidence. Verily, said findings have to be
maintained and upheld. We reiterate, as a reminder to labor leaders, the rule
that [u]nion officers are duty bound to guide their members to respect the
law.[46] Contrarily, if the officers urge the members to violate the law and
defy the duly constituted authorities, their dismissal from the service is a just
penalty or sanction for their unlawful acts.[47]
Members liability depends on participation in illegal acts
Art. 264(a) of the Labor Code provides that a member is liable when he
knowingly participates in an illegal act during a strike. While the provision
is silent on whether the strike is legal or illegal, we find that the same is
irrelevant. As long as the members commit illegal acts, in a legal or illegal
strike, then they can be terminated.[48] However, when union members
merely participate in an illegal strike without committing any illegal act, are
they liable?

This was squarely answered in Gold City Integrated Port Service, Inc.
v. NLRC,[49] where it was held that an ordinary striking worker cannot be
terminated for mere participation in an illegal strike. This was an affirmation
of the rulings in Bacus v. Ople[50] and Progressive Workers Union v. Aguas,
[51]
where it was held that though the strike is illegal, the ordinary member
who merely participates in the strike should not be meted loss of
employment on the considerations of compassion and good faith and in view
of the security of tenure provisions under the Constitution. In Esso
Philippines, Inc. v. Malayang Manggagawa sa Esso (MME), it was
explained that a member is not responsible for the unions illegal strike even
if he voted for the holding of a strike which became illegal.[52]
Noted labor law expert, Professor Cesario A. Azucena, Jr., traced the
history relating to the liability of a union member in an illegal strike, starting
with the rule of vicarious liability, thus:
Under [the rule of vicarious liability], mere membership
in a labor union serves as basis of liability for acts of
individuals, or for a labor activity, done on behalf of the union.
The union member is made liable on the theory that all the
members are engaged in a general conspiracy, and the unlawful
acts of the particular members are viewed as necessary
incidents of the conspiracy. It has been said that in the absence
of statute providing otherwise, the rule of vicarious liability
applies.
Even the Industrial Peace Act, however, which was in
effect from 1953 to 1974, did not adopt the vicarious liability
concept. It expressly provided that:
No officer or member of any association or
organization, and no association or organization
participating or interested in a labor dispute shall be held
responsible or liable for the unlawful acts of individual
officers, members, or agents, except upon proof of actual

participation in, or actual authorization of, such acts or of

ratifying of such acts after actual knowledge thereof.
Replacing the Industrial Peace Act, the Labor Code has
not adopted the vicarious liability rule.[53]

Thus, the rule on vicarious liability of a union member was abandoned

and it is only when a striking worker knowingly participates in the
commission of illegal acts during a strike that he will be penalized with
dismissal.
Now, what are considered illegal acts under Art. 264(a)?
No precise meaning was given to the phrase illegal acts. It may
encompass a number of acts that violate existing labor or criminal laws, such
as the following:
(1) Violation of Art. 264(e) of the Labor Code which provides that
[n]o person engaged in picketing shall commit any act of violence, coercion
or intimidation or obstruct the free ingress to or egress from the employers
premises for lawful purposes, or obstruct public thoroughfares;
(2) Commission of crimes and other unlawful acts in carrying out the
strike;[54] and
(3) Violation of any order, prohibition, or injunction issued by the
DOLE Secretary or NLRC in connection with the assumption of
jurisdiction/certification Order under Art. 263(g) of the Labor Code.
As earlier explained, this enumeration is not exclusive and it may
cover other breaches of existing laws.

In the cases at bench, the individual respondents participated in

several mass actions, viz:
(1) The rallies held at the DOLE and BLR offices on February 21, 22,
and 23, 2001;
(2) The strikes held on March 17 to April 12, 2001; and
(3) The rallies and picketing on May 23 and 28, 2001 in front of the
Toyota Bicutan and Sta. Rosa plants.
Did they commit illegal acts during the illegal strikes on February 21
to 23, 2001, from March 17 to April 12, 2001, and on May 23 and 28, 2001?
The answer is in the affirmative.
As we have ruled that the strikes by the Union on the three different
occasions were illegal, we now proceed to determine the individual
liabilities of the affected union members for acts committed during these
forbidden concerted actions.
Our ruling in Association of Independent Unions in the Philippines v.
NLRC lays down the rule on the liability of the union members:
Decisive on the matter is the pertinent provisions of Article 264
(a) of the Labor Code that: [x x x] any worker [x x x] who
knowingly participates in the commission of illegal acts during
a strike may be declared to have lost his employment status. [x
x x] It can be gleaned unerringly from the aforecited provision
of law in point, however, that an ordinary striking employee can

not be terminated for mere participation in an illegal

strike. There must be proof that he committed illegal acts
during the strike and the striker who participated in the
commission of illegal act[s] must be identified. But proof
beyond reasonable doubt is not required. Substantial
evidence available under the circumstances, which may
justify the imposition of the penalty of dismissal, may
suffice.
In the landmark case of Ang Tibay vs. CIR, the court
ruled Not only must there be some evidence to support a
finding or conclusion, but the evidence must be
substantial. Substantial evidence is more than a mere
scintilla. It means such relevant evidence that a reasonable
mind might accept as sufficient to support a conclusion.
[55]
(Emphasis supplied.)

Thus, it is necessary for the company to adduce proof on the

participation of the striking employee in the commission of illegal acts
during the strikes.
After a scrutiny of the records, we find that the 227 employees indeed
joined the February 21, 22, and 23, 2001 rallies and refused to render
overtime work or report for work. These rallies, as we earlier ruled, are in
reality illegal strikes, as the procedural requirements for strikes under Art.
263 were not complied with. Worse, said strikes were in violation of the
company rule prohibiting acts in citing or participating in riots, disorders,
alleged strikes or concerted action detrimental to Toyotas interest.
With respect to the February 21, 22, and 23, 2001 concerted actions,
Toyota submitted the list of employees who did not render overtime work on
February 21, 2001 and who did not report for work on February 22 and 23,
2001 as shown by Annex I of Toyotas Position Paper in NLRC Certified

Case No. 000203-01 entitled In Re: Labor Dispute at Toyota Motor

Philippines Corp. The employees who participated in the illegal concerted
actions were as follows:
1. Aclan, Eugenio; 2. Agosto, Joel; 3. Agot, Rodelio; 4. Alarana,
Edwin; 5. Alejo, Alex; 6. Alfonso, Erwin; 7. Apolinario,
Dennis; 8. Apostol, Melvin; 9. Arceta, Romel; 10. Arellano,
Ruel; 11. Ariate, Abraham; 12. Arollado, Daniel; 13. Arriola,
Dominador; 14. Atun, Lester; 15. Bala, Rizalino; 16. Baluyut,
Rolando; 17. Banzuela, Tirso Jr.; 18. Bayani, Roderick; 19.
Benabise, Sabas Jr.; 20. Berces, Abel; 21. Bering, Benny; 22.
Birondo, Alberto; 23. Blanco, Melchor; 24. Bolanos, Dexter;
25. Bolocon, Jerry; 26. Borebor, Rurel; 27. Borromeo, Jubert;
28. Borsigue, Antonio; 29. Bulan, Elmer; 30. Busano, Freddie;
31. Bustillo, Ernesto Jr.; 32. Caalim, Alexander; 33. Cabahug,
Nelson; 34. Cabatay, Jessie; 35. Cabezas, Marcelo;
36. Calalang, Richard; 37. Candelario, Roque Jr.; 38. Capate,
Leo Nelson; 39. Carandang, Resty; 40. Caraqueo, Lorenzo; 41.
Caringal, Dennis; 42. Casaba, Gienell; 43. Catapusan,
Christopher; 44. Catral, Rico; 45. Cecilio, Felipe; 46. Cinense,
Joey; 47. Cometa, Julius; 48. Completo, Emilio; 49.
Consignado, Randy; 50. Coral, Jay Antonio; 51. Correa,
Claudio Jr.; 52. Cuevas, Reynaldo; 53. Dacalcap, Albert; 54.
Dakay, Ryan; 55. Dalanon, Herbert; 56. Dalisay, Rene;
57. David, Benigno Jr.; 58. De Guzman, Joey; 59. Dela Cruz,
Basilio; 60. Dela Cruz, Ferdinand; 61. Dela Torre, Heremo; 62.
De Leon, Leonardo; 63. Delos Santos, Rogelio; 64. De
Ocampo, Joselito; 65. De Silva, Leodegario; 66. Del Mundo,
Alex; 67. Del Rio, Rey; 68. Dela Ysla, Alex; 69. Dia, Frank
Manuel; 70. Dimayuga, Antonio; 71. Dingcong, Jessiah; 72.
Dumalag, Jasper; 73. Duyag, Aldrin; 74. Ercillo, Armando; 75.
Espadilla, Delmar; 76. Espejo, Lionel; 77. Espeloa, Dennis; 78.
Esteva, Alexander; 79. Estole, Francisco; 80. Fajardo, George;
81. Fajilagutan, Jason; 82. Fajura, John; 83. Franco, Melencio;
84. Franco, Nikko; 85. Fulgar, Dexter; 86. Fulo, Dante; 87.
Gado, Eduardo; 88. Galang, Erwin; 89. Gamit, Rodel; 90.
Garces, Robin; 91. Garcia, Ariel; 92. Gaspi, Ronald; 93.
Gavarra, Angelo; 94. Gerola, Genaro Jr.; 95. Gerola, Larry; 96.
Gohilde, Michael; 97. Gojar, Regino; 98. Gojar, Reynaldo; 99.

Gonzales, Roberto; 100. Gutierrez, Bernabe; 101. Hilaga,

Edgar; 102. Hilanga, Melchor; 103. Hondrada, Eugene Jay;
104. Imperial, Alejandro; 105. Jaen, Ferdinand; 106. Jalea,
Philip; 107. Javillonar, Joey; 108. Julve, Frederick; 109.
Lalisan, Victorio; 110. Landicho, Danny; 111. Laqui, Basilio;
112. Lavide, Edgar; 113. Lazaro, Orlando; 114. Legaspi, Noel;
115. Lising, Reynaldo Jr.; 116. Llanera, Joey; 117. Lomboy,
Alberto; 118. Lopez, Geronimo; 119. Lozada, Jude Jonobell;
120. Lucido, Johny; 121. Macalindong, Rommel; 122.
Madrazo, Nixon; 123. Magbalita, Valentin; 124. Magistrado,
Rogelio Jr.; 125. Magnaye, Philip John; 126. Malabanan, Allan
John; 127. Malabrigo, Angelito; 128. Malaluan, Rolando Jr.;
129. Malate, Leoncio Jr.; 130. Maleon, Paulino; 131. Manaig,
Roger; 132. Manalang, Joseph Patrick; 133. Manalo, Manuel
Jr.; 134. Manaog, Jonamar; 135. Manaog, Melchor; 136.
Mandolado, Melvin; 137. Maneclang, Jovito; 138. Manego,
Ruel; 139. Manguil, Bayani Jr.; 140. Manigbas, June; 141.
Manjares, Alfred; 142. Manzanilla, Edwin; 143. Marasigan,
Carlito; 144. Marcial, Nilo; 145. Mariano, Rommel; 146. Mata,
Mayo; 147. Mendoza, Bobit; 148. Mendoza, Roberto; 149.
Milan, Joseph; 150. Miranda, Eduardo; 151. Miranda, Luis;
152. Montero, Ericson; 153. Montero, Marlaw; 154. Montes,
Ruel; 155. Morales, Dennis; 156. Natividad, Kenneth; 157.
Nava, Ronaldo; 158. Nevalga, Alexander; 159. Nicanor, Edwin;
160. Nierves, Roderick; 161. Nunez, Alex; 162. Nunez, Lolito;
163. Obe, Victor; 164. Oclarino, Alfonso; 165. Ojenal, Leo;
166. Olit, Freddie; 167. Oliver, Rex; 168. Oliveria, Charlie;
169. Operana, Danny; 170. Oriana, Allan; 171. Ormilla, Larry;
172. Ortiz, Felimon; 173. Paniterce, Alvin; 174. Parallag,
Gerald; 175. Pecayo, Edwin; 176. Pena, Erwin; 177.
Penamante, Jowald; 178. Piamonte, Melvin; 179. Piamonte,
Rogelio; 180. Platon, Cornelio; 181. Polutan, Jorge; 182.
Posada, John; 183. Puno, Manjolito; 184. Ramos, Eddie; 185.
Reyes, Rolando; 186. Roxas, Philip; 187. Sales, Paul Arthur;
188. Sallan, David Jr.; 189. Salvador, Bernardo; 190. Sampang,
Alejandro; 191. San Pablo, Baldwin; 192. Sangalang, Jeffrey;
193. Santiago, Eric; 194. Santos, Raymond; 195. Sapin, Al
Jose; 196. Saquilabon, Bernabe; 197. Serrano, Ariel; 198.
Sierra, Alex; 199. Simborio, Romualdo; 200. Sulit, Lauro; 201.
Tabirao, Elvisanto; 202. Tablizo, Edwin; 203. Taclan, Petronio;

204. Tagala, Rommel; 205. Tagle, Wilfredo Jr.; 206. Tecson

Alexander; 207. Templo, Christopher; 208. Tenorio, Roderick;
209. Tolentino, Rodel; 210. Tolentino, Rommel; 211. Tolentino,
Romulo Jr.; 212. Tomas, Rolando; 213. Topaz, Arturo Sr.; 214.
Toral, Grant Robert; 215. Torres, Dennis; 216. Torres, Federico;
217. Trazona, Jose Rommel; 218. Tulio, Emmanuel; 219.
Umiten, Nestor Jr.; 220. Vargas, Joseph; 221. Vergara, Allan;
222. Vergara, Esdwin; 223. Violeta, Apollo Sr.; 224. Vistal,
Alex; 225. Yangyon, Michael Teddy; 226. Zaldevar,
Christopher; and 227. Zamora, Dominador Jr.

Toyotas Position Paper containing the list of striking workers was

attested to as true and correct under oath by Mr. Jose Ma. Aligada, First Vice
President of the Group Administration Division of Toyota. Mr. Emerito
Dumaraos, Assistant Department Manager of the Production Department of
Toyota, likewise submitted a June 29, 2001 Affidavit [56] confirming the low
attendance of employees on February 21, 22, and 23, 2001, which resulted
from the intentional absences of the aforelisted striking workers. The Union,
on the other hand, did not refute Toyotas categorical assertions on the
participation of said workers in the mass actions and their deliberate refusal
to perform their assigned work on February 21, 22, and 23, 2001. More
importantly, it did not deny the fact of absence of the employees on those
days from the Toyota manufacturing plants and their deliberate refusal to
render work. Their admission that they participated in theFebruary 21 to 23,
2001 mass actions necessarily means they were absent from their work on
those days.
Anent the March 28 to April 12, 2001 strikes, evidence is ample to
show commission of illegal acts like acts of coercion or intimidation and
obstructing free ingress to or egress from the company premises. Mr.
Eduardo Nicolas III, Toyotas Security Chief, attested in his affidavit that the

strikers badmouthed people coming in and shouted invectives such

as bakeru at Japanese officers of the company. The strikers even pounded
the vehicles of Toyota officials. More importantly, they prevented the ingress
of Toyota employees, customers, suppliers, and other persons who wanted to
transact business with the company. These were patent violations of Art.
264(e) of the Labor Code, and may even constitute crimes under the Revised
Penal Code such as threats or coercion among others.
On March 28, 2001, the following have committed illegal
actsblocking the ingress to or egress from the two (2) Toyota plants and
preventing the ingress ofToyota employees on board the company shuttle at
the Bicutan and Sta. Rosa Plants, viz:
1. Grant Robert Toral; 2. John Posadas; 3. Alex Sierra; 4. Allan
John Malabanan; 5. Abel Berces; 6. Ariel Garcia; 7. Charlie
Oliveria; 8. Manjolito Puno; 9. Baldwin San Pablo; 10.
Federico Torres; 11. Larry Gerola; 12. Roderick Bayani; 13.
Allan Oclarino; 14. Reynaldo Cuevas; 15. George Polutan; 16.
Arman Ercillo; 17. Joey Llanera; and 18. Roberto Gonzales

Photographs were submitted by Toyota marked as Annexes 1 through

18 of its Position Paper, vividly showing the participation of the aforelisted
employees in illegal acts.[57]
To further aggravate the situation, a number of union members
committed illegal acts (blocking the ingress to and egress from the plant)
during the strike staged on March 29, 2001 at the Toyota plant in Bicutan, to
wit:
1. Basilio Laqui; 2. Sabas Benabise; 3. Federico Torres;
4. Freddie Olit; and 5. Joel Agosto

Pictures marked as Annexes 21 to 22 of Toyotas Position Paper reveal

the illegal acts committed by the aforelisted workers.[58]
On the next day, March 30, 2001, several employees again committed
illegal acts (blocking ingress to and egress from the plant) during the strike
at the Bicutan plant, to wit:
1. Ariel Garcia; 2. Edgar Hilaga; 3. Charlie Oliveria; 4.
Ferdinand Jaen; 5. Wilfredo Tagle; 6. Alejandro Imperial; 7.
Manjolito Puno; 8. Delmar Espadilla; 9. Apollo Violeta; and 10.
Elvis Tabirao

Pictures marked as Annexes 25 to 26 and 28 of Toyotas Position Paper

show the participation of these workers in unlawful acts.[59]
On April 5, 2001, seven (7) Toyota employees were identified to have
committed illegal acts (blocking ingress to and egress from the plant) during
the strike held at the Bicutan plant, to wit:
1. Raymund Santos; 2. Elvis Tabirao; 3. Joseph Vargas; 4.
Bernardo Salvador; 5. Antonio Dimayuga; 6. Rurel Borebor;
and 7. Alberto Lomboy

The participations of the strikers in illegal acts are manifest in the

pictures marked as Annexes 32 and 33 of Toyotas Position Paper.[60]
On April 6, 2001, only Rogelio Piamonte was identified to have
committed illegal acts (blocking ingress to and egress from the Toyota plant)
during the strike at the Toyota Santa Rosa plant. [61] Then, on April 9, 2001,

Alvin Paniterce, Dennis Apolinario, and Eduardo Miranda [62] were identified
to have committed illegal acts (blocking ingress to and egress from
the Toyota plant) during the strike at the Toyota Santa Rosa plant and were
validly dismissed byToyota.
Lastly, the strikers, though on payroll reinstatement, staged protest
rallies on May 23, 2001 and May 28, 2001 in front of the Bicutan and Sta.
Rosa plants.These workers acts in joining and participating in the May 23
and 28, 2001 rallies or pickets were patent violations of the April 10, 2001
assumption of jurisdiction/certification Order issued by the DOLE Secretary,
which proscribed the commission of acts that might lead to the worsening of
an already deteriorated situation. Art. 263(g) is clear that strikers who violate
the assumption/certification Order may suffer dismissal from work. This was
the situation in the May 23 and 28, 2001 pickets and concerted actions, with
the following employees who committed illegal acts:
a. Strikers who joined the illegal pickets on May 23, 2001 were (1)
Dennis Apolinario; (2) Abel Berces; (3) Benny Bering; (4) Dexter Bolaos;
(5) Freddie Busano; (6) Ernesto Bustillo, Jr.; (7) Randy Consignado; (8)
Herbert Dalanon; (9) Leodegario De Silva; (10) Alexander Esteva; (11)
Jason Fajilagutan; (12) Nikko Franco; (13) Genaro Gerola, Jr.; (14) Michael
Gohilde; (15) Rogelio Magistrado; (16) Rolando Malaluan, Jr.; (17) Leoncio
Malate, Jr.; (18) Edwin Manzanilla; (19) Nila Marcial; (20) Roderick
Nierves; (21) Larry Ormilla; (22) Filemon Ortiz; (23) Cornelio Platon; (24)
Alejandro Sampang; (25) Eric Santiago; (26) Romualdo Simborio; (27)
Lauro Sulit; and (28) Rommel Tagala.
Pictures show the illegal acts (participation in pickets/strikes despite
the issuance of a return-to-work order) committed by the aforelisted strikers.
[63]

b. Strikers who participated in the May 28, 2001 were (1) Joel Agosto;
(2) Alex Alejo; (3) Erwin Alfonso; (4) Dennis Apolinario; (5) Melvin
Apostol; (6) Rommel Arceta; (7) Lester Atun; (8) Abel Berces; (9) Benny
Bering; (10) Dexter Bolanos; (11) Marcelo Cabezas; (12) Nelson Leo
Capate; (13) Lorenzo Caraqueo; (14) Christopher Catapusan; (15) Ricky
Chavez; (16) Virgilio Colandog; (17) Claudio Correa; (18) Ed Cubelo; (19)
Reynaldo Cuevas; (20) Rene Dalisay; (21) Benigno David, Jr.; (22) Alex Del
Mundo; (23) Basilio Dela Cruz; (24) Roel Digma; (25) Aldrin Duyag; (26)
Armando Ercillo; (27) Delmar Espadilla; (28) Alexander Esteva; (29) Nikko
Franco; (30) Dexter Fulgar; (31) Dante Fulo; (32) Eduardo Gado; (33)
Michael Gohilde; (34) Eugene Jay Hondrada II; (35) Joey Javillonar; (36)
Basilio Laqui; (37) Alberto Lomboy; (38) Geronimo Lopez; (39) Rommel
Macalindog; (40) Nixon Madrazo; (41) Valentin Magbalita; (42) Allan Jon
Malabanan; (43) Jonamar Manaog; (44) Bayani Manguil; (45) June
Manigbas; (46) Alfred Manjares; (47) Edwin Manzanilla; (48) Mayo Mata;
(49) Leo Ojenal; (50) Allan Oriana; (51) Rogelio Piamonte; (52) George
Polutan; (53) Eric Santiago; (54) Bernabe Saquilabon; (55) Alex Sierra; (56)
Romualdo Simborio; (57) Lauro Sulit; (58) Elvisanto Tabirao; (59) Edwin
Tablizo; (60) Emmanuel Tulio; (61) Nestor Umiten; (62) Joseph Vargas; (63)
Edwin Vergara; and (64) Michael Teddy Yangyon.
Toyota presented photographs which show said employees conducting
mass pickets and concerted actions.[64]
Anent the grant of severance compensation to legally dismissed union
members, Toyota assails the turn-around by the CA in granting separation
pay in its June 20, 2003 Resolution after initially denying it in its February
27, 2003 Decision. The company asseverates that based on the CA finding
that the illegal acts of said union members constitute gross misconduct, not

to mention the huge losses it suffered, then the grant of separation pay was
not proper.
The general rule is that when just causes for terminating the services
of an employee under Art. 282 of the Labor Code exist, the employee is not
entitled to separation pay. The apparent reason behind the forfeiture of the
right to termination pay is that lawbreakers should not benefit from their
illegal acts. The dismissed employee, however, is entitled to whatever rights,
benefits and privileges [s/he] may have under the applicable individual or
collective bargaining agreement with the employer or voluntary employer
policy or practice[65] or under the Labor Code and other existing laws. This
means that the employee, despite the dismissal for a valid cause, retains the
right to receive from the employer benefits provided by law, like accrued
service incentive leaves. With respect to benefits granted by the CBA
provisions and voluntary management policy or practice, the entitlement of
the dismissed employees to the benefits depends on the stipulations of the
CBA or the company rules and policies.
As in any rule, there are exceptions. One exception where separation
pay is given even though an employee is validly dismissed is when the court
finds justification in applying the principle of social justice well entrenched
in the 1987 Constitution. In Phil. Long Distance Telephone Co. (PLDT) v.
NLRC, the Court elucidated why social justice can validate the grant of
separation pay, thus:
The reason is that our Constitution is replete with positive
commands for the promotion of social justice, and particularly
the protection of the rights of the workers. The enhancement of
their welfare is one of the primary concerns of the present
charter. In fact, instead of confining itself to the general
commitment to the cause of labor in Article II on the
Declaration of Principles of State Policies, the new Constitution
contains a separate article devoted to the promotion of social

justice and human rights with a separate sub-topic for

labor. Article XIII expressly recognizes the vital role of labor,
hand in hand with management, in the advancement of the
national economy and the welfare of the people in general. The
categorical mandates in the Constitution for the improvement of
the lot of the workers are more than sufficient basis to justify
the award of separation pay in proper cases even if the
dismissal be for cause.[66]

In the same case, the Court laid down the rule that severance
compensation shall be allowed only when the cause of the dismissal is other
than serious misconduct or that which reflects adversely on the employees
moral character. The Court succinctly discussed the propriety of the grant of
separation pay in this wise:
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. Of course it
has. Indeed, if the employee who steals from the company is
granted separation pay even as he is validly dismissed, it is not
unlikely that he will commit a similar offense in his next
employment because he thinks he can expect a like leniency if
he is again found out. This kind of misplaced compassion is not

going to do labor in general any good as it will encourage the

infiltration of its ranks by those who do not deserve the
protection and concern of the Constitution.
The policy of social justice is not intended to
countenance wrongdoing simply because it is committed by the
underprivileged. At best it may mitigate the penalty but it
certainly will not condone the offense. Compassion for the poor
is an imperative of every humane society but only when the
recipient is not a rascal claiming an undeserved
privilege. Social justice cannot be permitted to be refuge of
scoundrels any more than can equity be an impediment to the
punishment of the guilty. Those who invoke social justice may
do so only if their hands are clean and their motives blameless
and not simply because they happen to be poor. This great
policy of our Constitution is not meant for the protection of
those who have proved they are not worthy of it, like the
workers who have tainted the cause of labor with the blemishes
of their own character.[67]

Explicit in PLDT are two exceptions when the NLRC or the courts
should not grant separation pay based on social justiceserious misconduct
(which is the first ground for dismissal under Art. 282) or acts that reflect on
the moral character of the employee. What is unclear is whether the ruling
likewise precludes the grant of separation pay when the employee is validly
terminated from work on grounds laid down in Art. 282 of the Labor Code
other than serious misconduct.
A recall of recent cases decided bearing on the issue reveals that when
the termination is legally justified on any of the grounds under Art. 282,
separation pay was not allowed. In Ha Yuan Restaurant v. NLRC,[68] we
deleted the award of separation pay to an employee who, while unprovoked,
hit her co-workers face, causing injuries, which then resulted in a series of
fights and scuffles between them. We viewed her act as serious misconduct

which did not warrant the award of separation pay. In House of Sara Lee v.
Rey,[69] this Court deleted the award of separation pay to a branch supervisor
who regularly, without authorization, extended the payment deadlines of the
companys sales agents. Since the cause for the supervisors dismissal
involved her integrity (which can be considered as breach of trust), she was
not worthy of compassion as to deserve separation pay based on her length
of service. In Gustilo v. Wyeth Phils., Inc.,[70]this Court found no exceptional
circumstance to warrant the grant of financial assistance to an employee who
repeatedly violated the companys disciplinary rules and regulations and
whose employment was thus terminated for gross and habitual neglect of his
duties. In the doctrinal case of San Miguel v. Lao,[71] this Court reversed and
set aside the ruling of the CA granting retirement benefits or separation pay
to an employee who was dismissed for willful breach of trust and confidence
by causing the delivery of raw materials, which are needed for its glass
production plant, to its competitor. While a review of the case reports does
not reveal a case involving a termination by reason of the commission of a
crime against the employer or his/her family which dealt with the issue of
separation pay, it would be adding insult to injury if the employer would still
be compelled to shell out money to the offender after the harm done.
In all of the foregoing situations, the Court declined to grant
termination pay because the causes for dismissal recognized under Art. 282
of the Labor Code were serious or grave in nature and attended by willful or
wrongful intent or they reflected adversely on the moral character of the
employees. We therefore find that in addition to serious misconduct, in
dismissals based on other grounds under Art. 282 like willful disobedience,
gross and habitual neglect of duty, fraud or willful breach of trust, and
commission of a crime against the employer or his family, separation pay
should not be conceded to the dismissed employee.

In analogous causes for termination like inefficiency, drug use, and

others, the NLRC or the courts may opt to grant separation pay anchored on
social justice in consideration of the length of service of the employee, the
amount involved, whether the act is the first offense, the performance of the
employee and the like, using the guideposts enunciated in PLDT on the
propriety of the award of separation pay.
In the case at bench, are the 227 striking employees entitled to
separation pay?
In the instant case, the CA concluded that the illegal strikes committed
by the Union members constituted serious misconduct.[72]
The CA ratiocinated in this manner:
Neither can social justice justify the award to them of
severance compensation or any other form of financial
assistance. x x x
xxxx
Considering that the dismissal of the employees was
due to their participation in the illegal strikes as well as
violation of the Code of Conduct of the company, the same
constitutes serious misconduct. A serious misconduct is a
transgression of some established and definite rule of action, a
forbidden act, a dereliction of duty, willful in character, and
implies wrongful intent and not mere error in judgment. In fact,
in Panay Electric Company, Inc. v. NLRC, the Supreme Court
nullified the grant of separation benefits to employees who
unlawfully participated in an illegal strike in light of Article
264, Title VIII, Book V of the Labor Code, that, any union
officer who knowingly participates in an illegal strike and any
worker or union officer who knowingly participates in the

commission of illegal acts during a strike may be declared to

have lost his employment status.
The constitutional guarantee on social justice is not
intended only for the poor but for the rich as well. It is a
policy of fairness to both labor and management.
[73]
(Emphasis supplied.)

In disposing of the Unions plea for reconsideration of its February 27,

2003 Decision, the CA however performed a volte-face by reinstating the
award of separation pay.
The CAs grant of separation pay is an erroneous departure from our
ruling in Phil. Long Distance Telephone Co. v. NLRC that serious
misconduct forecloses the award of separation pay. Secondly, the advertence
to the alleged honest belief on the part of the 227 employees
that Toyota committed a breach of the duty to bargain collectively and an
abuse of valid exercise of management prerogative has not been
substantiated by the evidence extant on record. There can be no good faith in
intentionally incurring absences in a collective fashion from work on
February 22 and 23, 2001 just to attend the DOLE hearings. The Unions
strategy was plainly to cripple the operations and bring Toyota to its knees
by inflicting substantial financial damage to the latter to compel union
recognition.The Union officials and members are supposed to know through
common sense that huge losses would befall the company by the
abandonment of their regular work. It was not disputed that Toyota lost more
than PhP 50 million because of the willful desertion of company operations
in February 2001 by the dismissed union members. In addition, further
damage was experienced by Toyota when the Union again resorted to illegal
strikes from March 28 to April 12, 2001, when the gates of Toyota were
blocked and barricaded, and the company officials, employees, and

customers were intimidated and harassed. Moreover, they were fully aware
of the company rule on prohibition against concerted action inimical to the
interests of the company and hence, their resort to mass actions on several
occasions in clear violation of the company regulation cannot be excused nor
justified. Lastly, they blatantly violated the assumption/certification Order of
the DOLE Secretary, exhibiting their lack of obeisance to the rule of
law. These acts indeed constituted serious misconduct.
A painstaking review of case law renders obtuse the Unions claim for
separation pay. In a slew of cases, this Court 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 strikes. In the recent case of Pilipino Telephone
Corporation v. Pilipino Telephone Employees Association (PILTEA),[74] this
Court upheld the dismissal of union officers who participated and openly
defied the return-to-work order issued by the DOLE Secretary. No
separation pay or financial assistance was granted. In Sukhothai Cuisine and
Restaurant v. Court of Appeals,[75] this Court declared that the union officers
who participated in and the union members who committed illegal acts
during the illegal strike have lost their employment status. In this case, the
strike was held illegal because it violated agreements providing for
arbitration. Again, there was no award of separation pay nor financial
assistance. In Philippine Diamond Hotel and Resort, Inc. v. Manila
Diamond Hotel Employees Union,[76] the strike was declared illegal because
the means employed was illegal. We upheld the validity of dismissing union
members who committed illegal acts during the strike, but again, without
awarding separation pay or financial assistance to the erring
employees. In Samahang Manggagawa sa Sulpicio Lines, Inc. v. Sulpicio
Lines,[77] this Court upheld the dismissal of union officers who participated
in an illegal strike sans any award of separation pay. Earlier, in Grand

Boulevard Hotel v. Genuine Labor Organization of Workers in Hotel,

Restaurant and Allied Industries,[78] we affirmed the dismissal of the Unions
officers who participated in an illegal strike without awarding separation
pay, despite the NLRCs declaration urging the company to give financial
assistance to the dismissed employees.[79] In Interphil Laboratories UnionFFW, et al. v. Interphil Laboratories, Inc.,[80] this Court affirmed the
dismissal of the union officers who led the concerted action in refusing to
render overtime work and causing work slowdowns. However, no separation
pay or financial assistance was allowed. InCCBPI Postmix Workers Union v.
NLRC,[81] this Court affirmed the dismissal of union officers who
participated in the strike and the union members who committed illegal acts
while on strike, without awarding them separation pay or financial
assistance. In 1996, in Allied Banking Corporation v. NLRC,[82] this Court
affirmed the dismissal of Union officers and members, who staged a strike
despite the DOLE Secretarys issuance of a return to work order but did not
award separation pay. In the earlier but more relevant case of Chua v. NLRC,
[83]
this Court deleted the NLRCs award of separation benefits to an
employee who participated in an unlawful and violent strike, which strike
resulted in multiple deaths and extensive property damage. In Chua, we
viewed the infractions committed by the union officers and members as a
serious misconduct which resulted in the deletion of the award of separation
pay in conformance to the ruling in PLDT. Based on existing jurisprudence,
the award of separation pay to the Union officials and members in the instant
petitions cannot be sustained.
One last point to considerit is high time that employer and employee
cease to view each other as adversaries and instead recognize that theirs is a
symbiotic relationship, wherein they must rely on each other to ensure the
success of the business. When they consider only their own self-interests,
and when they act only with their own benefit in mind, both parties suffer

from short-sightedness, failing to realize that they both have a stake in the
business. The employer wants the business to succeed, considering the
investment that has been made. The employee in turn, also wants the
business to succeed, as continued employment means a living, and the
chance to better ones lot in life. It is clear then that they both have the same
goal, even if the benefit that results may be greater for one party than the
other. If this becomes a source of conflict, there are various, more amicable
means of settling disputes and of balancing interests that do not add fuel to
the fire, and instead open avenues for understanding and cooperation
between the employer and the employee. Even though strikes and lockouts
have been recognized as effective bargaining tools, it is an antiquated notion
that they are truly beneficial, as they only provide short-term solutions by
forcing concessions from one party; but staging such strikes would damage
the working relationship between employers and employees, thus
endangering the business that they both want to succeed. The more
progressive and truly effective means of dispute resolution lies in mediation,
conciliation, and arbitration, which do not increase tension but instead
provide relief from them. In the end, an atmosphere of trust and
understanding has much more to offer a business relationship than the
traditional enmity that has long divided the employer and the employee.
WHEREFORE, the petitions in G.R. Nos. 158786 and 158789
are DENIED while those in G.R. Nos. 158798-99 are GRANTED.
The June 20, 2003 CA Resolution in CA-G.R. SP Nos. 67100 and
67561
restoring
the
grant
of
severance
compensation
is ANNULLED and SET ASIDE.
The February 27, 2003 CA Decision in CA-G.R. SP Nos. 67100 and
67561, which affirmed the August 9, 2001 Decision of the NLRC but

deleted
the
grant
of
is REINSTATED and AFFIRMED.

severance

compensation,

No costs.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SPECIAL FIRST DIVISION
G.R. No. 196156

January 15, 2014

VISAYAS COMMUNITY MEDICAL CENTER (VCMC), Formerly

known as METRO CEBU COMMUNITY HOSPITAL
(MCCH), Petitioner,
vs.
ERMA YBALLE, NELIA ANGEL, ELEUTERIA CORTEZ and
EVELYN ONG, Respondents.
DECISION
VILLARAMA, JR., J.:
The present petition was included in the four consolidated cases previously
decided by this Court.1 However, its reinstatement and separate disposition
became necessary due to oversight in the issuance of the order of
consolidation.
The Facts

Respondents were hired as staff nurses (Ong and Angel) and midwives
(Yballe and Cortez) by petitioner Visayas Community Medical Center
(VCMC), formerly the Metro Cebu Community Hospital, Inc. (MCCHI).
MCCHI is a non-stock, non-profit corporation which operates the Metro
Cebu Community Hospital (MCCH), a tertiary medical institution owned by
the United Church of Christ in the Philippines (UCCP).
Considering the similar factual setting, we quote the relevant portions of the
narration of facts in our Decision dated December 7, 2011 in Abaria v.
NLRC2:
The National Federation of Labor (NFL) is the exclusive bargaining
representative of the rank-and-file employees of MCCHI. Under the 1987
and 1991 Collective Bargaining Agreements (CBAs), the signatories were
Ciriaco B. Pongasi, Sr. for MCCHI, and Atty. Armando M. Alforque (NFL
Legal Counsel) and Paterno A. Lumapguid as President of NFL-MCCH
Chapter. In the CBA effective from January 1994 until December 31, 1995,
the signatories were Sheila E. Buot as Board of Trustees Chairman, Rev.
Iyoy as MCCH Administrator and Atty. Fernando Yu as Legal Counsel of
NFL, while Perla Nava, President of Nagkahiusang Mamumuo sa MCCH
(NAMA-MCCH-NFL) signed the Proof of Posting.
On December 6, 1995, Nava wrote Rev. Iyoy expressing the unions desire
to renew the CBA, attaching to her letter a statement of proposals
signed/endorsed by 153 union members. Nava subsequently requested that
the following employees be allowed to avail of one-day union leave with
pay on December 19, 1995: Celia Sabas, Jesusa Gerona, Albina Baez,
Eddie Villa, Roy Malazarte, Ernesto Canen, Jr., Guillerma Remocaldo,
Catalina Alsado, Evelyn Ong, Melodia Paulin, Sofia Bautista, Hannah
Bongcaras, Ester Villarin, Iluminada Wenceslao and Perla Nava. However,
MCCHI returned the CBA proposal for Nava to secure first the endorsement
of the legal counsel of NFL as the official bargaining representative of
MCCHI employees.
Meanwhile, Atty. Alforque informed MCCHI that the proposed CBA
submitted by Nava was never referred to NFL and that NFL has not

authorized any other legal counsel or any person for collective bargaining
negotiations. By January 1996, the collection of union fees (check-off) was
temporarily suspended by MCCHI in view of the existing conflict between
the federation and its local affiliate. Thereafter, MCCHI attempted to take
over the room being used as union office but was prevented to do so by
Nava and her group who protested these actions and insisted that
management directly negotiate with them for a new CBA. MCCHI referred
the matter to Atty. Alforque, NFLs Regional Director, and advised Nava that
their group is not recognized by NFL.
In his letter dated February 24, 1996 addressed to Nava, Ernesto Canen, Jr.,
Jesusa Gerona, Hannah Bongcaras, Emma Remocaldo, Catalina Alsado and
Albina Baez, Atty. Alforque suspended their union membership for serious
violation of the Constitution and By-Laws. Said letter states:
xxxx
On February 26, 1996, upon the request of Atty. Alforque, MCCHI granted
one-day union leave with pay for 12 union members. The next day, several
union members led by Nava and her group launched a series of mass actions
such as wearing black and red armbands/headbands, marching around the
hospital premises and putting up placards, posters and streamers. Atty.
Alforque immediately disowned the concerted activities being carried out by
union members which are not sanctioned by NFL. MCCHI directed the
union officers led by Nava to submit within 48 hours a written explanation
why they should not be terminated for having engaged in illegal concerted
activities amounting to strike, and placed them under immediate preventive
suspension. Responding to this directive, Nava and her group denied there
was a temporary stoppage of work, explaining that employees wore their
armbands only as a sign of protest and reiterating their demand for MCCHI
to comply with its duty to bargain collectively. Rev. Iyoy, having been
informed that Nava and her group have also been suspended by NFL,
directed said officers to appear before his office for investigation in
connection with the illegal strike wherein they reportedly uttered slanderous
and scurrilous words against the officers of the hospital, threatening other

workers and forcing them to join the strike. Said union officers, however,
invoked the grievance procedure provided in the CBA to settle the dispute
between management and the union.
On March 13 and 19, 1996, the Department of Labor and Employment
(DOLE) Regional Office No. 7 issued certifications stating that there is
nothing in their records which shows that NAMA-MCCH- NFL is a
registered labor organization, and that said union submitted only a copy of
its Charter Certificate on January 31, 1995. MCCHI then sent individual
notices to all union members asking them to submit within 72 hours a
written explanation why they should not be terminated for having supported
the illegal concerted activities of NAMA-MCCH-NFL which has no legal
personality as per DOLE records. In their collective response/statement
dated March 18, 1996, it was explained that the picketing employees wore
armbands to protest MCCHIs refusal to bargain; it was also contended that
MCCHI cannot question the legal personality of the union which had
actively assisted in CBA negotiations and implementation.
On March 13, 1996, NAMA-MCCH-NFL filed a Notice of Strike but the
same was deemed not filed for want of legal personality on the part of the
filer. The National Conciliation and Mediation Board (NCMB) Region 7
office likewise denied their motion for reconsideration on March 25, 1996.
Despite such rebuff, Nava and her group still conducted a strike vote on
April 2, 1996 during which an overwhelming majority of union members
approved the strike.
Meanwhile, the scheduled investigations did not push through because the
striking union members insisted on attending the same only as a group.
MCCHI again sent notices informing them that their refusal to submit to
investigation is deemed a waiver of their right to explain their side and
management shall proceed to impose proper disciplinary action under the
circumstances. On March 30, 1996, MCCHI sent termination letters to union
leaders and other members who participated in the strike and picketing
activities. On April 8, 1996, it also issued a cease-and-desist order to the rest
of the striking employees stressing that the wildcat concerted activities

spearheaded by the Nava group is illegal without a valid Notice of Strike and
warning them that non-compliance will compel management to impose
disciplinary actions against them. For their continued picketing activities
despite the said warning, more than 100 striking employees were dismissed
effective April 12 and 19, 1996.
Unfazed, the striking union members held more mass actions. The means of
ingress to and egress from the hospital were blocked so that vehicles
carrying patients and employees were barred from entering the premises.
Placards were placed at the hospitals entrance gate stating:
"Please proceed to another hospital" and "we are on protest." Employees and
patients reported acts of intimidation and harassment perpetrated by union
leaders and members. With the intensified atmosphere of violence and
animosity within the hospital premises as a result of continued protest
activities by union members, MCCHI suffered heavy losses due to low
patient admission rates. The hospitals suppliers also refused to make further
deliveries on credit.
With the volatile situation adversely affecting hospital operations and the
condition of confined patients, MCCHI filed a petition for injunction in the
NLRC (Cebu City) on July 9, 1996 (Injunction Case No. V-0006-96). A
temporary restraining order (TRO) was issued on July 16, 1996. MCCHI
presented 12 witnesses (hospital employees and patients), including a
security guard who was stabbed by an identified sympathizer while in the
company of Navas group. MCCHIs petition was granted and a permanent
injunction was issued on September 18, 1996 enjoining the Nava group from
committing illegal acts mentioned in Art. 264 of the Labor Code.
On August 27, 1996, the City Government of Cebu ordered the demolition
of the structures and obstructions put up by the picketing employees of
MCCHI along the sidewalk, having determined the same as a public
nuisance or nuisance per se.

Thereafter, several complaints for illegal dismissal and unfair labor practice
were filed by the terminated employees against MCCHI, Rev. Iyoy, UCCP
and members of the Board of Trustees of MCCHI.3
On August 4, 1999, Executive Labor Arbiter Reynoso A. Belarmino
rendered his Decision4 in the consolidated cases which included NLRC Case
No. RAB-VII-02-0309-98 filed by herein respondents. The dispositive
portion of said decision reads:
WHEREFORE, premises considered, judgment is hereby rendered
dismissing the claim of unfair labor practice and illegal dismissal and
declaring the termination of the following as an offshoot of the illegal strike:
Perla Nava, Catalina Alsado, Albina Baez, Hannah Bongcaras, Ernesto
Canen, Jesusa Gerona and Guillerma Remocaldo but directing the
respondent Metro Cebu Community Hospital to pay the herein complainants
separation pay in the sum of THREE MILLION EIGHTY FIVE
THOUSAND EIGHT HUNDRED NINETY SEVEN and [40]/100
(P3,085,897.40) detailed as follows:
xxxx
79. Erma Yballe
6/11/83 4/19/96: 12 years, 10 mos. (13 years)
P5,000.00 2 x 13 = 32,500.00
80. Eleuteria Cortez
12/13/[74]5 4/12/96: 21 years, 4 mos. (21 years)
P5,000.00 2 x 21 = 52,500.00
81. Nelia Angel
6/01/88 4/12/96: 7 years, 10 mos. (8 years)
P5,000.00 2 x 8 = 20,000.00
82. Evelyn Ong

7/07/86 4/12/96: 9 years, 9 mos. (10 years)

P5,000.00 2 x 10 = 25,000.00
xxxx
SO ORDERED.6
Executive Labor Arbiter Belarmino ruled that MCCHI and its administrators
were not guilty of unfair labor practice. He likewise upheld the termination
of complainants union officers who conducted the illegal strike. The rest of
the complainants were found to have been illegally dismissed, thus:
We, however, see that the NAMA members deserve a different treatment. As
the Court said, members of a union cannot be held responsible for an illegal
strike on the sole basis of such membership, or even on an account of their
affirmative vote authorizing the same. They become liable only if they
actually participated therein (ESSO Phil., Inc. vs. Malayang Manggagawa sa
Esso 75 SCRA 73). But the illegality of their participation is placed in a state
of doubt they, being merely followers. Under the circumstances, We resort to
Art. 4 of the Labor Code favoring the workingman in case of doubt in the
interpretation and implementation of laws.
Obviously swayed by the actuations of their leaders, herein complainants
ought to be reinstated as a matter of policy but without backwages for they
cannot be compensated having skipped work during the illegal strike
(National Federation of Sugar Workers vs. Overseas et al. 114 SCRA 354).
But with their positions already taken over by their replacements and with
strained relations between the parties having taken place, We deem it fair
that complainants except for the seven officers, should be paid separation
pay of one-half (1/2) month for every year of service by the respondent
hospital.7
Respondents and their co-complainants filed their respective appeals before
the National Labor Relations Commission (NLRC) Cebu City. On February
15, 2001, respondents and MCCHI jointly moved to defer resolution of their
appeal (NLRC Case No. V-001042-99) in view of a possible compromise.

Consequently, in its Decision8dated March 14, 2001, the NLRCs Fourth

Division (Cebu City) resolved only the appeals filed by respondents cocomplainants. The dispositive portion of said decision reads:
WHEREFORE, premises considered, the decision of the Executive Labor
Arbiter dismissing the complaint for unfair labor practice and illegal
dismissal is AFFIRMED with MODIFICATIONS declaring the dismissal of
all the complainants in RAB Case No. 07-02-0394-98 and RAB Case No.
07-03-0596-98 valid and legal. Necessarily, the award of separation pay and
attorneys fees are hereby Deleted.
Resolution on RAB Case No. 07-02-0309-98 is hereby Deferred upon Joint
Motion of the parties.
SO ORDERED.9
The NLRC denied the motion for reconsideration of the above decision
under its Resolution10 dated July 2, 2001.
Having failed to reach a settlement, respondents counsel filed a motion to
resolve their appeal on January 2, 2003. Thus, on March 12, 2003, the
NLRC-Cebu City Fourth Division rendered its Decision,11 as follows:
WHEREFORE, premises considered, the decision of the Executive Labor
Arbiter dismissing the complaint for unfair labor practice and illegal
dismissal is AFFIRMED with MODIFICATIONS declaring all the
complainants to have been validly dismissed. Necessarily, the award of
separation pay and attorneys fees are hereby Deleted.
SO ORDERED.12
In deleting the award of separation pay and attorneys fees, the NLRC
emphasized that respondents and their co-complainants are guilty of
insubordination, having persisted in their illegal concerted activities even
after MCCHI had sent them individual notices that the strike was illegal as it
was filed by NAMA-MCCH-NFL which is not a legitimate labor
organization. It held that under the circumstances where the striking

employees harassed, threatened and prevented non-striking employees and

doctors from entering hospital premises, blocked vehicles carrying patients
to the hospital premises and caused anxiety to recuperating patients by
displaying placards along the corridors of the hospital, and the resulting
decrease in hospital admission, refusal of suppliers to make further
deliveries due to fears of violence erupting as a result of picketing, and
diminished income due to low admission rates, it would be unfair to saddle
MCCHI with the burden of paying separation pay to complainants who were
validly dismissed. Respondents motion for reconsideration was denied by
the NLRC under its Resolution13 dated April 13, 2004.
Meanwhile, the petition for certiorari filed by respondents co-complainants
in the Court of Appeals (CA) Cebu Station (CA-G.R. SP No. 66540) was
initially dismissed by the CAs Eighth Division on the ground that out of 88
petitioners only 47 have signed the certification against forum shopping. On
motion for reconsideration filed by said petitioners, the petition was
reinstated but only with respect to the 47 signatories. Said ruling was
challenged by complainants before this Court via a petition for review on
certiorari, docketed as G.R. No. 154113 (Abaria, et al. v. NLRC, et al.).14
On October 17, 2008, the CA dismissed the petition in CA-G.R. SP No.
66540, as follows:
WHEREFORE, premises considered, judgment is hereby rendered
AFFIRMING the Decision of the National Labor Relations Commission
(NLRC) Fourth Division dated March 14, 2001 in NLRC Case No. V001042-99, WITH MODIFICATIONS to the effect that (1) the petitioners,
except the union officers, shall be awarded separation pay equivalent to onehalf (1/2) month pay for every year of service, and (2) petitioner Cecilia
Sabas shall be awarded overtime pay amounting to sixty-three (63) hours.
SO ORDERED.15
The motion for reconsideration and motion for partial reconsideration
respectively filed by the complainants and MCCHI in CA-G.R. SP No.
66540 were likewise denied by the CA.16 Both parties elevated the case to

this Court in separate petitions: G.R. No. 187778 (Perla Nava, et al. v.
NLRC, et al.) and G.R. No. 187861 (Metro Cebu Community Hospital v.
Perla Nava, et al.). Herein respondents also filed in the CA a petition for
certiorari assailing the March 12, 2003 Decision and April 13, 2004
Resolution of the NLRC, docketed as CA-G.R. SP No. 84998 (Cebu City).
By Decision17 dated November 7, 2008, the CA granted their petition, as
follows:
WHEREFORE, the challenged Decision of public respondent dated March
12, 2003 and its Resolution dated April 13, 2004 are herebyREVERSED
AND SET ASIDE. Private respondent Metro Cebu Community Hospital is
ordered to reinstate petitioners Erma Yballe, Eleuteria Cortes, Nelia Angel
and Evelyn Ong without loss of seniority rights and other privileges; to pay
them their full backwages inclusive of their allowances and other benefits
computed from the time of their dismissal up to the time of their actual
reinstatement.
No pronouncement as to costs.
SO ORDERED.18
Petitioner filed a motion for reconsideration which the CA denied in its
February 22, 2011 Resolution.19
The Case
The present petition (G.R. No. 196156) was filed on April 27, 2011. Records
showed that as early as August 3, 2009, G.R. Nos. 187861 and 187778 were
consolidated with G.R. No. 154113 pending with the Third Division.20As to
the present petition, it was initially denied under the June 8, 2011
Resolution21 issued by the Second Division for failure to show any reversible
error committed by the CA. Petitioner filed a motion for reconsideration to
which respondents filed an opposition. Said motion for reconsideration of
the earlier dismissal (June 8, 2011) remained unresolved by the Second
Division which, on June 29, 2011, issued a resolution ordering the transfer
of the present case to the Third Division.22

It is further recalled that on June 23, 2011, petitioner moved to consolidate

the present case with G.R. Nos. 154113, 187861 and 187778 which was
opposed by respondents. Under Resolution dated August 1, 2011, the Third
Division denied the motion for consolidation, citing the earlier dismissal of
the petition on June 8, 2011.23However, on motion for reconsideration filed
by petitioner, said resolution was set aside on October 19, 2011 and the
present case was ordered consolidated with G.R. Nos. 154113, 187778 and
187861 and transferred to the First Division where the latter cases are
pending.24
On December 7, 2011, the Decision25 in the consolidated cases (G.R. Nos.
154113, 187778, 187861 and 196156) was rendered, the dispositive portion
of which states:
WHEREFORE, the petition for review on certiorari in G.R. No. 187861 is
DENIED while the petitions in G.R. Nos. 154113, 187778 and 196156 are
PARTLY GRANTED. The Decision dated October 17, 2008 of the Court of
Appeals in CA-G.R. SP No. 66540 is hereby AFFIRMED with
MODIFICATIONS in that MCCHI is ordered to pay the petitioners in G.R.
Nos. 154113 and 187778, except the petitioners who are union officers,
separation pay equivalent to one month pay for every year of service, and
reasonable attorneys fees in the amount ofP50,000.00. The Decision dated
November 7, 2008 is likewise AFFIRMED with MODIFICATIONS in that
MCCHI is ordered to pay the private respondents in G.R. No. 196156
separation pay equivalent to one month pay for every year of service, and
that the award of back wages is DELETED.
The case is hereby remanded to the Executive Labor Arbiter for the
recomputation of separation pay due to each of the petitioners union
members in G.R. Nos. 154113, 187778 and 196156 except those who have
executed compromise agreements approved by this Court.
No pronouncement as to costs.
SO ORDERED.26

On February 7, 2012, respondents filed a Motion for Reconsideration with

Motion for Severance and Remand27asserting that they were denied due
process as they had no opportunity to file a comment on the petition prior to
the rendition of the Decision dated December 7, 2011. They also point out
that the issues in the present case are different from those raised in the
petitions filed by their co-complainants.
On June 18, 2012, this Court issued a Resolution (1) reinstating the petition
and requiring the respondents to file their comment on the petition; and (2)
denying the motion for remand to the Second Division.28 Respondents thus
filed their Comment, to which petitioner filed its Reply. Thereafter, the
parties submitted their respective memoranda.
Issues
In their Memorandum, respondents submit that since the Decision dated
December 7, 2011 in the consolidated cases of Abaria v. NLRC have already
declared the dismissal of complainants union members as illegal but
awarded separation pay and reasonable attorneys fees, the remaining issue
to be resolved in this case is whether respondents are entitled to back wages
and damages.
Petitioner, however, further assail the CA in (a) allowing respondents to
change their theory on appeal, (b) finding that respondents did not commit
illegal acts during the strike and (c) increasing the award of separation pay to
one month pay for every year of service as held in the December 7, 2011
Decision in view of the damages suffered by petitioner.
Respondents Argument
Respondents maintain that there was no iota of evidence presented by
petitioner that they took part in the illegal strike conducted by the Nava
group or committed illegal acts like the blocking of ingress and egress in the
hospital premises. They claim that they were never involved in work
stoppage but instead were locked out by petitioner as they were unable to

resume work because hospital security personnel prevented them from

entering the hospital upon petitioners instructions.
Claiming that they have consistently manifested their non- participation in
the illegal strike before the regional arbitration branch, NLRC and the CA,
respondents argue that there is absolutely no reason to delete the awards of
back wages and separation pay in lieu of reinstatement.
Petitioners Argument
Petitioner contends that respondents have surreptitiously changed their
position from admitting in their pleadings before the NLRC their
participation in the illegal strike to that of mere wearing of arm bands and
alleged non-receipt of the notices in their appeal before the CA. They stress
the established facts on record that: (1) respondents signed the March 18,
1996 collective reply of the union officers and members to the notices sent
by petitioner regarding their illegal concerted activities, thus proving that
they received the said notices; (2) acknowledged Perla Nava as their union
leader which belies respondents belated attempt to distance themselves from
the Nava group who led the illegal strike; and (3) respondents did not, in
their motion for reconsideration of the NLRC Decision dated March 12,
2003, make any denial of their participation in the illegal strike but even
justified their resort thereto due to the prevailing labor dispute.
With the Decision in the consolidated cases (Abaria v. NLRC) having
already upheld the consistent rule that dismissed employees who
participated in an illegal strike are not entitled to back wages, petitioner
prays that the previous rulings in Philippine Diamond Hotel and Resort, Inc.
(Manila Diamond Hotel) v. Manila Diamond Hotel Employees Union,29 G &
S Transport Corporation v. Infante,30 Philippine Marine Officers Guild v.
Compaia Maritima, et al.,31 and Escario v. National Labor Relations
Commission (Third Division)32 be likewise applied in this case.
Our Ruling
The petition is partly meritorious.

Paragraph 3, Article 264(a) of the Labor Code provides that ". . .any union
officer who knowingly participates in an illegal strike and any worker or
union officer who knowingly participates in the commission of illegal acts
during a strike may be declared to have lost his employment status . . ." In
the Decision dated December 7, 2011, we declared as invalid the dismissal
of MCCH employees who participated in the illegal strike conducted by
NAMA-MCCH-NFL which is not a legitimate labor organization. Since
there was no showing that the complainants committed any illegal act during
the strike, they may not be deemed to have lost their employment status by
their mere participation in the illegal strike. On the other hand, the union
leaders (Nava group) who conducted the illegal strike despite knowledge
that NAMA-MCCH-NFL is not a duly registered labor union were declared
to have been validly terminated by petitioner.
We stress that the law makes a distinction between union members and
union officers. A worker merely participating in an illegal strike may not be
terminated from employment. It is only when he commits illegal acts during
a strike that he may be declared to have lost employment status.33 In
contrast, a union officer may be terminated from employment for knowingly
participating in an illegal strike or participates in the commission of illegal
acts during a strike. The law grants the employer the option of declaring a
union officer who participated in an illegal strike as having lost his
employment. It possesses the right and prerogative to terminate the union
officers from service.34
In this case, the NLRC affirmed the finding of the Labor Arbiter that
respondents supported and took part in the illegal strike and further declared
that they were guilty of insubordination. It noted that the striking employees
were determined to force management to negotiate with their union and
proceeded with the strike despite knowledge that NAMA-MCCH-NFL is not
a legitimate labor organization and without regard to the consequences of
their acts consisting of displaying placards and marching noisily inside the
hospital premises, and blocking the entry of vehicles and persons.

On appeal, the CA reversed the rulings of the Labor Arbiter and NLRC,
ordered the reinstatement of respondents and the payment of their full back
wages. The CA found that respondents participation was limited to the
wearing of armband and thus, citing Bascon v. CA,35 declared respondents
termination as invalid in the absence of any evidence that they committed
any illegal act during the strike.
In the Decision dated December 7, 2011, we likewise ruled that the mass
termination of complainants was illegal, notwithstanding the illegality of the
strike in which they participated. However, since reinstatement was no
longer feasible, we ordered MCCHI to pay the dismissed employees
separation pay equivalent to one month pay for every year of service. The
claim for back wages was denied, consistent with existing law and
jurisprudence. Respondents argue that the CA correctly awarded them back
wages because while they "supported the protest action" they were not part
of the Nava group who were charged with blocking the free ingress and
egress of the hospital, threatening and harassing persons entering the
premises, and making boisterous and unpleasant remarks. They deny any
participation in the illegal strike and assert that no evidence of their actual
participation in the strike was shown by petitioner.
We are not persuaded by respondents attempt to dissociate themselves from
the Nava group who led the illegal strike. In their motion for reconsideration
filed before the NLRC, respondents no longer denied having participated in
the strike but simply argued that no termination of employment in
connection with the strike "staged by complainants" cannot be legally
sustained because MCCHI "did not file a complaint or petition to declare the
strike of complainants illegal or declare that illegal acts were committed in
the conduct of the strike." Respondents further assailed the NLRCs finding
that they were guilty of insubordination since "the proximate cause of the
acts of complainants was the prevailing labor dispute and the consequent
resort by complainants of [sic] a strike action."36 When the case was elevated
to the CA, respondents shifted course and again insisted that they did not
participate in the strike nor receive the March 15, 1996 individual notices
sent by petitioner to the striking employees.

Respondents inconsistent posture cannot be sanctioned. While there was

indeed no evidence of any illegal act committed by respondents during the
strike, the Labor Arbiter and NLRC were one in finding that respondents
actively supported the concerted protest activities, signed the collective reply
of union members manifesting that they launched the mass actions to protest
managements refusal to negotiate a new CBA, refused to appear in the
investigations scheduled by petitioner because it was the unions stand that
they would only attend these investigations as a group, and failed to heed
petitioners final directive for them to desist from further taking part in the
illegal strike. The CA, on the other hand, found that respondents
participation in the strike was limited to the wearing of armbands. Since an
ordinary striking worker cannot be dismissed for such mere participation in
the illegal strike, the CA correctly ruled that respondents were illegally
dismissed. However, the CA erred in awarding respondents full back wages
and ordering their reinstatement despite the prevailing circumstances.
As a general rule, back wages are granted to indemnify a dismissed
employee for his loss of earnings during the whole period that he is out of
his job. Considering that an illegally dismissed employee is not deemed to
have left his employment, he is entitled to all the rights and privileges that
accrue to him from the employment.37 The grant of back wages to him is in
furtherance and effectuation of the public objectives of the Labor Code, and
is in the nature of a command to the employer to make a public reparation
for his illegal dismissal of the employee in violation of the Labor Code.38
Are respondents then entitled to back wages? This Court, in G & S Transport
Corporation v. Infante,39 ruled in the negative:
With respect to backwages, the principle of a "fair days wage for a fair
days labor" remains as the basic factor in determining the award thereof. If
there is no work performed by the employee there can be no wage or pay
unless, of course, the laborer was able, willing and ready to work but was
illegally locked out, suspended or dismissed or otherwise illegally prevented
from working. x x x In Philippine Marine Officers Guild v. Compaia
Maritima, as affirmed in Philippine Diamond Hotel and Resort v. Manila

Diamond Hotel Employees Union, the Court stressed that for this exception
to apply, it is required that the strike be legal, a situation that does not obtain
in the case at bar. (Emphasis supplied)
The alternative relief for union members who were dismissed for having
participated in an illegal strike is the payment of separation pay in lieu of
reinstatement under the following circumstances: (a) when reinstatement can
no longer be effected in view of the passage of a long period of time or
because of the realities of the situation; (b) reinstatement is inimical to the
employers interest; (c) reinstatement is no longer feasible; (d) reinstatement
does not serve the best interests of the parties involved; (e) the employer is
prejudiced by the workers continued employment; (f) facts that make
execution unjust or inequitable have supervened; or (g) strained relations
between the employer and employee.40
In the Decision dated December 7, 2011, we held that the grant of separation
pay to complainants is the appropriate relief under the circumstances, thus:
Considering that 15 years had lapsed from the onset of this labor dispute,
and in view of strained relations that ensued, in addition to the reality of
replacements already hired by the hospital which had apparently recovered
from its huge losses, and with many of the petitioners either employed
elsewhere, already old and sickly, or otherwise incapacitated, separation pay
without back wages is the appropriate relief. x x x41
In fine, we sustain the CA in ruling that respondents who are mere union
members were illegally dismissed for participating in the illegal strike
conducted by the Nava group. However, we set aside the order for their
reinstatement and payment of full back wages.
WHEREFORE, the petition is PARTLY GRANTED. The Decision dated
November 7, 2008 and Resolution dated February 22, 2011 of the Court of
Appeals in CA-G.R. SP No. 84998 are hereby AFFIRMED with
MODIFICATIONS. In lieu of reinstatement, petitioner Visayas Community
Medical Center formerly known as the Metro Cebu Community Hospital) is
ordered to PAY respondents Erma Yballe, Evelyn Ong, Nelia Angel and

Eleuteria Cortez separation pay equivalent to one month pay for every year
of service. The award of back wages to the said respondents is DELETED.
The case is hereby remanded to the Executive Labor Arbiter for the
recomputation of separation pay due to each of the respondents.
SO ORDERED.
THIRD DIVISION
HOTEL ENTERPRISES OF THE
PHILIPPINES, INC. (HEPI), owner
of Hyatt Regency Manila,
Petitioner,
- versus SAMAHAN NG MGA
MANGGAGAWA SA HYATTNATIONAL UNION OF
WORKERS IN THE HOTEL AND
RESTAURANT AND ALLIED
INDUSTRIES (SAMASAHNUWHRAIN),
Respondent.

G.R. No. 165756

Present:
YNARESSANTIAGO, J.,
Chairperson,
CARPIO,*
CORONA,**
NACHURA, and
PERALTA, JJ.
Promulgated:
June 5, 2009

x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:

The Constitution affords full protection to labor, but the policy is not to be
blindly followed at the expense of capital. Always, the interests of both sides

must be balanced in light of the evidence adduced and the peculiar

circumstances surrounding each case.

This is a petition for review on certiorari under Rule 45 of the Rules

of Court assailing the Court of Appeals (CA) Decision [1] dated July 20, 2004
and the Resolution[2] dated October 20, 2004 in CA-G.R. SP No. 81153. The
appellate court, in its decision and resolution, reversed the April 3, 2003
Resolution[3] of the National Labor Relations Commission (NLRC) and
reinstated the October 30, 2002 Decision[4] issued by Labor Arbiter Aliman
Mangandog upholding the legality of the strike staged by the officers and
members of respondent Samahan ng mga Manggagawa sa Hyatt-National
Union of Workers in the Hotel Restaurant and Allied Industries (Union).
We trace the antecedent facts below.
Respondent Union is the certified collective bargaining agent of the
rank-and-file employees of Hyatt Regency Manila, a hotel owned by
petitioner Hotel Enterprises of the Philippines, Inc. (HEPI).
In 2001, HEPIs hotel business suffered a slump due to the local and
international economic slowdown, aggravated by the events of September
11, 2001 in the United States. An audited financial report made by Sycip
Gorres Velayo (SGV) & Co. on January 28, 2002 indicated that the hotel
suffered a gross operating loss amounting to P16,137,217.00 in 2001,[5] a
staggering decline compared to its P48,608,612.00 gross operating profit[6] in
year 2000.[7]

2000
P 78,434,1
03

2001
P 12,230,24
8

20,000,000

20,000,000

9,825,491

8,367,465

29,825,491
P 48,608,6
12

28,367,465
(P 16,137,21
7)

Income from
Hotel
Operations
------------------------------------------------------------------------------------Other Deductions
Provision for
hotel
rehabilitation
Provision for
replacements
of and
additions to
furnishings
and
equipment
Gross
Operating
Profit (Loss)

According to petitioner, the management initially decided to cost-cut

by
implementing
energy-saving
schemes:
prioritizing
acquisitions/purchases; reducing work weeks in some of the hotels
departments; directing the employees to avail of their vacation leaves; and
imposing a moratorium on hiring employees for the year 2001 whenever
practicable.[8]
Meanwhile, on August 31, 2001, the Union filed a notice of strike due
to a bargaining deadlock before the National Conciliation Mediation Board
(NCMB), docketed as NCMB-NCR-NS 08-253-01.[9] In the course of the
proceedings, HEPI submitted its economic proposals for the rank-and-file
employees covering the years 2001, 2002, and 2003. The proposal included
manning and staffing standards for the 248 regular rank-and-file

employees. The Union accepted the economic proposals. Hence, a new

collective bargaining agreement (CBA) was signed on November 21, 2001,
adopting the manning standards for the 248 rank-and-file employees.[10]
Then, on December 21, 2001, HEPI issued a memorandum offering a
Special Limited Voluntary Resignation/Retirement Program (SLVRRP) to its
regular employees. Employees who were qualified to resign or retire were
given separation packages based on the number of years of service.[11] The
vacant positions, as well as the regular positions vacated, were later filled up
with contractual personnel and agency employees.[12]
Subsequently, on January 21, 2002, petitioner decided to implement a
downsizing scheme after studying the operating costs of its different
divisions to determine the areas where it could obtain significant savings. It
found that the hotel could save on costs if certain jobs, such as engineering
services, messengerial/courier services, janitorial and laundry services, and
operation of the employees cafeteria, which by their nature were
contractable pursuant to existing laws and jurisprudence, were abolished and
contracted out to independent job contractors. After evaluating the hotels
manning guide, the following positions were identified as redundant or in
excess of what was required for the hotels actual operation given the
prevailing poor business condition, viz.: a) housekeeping attendant-linen; b)
tailor; c) room attendant; d) messenger/mail clerk; and e) telephone
technician.[13] The effect was to be a reduction of the hotels rank-and file
employees from the agreed number of 248 down to just 150 [14] but it would
generate estimated savings of around P9,981,267.00 per year.[15]
On January 24, 2002, petitioner met with respondent Union to
formally discuss the downsizing program.[16] The Union opposed the
downsizing plan because no substantial evidence was shown to prove that
the hotel was incurring heavy financial losses, and for being violative of the
CBA, more specifically the manning/staffing standards agreed upon by both
parties in November 2001.[17] In a financial analysis made by
the Union based on Hyatts financial statements submitted to the Securities
and Exchange Commission (SEC), it noted that the hotel posted a positive
profit margin with respect to its gross operating and net incomes for the

years 1998, 1999, 2000, and even in 2001.[18] Moreover, figures comprising
the hotels unappropriated retained earnings showed a consistent increase
from 1998 to 2001, an indication that the company was, in fact, earning,
contrary to petitioners assertion. The net income from hotel operations
slightly dipped from P78,434,103.00 in 2000 to P12,230,248.00 for the year
2001, but nevertheless remained positive.[19] With this, the Union, through a
letter, informed the management of its opposition to the scheme and
proposed instead several cost-saving measures.[20]
Despite its opposition, a list of the positions declared redundant and to
be contracted out was given by the management to the Union on March 22,
2002.[21] Notices of termination were, likewise, sent to 48 employees whose
positions were to be retrenched or declared as redundant. The notices were
sent on April 5, 2002 and were to take effect on May 5, 2002. [22] A notice of
termination was also submitted by the management to the Department of
Labor and Employment (DOLE) indicating the names, positions, addresses,
and salaries of the employees to be terminated. [23] Thereafter, the hotel
management engaged the services of independent job contractors to perform
the following services: (1) janitorial (previously, stewarding and public area
attendants); (2) laundry; (3) sundry shop; (4) cafeteria; [24] and (5)
engineering.[25] Some employees, including one Union officer, who were
affected by the downsizing plan were transferred to other positions in order
to save their employment.[26]
On April 12, 2002, the Union filed a notice of strike based on unfair
labor practice (ULP) against HEPI. The case was docketed as NCMB-NCRNS-04-139-02.[27] On April 25, 2002, a strike vote was conducted with
majority in the bargaining unit voting in favor of the strike.[28] The result of
the strike vote was sent to NCMB-NCR Director Leopoldo de Jesus also on
April 25, 2002.[29]
On April 29, 2002, HEPI filed a motion to dismiss notice of strike
which was opposed by the Union. On May 3, 2002, the Union filed a
petition to suspend the effects of termination before the Office of the
Secretary of Labor. On May 5, 2002, the hotel management began
implementing its downsizing plan immediately terminating seven (7)

employees due to redundancy and 41 more due to retrenchment or abolition

of positions.[30] All were given separation pay equivalent to one (1) months
salary for every year of service.[31]
On May 8, 2002, conciliation proceedings were held between
petitioner and respondent, but to no avail. On May 10, 2002,
respondent Union went on strike. A petition to declare the strike illegal was
filed by petitioner on May 22, 2002, docketed as NLRC-NCR Case No. 0503350-2002.
On June 14, 2002, Acting Labor Secretary Manuel Imson issued an
order in NCM-NCR-NS-04-139-02 (thence, NLRC Certified Case No.
000220-02), certifying the labor dispute to the NLRC for compulsory
arbitration and directing the striking workers, except the 48 workers earlier
terminated, to return to work within 24 hours. On June 16, 2002, after
receiving a copy of the order, members of respondent Union returned to
work.[32] On August 1, 2002, HEPI filed a manifestation informing the
NLRC of the pending petition to declare the strike illegal. Because of this,
the NLRC, on November 15, 2002, issued an order directing Labor Arbiter
Aliman Mangandog to immediately suspend the proceedings in the pending
petition to declare the strike illegal and to elevate the records of the said case
for consolidation with the certified case.[33] However, the labor arbiter had
already issued a Decision[34] dated October 30, 2002 declaring the strike
legal.[35] Aggrieved, HEPI filed an appeal ad cautelam before the NLRC
questioning the October 30, 2002 decision.[36] The Union, on the other hand,
filed a motion for reconsideration of the November 15, 2002 Order on the
ground that a decision was already issued in one of the cases ordered to be
consolidated.[37]
On appeal, the NLRC reversed the labor arbiters decision. In a
Resolution[38] dated April 3, 2003, it gave credence to the financial report of
SGV & Co. that the hotel had incurred huge financial losses necessitating
the adoption of a downsizing scheme. Thus, NLRC declared the strike
illegal, suspended all Union officers for a period of six (6) months without
pay, and dismissed the ULP charge against HEPI.[39]

Respondent Union moved for reconsideration, while petitioner HEPI

filed its partial motion for reconsideration. Both were denied in a
Resolution[40]dated September 24, 2003.
The Union filed a petition for certiorari with the CA on December 19,
2003 questioning in the main the validity of the NLRCs reversal of the
labor arbiters decision.[42] But while the petition was pending, the hotel
management, on December 29, 2003, issued separate notices of suspension
against each of the 12 Union officers involved in the strike in line with the
April 3, 2003 resolution of the NLRC.[43]
[41]

On July 20, 2004, the CA promulgated the assailed Decision,

reversing the resolution of the NLRC and reinstating the October 30,
2002 decision of the Labor Arbiter which declared the strike valid. The CA
also ordered the reinstatement of the 48 terminated employees on account of
the hotel managements illegal redundancy and retrenchment scheme and the
payment of their backwages from the time they were illegally dismissed
until their actual reinstatement.[45]HEPI moved for reconsideration but the
same was denied for lack of merit.[46]
[44]

Hence, this petition.

The issue boils down to whether the CAs decision, reversing the
NLRC ruling, is in accordance with law and established facts.
We answer in the negative.
To resolve the correlative issues (i.e., the validity of the strike; the
charges of ULP against petitioner; the propriety of petitioners act of hiring
contractual employees from employment agencies; and the entitlement of
Union officers and terminated employees to reinstatement, backwages and
strike duration pay), we answer first the most basic question: Was petitioners
downsizing scheme valid?

The pertinent provision of the Labor Code states:

ART. 283. x x x
The employer may also terminate the employment of any
employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking
unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the
worker and the [Department] of Labor and Employment at least
one (1) month before the intended date thereof. In case of
termination due to the installation of labor saving devices or
redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least his one (1) month pay or to
at least one (1) month pay for every year of service, whichever
is higher. In case of retrenchment to prevent losses and in cases
of closures or cessation of operations of establishment or
undertaking not due to serious business losses or financial
reverses, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every year of
service, whichever is higher. A fraction of at least six (6)
months shall be considered as one (1) whole year.
Retrenchment is the reduction of work personnel usually due to poor
financial returns, aimed to cut down costs for operation particularly on
salaries and wages.[47] Redundancy, on the other hand, exists where the
number of employees is in excess of what is reasonably demanded by the
actual requirements of the enterprise.[48] Both are forms of downsizing and
are often resorted to by the employer during periods of business recession,
industrial depression, or seasonal fluctuations, and during lulls in production
occasioned by lack of orders, shortage of materials, conversion of the plant
for a new production program, or introduction of new methods or more
efficient machinery or automation.[49] Retrenchment and redundancy are
valid management prerogatives, provided they are done in good faith and the
employer faithfully complies with the substantive and procedural
requirements laid down by law and jurisprudence.[50]

For a valid retrenchment, the following requisites must be complied

with: (1) the retrenchment is necessary to prevent losses and such losses are
proven; (2) written notice to the employees and to the DOLE at least one
month prior to the intended date of retrenchment; and (3) payment of
separation pay equivalent to one-month pay or at least one-half month pay
for every year of service, whichever is higher.[51]
In case of redundancy, the employer must prove that: (1) a written
notice was served on both the employees and the DOLE at least one month
prior to the intended date of retrenchment; (2) separation pay equivalent to at
least one month pay or at least one month pay for every year of service,
whichever is higher, has been paid; (3) good faith in abolishing the
redundant positions; and (4) adoption of fair and reasonable criteria in
ascertaining which positions are to be declared redundant and accordingly
abolished.[52]
It is the employer who bears the onus of proving compliance with
these requirements, retrenchment and redundancy being in the nature of
affirmative defenses.[53] Otherwise, the dismissal is not justified.[54]
In the case at bar, petitioner justifies the downsizing scheme on the
ground of serious business losses it suffered in 2001. Some positions had to
be declared redundant to cut losses. In this context, what may technically be
considered as redundancy may verily be considered as a retrenchment
measure.[55] To substantiate its claim, petitioner presented a financial report
covering the years 2000 and 2001 submitted by the SGV & Co., an
independent external auditing firm.[56] From an impressive gross operating
profit of P48,608,612.00 in 2000, it nose-dived to negative P16,137,217.00
the following year. This was the same financial report submitted to the SEC
and later on examined by respondent Unions auditor. The only difference is
that, in respondents analysis, Hyatt Regency Manila was still earning
because its net income from hotel operations in 2001 was P12,230,248.00.
However, if provisions for hotel rehabilitation as well as replacement of and
additions to the hotels furnishings and equipments are included, which
respondent Union failed to consider, the result is indeed a staggering deficit

of more than P16 million. The hotel was already operating not only on a
slump in income, but on a huge deficit as well. In short, while the hotel did
earn, its earnings were not enough to cover its expenses and other liabilities;
hence, the deficit. With the local and international economic conditions
equally unstable, belt-tightening measures logically had to be implemented
to forestall eventual cessation of business.
Losses or gains of a business entity cannot be fully and satisfactorily
assessed by isolating or highlighting only a particular part of its financial
report. There are recognized accounting principles and methods by which a
companys performance can be objectively and thoroughly evaluated at the
end of every fiscal or calendar year. What is important is that the assessment
is accurately reported, free from any manipulation of figures to suit the
companys needs, so that the companys actual financial condition may be
impartially and accurately gauged.
The audit of financial reports by independent external auditors is
strictly governed by national and international standards and regulations for
the accounting profession.[57] It bears emphasis that the financial statements
submitted by petitioner were audited by a reputable auditing firm and are
clear and substantial enough to prove that the company was in a precarious
financial condition.
In the competitive and highly uncertain world of business, cash flow
is as important as and oftentimes, even more critical than profitability.[58] So
long as the hotel has enough funds to pay its workers and satisfy costs for
operations, maintenance and other expenses, it may survive and bridge better
days for its recovery. But to ensure a viable cash flow amidst the growing
business and economic uncertainty is the trick of the trade. Definitely, this
cannot be achieved if the cost-saving measures continuously fail to cap the
losses. More drastic, albeit painful, measures have to be taken.
This Court will not hesitate to strike down a companys redundancy
program structured to downsize its personnel, solely for the purpose of
weakening the union leadership.[59] Our labor laws only allow retrenchment
or downsizing as a valid exercise of management prerogative if all other else

fail. But in this case, petitioner did implement various cost-saving measures
and even transferred some of its employees to other viable positions just to
avoid the premature termination of employment of its affected workers. It
was when the same proved insufficient and the amount of loss became
certain that petitioner had to resort to drastic measures to stave
off P9,981,267.00 in losses, and be able to survive.
If we see reason in allowing an employer not to keep all its employees
until after its losses shall have fully materialized, [60] with more reason should
we allow an employer to let go of some of its employees to prevent further
financial slide.
This, in turn, gives rise to another question: Does the implementation
of the downsizing scheme preclude petitioner from availing the services of
contractual and agency-hired employees?
In Asian Alcohol Corporation v. National
Commission, [61] we answered in the negative. We said:

Labor

Relations

In any event, we have held that an employers good faith

in implementing a redundancy program is not necessarily
destroyed by availment of the services of an independent
contractor to replace the services of the terminated
employees. We have previously ruled that the reduction of the
number of workers in a company made necessary by the
introduction of the services of an independent contractor is
justified when the latter is undertaken in order to effectuate
more economic and efficient methods of production. In the case
at bar, private respondent failed to proffer any proof that the
management acted in a malicious or arbitrary manner in
engaging the services of an independent contractor to operate
the Laura wells. Absent such proof, the Court has no basis to
interfere with the bona fide decision of management to effect
more economic and efficient methods of production.

With petitioners downsizing scheme being valid, and the availment of

contractual and agency-hired employees legal, the strike staged by officers
and members of respondent Union is, perforce, illegal.
Given the foregoing finding, the only remaining question that begs
resolution is whether the strike was staged in good faith. On this issue, we
find for the respondent.
Procedurally, a strike to be valid must comply with Article 263 of the
Labor Code, which pertinently reads:
Article 263. x x x
xxxx
(c) In cases of bargaining deadlocks, the duly certified or
recognized bargaining agent may file a notice of strike or the
employer may file a notice of lockout with the [Department] at
least 30 days before the intended date thereof. In cases of unfair
labor practice, the period of notice shall be 15 days and in the
absence of a duly certified or recognized bargaining agent, the
notice of strike may be filed by any legitimate labor
organization in behalf of its members. However, in case of
dismissal from employment of union officers duly elected in
accordance with the union constitution and by-laws, which may
constitute union busting where the existence of the union is
threatened, the 15-day cooling-off period shall not apply and
the union may take action immediately.
(d) The notice must be in accordance with such
implementing rules and regulations as the [Secretary] of Labor
and Employment may promulgate.
(e) During the cooling-off period, it shall be the duty of
the [Department] to exert all efforts at mediation and
conciliation to effect a voluntary settlement. Should the dispute
remain unsettled until the lapse of the requisite number of days

from the mandatory filing of the notice, the labor union may
strike or the employer may declare a lockout.
(f) A decision to declare a strike must be approved by a
majority of the total union membership in the bargaining unit
concerned, obtained by secret ballot in meetings or referenda
called for that purpose. A decision to declare a lockout must be
approved by a majority of the board of directors of the
corporation or association or of the partners in a partnership,
obtained by secret ballot in a meeting called for the
purpose. The decision shall be valid for the duration of the
dispute based on substantially the same grounds considered
when the strike or lockout vote was taken. The [Department]
may at its own initiative or upon the request of any affected
party, supervise the conduct of the secret balloting. In every
case, the union or the employer shall furnish the [Department]
the results of the voting at least seven days before the intended
strikeor lockout, subject to the cooling-off period herein
provided.
Accordingly, the requisites for a valid strike are: (a) a notice of strike
filed with the DOLE 30 days before the intended date thereof or 15 days in
case of ULP; (b) a strike vote approved by a majority of the total union
membership in the bargaining unit concerned obtained by secret ballot in a
meeting called for that purpose; and (c) a notice to the DOLE of the results
of the voting at least seven (7) days before the intended strike.[62] The
requirements are mandatory and failure of a union to comply therewith
renders the strike illegal.[63]
In this case, respondent fully satisfied the procedural requirements
prescribed by law: a strike notice filed on April 12, 2002; a strike vote
reached on April 25, 2002; notification of the strike vote filed also on April
25, 2002; conciliation proceedings conducted on May 8, 20002; and the
actual strike on May 10, 2002.
Substantively, however, there appears to be a problem. A valid and
legal strike must be based on strikeable grounds, because if it is based on a

non-strikeable ground, it is generally deemed an illegal strike. Corollarily, a

strike grounded on ULP is illegal if no acts constituting ULP actually exist.
As an exception, even if no such acts are committed by the employer, if the
employees believe in good faith that ULP actually exists, then the strike held
pursuant to such belief may be legal. As a general rule, therefore, where
a union believes that an employer committed ULP and the surrounding
circumstances warranted such belief in good faith, the resulting strike may
be considered legal although, subsequently, such allegations of unfair labor
practices were found to be groundless.[64]
Here, respondent Union went on strike in the honest belief that
petitioner was committing ULP after the latter decided to downsize its
workforce contrary to the staffing/manning standards adopted by both
parties under a CBA forged only four (4) short months earlier. The belief
was bolstered when the management hired 100 contractual workers to
replace the 48 terminated regular rank-and-file employees who were all
Union members.[65] Indeed, those circumstances showed prima facie that the
hotel committed ULP. Thus, even if technically there was no legal ground to
stage a strike based on ULP, since the attendant circumstances support the
belief in good faith that petitioners retrenchment scheme was structured to
weaken the bargaining power of the Union, the strike, by exception, may be
considered legal.
Because of this, we view the NLRCs decision to suspend all the
Union officers for six (6) months without pay to be too harsh a punishment.
A suspension of two (2) months without pay should have been more
reasonable and just. Be it noted that the striking workers are not entitled to
receive strike-duration pay, the ULP allegation against the employer being
unfounded. But since reinstatement is no longer feasible, the hotel having
permanently ceased operations on July 2, 2007,[66] we hereby order the Labor
Arbiter to instead make the necessary adjustments in the computation of the
separation pay to be received by the Union officers concerned.
Significantly, the Manifestations[67] filed by petitioner with respect to
the quitclaims executed by members of respondent Union state that 34 of the
48 employees terminated on account of the downsizing program have

already executed quitclaims on various dates.[68] We, however, take judicial

notice that 33 of these quitclaims failed to indicate the amounts received by
the terminated employees.[69] Because of this, petitioner leaves us no choice
but to invalidate and set aside these quitclaims. However, the actual amount
received by the employees upon signing the said documents shall be
deducted from whatever remaining amount is due them to avoid double
recovery of separation pay and other monetary benefits. We hereby order the
Labor Arbiter to effect the necessary computation on this matter.
For this reason, this Court strongly admonishes petitioner and its
counsel for making its former employees sign quitclaim documents without
indicating therein the consideration for the release and waiver of their
employees rights. Such conduct on the part of petitioner and its counsel is
reprehensible and puts in serious doubt the candor and fairness required of
them in their relations with their hapless employees. They are reminded to
observe common decency and good faith in their dealings with their
unsuspecting employees, particularly in undertakings that ultimately lead to
waiver of workers rights. This Court will not renege on its duty to protect the
weak against the strong, and the gullible against the wicked, be it for labor
or for capital.
However, with respect to the second batch of quitclaims signed by 85
of the remaining 160 employees who were terminated following Hyatts
permanent closure,[70] we hold that these are valid and binding undertakings.
The said documents indicate that the amount received by each of the
employees represents a reasonable settlement of their monetary claims
against petitioner and were even signed in the presence of a DOLE
representative. A quitclaim, with clear and unambiguous contents and
executed for a valid consideration received in full by the employee who
signed the same, cannot be later invalidated because its signatory claims that
he was pressured into signing it on account of his dire financial need. When
it is shown that the person executing the waiver did so voluntarily, with full
understanding of what he was doing, and the consideration for the quitclaim
is credible and reasonable, the transaction must be recognized as a valid and
binding undertaking.[71]

WHEREFORE, the petition is PARTLY GRANTED. The

downsizing scheme implemented by petitioner is hereby declared a valid
exercise of management prerogative. The penalty of six (6) months
suspension without pay imposed in the April 3, 2003 NLRC Resolution[72] is
hereby reduced to two (2) months, to be considered in the Labor Arbiters
computation of the separation pay to be received by the Union officers
concerned. The first batch of quitclaims signed by 33 of the 48 terminated
employees is hereby declared invalid and illegal for failure to state the
proper consideration therefor, but the amount received by the employees
concerned, if any, shall be deducted from their separation pay and other
monetary benefits, subject to the computation to be made by the Labor
Arbiter. The second batch of quitclaims signed by 85 of the 160 terminated
employees, following Hyatt Regency Manilas permanent closure, is declared
valid and binding.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. Nos. 171618-19

March 20, 2009

JACKBILT INDUSTRIES, INC., Petitioner,

vs.
JACKBILT EMPLOYEES WORKERS UNION-NAFLUKMU, Respondent.
DECISION
CORONA, J.:
This petition for review on certiorari1 seeks to reverse and set aside the July
13, 2005 decision2 and February 9, 2006 resolution3 of the Court of Appeals
in CA-G.R. SP No. 65208 and CA-G.R. SP No. 65425.

Due to the adverse effects of the Asian economic crisis on the construction
industry beginning 1997, petitioner Jackbilt Industries, Inc. decided to
temporarily stop its business of producing concrete hollow blocks,
compelling most of its employees to go on leave for six months. 4
Respondent Jackbilt Employees Workers Union-NAFLU-KMU immediately
protested the temporary shutdown. Because its collective bargaining
agreement with petitioner was expiring during the period of the shutdown,
respondent claimed that petitioner halted production to avoid its duty to
bargain collectively. The shutdown was allegedly motivated by anti-union
sentiments.
Accordingly, on March 9, 1998, respondent went on strike. Its officers and
members picketed petitioners main gates and deliberately prevented persons
and vehicles from going into and out of the compound.
On March 19, 1998, petitioner filed a petition for injunction5 with a prayer
for the issuance of a temporary restraining order (TRO) in the National
Labor Relations Commission (NLRC). It sought to enjoin respondent from
obstructing free entry to and exit from its production facility.6
On April 14, 1998, the NLRC issued a TRO directing the respondents to
refrain from preventing access to petitioners property.
The reports of both the implementing officer and the investigating labor
arbiter revealed, however, that respondent union violated the April 14, 1998
order. Union members, on various occasions, stopped and inspected private
vehicles entering and exiting petitioners production facility. Thus, in a
decision dated July 17, 1998, the NLRC ordered the issuance of a writ of
preliminary injunction.7
Meanwhile, petitioner sent individual memoranda to the officers and
members of respondent who participated in the strike8 ordering them to
explain why they should not be dismissed for committing illegal acts in the
course of a strike.9 However, respondent repeatedly ignored petitioners
memoranda despite the extensions granted.10 Thus, on May 30, 1998,

petitioner dismissed the concerned officers and members and barred them
from entering its premises effective June 1, 1998.
Aggrieved, respondent filed complaints for illegal lockout, runaway shop
and damages,11 unfair labor practice, illegal dismissal and attorneys
fees,12 and refusal to bargain13 on behalf of its officers and members against
petitioner and its corporate officers. It argued that there was no basis for the
temporary partial shutdown as it was undertaken by petitioner to avoid its
duty to bargain collectively.
Petitioner, on the other hand, asserted that because respondent conducted a
strike without observing the procedural requirements provided in Article 263
of the Labor Code,14 the March 9, 1998 strike was illegal. Furthermore, in
view of the July 17, 1998 decision of the NLRC (which found that
respondent obstructed the free ingress to and egress from petitioners
premises), petitioner validly dismissed respondents officers and employees
for committing illegal acts in the course of a strike.
In a decision dated October 15, 1999, 15 the labor arbiter dismissed the
complaints for illegal lockout and unfair labor practice for lack of merit.
However, because petitioner did not file a petition to declare the strike
illegal16before terminating respondents officers and employees, it was found
guilty of illegal dismissal. The dispositive portion of the decision read:
WHEREFORE, judgment is hereby rendered finding [petitioner and its
corporate officers] liable for the illegal dismissal of the 61 union officer and
members of [respondent] and concomitantly, [petitioner and its corporate
officers] are hereby jointly and severally ordered to pay [respondents
officers and members] limited backwages from June 1, 1998 to October 4,
1998.
[Petitioner and its corporate officers] are further ordered to pay
[respondents officers and members] separation pay based on salary for
every year of credited service, a fraction of at least 6 months to be
considered as one whole year in lieu of reinstatement.

The complaint for unfair labor practice, moral and exemplary damages and
runaway shop are hereby disallowed for lack of merit.
SO ORDERED.
On December 28, 2000, the NLRC, on appeal, modified the decision of the
labor arbiter. It held that only petitioner should be liable for monetary
awards granted to respondents officers and members.17
Both petitioner and respondent moved for reconsideration but they were
denied for lack of merit.18
Aggrieved, petitioner assailed the December 28, 2000 decision of the NLRC
via a petition for certiorari19 in the CA. It asserted that the NLRC committed
grave abuse of discretion in disregarding its July 17, 1998 decision20wherein
respondents officers and employees were found to have committed illegal
acts in the course of the March 9, 1998 strike. In view thereof and pursuant
to Article 264(a)(3) of the Labor Code,21 petitioner validly terminated
respondents officers and employees.
The CA dismissed the petition but modified the December 28, 2000 decision
of the NLRC.22 Because most of affected employees were union members,
the CA held that the temporary shutdown was moved by anti-union
sentiments. Petitioner was therefore guilty of unfair labor practice and,
consequently, was ordered to pay respondents officers and employees
backwages from March 9, 1998 (instead of June 1, 1998) to October 4, 1998
and separation pay of one month salary for every year of credited service.
Petitioner moved for reconsideration but it was denied.23 Thus, this recourse.
The primordial issue in this petition is whether or not the filing of a petition
with the labor arbiter to declare a strike illegal is a condition sine qua
non for the valid termination of employees who commit an illegal act in the
course of such strike.

Petitioner asserts that the filing of a petition to declare the strike illegal was
unnecessary since the NLRC, in its July 17, 1998 decision, had already
found that respondent committed illegal acts in the course of the strike.
We grant the petition.
The principle of conclusiveness of judgment, embodied in Section 47(c),
Rule 39 of the Rules of Court,24 holds that the parties to a case are bound by
the findings in a previous judgment with respect to matters actually raised
and adjudged therein.25
Article 264(e) of the Labor Code prohibits any person engaged in picketing
from obstructing the free ingress to and egress from the employers
premises. Since respondent was found in the July 17, 1998 decision of the
NLRC to have prevented the free entry into and exit of vehicles from
petitioners compound, respondents officers and employees clearly
committed illegal acts in the course of the March 9, 1998 strike.1awphi1
The use of unlawful means in the course of a strike renders such strike
illegal.26 Therefore, pursuant to the principle of conclusiveness of judgment,
the March 9, 1998 strike was ipso facto illegal. The filing of a petition to
declare the strike illegal was thus unnecessary.
Consequently, we uphold the legality of the dismissal of respondents
officers and employees. Article 264 of the Labor Code27 further provides that
an employer may terminate employees found to have committed illegal acts
in the course of a strike.28 Petitioner clearly had the legal right to terminate
respondents officers and employees.29
WHEREFORE, the petition is hereby granted. The July 13, 2005 decision
and February 9, 2006 resolution of the Court of Appeals in CA-G.R. SP No.
65208 and CA-G.R. SP No. 65425 are hereby REVERSED and SET
ASIDE.
The December 28, 2000 and March 6, 2001 resolutions of the National
Labor Relations Commission in NLRC-CA No. 022614-2000

are MODIFIED insofar as they affirmed the October 15, 1999 decision of
the labor arbiter in NLRC-NCR-Case No. 00-06-05017-98 finding petitioner
Jackbilt Industries, Inc. guilty of illegal dismissal for terminating
respondents officers and employees. New judgment is hereby
entered DISMISSING NLRC-NCR-Case No. 00-06-05017-98 for lack of
merit.
SO ORDERED.
Republic of the Philippines
Supreme Court
Manila
EN BANC

REPUBLIC OF THE
PHILIPPINES,
represented by the
CIVIL SERVICE
COMMISSION,
Petitioner,

- versus -

G.R. No. 178021

Present:
CORONA, C.J.,
CARPIO,
VELASCO, JR.,
LEONARDO-DE
CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA,
SERENO,
REYES, and
PERLAS-BERNABE, JJ.

MINERVA M.P.
PACHEO,
Respondent.

Promulgated:
January 25, 2012

x
------------------------------------------------------------------------------------------------------x
DECISION
MENDOZA, J.:

Before this Court is a petition for review on certiorari under Rule 45

of the Rules of Court filed by petitioner Republic of the Philippines,
represented by the Office of the Solicitor General (OSG), which assails the
February 22, 2007 Decision[1] and the May 15, 2007 Resolution[2] of the
Court of Appeals (CA) in CA-G.R. SP No. 93781. The CA reversed the
November
21,
2005
Resolution
of
the
Civil
Service
Commission (CSC) declaring the re-assignment of respondent Minerva M.P.
Pacheos (Pacheo) not valid and ordering her reinstatement to her original
station but without backwages under the principle of no work, no pay.
The Facts
Pacheo was a Revenue Attorney IV, Assistant Chief of the Legal
Division of the Bureau of Internal Revenue (BIR) in Revenue Region No.
7 (RR7),Quezon City.
On May 7, 2002, the BIR issued Revenue Travel Assignment
Order (RTAO) No. 25-2002,[3] ordering the reassignment of Pacheo as
Assistant Chief, Legal Division from RR7 in Quezon City to RR4 in San

Fernando, Pampanga. The BIR cited exigencies of the revenue service as

basis for the issuance of the said RTAO.
Pacheo questioned the reassignment through her Letter dated May 9,
2002[4] addressed to Rene G. Banez, then Commissioner of Internal
Revenue (CIR). She complained that the transfer would mean economic
dislocation since she would have to spend 200.00 on daily travel expenses
or approximately 4,000.00 a month. It would also mean physical burden on
her part as she would be compelled to wake up early in the morning for her
daily travel from Quezon City to San Fernando, Pampanga, and to return
home late at night from San Fernando, Pampanga to Quezon City. She was
of the view that that her reassignment was merely intended to harass and
force her out of the BIR in the guise of exigencies of the revenue service. In
sum, she considered her transfer from Quezon City to Pampanga as
amounting to a constructive dismissal.
Due to the then inaction of the BIR, Pacheo filed a
complaint[5] dated May 30, 2002, before the CSC- National Capital
Region (CSC-NCR), praying for the nullification of RTAO No. 25-2002. In
its July 22, 2002 Order,[6] the CSC-NCR treated Pacheos Complaint as an
appeal and dismissed the same, without prejudice, for failure to comply with
Sections 73 and 74 of Rule V(b) of the Uniform Rules on Administrative
Cases in the Civil Service.[7]
In its Letter-reply[8] dated September 13, 2002, the BIR, through its
Deputy Commissioner for Legal and Inspection Group, Edmundo P.
Guevara(Guevara), denied Pacheos protest for lack of merit. It contended
that her reassignment could not be considered constructive dismissal as she
maintained her position as Revenue Attorney IV and was designated as
Assistant Chief of Legal Division. It emphasized that her appointment to the

position of Revenue Attorney IV was without a specific station.

Consequently, she could properly be reassigned from one organizational unit
to another within the BIR. Lastly, she could not validly claim a vested right
to any specific station, or a violation of her right to security of tenure.
Not in conformity with the ruling of the BIR, Pacheo appealed her
case before the CSC.
On November 21, 2005, the CSC issued Resolution No.
051697[9] granting Pacheos appeal, the dispositive portion of which reads:
WHEREFORE, the instant appeal of Minerva M.P.
Pacheo is hereby GRANTED. The Bureau of Internal Revenue
Revenue Travel Assignment Order No. 25-2002 dated May 7,
2002, on the reassignment of Pacheo to the Legal Division
Revenue Region No. 4 San Fernanado, Pampanga, is hereby
declaredNOT VALID. ACCORDINGLY, Pacheo should now
be recalled to her original station. This Commission, however
rules and so holds that the withholding by the BIR of Pacheos
salary for the period she did not report to work is justified.
The CSCRO No. III is directed to monitor the
implementation of this Resolution.
In granting Pacheos appeal, the CSC explained:
On the second issue, this Commission finds merit in
appellants contention that her reassignment in not valid.
Of pertinent application thereto is Rule III, Section 6 of
CSC Memorandum Circular No. 40, series of 1998,
dated December 14, 1998, which provides:
Section 6. Other Personnel Movements. The
following personnel movements which will not

require issuance of an appointment shall

nevertheless require an office order by duly
authorized official.
a. Reassignment Movement of an employee
from one organizational unit to another in the same
department or agency which does not involve
reduction in rank, status or salary. If reassignment
is done without consent of the employee being
reassigned it shall be allowed for a maximum
period of one year. Reassignment is presumed to
be regular and made in the interest of public
service unless proven otherwise or it constitutes
constructive dismissal.
No assignment shall be undertaken if done
indiscriminately or whimsically because the law is
not intended as a convenient shield for the
appointing/ disciplining authority to harass or
oppress a subordinate on the pretext of advancing
and promoting public interest.
Reassignment of small salaried employee is
not permissible if it causes significant financial
dislocation.
Although reassignment is a management prerogative, the
same must be done in the exigency of the service without
diminution in rank, status and salary on the part of the officer or
employee being temporarily reassigned. Reassignment of small
salaried employees, however is not allowed if it will cause
significant financial dislocation to the employee reassigned.
Otherwise the Commission will have to intervene.
The primary purpose of emphasizing small salaried
employees in the foregoing rule is to protect the rank and
file employees from possible abuse by the management in the
guise of transfer/reassignment. The Supreme Court in Alzate v.
Mabutas, (51 O.G. 2452) ruled:

x x x [T]he protection against invalid

transfer is especially needed by lower ranking
employees. The Court emphasized this need when
it ruled that officials in the unclassified service,
presidential appointees, men in the government set
up occupy positions in the higher echelon should
be entitled to security of tenure, unquestionable a
lesser sol[ci]itude cannot be meant for the little
men, that great mass of Common underprivileged
employees-thousand there are of them in the lower
bracket, who generally are without connections
and who pin their hopes of advancement on the
merit system instituted by our civil service law.
In other words, in order to be embraced in the
term small-salaried employees, the latter must belong to
the rank and file; and, his/her salary would be significantly
reduced by virtue of the transfer/reassignment. Rank and
file was categorized as those occupying the position of Division
Chief and below, pursuant to CSC Resolution No. 1, series of
1991, dated January 28, 1991.
The facts established on record show that Pacheo belongs
to the rank and file receiving an average monthly salary of
Twenty Thousand Pesos (20,000.00) under the salary
standardization law and a monthly take home pay of Fourteen
Thousand Pesos (14,000.00). She has to spend around Four
Thousand Pesos (4,000.00) a month for her transportation
expenses as a consequence of her reassignment, roughly twenty
eight percent (28%) of her monthly take home pay. Clearly,
Pacheos salary shall be significantly reduced as a result of her
reassignment.

In ANORE, Ma. Theresa F., this Commission ruled:

Anore, a lowly salaried employee, was

reassigned to an isolated island 15 kilometers
away from her original place of assignment. She
has to travel by boat with only one trip a day to
report to her new place of assignment in an office
without any facilities, except its bare structure.
Worst, the municipality did not provide her with
transportation allowance. She was forced to be
separated from her family, look for a boarding
house where she can stay while in the island and
spend for her board and lodging. The
circumstances surrounding Anores reassignment is
exactly the kind of reassignment that is being
frowned upon by law.
This Commission, however, rules and so holds that the
withholding by the BIR of her salaries is justified as she is not
entitled thereto since she is deemed not to have performed any
actual work in the government on the principle of no work no
pay.
Accordingly, Pacheo should now be reinstated to her
original station without any right to claim back salary as she did
not report to work either at her new place of assignment or at
her original station.[10] [Emphases in the original]
Still not satisfied, Pacheo moved for reconsideration. She argued that
the CSC erred in not finding that she was constructively dismissed and,
therefore, entitled to back salary.
On March 7, 2006, the CSC issued Resolution No. 060397[11] denying
Pacheos motion for reconsideration.
Undaunted, Pacheo sought recourse before the CA via a petition for
review.

In its February 22, 2007 Decision, the CA reversed the CSC

Resolution and ruled in favor of Pacheo, the fallo of which states:
WHEREFORE, the petition is GRANTED. Resolution
nos. 051697 and 060397 dated November 21, 2005 and March
7, 2006, respectively, of the Civil Service Commission
are REVERSED and SET ASIDE. A new judgment is hereby
entered finding petitioner to have been constructively dismissed
and ordering her immediate reinstatement with full backwages
and benefits.
SO ORDERED.[12]
In setting aside CSC Resolution Nos. 051697 and 060397, the CA
held that:
While this Court agrees that petitioners reassignment was not
valid considering that a diminution in salary is enough to
invalidate such reassignment, We cannot agree that the latter
has not been constructively dismissed as a result thereof.
It is well to remember that constructive dismissal does not
always involve forthright dismissal or diminution in rank,
compensation, benefits and privileges.For an act of clear
discrimination, insensibility, or disdain by an employer may
become so unbearable on the part of the employee that it could
foreclose any choice by him except to forgo his continued
employment.
The management prerogative to transfer personnel must be
exercised without grave abuse of discretion and putting to mind
the basic elements of justice and fair play. The employer must
be able to show that the transfer is not unreasonable,
inconvenient, or prejudicial to the employee.
In this case, petitioners reassignment will result in the reduction
of her salary, not to mention the physical burden that she would
suffer in waking up early in the morning to travel daily
from Quezon City to San Fernando, Pampanga and in coming
home late at night.

Clearly, the insensibility of the employer is deducible from the

foregoing circumstances and petitioner may have no other
choice but to forego her continued employment.
Moreover, it would be inconsistent to hold that the
reassignment was not valid due to the significant reduction in
petitioners salary and then rule that there is no constructive
dismissal just because said reduction in salary will not render
petitioner penniless if she will report to her new place of
assignment. It must be noted that there is constructive dismissal
when the reassignment of an employee involves a diminution in
pay.

Having determined that petitioner has been

constructively dismissed as a result of her reassignment, We
shall resolve whether or not she is entitled to backwages.
In denying petitioners claim for backwages, the CSC held:
This Commission, however, rules and so holds that
the withholding by the BIR of her salaries is
justified as she is not entitled thereto since she is
deemed not to have performed any actual work in
the government on the principle of no work no pay.
Accordingly, Pacheo should now be reinstated to
her original station without any right to claim back
salary as she did not report for work either at her
new place of assignment or at her original station.
Pacheo, while belonging to the rank-and-file
employees, is holding a responsible position as an
Assistant Division Chief, who could not just
abandon her duties merely because she protested
her re-assignment and filed an appeal afterwards.

We do not agree.
If there is no work performed by the employee there can
be no wage or pay, unless of course the laborer was able,
willing and ready to work but was illegally locked
out, dismissed or suspended. The No work, no pay principle
contemplates a no work situation where the employees
voluntarily absent themselves.
In this case, petitioner was forced to forego her continued
employment and did not just abandon her duties. In fact, she
lost no time in protesting her reassignment as a form of
constructive dismissal. It is settled that the filing of a complaint
for illegal dismissal is inconsistent with a charge of
abandonment.The filing of the complaint is proof enough of his
desire to return to work, thus negating any suggestion of
abandonment.
Neither do we agree with the OSG when it opined that:
No one in the Civil Service should be allowed to
decide on whether she is going to accept or not any
work dictated upon by the exigency of the
service. One should consider that public office is a
public trust and that the act of respondent CIR
enjoys the presumption of regularity. To uphold the
failure of respondent to heed the RTAO would
result in chaos. Every employee would put his or
her vested interest or personal opinion over and
above the smooth functioning of the bureaucracy.
Security of tenure is a right of paramount value as
recognized and guaranteed under Sec. 3, Art. XIII of the 1987
Constitution.
The State shall afford full protection to labor, xxx
and promote full employment and equality of
employment
opportunities
for all. It
shall

guarantee the rights of all workers to xxx security

of tenure xxx
Such constitutional right should not be denied on mere
speculation of any similar unclear and nebulous basis.
In Garcia, et al. v. Lejano, et al., the Supreme Court
rejected the OSGs opinion that when the transfer is motivated
solely by the interest of the service of such act cannot be
considered violative of the Constitution, thus:
We do not agree to this view. While
temporary transfers or assignments may be made
of the personnel of a bureau or department without
first obtaining the consent of the employee
concerned within the scope of Section 79 (D) of
the Administrative Code which party provides that
The Department Head also may, from time to time,
in the interest of the service, change the
distribution among the several Bureaus and offices
of his Department of the employees or
subordinates authorized by law, such cannot be
undertaken when the transfer of the employee is
with a view to his removal. Such cannot be done
without the consent of the employee. And if the
transfer is resorted to as a scheme to lure the
employee away from his permanent position, such
attitude is improper as it would in effect result in a
circumvention of the prohibition which safeguards
the tenure of office of those who are in the civil
service. It is not without reason that this Court
made the following observation:
To permit circumvention of the constitutional
prohibition in question by allowing removal from
office without lawful cause, in the form or guise of
transfers from one office to another, or from one
province to another, without the consent of the
transferee, would blast the hopes of these young
civil service officials and career men and women,

destroy their security and tenure of office and

make for a subservient, discontented and
inefficient civil service force that sways with every
political wind that blows and plays up to whatever
political party is in the saddle. That would be far
from what the framers of our Constitution
contemplated and desired. Neither would that be
our concept of a free and efficient Government
force, possessed of self-respect and reasonable
ambition.
Clearly, the principle of no work, no pay does not apply
in this case. As held in Neeland v. Villanueva, Jr:
We also cannot deny back salaries and other
economic benefits on the ground that respondent
Clerk of Court did not work. For the principle of
no work, no pay does not apply when the
employee himself was forced out of job. Xxx
Indeed, it is not always true that back salaries are
paid only when work is done. Xxx For another, the
poor employee could offer no work since he was
forced out of work. Thus, to always require
complete exoneration or performance of work
would
ultimately
leave
the
dismissal
uncompensated
no
matter
how
grossly
disproportionate the penalty was. Clearly, it does
not serve justice to simply restore the dismissed
employee to his position and deny him his claim
for back salaries and other economic benefits on
these grounds. We would otherwise be serving
justice in halves.
An illegally dismissed government employee who is later
ordered reinstated is entitled to back wages and other monetary
benefits from the time of his illegal dismissal up to his
reinstatement. This is only fair and sensible because an
employee who is reinstated after having been illegally
dismissed is considered as not having left his office and should

be given a comparable compensation at the time of his

reinstatement.
When a government official or employee in the classified
civil service had been illegally dismissed, and his reinstatement
had later been ordered, for all legal purposes he is considered as
not having left his office, so that he is entitled to all the rights
and privileges that accrue to him by virtue of the office that he
held.[13]

The CSC moved for reconsideration but its motion was denied by the CA in
its May 15, 2007 Resolution.

Hence, this petition.

THE ISSUES

WHETHER OR NOT THE ASSAILED DECISION IS

LEGALLY CORRECT IN DECLARING THAT
RESPONDENT WAS CONSTRUCTIVELY DISMISED
AND
ENTITLED
TO
BACK
WAGES,
NOTWITHSTANDING RESPONDENTS REFUSAL TO
COMPLY WITH BIR RTAO No. 25-2002 WHICH IS
IMMEDIATELY
EXECUTORY
PURSUANT
TO
SECTION 24 (F) OF P.D. 807.
WHETHER OR NOT RESPONDENT SUFFERED A
DIMINUTION IN HER SALARY IN RELATION TO
SECTION 6, RULE III OF CSC MEMORANDUM

CIRCULAR No. 40, SERIES OF 1998, DATED

DECEMBER 14, 1998, AS A RESULT OF THE ISSUANCE
[OF] BIR RTAO No. 25-2002 ORDERING HER
REASSIGNMENT FROM BIR RR No. 7 IN QUEZON
CITY TO BIR RR No. 4 IN SAN FERNANDO,
PAMPANGA.[14]
In her Memorandum,[15] Pacheo asserts that RTAO No. 25-2002, on the
pretense of the exigencies of the revenue service, was solely meant to harass
her and force her to resign. As a result of her invalid reassignment, she was
constructively dismissed and, therefore, entitled to her back salaries and
monetary benefits from the time of her illegal dismissal up to her
reinstatement.
In its own Memorandum,[16] the CSC, through the OSG, argues that
constructive dismissal is not applicable in this case because it was Pacheo
herself who adamantly refused to report for work either in her original
station or new place of assignment in clear violation of Section 24 (f) of
Presidential Decree (PD) No. 807.[17] Citing jurisprudence,[18] the CSC avers
that the RTAO is immediately executory, unless otherwise ordered by the
CSC. Therefore, Pacheo should have first reported to her new place of
assignment and then appealed her case to the CSC if she indeed believed
that there was no justification for her reassignment. Since Pacheo did not
report for work at all, she is not entitled to backwages following the
principle of no work, no pay.
THE COURTS RULING
The petition fails to persuade.

It appears undisputed that the reassignment of Pacheo was not valid.

In its memorandum, the OSG initially argues for the validity of RTAO No.
25-2002 authorizing Pacheos reassignment from Quezon City to San
Fernando, Pampanga. Later, however, it specifically prays for the
reinstatement of CSC Resolution Nos. 051697 and 060397, which
categorically declared RTAO No. 25-2002 as not valid. In seeking such
relief, the OSG has effectively accepted the finding of the CSC, as affirmed
by the CA, that Pacheos reassignment was indeed invalid. Since the issue of
Pacheos reassignment is already settled, the Court finds it futile to pass upon
the same at this point.
The question that remains to be resolved is whether or not Pacheos
assignment constitutes constructive dismissal and, thus, entitling her to
reinstatement and backwages. Was Pacheo constructively dismissed by
reason of her reassignment?
The Court agrees with the CA on this point.
While a temporary transfer or assignment of personnel is permissible
even without the employee's prior consent, it cannot be done when the
transfer is a preliminary step toward his removal, or a scheme to lure him
away from his permanent position, or when it is designed to indirectly
terminate his service, or force his resignation. Such a transfer would in effect
circumvent the provision which safeguards the tenure of office of those who
are in the Civil Service.[19]
Significantly, Section 6, Rule III of CSC Memorandum Circular No.
40, series of 1998, defines constructive dismissal as a situation when an
employee quits his work because of the agency heads unreasonable,
humiliating, or demeaning actuations which render continued work
impossible. Hence, the employee is deemed to have been illegally dismissed.
This may occur although there is no diminution or reduction of salary of the
employee. It may be a transfer from one position of dignity to a more servile
or menial job.

The CSC, through the OSG, contends that the deliberate refusal of Pacheo to
report for work either in her original station in Quezon City or her new place
of assignment in San Fernando, Pampanga negates her claim of constructive
dismissal in the present case being in violation of Section 24 (f) of P.D. 807
[now Executive Order (EO) 292, Book V, Title 1, Subtitle A, Chapter 5,
Section 26 (6)].[20] It further argues that the subject RTAO was immediately
executory, unless otherwise ordered by the CSC. It was, therefore,
incumbent on Pacheo to have reported to her new place of assignment and
then appealed her case to the CSC if she indeed believed that there was no
justification for her reassignment.

Anent the first argument of CSC, the Court cannot sustain the
proposition. It was legally impossible for Pacheo to report to her original
place of assignment in Quezon City considering that the subject RTAO No.
25-2002 also reassigned Amado Rey B. Pagarigan (Pagarigan) as Assistant
Chief, Legal Division, from RR4, San Fernando, Pampanga to RR7, Quezon
City, the very same position Pacheo formerly held. The reassignment of
Pagarigan to the same position palpably created an impediment to Pacheos
return to her original station.
The Court finds Itself unable to agree to CSCs argument that the
subject RTAO was immediately executory. The Court deems it necessary to
distinguish between a detail and reassignment, as they are governed by
different rules.
A detail is defined and governed by Executive Order 292, Book V,
Title 1, Subtitle A, Chapter 5, Section 26 (6), thus:
(6) Detail. A detail is the movement of an employee from one
agency to another without the issuance of an appointment and
shall be allowed, only for a limited period in the case of
employees occupying professional, technical and scientific

positions. If the employee believes that there is no justification

for the detail, he may appeal his case to the Commission.
Pending appeal, the decision to detail the employee shall be
executory unless otherwise ordered by the Commission.
[Underscoring supplied]
On the other hand, a reassignment is defined and governed by E.O.
292, Book V, Title 1, Subtitle A, Chapter 5, Section 26 (7), thus:
(7) Reassignment.An employee may be reassigned from one
organizational unit to another in the same agency; Provided,
That such reassignment shall not involve a reduction in rank,
status or salaries. [Underscoring supplied]

The principal distinctions between a detail and reassignment lie in the

place where the employee is to be moved and in its effectivity pending
appeal with the CSC. Based on the definition, a detail requires a movement
from one agency to another while a reassignment requires a movement
within the same agency. Moreover, pending appeal with the CSC, an order to
detail is immediately executory, whereas a reassignment order does not
become immediately effective.
In the case at bench, the lateral movement of Pacheo as Assistant Chief,
Legal Division from Quezon City to San Fernando, Pampanga within
the same agency is undeniably a reassignment. The OSG posits that she
should have first reported to her new place of assignment and then
subsequently question her reassignment. It is clear, however, from E.O. 292,
Book V, Title 1, Subtitle A, Chapter 5, Section 26 (7) that there is no such
duty to first report to the new place of assignment prior to questioning an
alleged invalid reassignment imposed upon an employee. Pacheo was well
within her right not to report immediately to RR4, San Fernando, Pampanga,
and to question her reassignment.

Reassignments involving a reduction in rank, status or salary violate

an employees security of tenure, which is assured by the Constitution, the
Administrative Code of 1987, and the Omnibus Civil Service Rules and
Regulations. Security of tenure covers not only employees removed without
cause, but also cases of unconsented transfers and reassignments, which are
tantamount to illegal/constructive removal.[21]
The Court is not unaware that the BIR is authorized to assign or reassign
internal revenue officers and employees as the exigencies of service may
require. This authority of the BIR, however, should be prudently exercised in
accordance with existing civil service rules.
Having ruled that Pacheo was constructively dismissed, is she entitled
to reinstatement and back wages? The Court agrees with the CA that she is
entitled to reinstatement, but finds Itself unable to sustain the ruling that she
is entitled to full back wages and benefits. It is a settled jurisprudence [22] that
an illegally dismissed civil service employee is entitled to back salaries but
limited only to a maximum period of five (5) years, and not full back
salaries from his illegal dismissal up to his reinstatement.

WHEREFORE, the petition is DENIED. The assailed February 22,

2007 Decision and May 15, 2007 Resolution of the Court of Appeals, in CAG.R.
SP
No.
93781,
are
hereby AFFIRMED with MODIFICATION that respondent
Minerva
M.P. Pacheo is hereby ordered reinstated without loss of seniority rights but
is only entitled to the payment of back salaries corresponding to five (5)
years from the date of her invalid reassignment on May 7, 2002.
SO ORDERED.
FIRST DIVISION

[G.R. No. 149371. April 13, 2005]

ABERDEEN COURT, INC., and RICHARD
vs. MATEO C. AGUSTIN JR., respondent.

NG, petitioners,

DECISION
AZCUNA, J.:
This is a petition for review on certiorari under Rule 45 of the 1997
Rules of Civil Procedure, assailing the Decision of the Court of Appeals in
CAG.R. SP No. 60223, entitled Mateo Agustin Jr. v. National Labor
Relations Commission (First Division), Aberdeen Court, Inc. and Ricardo
Ng, dated January 31, 2001, and the Resolution of August 10, 2001 denying
the motion for reconsideration therein.
On September 16, 1996, Aberdeen Court, Inc. (Aberdeen), one of the
petitioners, employed Mateo C. Agustin (Agustin), herein respondent, for
the purpose of trouble shooting the electrical problems in said petitioners
establishment. Agustin was engaged on a six-month probationary basis. The
employment contract provided, inter alia, that:
Should my performance be considered unsatisfactory at any time by
management during my probationary period, I understand and agree that the
management can terminate my services at any time, even before the
termination of the agreed six-month period.[1]
On January 12 and 13, 1997 the personnel of Centigrade Industries, Inc.
performed a reading of the exhaust air balancing at the fifth and sixth floors
of Aberdeens premises. Petitioners claim that Agustin was placed in charge
of the undertaking. On the other hand, Agustin asserts that Engr. Abad
merely requested him to accompany the aforesaid personnel to show the
location of the exhaust air outlet at the fifth and sixth floors of the premises.
He avers that:
The request of Engr. Abad is actually the responsibility of the companys
mechanical engineers. Despite the fact that the request of Engr. Abad is not a

part of his job since he is not a mechanical engineer and there were three (3)
other mechanical engineers on duty in the company premises, petitioner
[herein respondent], being a subordinate of Engr. Abad, obliged and
accompanied the aforementioned personnel to the location. There were no
other specific instructions from Engr. Abad to petitioner with respect to the
conduct or actual reading to be made by the Centigrade personnel.
It must be noted that the reading of exhaust air balancing is under the
category of heating, ventilating and air conditioning (HVAC) which are
within the realm of field of work of mechanical engineers. Being an
electrical engineer, petitioner obviously has no knowledge of the procedure
and the equipment used by mechanical engineers in the conduct of the
reading of the exhaust air balancing.[2]
After the Centigrade personnel finished their job, they submitted their
report to Agustin. Petitioners allege that Agustin accepted and signed the
report, without verifying its correctness. Engineer Abad later checked the
work of the Centigrade employees only to find out that four rooms in the
fifth floor and five rooms in the sixth floor were incorrectly done.[3] In
contrast, Agustin states that after the report was handed to him, he took the
same to Engr. Abad, who he claims was responsible for evaluating and
confirming the said report. Allegedly, instead of signing it himself, Engr.
Abad directed respondent to sign it, giving the reason that Agustin was
present when the reading was conducted. Respondent Agustin complied, but
he now points out that his signature was not accompanied by any
qualification that he accepted the report on behalf of Aberdeen. He claims
that he signed merely to evidence that he received a copy of the report.[4]
The parties also differ on the occurrences two days after the signing of
the report or on January 15, 1997. According to petitioners, Aberdeen
management confronted Agustin with his failure to check the job and asked
him to explain his side. Agustin allegedly ignored management and left the
company, which made it impossible for Aberdeen to transmit any further
notice to him.[5]
However, Agustin claims that:

On January 15, 1997 or two days after the report was submitted by
Centigrade Industries, petitioner [herein respondent] was summarily
dismissed. In the afternoon of that day, he received a telephone call from the
personnel office of respondent company ordering him to report to that office
after his tour of duty. At about seven p.m. at the personnel office, Ms. Lani
Carlos of the Personnel Department, informed him that Aberdeen Court is
terminating his services as electrical engineer. Petitioner was flabbergasted.
Ms. Carlos then informed him that he could get his two (2) weeks salary in
the amount of P4,000, more or less, on the condition that he will sign some
documents which provides that the company has no more liability and that
he is voluntarily resigning from Aberdeen Court. Aware of his rights,
petitioner did not sign the offered documents. He was then hurriedly led to
the door by Ms. Carlos.
The following day or on January 16, 1997, petitioner requested assistance
from the Department of Labor and Employment (DOLE). A DOLE
personnel told him to report for work since private respondents did not serve
him a notice of termination. As instructed, petitioner reported for work on
the same day. Upon arriving at the company premises, petitioner asked Ms.
Carlos if he could still report for work but private respondents personnel
officer told him that he cannot do so.[6]
Within the same month of that year, respondent Agustin filed a
complaint for illegal dismissal which was docketed as NLRC NCR Case No.
00-01-00466-97.
In an undated decision, the labor arbiter rendered judgment in favor of
herein respondent, declaring that Agustin was illegally dismissed, thus:
WHEREFORE, judgment is hereby rendered:
1. Ordering respondent ABERDEEN COURT, INC. to reinstate to
his former position without loss of seniority rights complainant
MATEO C. AGUSTIN, JR.

2. Ordering respondent to pay to complainant backwages in the sum

of PHP P175,933.33.[7]
Petitioners appealed the decision to the National Labor Relations
Commission (NLRC). On February 29, 2000, the NLRC reversed the
decision of the Labor Arbiter and held that Agustin had not been illegally
dismissed, disposing thus:
WHEREFORE, for and on account of the reasons above-discussed, the
decision appealed from is hereby reversed and set aside and a new one
entered dismissing the complaint for lack of merit.[8]
From the NLRC decision, Agustin filed a petition for certiorari under
Rule 65 of the Rules of Court with the Court of Appeals. The appellate court
ruled in favor of Agustin and reasoned thus:
Constructive dismissal is defined as a quitting because continued
employment is rendered impossible, unreasonable or unlikely, as an offer
involving demotion in rank and a diminution in pay (Jarcia Machine Shop
and Auto Supply, Inc. vs. National Labor Relations Commission, 266 SCRA
97, 108). As there is no showing in the record of any circumstance to support
the proposition that the petitioner was constructively dismissed, the private
respondents correctly point out the flaw in the first ground proffered by the
petitioner in support of his petition. Be that as it may, the petitioners
erroneous choice of terminology does not, to our mind, preclude a finding of
illegal dismissal. Alongside the private respondents contention that it was
the petitioner who unceremoniously quit his employment after being
confronted with his negligence, greater stock m[a]y be taken of the
petitioners immediate recourse for assistance from the Department of Labor
and his subsequent filing of his complaint. The rule is settled that the
immediate filing of a complaint for illegal dismissal is inconsistent with
abandonment (Pampanga Sugar Development Company, Inc. vs. National
Labor Relations Commission, 272 SCRA 737, 747) and, in such cases, the
burden of proof to establish the validity of the dismissal of an employee lies
on the employer (Gonpu Services Corporation vs. National Labor Relations
Commission, 266 SCRA 657, 662). Rather than the employee who must

prove its invalidity, it is the employer who should prove the validity of a
dismissal. (Sanyo Travel Corporation vs. National Labor Relations
Commission, 280 SCRA 129, 138) and failure to do so will result in a
finding that the dismissal was unfounded (Reformist Union of R.B. Liner,
Inc. vs. National Labor Relations Commissions, 266 SCRA 713, 726).
Our perusal of the record yielded no showing of satisfactory attempt on the
part of the private respondents to prove the validity of the petitioners
dismissal. It bears emphasizing that, to be lawful, the employees dismissal
must comply with the following requirements (a) the dismissal must be for
any of the causes provided in Article 292 of the Labor Code; and, (b) the
employee must be given an opportunity to be heard and defend himself
(Molato vs. National Labor Relations Commission, 266 SCRA 42, 45). The
employer must first affirmatively show rationally adequate evidence that the
dismissal was for a justifiable cause (Brahm Industries, Inc. vs. National
Labor Relations Commission, 280 SCRA 828,838).
It is our considered view that the private respondents did not succeed in
discharging the aforesaid onus. Against the petitioners contention that
exhaust air balancing is neither covered by his duties nor competence, there
is no showing that the private respondents even attempted to prove the
extent of the petitioners technical responsibilities. Even assuming that the
task properly pertained to the petitioner, an employee where, as in the case at
bench, the offense appears to be the first committed by the employee, was
devoid of malice and, more importantly, was not his sole responsibility
(Tumbiga vs. National Labor Relations Commission, 274 SCRA 338, 348).
The fact that the petitioner was still in his probationary period of
employment did not lessen the burden of proof the law imposes on the
private respondents. Probationary employees are protected by the security of
tenure provision of the Constitution and cannot, likewise, be removed from
their position unless for cause (Pines City Educational Center vs. National
Labor Relations Commission, 227 SCRA 655, 663). Article 281 of the Labor
Code of the Philippines, as amended provides:

Art. 281. Probationary employment. Probationary employment shall not

exceed six (6) months from the date the employee started working unless it
is covered by an apprenticeship agreement stipulating a longer period. The
services of an employee who has been engaged on a probationary basis may
be terminated for just cause or when he fails to qualify as a regular employee
in accordance with reasonable standards made known by the employer to the
employee at the time of his engagement. An employee who is allowed to
work after a probationary period shall be considered a regular employee.
Aside from failing to show a just cause for the termination of the petitioners
services, the private respondents appear not to have even deigned to show
such reasonable standards the petitioners failure to measure up alongside
which would have justified his dismissal from employment.
Neither did the private respondents successfully show their compliance with
the second requirement for the validity of the termination of petitioners
employment. Their contention that it was the latter who abandoned his job
cannot be taken at face value in view of the fact that an employee who
forthwith takes steps to protest his layoff cannot, by any logic, be said to
have abandoned his work (Nazal vs. National Labor Relations Commission,
274 SCRA 350, 355). Even without the petitioners affirmative allegation that
he returned to his workplace after being so advised at the Department of
Labor and Employment, we find the dearth of any notice of termination sent
to the petitioner or, at the very least, his address in the respondent
corporations record derogatory of elementary requirements of due process. A
valid dismissal presupposes not only the validity of its cause, but also the
validity of the manner by which dismissal is done (Dela Cruz vs. National
Labor Relations Commission, 277, SCRA 563, 573) and failure to prove the
observance of due process as in the case at bench taints the
dismissal (Aquinas School vs. Magnaye, 278 SCRA 602, 612).
Having been illegally dismissed from employment, the petitioner is as
initially ruled by the Labor Arbiter entitled to reinstatement and backwages
in accordance with the Labor Code of the Philippines (Magcalas vs. National
Labor Relations Commission, 269 SCRA 453, 470).[9]

The dispositive portion of the aforesaid Decision of the Court of

Appeals, dated January 31, 2001, states:
WHEREFORE, the instant petition is GRANTED and the assailed
decision dated February 29, 2000 of the First Division of the National Labor
Relations Commission is REVERSEDand SET ASIDE. In lieu thereof, the
undated decision of Labor Arbiter Celenito N. Daing rendered in NLRC
NCR Case No. 00-01-00466-97 is REINSTATED. No costs.[10]
Petitioners filed a motion for reconsideration dated February 20, 2001,
which the Court of Appeals denied in its Resolution of August 10, 2001.
Unsatisfied, petitioners filed the instant petition on August 29, 2001 and
raised the following assignments of error:
1. THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR
OF LAW IN REVERSING THE DECISION OF THE NATIONAL LABOR
RELATIONS COMMISSION (ANNEX E) WHOSE FINDING OF FACTS
ARE BY LAW ACCORDED DUE RESPECT AND EVEN FINALITY,
AFFIRMING THAT OF THE LABOR ARBITER. SUCH REVERSAL OF
THE COMMISSIONS DECISION IS BASED ON SPECULATION.
2. THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR
OF LAW IN NOT ENTERTAINING OR EVEN RESOLVING THE ISSUE
POSED BY PETITIONERS THAT IT IS NOT FOR THE COURT TO
REGULARIZE THE EMPLOYMENT OF A PROBATIONARY
EMPLOYEE AND ASSUMING HIS DISMISSAL IS ILLEGAL HIS
BACKWAGES SHOULD NOT GO BEYOND HIS PROBATIONARY
EMPLOYMENT.
3. AND ASSUMING THE REINSTATEMENT OF RESPONDENT IS
LEGAL, HIS BACKWAGES SHOULD NOT GO BEYOND ONE (1)
MONTH FROM SUBMISSION FOR DECISION (APRIL 30, 1997).[11]
Petitioners argue, as follows:

It has been ruled that findings of fact of the NLRC, except where there is
grave abuse of discretion committed by it, are conclusive on the Supreme
Court. National Union of Workers in Hotels, Restaurants and Allied
Industries vs. National Labor Relations Commissions, 287 SCRA 192.
Factual findings of the quasi-judicial agencies like the National Labor
Relations Commission, which have acquired expertise because their
jurisdiction is confined to specific matters, are generally accorded not only
respect but even finality. Suarez vs. National Labor Relations Commission,
293 SCRA 496.
Findings of fact of quasi-judicial bodies, like the National Labor Relations
Commission, are accorded with respect, even finality, if supported by
substantial evidence. Travelaire & Tours Corporation vs. National Labor
Relations Commission, 294 SCRA 505.[12]
Petitioners also contend that the Court of Appeals has no legal right to
regularize the employment of a probationary employee without assessing the
employees performance. Petitioners claim that the Court of Appeals
committed an error of law when it ordered the reinstatement of respondent
beyond March 15, 1997, which is six (6) months from the time respondent
commenced working. Petitioners contend that the reinstatement of Agustin
beyond that date resulted in regularizing his employment. [13] Going further,
petitioners quote the stipulation in the contract of probationary employment
that respondent signed, earlier adverted to.[14]
Petitioners, finally, raise Article 281 of the Labor Code which reads, as
follows:
Probationary employment shall not exceed six (6) months from the date the
employee started working, unless it is covered by an apprenticeship
agreement stipulating a longer period. The services of an employee who has
been engaged on a probationary basis may be terminated for a just cause or
when he fails to qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the time of his

engagement. An employee who is allowed to work after a probationary

period shall be considered a regular employee.
It can be gleaned from Article 281 of the Labor Code that there are two
grounds to legally terminate a probationary employee. It may be done either:
a) for a just cause or b) when employee fails to qualify as a regular employee
in accordance with reasonable standards made known by the employer to the
employee at the start of the employment.
Petitioners say that Agustin was terminated because he failed to qualify
as a regular employee. Petitioners, however, allegedly did not show that
respondent was apprised of these reasonable standards at the start of the
employment.
In Servidad v. NLRC et al.,[15] where effectively the probationary period
was for one year, the Court stated:
If the nature of the job did actually necessitate at least one year for the
employee to acquire the requisite training and experience, still, the same
could not be a valid probationary employment as it falls short of the
requirement of Article 281 of the Labor Code. It was not brought to light that
the petitioner was duly informed at the start of his employment, of the
reasonable standards under which he could qualify as a regular employee.
The rudiments of due process demand that an employee should be apprised
beforehand of the conditions of his employment and the basis for his
advancement.
Similarly, in Secon Philippines Ltd. v. NLRC,[16] the dismissal of the
employee was declared illegal by the Court because the employer did not
prove that the employee was properly apprised of the standards of the job at
the time of his engagement and, naturally, the employer could not show that
the employee failed to meet such standards.
The Implementing Rules of the Labor Code in Book VI, Rule I, Section
6, also provides:

Probationary employment. -- There is probationary employment where the

employee, upon his engagement, is made to undergo a trial period during
which the employer determines his fitness to qualify for regular
employment, based on reasonable standards made known to him at the time
of engagement.
Probationary employment shall be governed by the following rules:
...
(c) The services of an employee who has been engaged on probationary
basis may be terminated only for a just cause, when he fails to qualify as a
regular employee in accordance with the reasonable standards prescribed by
the employer.
(d) In all cases of probationary employment, the employer shall make known
to the employee the standards under which he will qualify as a regular
employee at the time of his engagement. Where no standards are made
known to the employee at that time, he shall be deemed a regular
employee. [17]
The above rule, however, should not be used to exculpate a probationary
employee who acts in a manner contrary to basic knowledge and common
sense, in regard to which there is no need to spell out a policy or standard to
be met. This is what the NLRC found to be the fact in this case. Said the
NLRC:
It bears stressing that even if technically the reading of air exhaust balancing
is not within the realm of expertise of the complainant, still it ought not to be
missed that prudence and due diligence imposed upon him not to readily
accept the report handed to him by the workers of Centigrade Industries.
Required of the complainant was that he himself proceed to the work area,
inquire from the workers as to any difficulties encountered, problems fixed
and otherwise observe for himself the progress and/or condition/quality of
the work performed.

As it is, We find it hard to believe that complainant would just have been
made to sign the report to signify his presence. By saying so, complainant is
inadvertently degrading himself from an electrical engineer to a mere
watchdog. It is in this regard that We concur with the respondents that by his
omission, lack of concern and grasp of basic knowledge and common sense,
complainant has shown himself to be undeserving of continued employment
from probationary employee to regular employee.[18]
Nevertheless, it appears that petitioners violated due process in the
dismissal of respondent, by not affording him the required notice. As this
Court held in Agabon, et al. v. NLRC, et al.,[19] an employer who dismisses
an employee for just cause but does so without notice, is liable for nominal
damages in the amount of P30,000.
WHEREFORE, the petition is partly GRANTED and the assailed
Decision and Resolution of the Court of Appeals are MODIFIED in that
respondent is declared dismissed for just cause but petitioners are ordered to
pay him nominal damages in the amount of P30,000.
No costs.
SO ORDERED.
Davide,
Jr.,
C.J.,
(Chairman),
Santiago, and Carpio, JJ., concur.

Quisumbing,

Republic of the Philippines

Supreme Court
Manila

SECOND DIVISION

Ynares-

MANILA ELECTRIC
COMPANY,
Petitioner,

G.R. Nos. 191288 &

191304

Present:

CARPIO, J.,
Chairperson,
BRION,
PEREZ,

- versus -

SERENO, and
REYES, JJ.

Promulgated:

JAN CARLO GALA,

March 7, 2012

Respondent.

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

DECISION

BRION, J.:

We resolve the petition for review on certiorari,[1] seeking to annul the

decision[2] dated August 25, 2009 and the resolution[3] dated February 10,
2010 of the Court of Appeals (CA) rendered in CA-G.R. SP. Nos. 105943
and 106021.
The Antecedents
The facts are summarized below.

On March 2, 2006, respondent Jan Carlo Gala commenced employment with

the petitioner Meralco Electric Company (Meralco) as a probationary
lineman. He was assigned at Meralcos Valenzuela Sector. He initially served
as member of the crew of Meralcos Truck No. 1823 supervised by Foreman
Narciso Matis. After one month, he joined the crew of Truck No. 1837 under
the supervision of Foreman Raymundo Zuiga, Sr.
On July 27, 2006, barely four months on the job, Gala was dismissed for
alleged complicity in pilferages of Meralcos electrical supplies, particularly,
for the incident which took place on May 25, 2006. On that day, Gala and

other Meralco workers were instructed to replace a worn-out electrical pole

at the Pacheco Subdivision in Valenzuela City. Gala and the other linemen
were directed to join Truck No. 1891, under the supervision of Foreman
Nemecio Hipolito.
When they arrived at the worksite, Gala and the other workers saw that
Truck No. 1837, supervised by Zuiga, was already there. The linemen of
Truck No. 1837 were already at work. Gala and the other members of the
crew of Truck No. 1891 were instructed to help in the digging of a hole for
the pole to be installed.
While the Meralco crew was at work, one Noberto Bing Llanes, a nonMeralco employee, arrived. He appeared to be known to the Meralco
foremen as they were seen conversing with him. Llanes boarded the trucks,
without being stopped, and took out what were later found as electrical
supplies. Aside from Gala, the foremen and the other linemen who were at
the worksite when the pilferage happened were later charged with
misconduct and dishonesty for their involvement in the incident.
Unknown to Gala and the rest of the crew, a Meralco surveillance task force
was monitoring their activities and recording everything with a Sony video
camera. The task force was composed of Joseph Aguilar, Ariel Dola and
Frederick Riano.
Meralco called for an investigation of the incident and asked Gala to explain.
Gala denied involvement in the pilferage, contending that even if his
superiors might have committed a wrongdoing, he had no participation in
what they did. He claimed that: (1) he was at some distance away from the
trucks when the pilferage happened; (2) he did not have an inkling that an
illegal activity was taking place since his supervisors were conversing with

Llanes, giving him the impression that they knew him; (3) he did not call the
attention of his superiors because he was not in a position to do so as he was
a mere lineman; and (4) he was just following instructions in connection
with his work and had no control in the disposition of company supplies and
materials. He maintained that his mere presence at the scene of the incident
was not sufficient to hold him liable as a conspirator.
Despite Galas explanation, Meralco proceeded with the investigation and
eventually terminated his employment on July 27, 2006.[4] Gala responded
by filing an illegal dismissal complaint against Meralco.[5]
The Compulsory Arbitration Rulings
In a decision dated September 7, 2007,[6] Labor Arbiter Teresita D. CastillonLora dismissed the complaint for lack of merit. She held that Galas
participation in the pilferage of Meralcos property rendered him unqualified
to become a regular employee.
Gala appealed to the National Labor Relations Commission (NLRC). In its
decision of May 2, 2008,[7] the NLRC reversed the labor arbiters
ruling. It found that Gala had been illegally dismissed, since there was no
concrete showing of complicity with the alleged misconduct/dishonesty[.]
[8]
The NLRC, however, ruled out Galas reinstatement, stating that his tenure
lasted only up to the end of his probationary period. It awarded him
backwages and attorneys fees.
Both parties moved for partial reconsideration; Gala, on the ground that he
should have been reinstated with full backwages, damages and interests; and
Meralco, on the ground that the NLRC erred in finding that Gala had been
illegally dismissed. The NLRC denied the motions. Relying on the same

grounds, Gala and Meralco elevated the case to the CA through a petition
for certiorari under Rule 65 of the Rules of Court.
The CA Decision
In its decision of August 25, 2009,[9] the CA denied Meralcos petition for
lack of merit and partially granted Galas petition. It concurred with the
NLRC that Gala had been illegally dismissed, a ruling that was supported by
the evidence. It opined that nothing in the records show Galas knowledge of
or complicity in the pilferage. It found insufficient the joint affidavit [10] of the
members of Meralcos task force testifying that Gala and two other linemen
knew Llanes.
The CA modified the NLRC decision of May 2, 2008[11] and ordered Galas
reinstatement with full backwages and other benefits. The CA also denied
Meralcos motion for reconsideration. Hence, the present petition for review
on certiorari.[12]
The Petition
The petition is anchored on the ground that the CA seriously erred and
gravely abused its discretion in 1.
2.

ruling that Gala was illegally dismissed; and

directing Galas reinstatement despite his probationary

status.
Meralco faults the CA for not giving credit to its witnesses Aguilar,
Dola and Riano, and instead treated their joint affidavit (Samasamang
Sinumpaang
Salaysay) as inconclusive to establish Galas
participation
in the pilferage of company property on May 25, 2006. It submits that the

affidavit of the three Meralco employees disproves the CAs findings,

considering that their statements were based on their first-hand account of
the incident during their day-long surveillance on May 25, 2006. It points
out that the three Meralco employees categorically stated that all of
the
companys foremen and linemen present at that time, including Gala,
had knowledge of the pilferage that was happening at the time. According to
Aguilar, Dola and Riano, the trucks crew, including Gala, was familiar with
Llanes who acted as if his presence particularly, that of freely collecting
materials and supplies was a regular occurrence during their operations.
Meralco maintains that Gala himself admitted in his own
testimony[13] that he had been familiar with Llanes even before the May 25,
2006 incident where he saw Zuiga, the foreman of Truck No. 1837,
conversing with Llanes. Meralco submits that Galas admission, instead of
demonstrating his feigned innocence,[14] even highlights his guilt, especially
considering that by design, his misfeasance assisted Llanes in pilfering
company property; Gala neither intervened to stop Llanes, nor did he report
the incident to the Meralco management.
Meralco posits that because of his undeniable knowledge of, if not
participation in, the pilferage activities done by their group, the company
was well within its right in terminating his employment as a probationary
employee for his failure to meet the basic standards for his regularization.
The standards, it points out, were duly explained to him and outlined in his
probationary employment contract. For this reason and due to the expiration
of Galas probationary employment, the CA should not have ordered his
reinstatement with full backwages.

Finally, Meralco argues that even if Gala was illegally dismissed, he

was entitled to just his backwages for the unexpired portion of his
employment contract with the company.
Galas Case
By way of his Comment (to the Petition) dated September 2, 2010, [15] Gala
asks for a denial of the petition because of (1) serious and fatal infirmities in
the petition; (2) unreliable statements of Meralcos witnesses; and (3) clear
lack of basis to support the termination of his employment.
Gala contends, in regard to the alleged procedural defects of the petition,
that the Verification and Certification, Secretarys Certificate and Affidavit of
Service do not contain the details of the Community or Residence Tax
Certificates of the affiants, in violation of Section 6 of Commonwealth Act
No. 465 (an Act to Impose a Residence Tax). Additionally, the lawyers who
signed the petition failed to indicate their updated Mandatory Continuing
Legal Education (MCLE) certificate numbers, in violation of the rules.
With respect to the merits of the case, Gala bewails Meralcos reliance on
the joint affidavit[16] of Aguilar, Dola and Riano not only because it was
presented for the first time on appeal to the CA, but also because it was a
mere afterthought. He explains that Aguilar and Dola were the very same
persons who executed a much earlier sworn statement or transcription
dated July 7, 2006. This earlier statement did not even mention Gala, but the
later joint affidavit splashes GALAs name in a desperate attempt to link him
to an imagined wrongdoing.[17]
Zeroing in on what he believes as lack of credibility of Meralcos evidence,
Gala posits that there is clear lack of basis for the termination of his

employment. Thus, he wonders why Meralco did not present as evidence the
video footage of the entire incident which it claims exists. He suspects that
the footage was adverse to Meralcos position in the case.
Gala adds that the allegations of a reported pilferage or rampant theft or
pilferage committed prior to May 25, 2006 by his superiors were not
established, for even the labor arbiter did not make a finding on the
foremens involvement in the incident. He stresses that the same is true in his
case as there is no proof of his participation in the pilferage.
Gala further submits that even if he saw Llanes on May 25, 2006 at about
the time of the occurrence of the pilferage near or around the Meralco
trucks, he was not aware that a wrongdoing was being committed or was
about to be committed. He points out at that precise time, his superiors were
much nearer to the trucks than he as he was among the crew digging a
hole. He presumed at the time that his own superiors, being the more senior
employees, could be trusted to protect company property.
Finally, Gala posits that his reinstatement with full backwages is but a
consequence of the illegality of his dismissal. He argues that even if he was
on probation, he is entitled to security of tenure. Citing Philippine
Manpower Services, Inc. v. NLRC,[18] he claims that in the absence of any
justification for the termination of his probationary employment, he is
entitled to continued employment even beyond the probationary period.
The Courts Ruling
The procedural issue
Gala would want the petition to be dismissed outright on procedural
grounds, claiming that the Verification and Certification, Secretarys

Certificate and Affidavit of Service accompanying the petition do not

contain the details of the Community Tax Certificates of the affiants, and
that the lawyers who signed the petition failed to indicate their updated
MCLE certificate numbers, in violation of existing rules.
We stress at this point that it is the spirit and intention of labor
legislation that the NLRC and the labor arbiters shall use every reasonable
means to ascertain the facts in each case speedily and objectively, without
regard to technicalities of law or procedure, provided due process is duly
observed.[19] In keeping with this policy and in the interest of substantial
justice, we deem it proper to give due course to the petition, especially in
view of the conflict between the findings of the labor arbiter, on the one
hand, and the NLRC and the CA, on the other. As we said in S.S. Ventures
International, Inc. v. S.S. Ventures Labor Union,[20] the application of
technical rules of procedure in labor cases may be relaxed to serve the
demands of substantial justice.
The substantive aspect of the case
We find merit in the petition.
Contrary to the conclusions of the CA and the NLRC, there is
substantial evidence supporting Meralcos position that Gala had become
unfit to continue his employment with the company. Gala was found, after
an administrative investigation, to have failed to meet the standards expected
of him to become a regular employee and this failure was mainly due to his
undeniable knowledge, if not participation, in the pilferage activities done by
their group, all to the prejudice of the Companys interests.[21]

Gala insists that he cannot be sanctioned for the theft of company property
on May 25, 2006. He maintains that he had no direct participation in the
incident and that he was not aware that an illegal activity was going on as he
was at some distance from the trucks when the alleged theft was being
committed. He adds that he did not call the attention of the foremen because
he was a mere lineman and he was focused on what he was doing at the
time. He argues that in any event, his mere presence in the area was not
enough to make him a conspirator in the commission of the pilferage.
Gala misses the point. He forgets that as a probationary employee, his
overall job performance and his behavior were being monitored and
measured in accordance with the standards (i.e., the terms and conditions)
laid down in his probationary employment agreement.[22] Under paragraph 8
of the agreement, he was subject to strict compliance with, and non-violation
of the Company Code on Employee Discipline, Safety Code, rules and
regulations and existing policies.Par. 10 required him to observe at all times
the highest degree of transparency, selflessness and integrity in the
performance of his duties and responsibilities, free from any form of conflict
or contradicting with his own personal interest.
The evidence on record established Galas presence in the worksite where
the pilferage of company property happened. It also established that it was
not only onMay 25, 2006 that Llanes, the pilferer, had been seen during a
Meralco operation. He had been previously noticed by Meralco employees,
including Gala (based on his admission),[23] in past operations. If Gala had
seen Llanes in earlier projects or operations of the company, it is incredulous
for him to say that he did not know why Llanes was there or what Zuiga and
Llanes were talking about. To our mind, the Meralco crew (the foremen and
the linemen) allowed or could have even asked Llanes to be there during
their operations for one and only purpose to serve as their conduit for

pilfered company supplies to be sold to ready buyers outside Meralco

worksites.
The familiarity of the Meralco crew with Llanes, a non-Meralco employee
who had been present in Meralco field operations, does not contradict at all
but rather support the Meralco submission that there had been reported
pilferage or rampant theft, by the crew, of company property even
before May 25, 2006. Gala downplays this particular point with the
argument that the labor arbiter made no such finding as she merely assumed
it to be a fact,[24] her only basis being the statement that may natanggap na
balita na ang mga crew na ito ay palagiang hindi nagsasauli ng mga
electric facilities na kanilang ginagamit o pinapalitan bagkus ito ay ibinenta
palabas.[25] Gala impugns the statement as hearsay. He also wonders why
Meralcos supposed video footage of the incident on May 25, 2006 was never
presented in evidence.
The established fact that Llanes, a non-Meralco employee, was often seen
during company operations, conversing with the foremen, for reason or
reasons connected with the ongoing company operations, gives rise to the
question: what was he doing there? Apparently, he had been visiting Meralco
worksites, at least in the Valenzuela Sector, not simply to socialize, but to do
something else. As testified to by witnesses, he was picking up unused
supplies and materials that were not returned to the company. From these
factual premises, it is not hard to conclude that this activity was for the
mutual pecuniary benefit of himself and the crew who tolerated the practice.
For one working at the scene who had seen or who had shown familiarity
with Llanes (a non-Meralco employee), not to have known the reason for his
presence is to disregard the obvious, or at least the very suspicious.

We consider, too, and we find credible the company submission that the
Meralco
crew
who
worked
at
the
Pacheco
Subdivision
in Valenzuela City on May 25, 2006 had not been returning unused supplies
and materials, to the prejudice of the company. From all these, the allegedly
hearsay evidence that is not competent in judicial proceedings (as noted
above), takes on special meaning and relevance.
With respect to the video footage of the May 25, 2006 incident, Gala
himself admitted that he viewed the tape during the administrative
investigation, particularly in connection with the accusation against him that
he allowed Llanes (binatilyong may kapansanan sa bibig) to board the
Meralco trucks.[26] The choice of evidence belongs to a party and the mere
fact that the video was shown to Gala indicates that the video was not an
evidence that Meralco was trying to suppress. Gala could have, if he had
wanted to, served a subpoena for the production of the video footage as
evidence. The fact that he did not does not strengthen his case nor weaken
the case of Meralco.
On the whole, the totality of the circumstances obtaining in the case
convinces us that Gala could not but have knowledge of the pilferage of
company electrical supplies on May 25, 2006; he was complicit in its
commission, if not by direct participation, certainly, by his inaction while it
was being perpetrated and by not reporting the incident to company
authorities. Thus, we find substantial evidence to support the conclusion that
Gala does not deserve to remain in Meralcos employ as a regular employee.
He violated his probationary employment agreement, especially the
requirement for him to observe at all times the highest degree of
transparency, selflessness and integrity in the performance of their duties and
responsibilities[.][27] He failed to qualify as a regular employee.[28]

For ignoring the evidence in this case, the NLRC committed grave abuse of
discretion and, in sustaining the NLRC, the CA committed a reversible error.
WHEREFORE, premises considered, the petition is GRANTED. The
assailed decision and resolution of the Court of Appeals are SET ASIDE.
The complaint is DISMISSED for lack of merit.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Baguio City
ARMANDO ALILING,
Petitioner,

THIRD DIVISION
G.R. No. 185829
Present:

- versus -

VELASCO, JR., J.,

Chairperson
PERALTA,
ABAD,
MENDOZA, and
PERLAS-BERNABE, J
J.

JOSE B. FELICIANO,
MANUELBERSAMIN, JJ.
F. SAN MATEO III, JOSEPH
R.
LARIOSA, and WIDE
WIDEPromulgated:
WORLD EXPRESS
Promulgated:
CORPORATION,
Respondents.
April 25, 2012
x-----------------------------------------------------------------------------------------x
DECISION
VELASCO, JR., J.:
The Case

This Petition for Review on Certiorari under Rule 45 assails and seeks
to set aside the July 3, 2008 Decision [1] and December 15, 2008
Resolution[2] of the Court of Appeals (CA), in CA-G.R. SP No. 101309,
entitled Armando Aliling v. National Labor Relations Commission, Wide
Wide World Express Corporation, Jose B. Feliciano, Manuel F. San Mateo
III and Joseph R. Lariosa. The assailed issuances modified the Resolutions
dated May 31, 2007[3] and August 31, 2007[4] rendered by the National Labor
Relations Commission (NLRC) in NLRC NCR Case No. 00-10-11166-2004,
affirming the Decision dated April 25, 2006[5] of the Labor Arbiter.
The Facts
Via a letter dated June 2, 2004,[6] respondent Wide Wide World Express
Corporation (WWWEC) offered to employ petitioner Armando Aliling
(Aliling) asAccount Executive (Seafreight Sales), with the following
compensation package: a monthly salary of PhP 13,000, transportation
allowance of PhP 3,000, clothing allowance of PhP 800, cost of living
allowance of PhP 500, each payable on a per month basis and a 14 th month
pay depending on the profitability and availability of financial resources of
the company. The offer came with a six (6)-month probation period
condition with this express caveat: Performance during [sic] probationary
period shall be made as basis for confirmation to Regular or Permanent
Status.
On June 11, 2004, Aliling and WWWEC inked an Employment
Contract[7] under the following terms, among others:
Conversion to regular status shall be determined on the basis of
work performance; and
Employment services may, at any time, be terminated for just
cause or in accordance with the standards defined at the time of
engagement.[8]
Training then started. However, instead of a Seafreight Sale
assignment, WWWEC asked Aliling to handle Ground Express (GX), a new

company product launched on June 18, 2004 involving domestic cargo

forwarding service for Luzon. Marketing this product and finding daily
contracts for it formed the core of Alilings new assignment.
Barely a month after, Manuel F. San Mateo III (San Mateo),
WWWEC Sales and Marketing Director, emailed Aliling [9] to express
dissatisfaction with the latters performance, thus:
Armand,
My expectations is [sic] that GX Shuttles should be 80% full by
the 3rd week (August 5) after launch (July 15). Pls. make that
happen. It has been more than a month since you came in. I am
expecting sales to be pumping in by now. Thanks.
Nonong
Thereafter, in a letter of September 25, 2004, [10] Joseph R. Lariosa (Lariosa),
Human Resources Manager of WWWEC, asked Aliling to report to the
Human Resources Department to explain his absence taken without leave
from September 20, 2004.
Aliling responded two days later. He denied being absent on the days in
question, attaching to his reply-letter[11] a copy of his timesheet[12] which
showed that he worked from September 20 to 24, 2004. Alilings explanation
came with a query regarding the withholding of his salary corresponding to
September 11 to 25, 2004.
In a separate letter dated September 27, 2004, [13] Aliling wrote San
Mateo stating: Pursuant to your instruction on September 20, 2004, I hereby
tender my resignation effective October 15, 2004. While WWWEC took no
action on his tender, Aliling nonetheless demanded reinstatement and a
written apology, claiming in a subsequent letter dated October 1, 2004 [14] to
management that San Mateo had forced him to resign.

Lariosas response-letter of October 1, 2004,[15] informed Aliling that his case

was still in the process of being evaluated. On October 6, 2004,[16] Lariosa
again wrote, this time to advise Aliling of the termination of his services
effective as of that date owing to his non-satisfactory performance during
his probationary period. Records show that Aliling, for the period indicated,
was paid his outstanding salary which consisted of:
PhP 4,988.18 (salary for the September 25, 2004 payroll)
1,987.28 (salary for 4 days in October 2004)
------------PhP 6,975.46 Total
Earlier, however, or on October 4, 2004, Aliling filed a Complaint [17] for
illegal dismissal due to forced resignation, nonpayment of salaries as well as
damages with the NLRC against WWWEC. Appended to the complaint was
Alilings Affidavit dated November 12, 2004,[18] in which he stated: 5. At the
time of my engagement, respondents did not make known to me the
standards under which I will qualify as a regular employee.
Refuting Alilings basic posture, WWWEC stated in its Position Paper
dated November 22, 2004[19] that, in addition to the letter-offer and
employment contract adverted to, WWWEC and Aliling have signed a letter
of appointment[20] on June 11, 2004 containing the following terms of
engagement:
Additionally, upon the effectivity of your probation, you and
your immediate superior are required to jointly define your
objectives compared with the job requirements of the position.
Based on the pre-agreed objectives, your performance shall
be reviewed on the 3rd month to assess your competence and
work attitude. The 5th month Performance Appraisal shall
be the basis in elevating or confirming your employment
status from Probationary to Regular.
Failure to meet the job requirements during the probation stage
means that your services may be terminated without prior
notice and without recourse to separation pay.

WWWEC also attached to its Position Paper a memo dated September 20,
2004[21] in which San Mateo asked Aliling to explain why he should not be
terminated for failure to meet the expected job performance, considering that
the load factor for the GX Shuttles for the period July to September was only
0.18% as opposed to the allegedly agreed upon load of 80% targeted for
August 5, 2004. According to WWWEC, Aliling, instead of explaining
himself, simply submitted a resignation letter.
In a Reply-Affidavit dated December 13, 2004,[22] Aliling denied having
received a copy of San Mateos September 20, 2004 letter.
Issues having been joined, the Labor Arbiter issued on April 25, 2006 [23] a
Decision declaring Alilings termination as unjustified. In its pertinent parts,
the decision reads:
The grounds upon which complainants dismissal was based did
not conform not only the standard but also the compliance
required under Article 281 of the Labor Code, Necessarily,
complainants termination is not justified for failure to comply
with the mandate the law requires. Respondents should be
ordered to pay salaries corresponding to the unexpired
portion of the contract of employment and all other benefits
amounting to a total of THIRTY FIVE THOUSAND EIGHT
HUNDRED ELEVEN PESOS (P35,811.00) covering the
period from October 6 to December 7, 2004, computed as
follows:
Unexpired Portion of the Contract:
Basic Salary P13,000.00
Transportation 3,000.00
Clothing Allowance 800.00
ECOLA 500.00
-------------P17,300.00

10/06/04 12/07/04
P17,300.00 x 2.7 mos. = P35,811.00
Complainants 13th month pay proportionately for 2004 was not
shown to have been paid to complainant, respondent be made
liable to him therefore computed at SIX THOUSAND FIVE
HUNDRED THIRTY TWO PESOS AND 50/100 (P6,532.50).
For engaging the services of counsel to protect his interest,
complainant is likewise entitled to a 10% attorneys fees of the
judgment amount. Such other claims for lack of basis sufficient
to support for their grant are unwarranted.
WHEREFORE, judgment is hereby rendered ordering
respondent company to pay complainant Armando Aliling the
sum of THIRTY FIVE THOUSAND EIGHT HUNDRED
ELEVEN PESOS (P35,811.00) representing his salaries and
other benefits as discussed above.
Respondent company is likewise ordered to pay said
complainant the amount of TEN THOUSAND SEVEN
HUNDRED SIXTY SIX PESOS AND 85/100 ONLY
(10.766.85) representing his proportionate 13th month pay for
2004 plus 10% of the total judgment as and by way of attorneys
fees.
Other claims are hereby denied for lack of merit. (Emphasis
supplied.)
The labor arbiter gave credence to Alilings allegation about not receiving
and, therefore, not bound by, San Mateos purported September 20, 2004
memo. The memo, to reiterate, supposedly apprised Aliling of the sales
quota he was, but failed, to meet. Pushing the point, the labor arbiter
explained that Aliling cannot be validly terminated for non-compliance with
the quota threshold absent a prior advisory of the reasonable standards upon
which his performance would be evaluated.
Both parties appealed the above decision to the NLRC, which affirmed the
Decision in toto in its Resolution dated May 31, 2007. The separate motions

for reconsideration were also denied by the NLRC in its Resolution dated
August 31, 2007.
Therefrom, Aliling went on certiorari to the CA, which eventually rendered
the assailed Decision, the dispositive portion of which reads:
WHEREFORE, the petition is PARTLY GRANTED. The
assailed Resolutions of respondent (Third Division) National
Labor Relations Commission are AFFIRMED, with the
following MODIFICATION/CLARIFICATION: Respondents
Wide Wide World Express Corp. and its officers, Jose B.
Feliciano, Manuel F. San Mateo III and Joseph R. Lariosa,
are jointly and severally liable to pay petitioner Armando
Aliling: (A) the sum of Forty Two Thousand Three Hundred
Thirty Three & 50/100 (P42,333.50) as the total money
judgment, (B) the sum of Four Thousand Two Hundred Thirty
Three & 35/100 (P4,233.35) as attorneys fees, and (C) the
additional sum equivalent to one-half (1/2) month of petitioners
salary as separation pay.
SO ORDERED.[24] (Emphasis supplied.)
The CA anchored its assailed action on the strength of the following
premises: (a) respondents failed to prove that Alilings dismal performance
constituted gross and habitual neglect necessary to justify his dismissal; (b)
not having been informed at the time of his engagement of the reasonable
standards under which he will qualify as a regular employee, Aliling was
deemed to have been hired from day one as a regular employee; and (c) the
strained relationship existing between the parties argues against the propriety
of reinstatement.
Alilings motion for reconsideration was rejected by the CA through the
assailed Resolution dated December 15, 2008.
Hence, the instant petition.
The Issues

Aliling raises the following issues for consideration:

A. The failure of the Court of Appeals to order
reinstatement (despite its finding that petitioner was illegally
dismissed from employment) is contrary to law and applicable
jurisprudence.
B. The failure of the Court of Appeals to award
backwages (even if it did not order reinstatement) is contrary to
law and applicable jurisprudence.
C. The failure of the Court of Appeals to award moral
and exemplary damages (despite its finding that petitioner was
dismissed to prevent the acquisition of his regular status) is
contrary to law and applicable jurisprudence.[25]
In their Comment,[26] respondents reiterated their position that
WWWEC hired petitioner on a probationary basis and fired him before he
became a regular employee.
The Courts Ruling
The petition is partly meritorious.
Petitioner is a regular employee
On a procedural matter, petitioner Aliling argues that WWWEC, not
having appealed from the judgment of CA which declared Aliling as a
regular employee from the time he signed the employment contract, is now
precluded from questioning the appellate courts determination as to the
nature of his employment.
Petitioner errs. The Court has, when a case is on appeal, the authority
to review matters not specifically raised or assigned as error if their
consideration is necessary in reaching a just conclusion of the case. We said
as much in Sociedad Europea de Financiacion, SA v. Court of Appeals,[27] It
is axiomatic that an appeal, once accepted by this Court, throws the entire

case open to review, and that this Court has the authority to review matters
not specifically raised or assigned as error by the parties, if their
consideration is necessary in arriving at a just resolution of the case.
The issue of whether or not petitioner was, during the period material,
a probationary or regular employee is of pivotal import. Its resolution is
doubtless necessary at arriving at a fair and just disposition of the
controversy.
The Labor Arbiter cryptically held in his decision dated April 25, 2006
that:
Be that as it may, there appears no showing that indeed
the said September 20, 2004 Memorandum addressed to
complainant was received by him. Moreover, complainants
tasked where he was assigned was a new developed service. In
this regard, it is noted:
Due process dictates that an employee be apprised
beforehand of the conditions of his employment and of
the terms of advancement therein. Precisely, implicit in
Article 281 of the Labor Code is the requirement that
reasonable standards be previously made known by the
employer to the employee at the time of his engagement
(Ibid, citing Sameer Overseas Placement Agency, Inc. vs.
NLRC, G.R. No. 132564, October 20, 1999).[28]
From our review, it appears that the labor arbiter, and later the NLRC,
considered Aliling a probationary employee despite finding that he was not
informed of the reasonable standards by which his probationary employment
was to be judged.
The CA, on the other hand, citing Cielo v. National Labor Relations
Commission,[29] ruled that petitioner was a regular employee from the outset
inasmuch as he was not informed of the standards by which his probationary
employment would be measured. The CA wrote:

Petitioner was regularized from the time of the execution

of the employment contract on June 11, 2004, although
respondent company had arbitrarily shortened his tenure. As
pointed out, respondent company did not make known the
reasonable standards under which he will qualify as a
regular employee at the time of his engagement. Hence, he
was deemed to have been hired from day one as a regular
employee.[30] (Emphasis supplied.)
WWWEC, however, excepts on the argument that it put Aliling on
notice that he would be evaluated on the 3 rd and 5th months of his
probationary employment. To WWWEC, its efforts translate to sufficient
compliance with the requirement that a probationary worker be apprised of
the reasonable standards for his regularization. WWWEC invokes the
ensuing holding in Alcira v. National Labor Relations Commission[31] to
support its case:
Conversely, an employer is deemed to substantially
comply with the rule on notification of standards if he apprises
the employee that he will be subjected to a performance
evaluation on a particular date after his hiring. We agree with
the labor arbiter when he ruled that:
In the instant case, petitioner cannot successfully
say that he was never informed by private respondent of
the standards that he must satisfy in order to be converted
into regular status. This rans (sic) counter to the
agreement between the parties that after five months
of service the petitioners performance would be
evaluated. It is only but natural that the evaluation
should be made vis--vis the performance standards for
the job. Private respondent Trifona Mamaradlo speaks of
such standard in her affidavit referring to the fact that
petitioner did not perform well in his assigned work and
his attitude was below par compared to the companys
standard required of him. (Emphasis supplied.)

WWWECs contention is untenable.

Alcira is cast under a different factual setting. There, the labor arbiter,
the NLRC, the CA, and even finally this Court were one in their findings
that the employee concerned knew, having been duly informed during his
engagement, of the standards for becoming a regular employee. This is in
stark contrast to the instant case where the element of being informed of the
regularizing standards does not obtain. As such, Alcira cannot be made to
apply to the instant case.
To note, the June 2, 2004 letter-offer itself states that the
regularization standards or the performance norms to be used are still to be
agreed upon by Aliling and his supervisor. WWWEC has failed to prove
that an agreement as regards thereto has been reached. Clearly then, there
were actually no performance standards to speak of. And lest it be
overlooked, Aliling was assigned to GX trucking sales, an activity entirely
different to the Seafreight Sales he was originally hired and trained for.
Thus, at the time of his engagement, the standards relative to his assignment
with GX sales could not have plausibly been communicated to him as he
was under Seafreight Sales. Even for this reason alone, the conclusion
reached in Alcira is of little relevant to the instant case.
Based on the facts established in this case in light of extant
jurisprudence, the CAs holding as to the kind of employment petitioner
enjoyed is correct. So was the NLRC ruling, affirmatory of that of the labor
arbiter. In the final analysis, one common thread runs through the holding of
the labor arbiter, the NLRC and the CA, i.e., petitioner Aliling, albeit hired
from managements standpoint as a probationary employee, was deemed a
regular employee by force of the following self-explanatory provisions:
Article 281 of the Labor Code
ART. 281. Probationary employment. - Probationary
employment shall not exceed six (6) months from the date the
employee started working, unless it is covered by an
apprenticeship agreement stipulating a longer period. The

services of an employee who has been engaged on a

probationary basis may be terminated for a just cause or when
he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the
employee at the time of his engagement.An employee who is
allowed to work after a probationary period shall be considered
a regular employee. (Emphasis supplied.)
Section 6(d) of the Implementing Rules of Book VI, Rule
VIII-A of the Labor Code
Sec. 6. Probationary employment. There is probationary
employment where the employee, upon his engagement, is
made to undergo a trial period where the employee determines
his fitness to qualify for regular employment, based on
reasonable standards made known to him at the time of
engagement.
Probationary employment shall be governed by the
following rules:
xxxx
(d) In all cases of probationary employment, the
employer shall make known to the employee the standards
under which he will qualify as a regular employee at the
time of his engagement. Where no standards are made
known to the employee at that time, he shall be deemed a
regular employee. (Emphasis supplied.)
To repeat, the labor arbiter, NLRC and the CA are agreed, on the basis
of documentary evidence adduced, that respondent WWWEC did not inform
petitioner Aliling of the reasonable standards by which his probation would
be measured against at the time of his engagement. The Court is loathed to
interfere with this factual determination. As We have held:
Settled is the rule that the findings of the Labor
Arbiter, when affirmed by the NLRC and the Court of
Appeals, are binding on the Supreme Court, unless patently
erroneous. It is not the function of the Supreme Court to

analyze or weigh all over again the evidence already considered

in the proceedings below. The jurisdiction of this Court in a
petition for review on certiorari is limited to reviewing only
errors of law, not of fact, unless the factual findings being
assailed are not supported by evidence on record or the
impugned judgment is based on a misapprehension of facts.[32]
The more recent Peafrancia Tours and Travel Transport, Inc., v.
Sarmiento[33] has reaffirmed the above ruling, to wit:
Finally, the CA affirmed the ruling of the NLRC and
adopted as its own the latter's factual findings. Long-established
is the doctrine that findings of fact of quasi-judicial bodies x x x
are accorded respect, even finality, if supported by substantial
evidence. When passed upon and upheld by the CA, they are
binding and conclusive upon this Court and will not normally
be disturbed. Though this doctrine is not without exceptions,
the Court finds that none are applicable to the present case.
WWWEC also cannot validly argue that the factual findings being
assailed are not supported by evidence on record or the impugned
judgment is based on a misapprehension of facts. Its very own letter-offer
of employment argues against its above posture. Excerpts of the letter-offer:
Additionally, upon the effectivity of your probation, you
and your immediate superior are required to jointly define
your objectives compared with the job requirements of the
position. Based on the pre-agreed objectives, your performance
shall be reviewed on the 3rd month to assess your competence
and work attitude. The 5th month Performance Appraisal shall
be the basis in elevating or confirming your employment status
from Probationary to Regular.
Failure to meet the job requirements during the probation
stage means that your services may be terminated without prior
notice and without recourse to separation pay. (Emphasis
supplied.)

Respondents further allege that San Mateos email dated July 16, 2004
shows that the standards for his regularization were made known to
petitioner Aliling at the time of his engagement. To recall, in that email
message, San Mateo reminded Aliling of the sales quota he ought to meet as
a condition for his continued employment, i.e., that the GX trucks should
already be 80% full by August 5, 2004. Contrary to respondents
contention, San Mateos email cannot support their allegation on Aliling
being informed of the standards for his continued employment, such as the
sales quota, at the time of his engagement. As it were, the email message
was sent to Aliling more than a month after he signed his employment
contract with WWWEC. The aforequoted Section 6 of the Implementing
Rules of Book VI, Rule VIII-A of the Code specifically requires the
employer to inform the probationary employee of such reasonable
standardsat the time of his engagement, not at any time later; else, the
latter shall be considered a regular employee. Thus, pursuant to the explicit
provision of Article 281 of the Labor Code, Section 6(d) of the
Implementing Rules of Book VI, Rule VIII-A of the Labor Code and settled
jurisprudence, petitioner Aliling is deemed a regular employee as of June 11,
2004, the date of his employment contract.

Petitioner was illegally dismissed

To justify fully the dismissal of an employee, the employer must, as a
rule, prove that the dismissal was for a just cause and that the employee was
afforded due process prior to dismissal. As a complementary principle, the
employer has the onus of proving with clear, accurate, consistent, and
convincing evidence the validity of the dismissal.[34]
WWWEC had failed to discharge its twin burden in the instant case.
First off, the attendant circumstances in the instant case aptly show
that the issue of petitioners alleged failure to achieve his quota, as a ground
for terminating employment, strikes the Court as a mere afterthought on the

part of WWWEC. Consider: Lariosas letter of September 25, 2004 already

betrayed managements intention to dismiss the petitioner for alleged
unauthorized absences. Aliling was in fact made to explain and he did so
satisfactorily. But, lo and behold, WWWEC nonetheless proceeded with its
plan to dismiss the petitioner for non-satisfactory performance, although the
corresponding termination letter dated October 6, 2004 did not even
specifically state Alilings non-satisfactory performance, or that Alilings
termination was by reason of his failure to achieve his set quota.
What WWWEC considered as the evidence purportedly showing it
gave Aliling the chance to explain his inability to reach his quota was a
purported September 20, 2004 memo of San Mateo addressed to the latter.
However, Aliling denies having received such letter and WWWEC has failed
to refute his contention of non-receipt. In net effect, WWWEC was at a loss
to explain the exact just reason for dismissing Aliling.
At any event, assuming for argument that the petitioner indeed failed
to achieve his sales quota, his termination from employment on that ground
would still be unjustified.
Article 282 of the Labor Code considers any of the following acts or
omission on the part of the employee as just cause or ground for terminating
employment:
(a) Serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or representative
in connection with his work;
(b) Gross and habitual neglect by the employee of his
duties;
(c) Fraud or willful breach by the employee of the trust
reposed in him by his employer or duly authorized
representative;

(d) Commission of a crime or offense by the employee

against the person of his employer or any immediate member of
his family or his duly authorized representatives; and
(e) Other causes analogous to the foregoing. (Emphasis
supplied)
In Lim v. National Labor Relations Commission,[35] the Court
considered inefficiency as an analogous just cause for termination of
employment under Article 282 of the Labor Code:
We cannot but agree with PEPSI that gross
inefficiency falls within the purview of other causes
analogous to the foregoing, this constitutes, therefore, just
cause to terminate an employee under Article 282 of the
Labor Code. One is analogous to another if it is susceptible of
comparison with the latter either in general or in some specific
detail; or has a close relationship with the latter. Gross
inefficiency is closely related to gross neglect, for both involve
specific acts of omission on the part of the employee resulting
in damage to the employer or to his business. In Buiser vs.
Leogardo, this Court ruled that failure to observed prescribed
standards to inefficiency may constitute just cause for
dismissal. (Emphasis supplied.)
It did so anew in Leonardo v. National Labor Relations
Commission[36] on the following rationale:
An employer is entitled to impose productivity standards for
its workers, and in fact, non-compliance may be visited with a
penalty even more severe than demotion. Thus,
[t]he practice of a company in laying off workers
because they failed to make the work quota has been
recognized in this jurisdiction. (Philippine American
Embroideries vs. Embroidery and Garment Workers, 26
SCRA 634, 639). In the case at bar, the petitioners' failure
to meet the sales quota assigned to each of them
constitute a just cause of their dismissal, regardless of the
permanent
or
probationary
status
of
their

employment. Failure to observe prescribed standards

of work, or to fulfill reasonable work assignments due
to inefficiency may constitute just cause for
dismissal. Such inefficiency is understood to mean
failure to attain work goals or work quotas, either by
failing to
complete
the
same
within
the
allotted reasonable period, or by producing unsatisfactory
results. This management prerogative of requiring
standards may be availed of so long as they are
exercised in good faith for the advancement of the
employer's interest.(Emphasis supplied.)
In fine, an employees failure to meet sales or work quotas falls under
the concept of gross inefficiency, which in turn is analogous to gross neglect
of duty that is a just cause for dismissal under Article 282 of the Code.
However, in order for the quota imposed to be considered a valid
productivity standard and thereby validate a dismissal, managements
prerogative of fixing the quota must be exercised in good faith for the
advancement of its interest. The duty to prove good faith, however, rests
with WWWEC as part of its burden to show that the dismissal was for a just
cause. WWWEC must show that such quota was imposed in good faith. This
WWWEC failed to do, perceptibly because it could not. The fact of the
matter is that the alleged imposition of the quota was a desperate attempt to
lend a semblance of validity to Alilings illegal dismissal. It must be stressed
that even WWWECs sales manager, Eve Amador (Amador), in an internal email to San Mateo, hedged on whether petitioner performed below or above
expectation:
Could not quantify level of performance as he as was tasked to
handle a new product (GX). Revenue report is not yet
administered by IT on a month-to-month basis. Moreover, this
in a way is an experimental activity. Practically you have a
close monitoring with Armand with regards to his performance.
Your assessment of him would be more accurate.
Being an experimental activity and having been launched for the first
time, the sales of GX services could not be reasonably quantified. This

would explain why Amador implied in her email that other bases besides
sales figures will be used to determine Alilings performance. And yet,
despite such a neutral observation, Aliling was still dismissed for his dismal
sales of GX services. In any event, WWWEC failed to demonstrate the
reasonableness and the bona fideson the quota imposition.
Employees must be reminded that while probationary employees do
not enjoy permanent status, they enjoy the constitutional protection of
security of tenure. They can only be terminated for cause or when they
otherwise fail to meet the reasonable standards made known to them by the
employer at the time of their engagement.[37] Respondent WWWEC
miserably failed to prove the termination of petitioner was for a just cause
nor was there substantial evidence to demonstrate the standards were made
known to the latter at the time of his engagement. Hence, petitioners right to
security of tenure was breached.
Alilings right to procedural due process was violated
As earlier stated, to effect a legal dismissal, the employer must show
not only a valid ground therefor, but also that procedural due process has
properly been observed. When the Labor Code speaks of procedural due
process, the reference is usually to the two (2)-written notice rule envisaged
in Section 2 (III), Rule XXIII, Book V of the Omnibus Rules Implementing
the Labor Code, which provides:
Section 2. Standard of due process: requirements of
notice. In all cases of termination of employment, the following
standards of due process shall be substantially observed.
I. For termination of employment based on just causes as
defined in Article 282 of the Code:
(a) A written notice served on the employee
specifying the ground or grounds for termination, and
giving to said employee reasonable opportunity within
which to explain his side;

(b) A hearing or conference during which the

employee concerned, with the assistance of counsel if the
employee so desires, is given opportunity to respond to
the charge, present his evidence or rebut the evidence
presented against him; and
(c) A written notice [of] termination served on the
employee indicating that upon due consideration of all
the circumstance, grounds have been established to
justify his termination.
In case of termination, the foregoing notices shall be
served on the employees last known address.

MGG Marine Services, Inc. v. NLRC[38] tersely described the

mechanics of what may be considered a two-part due process requirement
which includes the two-notice rule, x x x one, of the intention to dismiss,
indicating therein his acts or omissions complained against, and two, notice
of the decision to dismiss; and an opportunity to answer and rebut the
charges against him, in between such notices.
King of Kings Transport, Inc. v. Mamac [39] expounded on this procedural
requirement in this manner:
(1) The first written notice to be served on the
employees should contain the specific causes or grounds for
termination against them, and a directive that the employees are
given the opportunity to submit their written explanation within
a reasonable period. Reasonable opportunity under the
Omnibus Rules means every kind of assistance that
management must accord to the employees to enable them to
prepare adequately for their defense. This should be construed
as a period of at least five calendar days from receipt of the
notice xxxx Moreover, in order to enable the employees to
intelligently prepare their explanation and defenses, the notice
should contain a detailed narration of the facts and
circumstances that will serve as basis for the charge against the

employees. A general description of the charge will not

suffice. Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which among the
grounds under Art. 288 [of the Labor Code] is being charged
against the employees
(2) After serving the first notice, the employees should
schedule and conduct a hearing or conference wherein the
employees will be given the opportunity to (1) explain and
clarify their defenses to the charge against them; (2) present
evidence in support of their defenses; and (3) rebut the evidence
presented against them by the management. During the hearing
or conference, the employees are given the chance to defend
themselves personally, with the assistance of a representative or
counsel of their choice x x x.
(3) After determining that termination is justified, the
employer shall serve the employees a written notice of
termination indicating that: (1) all the circumstances involving
the charge against the employees have been considered; and (2)
grounds have been established to justify the severance of their
employment. (Emphasis in the original.)
Here, the first and second notice requirements have not been properly
observed, thus tainting petitioners dismissal with illegality.
The adverted memo dated September 20, 2004 of WWWEC
supposedly informing Aliling of the likelihood of his termination and
directing him to account for his failure to meet the expected job performance
would have had constituted the charge sheet, sufficient to answer for the first
notice requirement, but for the fact that there is no proof such letter had been
sent to and received by him. In fact, in his December 13, 2004 Complainants
Reply Affidavit, Aliling goes on to tag such letter/memorandum as
fabrication. WWWEC did not adduce proof to show that a copy of the letter
was duly served upon Aliling. Clearly enough, WWWEC did not comply
with the first notice requirement.

Neither was there compliance with the imperatives of a hearing or

conference. The Court need not dwell at length on this particular breach of
the due procedural requirement. Suffice it to point out that the record is
devoid of any showing of a hearing or conference having been conducted.
On the contrary, in its October 1, 2004 letter to Aliling, or barely five (5)
days after it served the notice of termination, WWWEC acknowledged that
it was still evaluating his case. And the written notice of termination itself
did not indicate all the circumstances involving the charge to justify
severance of employment.
Aliling is entitled to backwages
and separation pay in lieu of reinstatement
As may be noted, the CA found Alilings dismissal as having been
illegally effected, but nonetheless concluded that his employment ceased at
the end of the probationary period. Thus, the appellate court merely affirmed
the monetary award made by the NLRC, which consisted of the payment of
that amount corresponding to the unserved portion of the contract of
employment.
The case disposition on the award is erroneous.
As earlier explained, Aliling cannot be rightfully considered as a mere
probationary employee. Accordingly, the probationary period set in the
contract of employment dated June 11, 2004 was of no moment. In net
effect, as of that date June 11, 2004, Aliling became part of the WWWEC
organization as a regular employee of the company without a fixed term of
employment. Thus, he is entitled to backwages reckoned from the time he
was illegally dismissed on October 6, 2004, with a PhP 17,300.00 monthly
salary, until the finality of this Decision. This disposition hews with the
Courts ensuing holding in Javellana v. Belen:[40]
Article 279 of the Labor Code, as amended by Section 34
of Republic Act 6715 instructs:
Art. 279. Security of Tenure. - In cases of regular
employment, the employer shall not terminate the

services of an employee except for a just cause or when

authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges
and to his full backwages, inclusive of allowances, and
to his other benefits or their monetary equivalent
computed from the time his compensation was
withheld from him up to the time of his actual
reinstatement. (Emphasis supplied)
Clearly, the law intends the award of backwages and
similar benefits to accumulate past the date of the Labor
Arbiters decision until the dismissed employee is actually
reinstated. But if, as in this case, reinstatement is no longer
possible, this Court has consistently ruled that backwages
shall be computed from the time of illegal dismissal until the
date the decision becomes final. (Emphasis supplied.)
Additionally, Aliling is entitled to separation pay in lieu of
reinstatement on the ground of strained relationship.
In Golden Ace Builders v. Talde,[41] the Court ruled:
The basis for the payment of backwages is different from
that for the award of separation pay. Separation pay is granted
where reinstatement is no longer advisable because of strained
relations between the employee and the employer. Backwages
represent compensation that should have been earned but were
not collected because of the unjust dismissal. The basis for
computing backwages is usually the length of the employee's
service while that for separation pay is the actual period when
the employee was unlawfully prevented from working.
As to how both awards should be computed, Macasero v.
Southern Industrial Gases Philippines instructs:
[T]he award of separation pay is inconsistent with
a finding that there was no illegal dismissal, for under
Article 279 of the Labor Code and as held in a catena of

cases, an employee who is dismissed without just cause

and without due process is entitled to backwages and
reinstatement or payment of separation pay in lieu
thereof:
Thus, an illegally dismissed employee is
entitled to two reliefs: backwages and
reinstatement. The two reliefs provided are
separate and distinct. In instances where
reinstatement is no longer feasible because of
strained relations between the employee and the
employer, separation pay is granted. In effect,
an illegally dismissed employee is entitled to
either reinstatement, if viable, or separation pay
if reinstatement is no longer viable, and
backwages.
The normal consequences of respondents
illegal dismissal, then, are reinstatement without
loss of seniority rights, and payment of backwages
computed from the time compensation was
withheld up to the date of actual reinstatement.
Where reinstatement is no longer viable as an
option, separation pay equivalent to one (1) month
salary for every year of service should be awarded
as an alternative. The payment of separation pay is
in addition to payment of backwages. x x x
Velasco
v.
National
Labor
Relations
Commission emphasizes:
The accepted doctrine is that separation pay may
avail in lieu of reinstatement if reinstatement is no longer
practical or in the best interest of the parties. Separation
pay in lieu of reinstatement may likewise be awarded if
the employee decides not to be reinstated. (emphasis in
the original; italics supplied)
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.
Strained relations must be demonstrated as a
fact, however, to be adequately supported by evidence
substantial evidence to show that the relationship between the
employer and the employee is indeed strained as a necessary
consequence of the judicial controversy.
In the present case, the Labor Arbiter found that
actual animosity existed between petitioner Azul and
respondent as a result of the filing of the illegal dismissal
case. Such finding, especially when affirmed by the
appellate court as in the case at bar, is binding upon the
Court, consistent with the prevailing rules that this Court
will not try facts anew and that findings of facts of quasijudicial bodies are accorded great respect, even
finality. (Emphasis supplied.)
As the CA correctly observed, To reinstate petitioner [Aliling] would
only create an atmosphere of antagonism and distrust, more so that he had
only a short stint with respondent company.[42] The Court need not belabor
the fact that the patent animosity that had developed between employer and
employee generated what may be considered as the arbitrary dismissal of the
petitioner.
Following the pronouncements of this Court Sagales v. Rustans
Commercial Corporation,[43] the computation of separation pay in lieu of
reinstatement includes the period for which backwages were awarded:
Thus, in lieu of reinstatement, it is but proper to award
petitioner separation pay computed at one-month salary for
every year of service, a fraction of at least six (6) months
considered as one whole year. In the computation of

separation pay, the period where backwages are awarded

must be included. (Emphasis supplied.)
Thus, Aliling is entitled to both backwages and separation pay (in lieu
of reinstatement) in the amount of one (1) months salary for every year of
service, that is, from June 11, 2004 (date of employment contract) until the
finality of this decision with a fraction of a year of at least six (6) months to
be considered as one (1) whole year. As determined by the labor arbiter, the
basis for the computation of backwages and separation pay will be Alilings
monthly salary at PhP 17,300.
Finally, Aliling is entitled to an award of PhP 30,000 as nominal
damages in consonance with prevailing jurisprudence[44] for violation of due
process.
Petitioner is not entitled to moral and exemplary damages
In Nazareno v. City of Dumaguete,[45] the Court expounded on the
requisite elements for a litigants entitlement to moral damages, thus:
Moral damages are awarded if the following elements
exist in the case: (1) an injury clearly sustained by the claimant;
(2) a culpable act or omission factually established; (3) a
wrongful act or omission by the defendant as the proximate
cause of the injury sustained by the claimant; and (4) the award
of damages predicated on any of the cases stated Article 2219
of the Civil Code. In addition, the person claiming moral
damages must prove the existence of bad faith by clear and
convincing evidence for the law always presumes good faith. It
is not enough that one merely suffered sleepless nights, mental
anguish, and serious anxiety as the result of the actuations of
the other party. Invariably such action must be shown to have
been willfully done in bad faith or with ill motive. Bad faith,
under the law, does not simply connote bad judgment or
negligence. It imports a dishonest purpose or some moral
obliquity and conscious doing of a wrong, a breach of a
known duty through some motive or interest or ill will that
partakes of the nature of fraud. (Emphasis supplied.)

In alleging that WWWEC acted in bad faith, Aliling has the burden of
proof to present evidence in support of his claim, as ruled in Culili v.
Eastern Telecommunications Philippines, Inc.:[46]
According to jurisprudence, basic is the principle that
good faith is presumed and he who alleges bad faith has the
duty to prove the same. By imputing bad faith to the actuations
of ETPI, Culili has the burden of proof to present substantial
evidence to support the allegation of unfair labor practice.
Culili failed to discharge this burden and his bare allegations
deserve no credit.
This was reiterated in United Claimants Association of NEA
(UNICAN) v. National Electrification Administration (NEA),[47] in this wise:
It must be noted that the burden of proving bad faith rests
on the one alleging it. As the Court ruled in Culili v. Eastern
Telecommunications, Inc., According to jurisprudence, basic is
the principle that good faith is presumed and he who alleges
bad faith has the duty to prove the same. Moreover, in Spouses
Palada v. Solidbank Corporation, the Court stated, Allegations
of bad faith and fraud must be proved by clear and convincing
evidence.
Similarly, Aliling has failed to overcome such burden to prove bad
faith on the part of WWWEC. Aliling has not presented any clear and
convincing evidence to show bad faith. The fact that he was illegally
dismissed is insufficient to prove bad faith. Thus, the CA correctly ruled that
[t]here was no sufficient showing of bad faith or abuse of management
prerogatives in the personal action taken against petitioner.[48] In Lambert
Pawnbrokers and Jewelry Corporation v. Binamira,[49] the Court ruled:
A dismissal may be contrary to law but by itself alone, it
does not establish bad faith to entitle the dismissed employee to
moral damages. The award of moral and exemplary damages
cannot be justified solely upon the premise that the employer

dismissed his employee without authorized cause and due

process.

The officers of WWWEC cannot be held

jointly and severally liable with the company
The CA held the president of WWWEC, Jose B. Feliciano, San
Mateo and Lariosa jointly and severally liable for the monetary awards of
Aliling on the ground that the officers are considered employers acting in the
interest of the corporation. The CA cited NYK International Knitwear
Corporation Philippines(NYK) v.
National
Labor
Relations
[50]
Commission in support of its argument. Notably, NYK in turn cited A.C.
Ransom Labor Union-CCLU v. NLRC.[51]

[52]

Such ruling has been reversed by the Court in Alba v. Yupangco,

where the Court ruled:
By Order of September 5, 2007, the Labor Arbiter denied
respondents motion to quash the 3rd alias writ. Brushing aside
respondents contention that his liability is merely joint, the
Labor Arbiter ruled:
Such issue regarding the personal liability of the officers
of a corporation for the payment of wages and money claims to
its employees, as in the instant case, has long been resolved by
the Supreme Court in a long list of cases [A.C. Ransom Labor
Union-CLU vs. NLRC (142 SCRA 269) and reiterated in the
cases of Chua vs. NLRC (182 SCRA 353), Gudez vs.
NLRC (183 SCRA 644)]. In the aforementioned cases, the
Supreme Court has expressly held that the irresponsible officer
of the corporation (e.g. President) is liable for the corporations
obligations to its workers. Thus, respondent Yupangco, being
the president of the respondent YL Land and Ultra Motors
Corp., is properly jointly and severally liable with the defendant
corporations for the labor claims of Complainants Alba and De
Guzman. x x x

xxxx
As reflected above, the Labor Arbiter held that
respondents liability is solidary.
There is solidary liability when the obligation expressly
so states, when the law so provides, or when the nature of the
obligation so requires. MAM Realty Development Corporation
v. NLRC, on solidary liability of corporate officers in labor
disputes, enlightens:
x x x A corporation being a juridical entity, may act
only through its directors, officers and employees.
Obligations incurred by them, acting as such corporate
agents are not theirs but the direct accountabilities of the
corporation they represent. True solidary liabilities may
at times be incurred but only when exceptional
circumstances warrant such as, generally, in the
following cases:
1. When directors and trustees or, in
appropriate cases, the officers of a corporation:
(a) vote for or assent to patently unlawful
acts of the corporation;
(b) act in bad faith or with gross negligence
in directing the corporate affairs;
xxxx
In labor cases, for instance, the Court has held corporate
directors and officers solidarily liable with the corporation for
the termination of employment of employees done with malice
or in bad faith.
A review of the facts of the case does not reveal ample and
satisfactory proof that respondent officers of WWEC acted in bad faith or
with malice in effecting the termination of petitioner Aliling. Even

assuming arguendo that the actions of WWWEC are ill-conceived and

erroneous, respondent officers cannot be held jointly and solidarily with
it. Hence, the ruling on the joint and solidary liability of individual
respondents must be recalled.
Aliling is entitled to Attorneys Fees and Legal Interest
Petitioner Aliling is also entitled to attorneys fees in the amount of ten
percent (10%) of his total monetary award, having been forced to litigate in
order to seek redress of his grievances, pursuant to Article 111 of the Labor
Code and following our ruling in Exodus International Construction
Corporation v. Biscocho,[53] to wit:
In Rutaquio v. National Labor Relations Commission, this
Court held that:
It is settled that in actions for recovery of wages or where
an employee was forced to litigate and, thus, incur
expenses to protect his rights and interest, the award of
attorneys fees is legally and morally justifiable.
In Producers Bank of the Philippines v. Court of
Appeals this Court ruled that:
Attorneys fees may be awarded when a party is
compelled to litigate or to incur expenses to protect his
interest by reason of an unjustified act of the other party.
While in Lambert Pawnbrokers and Jewelry Corporation,[54] the Court
specifically ruled:
However, the award of attorneys fee is warranted
pursuant to Article 111 of the Labor Code. Ten (10%) percent of
the total award is usually the reasonable amount of attorneys
fees awarded. It is settled that where an employee was forced to
litigate and, thus, incur expenses to protect his rights and
interest, the award of attorneys fees is legally and morally
justifiable.

Finally, legal interest shall be imposed on the monetary awards herein

granted at the rate of 6% per annum from October 6, 2004 (date of
termination) until fully paid.
WHEREFORE, the petition is PARTIALLY GRANTED. The July
3, 2008 Decision of the Court of Appeals in CA-G.R. SP No. 101309 is
herebyMODIFIED to read:
WHEREFORE, the
petition
is PARTIALLY
GRANTED. The assailed Resolutions of respondent (Third
Division)
National
Labor
Relations
Commission
areAFFIRMED,
with
the
following MODIFICATION/CLARIFICATION: Respondent
Wide Wide World Express Corp. is liable to pay Armando
Aliling the following: (a) backwages reckoned from October 6,
2004 up to the finality of this Decision based on a salary of PhP
17,300 a month, with interest at 6% per annum on the principal
amount from October 6, 2004 until fully paid; (b) the additional
sum equivalent to one (1) month salary for every year of
service, with a fraction of at least six (6) months considered as
one whole year based on the period from June 11, 2004 (date of
employment contract) until the finality of this Decision, as
separation pay; (c) PhP 30,000 as nominal damages; and (d)
Attorneys Fees equivalent to 10% of the total award.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Baguio City
EN BANC
G.R. No. 192571

April 22, 2014

ABBOTT LABORATORIES, PHILIPPINES, CECILLE A.

TERRIBLE, EDWIN D. FEIST, MARIA OLIVIA T. YABUT-MISA,
TERESITA C. BERNARDO, AND ALLAN G. ALMAZAR, Petitioners,
vs.
PEARLIE ANN F. ALCARAZ, Respondent.

RESOLUTION
PERLAS-BERNABE, J.:
For resolution is respondent Pearlie Ann Alcaraz's (Alcaraz) Motion for
Reconsideration dated August 23, 2013 of the Court's Decision dated July
23, 2013 (Decision).1
At the outset, there appears to be no substantial argument in the said motion
sufficient for the Court to depart from the pronouncements made in the
initial ruling. But if only to address Akaraz's novel assertions, and to so
placate any doubt or misconception in the resolution of this case, the Court
proceeds to shed light on the matters indicated below.
A. Manner of review.
Alcaraz contends that the Court should not have conducted a re-weighing of
evidence since a petition for review on certiorari under Rule 45 of the Rules
of Court (Rules) is limited to the review of questions of law. She submits
that since what was under review was a ruling of the Court of Appeals (CA)
rendered via a petition for certiorari under Rule 65 of the Rules, the Court
should only determine whether or not the CA properly determined that the
National Labor Relations Commission (NLRC) committed a grave abuse of
discretion.
The assertion does not justify the reconsideration of the assailed Decision.
A careful perusal of the questioned Decision will reveal that the Court
actually resolved the controversy under the above-stated framework of
analysis. Essentially, the Court found the CA to have committed an error in
holding that no grave abuse of discretion can be ascribed to the NLRC since
the latter arbitrarily disregarded the legal implication of the attendant
circumstances in this case which should have simply resulted in the finding
that Alcaraz was apprised of the performance standards for her
regularization and hence, was properly a probationary employee. As the
Court observed, an employees failure to perform the duties and

responsibilities which have been clearly made known to him constitutes a

justifiable basis for a probationary employees non-regularization. As
detailed in the Decision, Alcaraz was well-apprised of her duties and
responsibilities as well as the probationary status of her employment:
(a) On June 27, 2004, [Abbott Laboratories, Philippines (Abbott)]
caused the publication in a major broadsheet newspaper of its need for
a Regulatory Affairs Manager, indicating therein the job description
for as well as the duties and responsibilities attendant to the aforesaid
position; this prompted Alcaraz to submit her application to Abbott on
October 4, 2004;
(b) In Abbotts December 7, 2004 offer sheet, it was stated that
Alcaraz was to be employed on a probationary status;
(c) On February 12, 2005, Alcaraz signed an employment contract
which specifically stated, inter alia, that she was to be placed on
probation for a period of six (6) months beginning February 15, 2005
to August 14, 2005;
(d) On the day Alcaraz accepted Abbotts employment offer, Bernardo
sent her copies of Abbotts organizational structure and her job
description through e-mail;
(e) Alcaraz was made to undergo a pre-employment orientation where
[Allan G. Almazar] informed her that she had to implement Abbotts
Code of Conduct and office policies on human resources and finance
and that she would be reporting directly to [Kelly Walsh];
(f) Alcaraz was also required to undergo a training program as part of
her orientation;
(g) Alcaraz received copies of Abbotts Code of Conduct and
Performance Modules from [Maria Olivia T. Yabut-Misa] who
explained to her the procedure for evaluating the performance of

probationary employees; she was further notified that Abbott had only
one evaluation system for all of its employees; and
(h) Moreover, Alcaraz had previously worked for another
pharmaceutical company and had admitted to have an "extensive
training and background" to acquire the necessary skills for her job.2
Considering the foregoing incidents which were readily observable from the
records, the Court reached the conclusion that the NLRC committed grave
abuse of discretion, viz.:
[I]n holding that Alcaraz was illegally dismissed due to her status as a
regular and not a probationary employee, the Court finds that the NLRC
committed a grave abuse of discretion.
To elucidate, records show that the NLRC based its decision on the premise
that Alcarazs receipt of her job description and Abbotts Code of Conduct
and Performance Modules was not equivalent to being actually informed of
the performance standards upon which she should have been evaluated on.
It, however, overlooked the legal implication of the other attendant
circumstances as detailed herein which should have warranted a contrary
finding that Alcaraz was indeed a probationary and not a regular employee
more particularly the fact that she was well-aware of her duties and
responsibilities and that her failure to adequately perform the same would
lead to her non-regularization and eventually, her termination.3
Consequently, since the CA found that the NLRC did not commit grave
abuse of discretion and denied the certiorari petition before it, the reversal of
its ruling was thus in order.
At this juncture, it bears exposition that while NLRC decisions are, by their
nature, final and executory4 and, hence, not subject to appellate review,5 the
Court is not precluded from considering other questions of law aside from
the CAs finding on the NLRCs grave abuse of discretion. While the focal
point of analysis revolves on this issue, the Court may deal with ancillary
issues such as, in this case, the question of how a probationary employee is

deemed to have been informed of the standards of his regularization if only

to determine if the concepts and principles of labor law were correctly
applied or misapplied by the NLRC in its decision. In other words, the
Courts analysis of the NLRCs interpretation of the environmental
principles and concepts of labor law is not completely prohibited in as it is
complementary to a Rule 45 review of labor cases.
Finally, if only to put to rest Alcarazs misgivings on the manner in which
this case was reviewed, it bears pointing out that no "factual appellate
review" was conducted by the Court in the Decision. Rather, the Court
proceeded to interpret the relevant rules on probationary employment as
applied to settled factual findings. Besides, even on the assumption that a
scrutiny of facts was undertaken, the Court is not altogether barred from
conducting the same. This was explained in the case of Career Philippines
Shipmanagement, Inc. v. Serna6 wherein the Court held as follows:
Accordingly, we do not re-examine conflicting evidence, re-evaluate the
credibility of witnesses, or substitute the findings of fact of the NLRC, an
administrative body that has expertise in its specialized field. Nor do we
substitute our "own judgment for that of the tribunal in determining where
the weight of evidence lies or what evidence is credible." The factual
findings of the NLRC, when affirmed by the CA, are generally conclusive
on this Court.
Nevertheless, there are exceptional cases where we, in the exercise of our
discretionary appellate jurisdiction may be urged to look into factual issues
raised in a Rule 45 petition. For instance, when the petitioner persuasively
alleges that there is insufficient or insubstantial evidence on record to
support the factual findings of the tribunal or court a quo, as Section 5, Rule
133 of the Rules of Court states in express terms that in cases filed before
administrative or quasi-judicial bodies, a fact may be deemed established
only if supported by substantial evidence.7 (Emphasis supplied)
B. Standards for regularization;
conceptual underpinnings.

Alcaraz posits that, contrary to the Courts Decision, ones job description
cannot by and of itself be treated as a standard for regularization as a
standard denotes a measure of quantity or quality. By way of example,
Alcaraz cites the case of a probationary salesperson and asks how does such
employee achieve regular status if he does not know how much he needs to
sell to reach the same.
The argument is untenable.
First off, the Court must correct Alcarazs mistaken notion: it is not the
probationary employees job description but the adequate performance of his
duties and responsibilities which constitutes the inherent and implied
standard for regularization. To echo the fundamental point of the Decision, if
the probationary employee had been fully apprised by his employer of these
duties and responsibilities, then basic knowledge and common sense dictate
that he must adequately perform the same, else he fails to pass the
probationary trial and may therefore be subject to termination.8
The determination of "adequate performance" is not, in all cases, measurable
by quantitative specification, such as that of a sales quota in Alcarazs
example. It is also hinged on the qualitative assessment of the employees
work; by its nature, this largely rests on the reasonable exercise of the
employers management prerogative. While in some instances the standards
used in measuring the quality of work may be conveyed such as workers
who construct tangible products which follow particular metrics, not all
standards of quality measurement may be reducible to hard figures or are
readily articulable in specific pre-engagement descriptions. A good example
would be the case of probationary employees whose tasks involve the
application of discretion and intellect, such as to name a few lawyers,
artists, and journalists. In these kinds of occupation, the best that the
employer can do at the time of engagement is to inform the probationary
employee of his duties and responsibilities and to orient him on how to
properly proceed with the same. The employer cannot bear out in exacting
detail at the beginning of the engagement what he deems as "quality work"
especially since the probationary employee has yet to submit the required

output. In the ultimate analysis, the communication of performance

standards should be perceived within the context of the nature of the
probationary employees duties and responsibilities.
The same logic applies to a probationary managerial employee who is tasked
to supervise a particular department, as Alcaraz in this case.1wphi1 It is
hardly possible for the employer, at the time of the employees engagement,
to map into technical indicators, or convey in precise detail the quality
standards by which the latter should effectively manage the department.
Factors which gauge the ability of the managerial employee to either deal
with his subordinates (e.g., how to spur their performance, or command
respect and obedience from them), or to organize office policies, are hardly
conveyable at the outset of the engagement since the employee has yet to be
immersed into the work itself. Given that a managerial role essentially
connotes an exercise of discretion, the quality of effective management can
only be determined through subsequent assessment. While at the time of
engagement, reason dictates that the employer can only inform the
probationary managerial employee of his duties and responsibilities as such
and provide the allowable parameters for the same. Verily, as stated in the
Decision, the adequate performance of such duties and responsibilities is, by
and of itself, an implied standard of regularization.
In this relation, it bears mentioning that the performance standard
contemplated by law should not, in all cases, be contained in a specialized
system of feedbacks or evaluation. The Court takes judicial notice of the fact
that not all employers, such as simple businesses or small-scale enterprises,
have a sophisticated form of human resource management, so much so that
the adoption of technical indicators as utilized through "comment cards" or
"appraisal" tools should not be treated as a prerequisite for every case of
probationary engagement. In fact, even if a system of such kind is employed
and the procedures for its implementation are not followed, once an
employer determines that the probationary employee fails to meet the
standards required for his regularization, the former is not precluded from
dismissing the latter. The rule is that when a valid cause for termination
exists, the procedural infirmity attending the termination only warrants the

payment of nominal damages. This was the principle laid down in the
landmark cases of Agabon v. NLRC9 (Agabon) and Jaka Food Processing
Corporation v. Pacot10 (Jaka). In the assailed Decision, the Court actually
extended the application of the Agabon and Jaka rulings to breaches of
company procedure, notwithstanding the employers compliance with the
statutory requirements under the Labor Code.11 Hence, although Abbott did
not comply with its own termination procedure, its non-compliance thereof
would not detract from the finding that there subsists a valid cause to
terminate Alcarazs employment. Abbott, however, was penalized for its
contractual breach and thereby ordered to pay nominal damages.
As a final point, Alcaraz cannot take refuge in Aliling v. Feliciano12 (Aliling)
since the same is not squarely applicable to the case at bar. The employee in
Aliling, a sales executive, was belatedly informed of his quota requirement.
Thus, considering the nature of his position, the fact that he was not
informed of his sales quota at the time of his engagement changed the
complexion of his employment. Contrarily, the nature of Alcaraz's duties and
responsibilities as Regulatory Affairs Manager negates the application of the
foregoing. Records show that Alcaraz was terminated because she (a) did not
manage her time effectively; (b) failed to gain the trust of her staff and to
build an effective rapport with them; (c) failed to train her staff effectively;
and (d) was not able to obtain the knowledge and ability to make sound
judgments on case processing and article review which were necessary for
the proper performance of her duties.13 Due to the nature and variety of these
managerial functions, the best that Abbott could have done, at the time of
Alcaraz's engagement, was to inform her of her duties and responsibilities,
the adequate performance of which, to repeat, is an inherent and implied
standard for regularization; this is unlike the circumstance in Aliling where a
quantitative regularization standard, in the term of a sales quota, was readily
articulable to the employee at the outset. Hence, since the reasonableness of
Alcaraz's assessment clearly appears from the records, her termination was
justified. Bear in mind that the quantum of proof which the employer must
discharge is only substantial evidence which, as defined in case law, means
that amount of relevant evidence as a reasonable mind might accept as
adequate to support a conclusion, even if other minds, equally reasonable,

might conceivably opine otherwise.14 To the Court's mind, this threshold of

evidence Abbott amply overcame in this case.
All told, the Court hereby denies the instant motion for reconsideration and
thereby upholds the Decision in the main case.
WHEREFORE, the motion for reconsideration dated August 23, 2013 of the
Court's Decision dated July 23, 2013 in this case is hereby DENIED.
SO ORDERED.
SECOND DIVISION
ABESCO CONSTRUCTION AND G.R. No. 141168
DEVELOPMENT CORPORATION
and MR. OSCAR BANZON,
General Manager,
Petitioners, Present:

PUNO, J., Chairperson,

SANDOVAL-GUTIERREZ,
- v e r s u s - CORONA,
AZCUNA and
GARCIA, JJ.

ALBERTO RAMIREZ, BERNARDO

DIWA, MANUEL LOYOLA,
REYNALDO P. ACODESIN,

ALEXANDER BAUTISTA,
EDGAR TAJONERA and
GARY DISON,*
Respondents. Present:

April 10, 2006

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

RESOLUTION

CORONA, J.:

Petitioner company was engaged in a construction business where

respondents were hired on different dates from 1976 to 1992 either as
laborers, road roller operators, painters or drivers.

In 1997, respondents filed two separate complaints [1] for illegal

dismissal against the company and its General Manager, Oscar Banzon,
before the Labor Arbiter (LA). Petitioners allegedly dismissed them without
a valid reason and without due process of law. The complaints also included
claims for non-payment of the 13th month pay, five days service incentive

leave pay, premium pay for holidays and rest days, and moral and exemplary
damages. The LA later on ordered the consolidation of the two complaints.[2]

Petitioners denied liability to respondents and countered that respondents

were project employees since their services were necessary only when the
company had projects to be completed. Petitioners argued that, being project
employees, respondents employment was coterminous with the project to
which they were assigned. They were not regular employees who enjoyed
security of tenure and entitlement to separation pay upon termination from
work.

After trial, the LA declared respondents as regular

employees because they belonged to a work pool from which
the company drew workers for assignment to different
projects, at its discretion. He ruled that respondents were
hired and re-hired over a period of 18 years, hence, they
were deemed to be regular employees. He likewise found
that their employment was terminated without just cause. In
a decision dated January 7, 1998, he stated:

WHEREFORE, judgment is hereby rendered declaring

respondents guilty of illegal dismissal and ordering the latter to
reinstate
complainants
to
their
former
positions
with backwages and other benefits from the time their

compensation was withheld from them up to the time their

actual reinstatement which as of the date of this decision
amounted to:

NAME
1. Alberto Ramirez P49,764.00
2. Manuel B. Loyola 46,695.22
3. Hernando Diwa 49,764.00
4. Reynaldo Acodesin 46,695.22
5. Alexander Bautista 45,285.24
6. Edgar Tajonera 62,985.00
7. Gary Dison 53,911.00
TOTAL P 355,099.68

However, if reinstatement is no longer feasible, a one-month

salary shall be awarded as a form of separation pay, in addition
to the aforementioned award.

Respondents are likewise ordered to pay complainants

the following:

NAM
E

U
N
P
A
I
D

SAL
ARY
DIFF
ERE
NTI
AL

S
A
L
A
R
Y

1.Her
nando
Diwa

2.Ale
xande
r
Bautis
ta

P
7
6
5
.
0
0

13T
H

M
ON
TH
PA
Y

5
D
A
YS
SE
RV
IC
E
IN
CE
NT
IV
E
LE
AV
E

P1,
274
.00

P23,
088.
00

SEP
AR
ATI
ON
PA
Y

P4,
147.
00

11,
141
.00

P2,
00
5.0
0

45,6
17.0
0

3.Alb
erto
Ramir
ez

11,
141
.00

2,0
05.
00

74,6
46.0
0

4.Man

11,

2,0

41,1

uel B.
Loyol
a

141
.00

20.
00

70.0
0

5.Rey
naldo
Acod
esin

11,
141
.00

2,0
20.
00

20,7
35.0
0

6.Edg
ardoT
ajoner
a

19,
500
.00

3,7
50.
00

130,
000.
00

7.Gar
y Dis
on

11,
141
.00

2,0
20.
00

29,0
29.0
0

P7
6,4
79.
00

P1
3,8
20.
00

P34
5,34
4.00

P
7
6
5
.
0
0

P23,
088.
00

xxx

All other claims are hereby dismissed for lack of merit.[3]

Petitioners appealed to the National Labor Relations Commission (NLRC)

which affirmed the LAs decision.[4]

Subsequently, petitioners filed a petition for review in the Court of Appeals

(CA) arguing that they were not liable for illegal dismissal since respondents
services were merely put on hold until the resumption of their business
operations. They also averred that they had paid respondents their full wages
and benefits as provided by law, hence, the latter had no more right to
further benefits.

The CA was not convinced and dismissed petitioners appeal. It held:

We note that the petitioners are taking a new tack in

arguing, for the first time, that the [respondents] were not
dismissed but their employment was merely suspended.
Previous to this, their defense was that the [respondents] were
project employees who were not entitled to security of tenure.
The petitioners are barred from raising a new defense at this
stage of the case.

xxx xxx xxx

WHEREFORE, the petition

hereby DISMISSED, for lack of merit.[5]

for

certiorari

is

Petitioners filed a motion for reconsideration but it was dismissed by

the CA.[6]
In this petition for review under Rule 45 of the Rules of Court,
petitioners raise the following issues for resolution: (1)
whether respondents were project employees or regular
employees and (2) whether respondents were illegally
dismissed.

On the first issue, we rule that respondents were regular employees.

However, we take exception to the reasons cited by the LA (which both the
NLRC and the CA affirmed) in considering respondents as regular
employees and not as project employees.

Contrary to the disquisitions of the LA, employees (like respondents)

who work under different project employment contracts for several years do
not automatically become regular employees; they can remain as project
employees regardless of the number of years they work. [7] Length of service
is not a controlling factor in determining the nature of ones employment.[8]

Moreover, employees who are members of a work pool from which a

company (like petitioner corporation) draws workers for deployment to its
different projects do not become regular employees by reason of that fact

alone. The Court has enunciated in some cases [9] that members of a work
pool can either be project employees or regular employees.

The principal test for determining whether employees are project

employees or regular employees is whether they are assigned to carry out a
specific project or undertaking, the duration and scope of which are
specified at the time they are engaged for that project. [10] Such duration, as
well as the particular work/service to be performed, is defined in an
employment agreement and is made clear to the employees at the time of
hiring.[11]

In this case, petitioners did not have that kind of agreement with
respondents. Neither did they inform respondents of the nature of the
latters work at the time of hiring. Hence, for failure of petitioners to
substantiate their claim that respondents were project employees, we are
constrained to declare them as regular employees.

Furthermore, petitioners cannot belatedly argue that respondents

continue to be their employees (so as to escape liability for illegal
dismissal). Before the LA, petitioners staunchly postured that respondents
were only project employees whose employment tenure was coterminous
with the projects they were assigned to. However, before the CA, they took a
different stance by insisting that respondents continued to be their
employees. Petitioners inconsistent and conflicting positions on their true

relation with respondents make it all the more evident that the latter were
indeed their regular employees.

On the issue of illegal dismissal, we hold that petitioners failed to

adhere to the two-notice rule which requires that workers to be dismissed
must be furnished with: (1) a notice informing them of the particular acts for
which they are being dismissed and (2) a notice advising them of the
decision to terminate the employment.[12] Respondents were never given
such notices.
WHEREFORE, the petition is hereby DENIED.
Costs against petitioners.

SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 176419

November 27, 2013

GMA NETWORK, INC., Petitioner,

vs.
CARLOS P. PABRIGA, GEOFFREY F. ARIAS, KIRBY N. CAMPO,
ARNOLD L. LAGAHIT, and ARMANDO A. CATUBIG, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:

This is a Petition for Review on Certiorari filed by petitioner GMA Network

Inc. assailing the Decision1 of the Court of Appeals dated September 8, 2006
and the subsequent Resolution2 dated January 22 2007 denying
reconsideration in CA-G.R. SP No. 73652.
The Court of Appeals summarized the facts of the case as follows:
On July 19 1999 due to the miserable working conditions private
respondents were forced to file a complaint against petitioner before the
National Labor Relations Commission Regional Arbitration Branch No. VII
Cebu City assailing their respective employment circumstances as follows:
NAME

DATE HIRED

POSITION

Carlos Pabriga

2 May 1997

Television Technicians

Geoffrey Arias

2 May 1997

Television Technicians

Kirby Campo

1 Dec. 1993

Television Technicians

Arnold Laganit

11 Feb. 1996

Television Technicians

Armand Catubig

2 March 1997

Television Technicians

Private respondents were engaged by petitioner to perform the following

activities, to wit:
1) Manning of Technical Operations Center:
(a) Responsible for the airing of local commercials; and
(b) Logging/monitoring of national commercials (satellite)
2) Acting as Transmitter/VTR men:
(a) Prepare tapes for local airing;
(b) Actual airing of commercials;
(c) Plugging of station promo;
(d) Logging of transmitter reading; and

(e) In case of power failure, start up generator set to resume

program;
3) Acting as Maintenance staff;
(a) Checking of equipment;
(b) Warming up of generator;
(c) Filling of oil, fuel, and water in radiator; and
4) Acting as Cameramen
On 4 August 1999, petitioner received a notice of hearing of the complaint.
The following day, petitioners Engineering Manager, Roy Villacastin,
confronted the private respondents about the said complaint.
On 9 August 1999, private respondents were summoned to the office of
petitioners Area Manager, Mrs. Susan Alio, and they were made to explain
why they filed the complaint. The next day, private respondents were barred
from entering and reporting for work without any notice stating the reasons
therefor.
On 13 August 1999, private respondents, through their counsel, wrote a
letter to Mrs. Susan Alio requesting that they be recalled back to work.
On 23 August 1999, a reply letter from Mr. Bienvenido Bustria, petitioners
head of Personnel and Labor Relations Division, admitted the non-payment
of benefits but did not mention the request of private respondents to be
allowed to return to work.
On 15 September 1999, private respondents sent another letter to Mr. Bustria
reiterating their request to work but the same was totally ignored. On 8
October 1999, private respondents filed an amended complaint raising the
following additional issues: 1) Unfair Labor Practice; 2) Illegal dismissal;
and 3) Damages and Attorneys fees.
On 23 September 1999, a mandatory conference was set to amicably settle
the dispute between the parties, however, the same proved to be futile. As a
result, both of them were directed to file their respective position papers.

On 10 November 1999, private respondents filed their position paper and on

2 March 2000, they received a copy of petitioners position paper. The
following day, the Labor Arbiter issued an order considering the case
submitted for decision.3
In his Decision dated August 24, 2000, the Labor Arbiter dismissed the
complaint of respondents for illegal dismissal and unfair labor practice, but
held petitioner liable for 13th month pay. The dispositive portion of the
Labor Arbiters Decision reads:
WHEREFORE, the foregoing premises considered, judgment is hereby
rendered dismissing the complaints for illegal dismissal and unfair labor
practice.
Respondents are, however, directed to pay the following complainants their
proportionate 13th month pay, to wit:
1. Kirby Campo

P 7,716.04

2. Arnold Lagahit

7,925.98

3. Armand Catubig

4,233.68

4. Carlos Pabriga

4,388.19

5. Geoffrey Arias

4,562.01
P28,826.14

10% Attorneys fees

GRAND TOTAL

2,882.61
P31,708.75

All other claims are, hereby, dismissed for failure to substantiate the same.4
Respondents appealed to the National Labor Relations Commission
(NLRC). The NLRC reversed the Decision of the Labor Arbiter, and held
thus:
WHEREFORE, we make the following findings:
a) All complainants are regular employees with respect to the particular
activity to which they were assigned, until it ceased to exist. As such, they

are entitled to payment of separation pay computed at one (1) month salary
for every year of service;
b) They are not entitled to overtime pay and holiday pay; and
c) They are entitled to 13th month pay, night shift differential and service
incentive leave pay.
For purposes of accurate computation, the entire records are REMANDED
to the Regional Arbitration Branch of origin which is hereby directed to
require from respondent the production of additional documents where
necessary.
Respondent is also assessed the attorneys fees of ten percent (10%) of all
the above awards.5
Petitioner elevated the case to the Court of Appeals via a Petition for
Certiorari. On September 8, 2006, the appellate court rendered its Decision
denying the petition for lack of merit.
Petitioner filed the present Petition for Review on Certiorari, based on the
following grounds:
I.
THE COURT OF APPEALS GRAVELY ERRED FINDING
RESPONDENTS ARE REGULAR EMPLOYEES OF THE
PETITIONER AND ARE NOT PROJECT EMPLOYEES.
II.
THE COURT OF APPEALS GRAVELY ERRED IN AWARDING
SEPARATION PAY TO RESPONDENTS ABSENT A FINDING
THAT RESPONDENTS WERE ILLEGALLY DISMISSED.
III.
THE COURT OF APPEALS GRAVELY ERRED IN AWARDING
NIGHT SHIFT DIFFERENTIAL PAY CONSIDERING THE
ABSENCE OF EVIDENCE WHICH WOULD ENTITLE THEM TO
SUCH AN AWARD.

IV.
THE COURT OF APPEALS GRAVELY ERRED IN AWARDING
ATTORNEYS FEES TO RESPONDENTS.6
The parties having extensively elaborated on their positions in their
respective memoranda, we proceed to dispose of the issues raised.
Five Classifications of Employment
At the outset, we should note that the nature of the employment is
determined by law, regardless of any contract expressing otherwise. The
supremacy of the law over the nomenclature of the contract and the
stipulations contained therein is to bring to life the policy enshrined in the
Constitution to afford full protection to labor. Labor contracts, being imbued
with public interest, are placed on a higher plane than ordinary contracts and
are subject to the police power of the State.7
Respondents claim that they are regular employees of petitioner GMA
Network, Inc. The latter, on the other hand, interchangeably characterize
respondents employment as project and fixed period/fixed term
employment. There is thus the need to clarify the foregoing terms.
The terms regular employment and project employment are taken from
Article 280 of the Labor Code, which also speaks of casual and seasonal
employment:
ARTICLE 280. Regular and casual employment. The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer,
except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or services to
be performed is seasonal in nature and employment is for the duration of the
season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That, any employee who has rendered at
least one year of service, whether such service is continuous or broken, shall

be considered a regular employee with respect to the activity in which he is

employed and his employment shall continue while such activity actually
exist.
A fifth classification, that of a fixed term employment, is not expressly
mentioned in the Labor Code. Nevertheless, this Court ruled in Brent
School, Inc. v. Zamora,8 that such a contract, which specifies that
employment will last only for a definite period, is not per se illegal or
against public policy.
Whether respondents are regular or project employees
Pursuant to the above-quoted Article 280 of the Labor Code, employees
performing activities which are usually necessary or desirable in the
employers usual business or trade can either be regular, project or seasonal
employees, while, as a general rule, those performing activities not usually
necessary or desirable in the employers usual business or trade are casual
employees. The reason for this distinction may not be readily
comprehensible to those who have not carefully studied these provisions:
only employers who constantly need the specified tasks to be performed can
be justifiably charged to uphold the constitutionally protected security of
tenure of the corresponding workers. The consequence of the distinction is
found in Article 279 of the Labor Code, which provides:
ARTICLE 279. Security of tenure. In cases of regular employment, the
employer shall not terminate the services of an employee except for a just
cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed
from the time his compensation was withheld from him up to the time of his
actual reinstatement.
On the other hand, the activities of project employees may or may not be
usually necessary or desirable in the usual business or trade of the employer,
as we have discussed in ALU-TUCP v. National Labor Relations
Commission,9 and recently reiterated in Leyte Geothermal Power
Progressive Employees Union-ALU-TUCP v. Philippine National Oil
Company-Energy Development Corporation.10 In said cases, we clarified the

term "project" in the test for determining whether an employee is a regular

or project employee:
It is evidently important to become clear about the meaning and scope of the
term "project" in the present context. The "project" for the carrying out of
which "project employees" are hired would ordinarily have some
relationship to the usual business of the employer. Exceptionally, the
"project" undertaking might not have an ordinary or normal relationship to
the usual business of the employer. In this latter case, the determination of
the scope and parameters of the "project" becomes fairly easy. It is unusual
(but still conceivable) for a company to undertake a project which has
absolutely no relationship to the usual business of the company; thus, for
instance, it would be an unusual steel-making company which would
undertake the breeding and production of fish or the cultivation of
vegetables. From the viewpoint, however, of the legal characterization
problem here presented to the Court, there should be no difficulty in
designating the employees who are retained or hired for the purpose of
undertaking fish culture or the production of vegetables as "project
employees," as distinguished from ordinary or "regular employees," so long
as the duration and scope of the project were determined or specified at the
time of engagement of the "project employees." For, as is evident from the
provisions of Article 280 of the Labor Code, quoted earlier, the principal test
for determining whether particular employees are properly characterized as
"project employees" as distinguished from "regular employees," is whether
or not the "project employees" were assigned to carry out a "specific project
or undertaking," the duration (and scope) of which were specified at the time
the employees were engaged for that project.
In the realm of business and industry, we note that "project" could refer to
one or the other of at least two (2) distinguishable types of activities. Firstly,
a project could refer to a particular job or undertaking that is within the
regular or usual business of the employer company, but which is distinct and
separate, and identifiable as such, from the other undertakings of the
company. Such job or undertaking begins and ends at determined or
determinable times. The typical example of this first type of project is a
particular construction job or project of a construction company. A
construction company ordinarily carries out two or more [distinct]
identifiable construction projects: e.g., a twenty-five-storey hotel in Makati;
a residential condominium building in Baguio City; and a domestic air
terminal in Iloilo City. Employees who are hired for the carrying out of one

of these separate projects, the scope and duration of which has been
determined and made known to the employees at the time of employment,
are properly treated as "project employees," and their services may be
lawfully terminated at completion of the project.
The term "project" could also refer to, secondly, a particular job or
undertaking that is not within the regular business of the corporation. Such a
job or undertaking must also be identifiably separate and distinct from the
ordinary or regular business operations of the employer. The job or
undertaking also begins and ends at determined or determinable times. x x
x.11 (Emphases supplied, citation omitted.)
Thus, in order to safeguard the rights of workers against the arbitrary use of
the word "project" to prevent employees from attaining the status of regular
employees, employers claiming that their workers are project employees
should not only prove that the duration and scope of the employment was
specified at the time they were engaged, but also that there was indeed a
project. As discussed above, the project could either be (1) a particular job or
undertaking that is within the regular or usual business of the employer
company, but which is distinct and separate, and identifiable as such, from
the other undertakings of the company; or (2) a particular job or undertaking
that is not within the regular business of the corporation. As it was with
regard to the distinction between a regular and casual employee, the purpose
of this requirement is to delineate whether or not the employer is in constant
need of the services of the specified employee. If the particular job or
undertaking is within the regular or usual business of the employer company
and it is not identifiably distinct or separate from the other undertakings of
the company, there is clearly a constant necessity for the performance of the
task in question, and therefore said job or undertaking should not be
considered a project.
Brief examples of what may or may not be considered identifiably distinct
from the business of the employer are in order. In Philippine Long Distance
Telephone Company v. Ylagan,12 this Court held that accounting duties were
not shown as distinct, separate and identifiable from the usual undertakings
of therein petitioner PLDT. Although essentially a telephone company,
PLDT maintains its own accounting department to which respondent was
assigned. This was one of the reasons why the Court held that respondent in
said case was not a project employee. On the other hand, in San Miguel
Corporation v. National Labor Relations Commission,13 respondent was

hired to repair furnaces, which are needed by San Miguel Corporation to

manufacture glass, an integral component of its packaging and
manufacturing business. The Court, finding that respondent is a project
employee, explained that San Miguel Corporation is not engaged in the
business of repairing furnaces. Although the activity was necessary to enable
petitioner to continue manufacturing glass, the necessity for such repairs
arose only when a particular furnace reached the end of its life or operating
cycle. Respondent therein was therefore considered a project employee.
In the case at bar, as discussed in the statement of facts, respondents were
assigned to the following tasks:
1) Manning of Technical Operations Center:
(a) Responsible for the airing of local commercials; and
(b) Logging/monitoring of national commercials (satellite)
2) Acting as Transmitter/VTR men:
(a) Prepare tapes for local airing;
(b) Actual airing of commercials;
(c) Plugging of station promo;
(d) Logging of transmitter reading; and
(e) In case of power failure, start up generator set to resume
program;
3) Acting as Maintenance staff;
(a) Checking of equipment;
(b) Warming up of generator;
(c) Filling of oil, fuel, and water in radiator; and
4) Acting as Cameramen14

These jobs and undertakings are clearly within the regular or usual business
of the employer company and are not identifiably distinct or separate from
the other undertakings of the company. There is no denying that the manning
of the operations center to air commercials, acting as transmitter/VTR men,
maintaining the equipment, and acting as cameramen are not undertakings
separate or distinct from the business of a broadcasting company.
Petitioners allegation that respondents were merely substitutes or what they
call pinch-hitters (which means that they were employed to take the place of
regular employees of petitioner who were absent or on leave) does not
change the fact that their jobs cannot be considered projects within the
purview of the law. Every industry, even public offices, has to deal with
securing substitutes for employees who are absent or on leave. Such tasks,
whether performed by the usual employee or by a substitute, cannot be
considered separate and distinct from the other undertakings of the company.
While it is managements prerogative to device a method to deal with this
issue, such prerogative is not absolute and is limited to systems wherein
employees are not ingeniously and methodically deprived of their
constitutionally protected right to security of tenure. We are not convinced
that a big corporation such as petitioner cannot device a system wherein a
sufficient number of technicians can be hired with a regular status who can
take over when their colleagues are absent or on leave, especially when it
appears from the records that petitioner hires so-called pinch-hitters
regularly every month.
In affirming the Decision of the NLRC, the Court of Appeals furthermore
noted that if respondents were indeed project employees, petitioner should
have reported the completion of its projects and the dismissal of respondents
in its finished projects:
There is another reason why we should rule in favor of private respondents.
Nowhere in the records is there any showing that petitioner reported the
completion of its projects and the dismissal of private respondents in its
finished projects to the nearest Public Employment Office as per Policy
Instruction No. 2015 of the Department of Labor and Employment [DOLE].
Jurisprudence abounds with the consistent rule that the failure of an
employer to report to the nearest Public Employment Office the termination
of its workers services everytime a project or a phase thereof is completed
indicates that said workers are not project employees.

In the extant case, petitioner should have filed as many reports of

termination as there were projects actually finished if private respondents
were indeed project employees, considering that the latter were hired and
again rehired from 1996 up to 1999. Its failure to submit reports of
termination cannot but sufficiently convince us further that private
respondents are truly regular employees. Important to note is the fact that
private respondents had rendered more than one (1) year of service at the
time of their dismissal which overturns petitioners allegations that private
respondents were hired for a specific or fixed undertaking for a limited
period of time.16 (Citations omitted.)
We are not unaware of the decisions of the Court in Philippine Long
Distance Telephone Company v. Ylagan17and ABS-CBN Broadcasting
Corporation v. Nazareno18 which held that the employers failure to report
the termination of employees upon project completion to the DOLE
Regional Office having jurisdiction over the workplace within the period
prescribed militates against the employers claim of project employment,
even outside the construction industry. We have also previously stated in
another case that the Court should not allow circumvention of labor laws in
industries not falling within the ambit of Policy Instruction No.
20/Department Order No. 19, thereby allowing the prevention of acquisition
of tenurial security by project employees who have already gained the status
of regular employees by the employers conduct.19
While it may not be proper to revisit such past pronouncements in this case,
we nonetheless find that petitioners theory of project employment fails the
principal test of demonstrating that the alleged project employee was
assigned to carry out a specific project or undertaking, the duration and
scope of which were specified at the time the employee is engaged for the
project.20
The Court of Appeals also ruled that even if it is assumed that respondents
are project employees, they would nevertheless have attained regular
employment status because of their continuous rehiring:
Be that as it may, a project employee may also attain the status of a regular
employee if there is a continuous rehiring of project employees after the
stoppage of a project; and the activities performed are usual [and] customary
to the business or trade of the employer. The Supreme Court ruled that a

project employee or a member of a work pool may acquire the status of a

regular employee when the following concur:
1) There is a continuous rehiring of project employees even after
cessation of a project; and
2) The tasks performed by the alleged project employee are vital,
necessary and indispensable to the usual business or trade of the
employer.
The circumstances set forth by law and the jurisprudence is present in this
case. In fine, even if private respondents are to be considered as project
employees, they attained regular employment status, just the
same.21 (Citation omitted.)
Anent this issue of attainment of regular status due to continuous rehiring,
petitioner advert to the fixed period allegedly designated in employment
contracts and reflected in vouchers. Petitioner cites our pronouncements in
Brent, St. Theresas School of Novaliches Foundation v. National Labor
Relations Commission,22 and Fabela v. San Miguel Corporation,23 and argues
that respondents were fully aware and freely entered into agreements to
undertake a particular activity for a specific length of time.24 Petitioner
apparently confuses project employment from fixed term employment. The
discussions cited by petitioner in Brent, St. Theresas and Fabela all refer to
fixed term employment, which is subject to a different set of requirements.
Whether the requisites of a valid fixed term employment are met
As stated above, petitioner interchangeably characterizes respondents
service as project and fixed term employment. These types of employment,
however, are not the same. While the former requires a project as
restrictively defined above, the duration of a fixed-term employment agreed
upon by the parties may be any day certain, which is understood to be "that
which must necessarily come although it may not be known when."25 The
decisive determinant in fixed-term employment is not the activity that the
employee is called upon to perform but the day certain agreed upon by the
parties for the commencement and termination of the employment
relationship.26
Cognizant of the possibility of abuse in the utilization of fixed-term
employment contracts, we emphasized in Brent that where from the

circumstances it is apparent that the periods have been imposed to preclude

acquisition of tenurial security by the employee, they should be struck down
as contrary to public policy or morals.27 We thus laid down indications or
criteria under which "term employment" cannot be said to be in
circumvention of the law on security of tenure, namely:
1) The fixed period of employment was knowingly and voluntarily
agreed upon by the parties without any force, duress, or improper
pressure being brought to bear upon the employee and absent any
other circumstances vitiating his consent; or
2) It satisfactorily appears that the employer and the employee dealt
with each other on more or less equal terms with no moral dominance
exercised by the former or the latter.28 (Citation omitted.)
These indications, which must be read together, make the Brent doctrine
applicable only in a few special cases wherein the employer and employee
are on more or less in equal footing in entering into the contract. The reason
for this is evident: when a prospective employee, on account of special skills
or market forces, is in a position to make demands upon the prospective
employer, such prospective employee needs less protection than the ordinary
worker. Lesser limitations on the parties freedom of contract are thus
required for the protection of the employee. These indications were applied
in Pure Foods Corporation v. National Labor Relations Commission,29where
we discussed the patent inequality between the employer and employees
therein:
[I]t could not be supposed that private respondents and all other so-called
"casual" workers of [the petitioner] KNOWINGLY and VOLUNTARILY
agreed to the 5-month employment contract. Cannery workers are never on
equal terms with their employers. Almost always, they agree to any terms of
an employment contract just to get employed considering that it is difficult
to find work given their ordinary qualifications. Their freedom to contract is
empty and hollow because theirs is the freedom to starve if they refuse to
work as casual or contractual workers. Indeed, to the unemployed, security
of tenure has no value. It could not then be said that petitioner and private
respondents "dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former over the latter.

To recall, it is doctrinally entrenched that in illegal dismissal cases, the

employer has the burden of proving with clear, accurate, consistent, and
convincing evidence that the dismissal was valid.30 It is therefore the
employer which must satisfactorily show that it was not in a dominant
position of advantage in dealing with its prospective employee. Thus, in
Philips Semiconductors (Phils.), Inc. v. Fadriquela,31 this Court rejected the
employers insistence on the application of the Brent doctrine when the sole
justification of the fixed terms is to respond to temporary albeit frequent
need of such workers:
We reject the petitioners submission that it resorted to hiring employees for
fixed terms to augment or supplement its regular employment "for the
duration of peak loads" during short-term surges to respond to cyclical
demands; hence, it may hire and retire workers on fixed terms, ad infinitum,
depending upon the needs of its customers, domestic and international.
Under the petitioner's submission, any worker hired by it for fixed terms of
months or years can never attain regular employment status. x x x.
Similarly, in the case at bar, we find it unjustifiable to allow petitioner to hire
and rehire workers on fixed terms, ad infinitum, depending upon its needs,
never attaining regular employment status. To recall, respondents were
repeatedly rehired in several fixed term contracts from 1996 to 1999. To
prove the alleged contracts, petitioner presented cash disbursement vouchers
signed by respondents, stating that they were merely hired as pinch-hitters. It
is apparent that respondents were in no position to refuse to sign these
vouchers, as such refusal would entail not getting paid for their services.
Plainly, respondents as "pinch-hitters" cannot be considered to be in equal
footing as petitioner corporation in the negotiation of their employment
contract.
In sum, we affirm the findings of the NLRC and the Court of Appeals that
respondents are regular employees of petitioner.1wphi1 As regular
employees, they are entitled to security of tenure and therefore their services
may be terminated only for just or authorized causes. Since petitioner failed
to prove any just or authorized cause for their termination, we are
constrained to affirm the findings of the NLRC and the Court of Appeals that
they were illegally dismissed.
Separation Pay, Night Shift Differential and Attorneys Fees

Petitioner admits that respondents were not given separation pay and night
shift differential. Petitioner, however, claims that respondents were not
illegally dismissed and were therefore not entitled to separation pay. As
regards night shift differential, petitioner claims that its admission in its
August 23, 1999 letter as to the nonpayment thereof is qualified by its
allegation that respondents are not entitled thereto. Petitioner points out that
respondents failed to specify the period when such benefits are due, and did
not present additional evidence before the NLRC and the Court of Appeals.32
In light, however, of our ruling that respondents were illegally dismissed, we
affirm the findings of the NLRC and the Court of Appeals that respondents
are entitled to separation pay in lieu of reinstatement. We quote with
approval the discussion of the Court of Appeals:
However, since petitioner refused to accept private respondents back to
work, reinstatement is no longer practicable. Allowing private respondents to
return to their work might only subject them to further embarrassment,
humiliation, or even harassment.
Thus, in lieu of reinstatement, the grant of separation pay equivalent to one
(1) month pay for every year of service is proper which public respondent
actually did. Where the relationship between private respondents and
petitioner has been severely strained by reason of their respective
imputations of accusations against each other, to order reinstatement would
no longer serve any purpose. In such situation, payment of separation pay
instead of reinstatement is in order.33 (Citations omitted.)
As regards night shift differential, the Labor Code provides that every
employee shall be paid not less than ten percent (10%) of his regular wage
for each hour of work performed between ten oclock in the evening and six
oclock in the morning.34 As employees of petitioner, respondents are
entitled to the payment of this benefit in accordance with the number of
hours they worked from 10:00 p.m. to 6:00 a.m., if any. In the Decision of
the NLRC affirmed by the Court of Appeals, the records were remanded to
the Regional Arbitration Branch of origin for the computation of the night
shift differential and the separation pay. The Regional Arbitration Branch of
origin was likewise directed to require herein petitioner to produce
additional documents where necessary. Therefore, while we are affirming
that respondents are entitled to night shift differential in accordance with the
number of hours they worked from 10:00 p.m. to 6:00 a.m., it is the

Regional Arbitration Branch of origin which should determine the

computation thereof for each of the respondents, and award no night shift
differential to those of them who never worked from 10:00 p.m. to 6:00 a.m.
It is also worthwhile to note that in the NLRC Decision, it was herein
petitioner GMA Network, Inc. (respondent therein) which was tasked to
produce additional documents necessary for the computation of the night
shift differential. This is in accordance with our ruling in Dansart Security
Force & Allied Services Company v. Bagoy,35where we held that it is
entirely within the employer's power to present such employment records
that should necessarily be in their possession, and that failure to present such
evidence must be taken against them.
Petitioner, however, is correct that the award of attorney's fees is contrary to
jurisprudence. In De las Santos v. Jebsen Maritime Inc.,36 we held:
Likewise legally correct is the deletion of the award of attorney's fees, the
NLRC having failed to explain petitioner's entitlement thereto. As a matter
of sound policy, an award of attorney's fees remains the exception rather
than the rule. It must be stressed, as aptly observed by the appellate court,
that it is necessary for the trial court, the NLRC in this case, to make express
findings of facts and law that would bring the case within the exception. In
fine, the factual, legal or equitable justification for the award must be set
forth in the text of the decision. The matter of attorney's fees cannot be
touched once and only in the fallo of the decision, else, the award should be
thrown out for being speculative and conjectural. In the absence of a
stipulation, attorney's fees are ordinarily not recoverable; otherwise a
premium shall be placed on the right to litigate. They are not awarded every
time a party wins a suit. (Citations omitted.)
In the case at bar, the factual basis for the award of attorney's fees was not
discussed in the text of NLRC Decision. We are therefore constrained to
delete the same.
WHEREFORE the Decision of the Court of Appeals dated September 8,
2006 and the subsequent Resolution denying reconsideration dated January
22, 2007 in CA-G.R. SP No. 73652, are hereby AFFIRMED with the
MODIFICATION that the award of attorney's fees in the affirmed Decision
of the National Labor Relations Commission is hereby DELETED.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 79182 September 11, 1991
PNOC-ENERGY DEVELOPMENT CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Third Division)
and DANILO MERCADO, respondents.
Bacorro & Associates for petitioner.
Alberto L. Dalmacion for private respondent.

PARAS, J.:p
This is a petition for certiorari to set aside the Resolution * dated July 3,
1987 of respondent National Labor Relations Commission (NLRC for
brevity) which affirmed the decision dated April 30, 1986 of Labor Arbiter
Vito J. Minoria of the NLRC, Regional Arbitration Branch No. VII at Cebu
City in Case No. RAB-VII-0556-85 entitled "Danilo Mercado, Complainant,
vs. Philippine National Oil Company-Energy Development Corporation,
Respondent", ordering the reinstatement of complainant Danilo Mercado
and the award of various monetary claims.
The factual background of this case is as follows:
Private respondent Danilo Mercado was first employed by herein petitioner
Philippine National Oil Company-Energy Development Corporation
(PNOC-EDC for brevity) on August 13, 1979. He held various positions
ranging from clerk, general clerk to shipping clerk during his employment at
its Cebu office until his transfer to its establishment at Palimpinon,

Dumaguete, Oriental Negros on September 5, 1984. On June 30, 1985,

private respondent Mercado was dismissed. His last salary was P1,585.00 a
month basic pay plus P800.00 living allowance (Labor Arbiter's Decision,
Annex "E" of Petition, Rollo, p. 52).
The grounds for the dismissal of Mercado are allegedly serious acts of
dishonesty committed as follows:
1. On ApriI 12, 1985, Danilo Mercado was ordered to purchase
1,400 pieces of nipa shingles from Mrs. Leonardo Nodado of
Banilad, Dumaguete City, for the total purchase price of
Pl,680.00. Against company policy, regulations and specific
orders, Danilo Mercado withdrew the nipa shingles from the
supplier but paid the amount of P1,000.00 only. Danilo
Mercado appropriated the balance of P680.00 for his personal
use;
2. In the same transaction stated above, the supplier agreed to
give the company a discount of P70.00 which Danilo Mercado
did not report to the company;
3. On March 28, 1985, Danilo Mercado was instructed to
contract the services of Fred R. Melon of Dumaguete City, for
the fabrication of rubber stamps, for the total amount of P28.66.
Danilo Mercado paid the amount of P20.00 to Fred R. Melon
and appropriated for his personal use the balance of P8.66.
In addition, private respondent, Danilo Mercado violated
company rules and regulations in the following instances:
1. On June 5, 1985, Danilo Mercado was absent from work
without leave, without proper turn-over of his work, causing
disruption and delay of company work activities;

2. On June 15, 1985, Danilo Mercado went on vacation leave

without prior leave, against company policy, rules and
regulations. (Petitioner's Memorandum, Rollo, p. 195).
On September 23, 1985, private respondent Mercado filed a complaint for
illegal dismissal, retirement benefits, separation pay, unpaid wages, etc.
against petitioner PNOC-EDC before the NLRC Regional Arbitration
Branch No. VII docketed as Case No. RAB-VII-0556-85.
After private respondent Mercado filed his position paper on December 16,
1985 (Annex "B" of the Petition, Rollo, pp. 28-40), petitioner PNOC-EDC
filed its Position Paper/Motion to Dismiss on January 15, 1986, praying for
the dismissal of the case on the ground that the Labor Arbiter and/or the
NLRC had no jurisdiction over the case (Annex "C" of the Petition, Rollo,
pp. 41-45), which was assailed by private respondent Mercado in his
Opposition to the Position Paper/Motion to Dismiss dated March 12, 1986
(Annex "D" of the Petition, Rollo, pp. 46-50).
The Labor Arbiter ruled in favor of private respondent Mercado. The
dispositive onion of said decision reads as follows:
WHEREFORE, in view of the foregoing, respondents are
hereby ordered:
1) To reinstate complainant to his former position with full back
wages from the date of his dismissal up to the time of his actual
reinstatement without loss of seniority rights and other
privileges;
2) To pay complainant the amount of P10,000.00 representing
his personal share of his savings account with the respondents;
3) To pay complainants the amount of P30,000.00 moral
damages; P20,000.00 exemplary damages and P5,000.00
attorney's fees;

4) To pay complainant the amount of P792.50 as his

proportionate 13th month pay for 1985.
Respondents are hereby further ordered to deposit the
aforementioned amounts with this Office within ten days from
receipt of a copy of this decision for further disposition.
SO ORDERED.
(Labor Arbiter's Decision, Rollo, p. 56)
The appeal to the NLRC was dismissed for lack of merit on July 3, 1987 and
the assailed decision was affirmed.
Hence, this petition.
The issues raised by petitioner in this instant petition are:
1. Whether or not matters of employment affecting the PNOCEDC, a government-owned and controlled corporation, are
within the jurisdiction of the Labor Arbiter and the NLRC.
2. Assuming the affirmative, whether or not the Labor Arbiter
and the NLRC are justified in ordering the reinstatement of
private respondent, payment of his savings, and proportionate
13th month pay and payment of damages as well as attorney's
fee.
Petitioner PNOC-EDC alleges that it is a corporation wholly owned and
controlled by the government; that the Energy Development Corporation is a
subsidiary of the Philippine National Oil Company which is a government
entity created under Presidential Decree No. 334, as amended; that being a
government-owned and controlled corporation, it is governed by the Civil
Service Law as provided for in Section 1, Article XII-B of the 1973
Constitution, Section 56 of Presidential Decree No. 807 (Civil Service
Decree) and Article 277 of Presidential Decree No. 442, as amended (Labor
Code).

The 1973 Constitution provides:

The Civil Service embraces every branch, agency, subdivision
and instrumentality of the government including governmentowned or controlled corporations.
Petitioner PNOC-EDC argued that since Labor Arbiter Minoria rendered the
decision at the time when the 1973 Constitution was in force, said decision
is null and void because under the 1973 Constitution, government-owned
and controlled corporations were governed by the Civil Service Law. Even
assuming that PNOC-EDC has no original or special charter and Section
2(i), Article IX-B of the 1987 Constitution provides that:
The Civil Service embraces all branches, subdivision,
instrumentalities and agencies of the Government, including
government-owned or controlled corporations with original
charters.
such circumstances cannot give validity to the decision of the Labor Arbiter
(Ibid., pp. 192-193).
This issue has already been laid to rest in the case of PNOC-EDC vs.
Leogardo, 175 SCRA 26 (July 5, 1989), involving the same petitioner and
the same issue, where this Court ruled that the doctrine that employees of
government-owned and/or con controlled corporations, whether created by
special law or formed as subsidiaries under the General Corporation law are
governed by the Civil Service Law and not by the Labor Code, has been
supplanted by the present Constitution. "Thus, under the present state of the
law, the test in determining whether a government-owned or controlled
corporation is subject to the Civil Service Law are the manner of its creation,
such that government corporations created by special charter are subject to
its provisions while those incorporated under the General Corporation Law
are not within its coverage."
Specifically, the PNOC-EDC having been incorporated under the General
Corporation Law was held to be a government owned or controlled

corporation whose employees are subject to the provisions of the Labor

Code (Ibid.).
The fact that the case arose at the time when the 1973 Constitution was still
in effect, does not deprive the NLRC of jurisdiction on the premise that it is
the 1987 Constitution that governs because it is the Constitution in place at
the time of the decision (NASECO v. NLRC, G.R. No. 69870, 168 SCRA
122 [1988]).
In the case at bar, the decision of the NLRC was promulgated on July 3,
1987. Accordingly, this case falls squarely under the rulings of the
aforementioned cases.
As regards the second issue, the record shows that PNOC-EDC's accusations
of dishonesty and violations of company rules are not supported by
evidence. Nonetheless, while acknowledging the rule that administrative
bodies are not governed by the strict rules of evidence, petitioner PNOCEDC alleges that the labor arbiter's propensity to decide the case through the
position papers submitted by the parties is violative of due process thereby
rendering the decision null and void (Ibid., p. 196).
On the other hand, private respondent contends that as can be seen from
petitioner's Motion for Reconsideration and/or Appeal dated July 28, 1986
(Annex "F" of the Petition, Rollo, pp. 57- 64), the latter never questioned the
findings of facts of the Labor Arbiter but simply limited its objection to the
lack of legal basis in view of its stand that the NLRC had no jurisdiction
over the case (Private Respondent's Memorandum, Rollo, p. 104).
Petitioner PNOC-EDC filed its Position Paper/Motion to Dismiss dated
January 15, 1986 (Annex "C" of the Petition Rollo, pp. 41-45) before the
Regional Arbitration Branch No. VII of Cebu City and its Motion for
Reconsideration and/or Appeal dated July 28, 1986 (Annex "F" of the
Petition, Rollo, pp. 57-64) before the NLRC of Cebu City. Indisputably, the
requirements of due process are satisfied when the parties are given an
opportunity to submit position papers. What the fundamental law abhors is
not the absence of previous notice but rather the absolute lack of opportunity

to ventilate a party's side. There is no denial of due process where the party
submitted its position paper and flied its motion for reconsideration (Odin
Security Agency vs. De la Serna, 182 SCRA 472 [February 21, 1990]).
Petitioner's subsequent Motion for Reconsideration and/or Appeal has the
effect of curing whatever irregularity might have been committed in the
proceedings below (T.H. Valderama and Sons, Inc. vs. Drilon, 181 SCRA
308 [January 22, 1990]).
Furthermore, it has been consistently held that findings of administrative
agencies which have acquired expertise because their jurisdiction is confined
to specific matters are accorded not only respect but even finality (Asian
Construction and Development Corporation vs. NLRC, 187 SCRA 784 [July
27, 1990]; Lopez Sugar Corporation vs. Federation of Free Workers, 189
SCRA 179 [August 30, 1990]). Judicial review by this Court does not go so
far as to evaluate the sufficiency of the evidence but is limited to issues of
jurisdiction or grave abuse of discretion (Filipinas Manufacturers Bank vs.
NLRC, 182 SCRA 848 [February 28, 1990]). A careful study of the records
shows no substantive reason to depart from these established principles.
While it is true that loss of trust or breach of confidence is a valid ground for
dismissing an employee, such loss or breach of trust must have some basis
(Gubac v. NLRC, 187 SCRA 412 [July 13, 1990]). As found by the Labor
Arbiter, the accusations of petitioner PNOC-EDC against private respondent
Mercado have no basis. Mrs. Leonardo Nodado, from whom the nipa
shingles were purchased, sufficiently explained in her affidavit (Rollo, p. 36)
that the total purchase price of P1,680.00 was paid by respondent Mercado
as agreed upon. The alleged discount given by Mrs. Nodado is not supported
by evidence as well as the alleged appropriation of P8.66 from the cost of
fabrication of rubber stamps. The Labor Arbiter, likewise, found no evidence
to support the alleged violation of company rules. On the contrary, he found
respondent Mercado's explanation in his affidavit (Rollo, pp. 38-40) as to the
alleged violations to be satisfactory. Moreover, these findings were never
contradicted by petitioner petitioner PNOC-EDC.

PREMISES CONSIDERED, the petition is DENIED and the resolution of

respondent NLRC dated July 3, 1987 is AFFIRMED with the modification
that the moral damages are reduced to Ten Thousand (P10,000.00) Pesos,
and the exemplary damages reduced to Five Thousand (P5,000.00) Pesos.
SO ORDERED.
Republic of the Philippines
Supreme Court
Baguio City

SECOND DIVISION

D.M. CONSUNJI, INC. and/or

DAVID

G.R. No. 192514

M. CONSUNJI,
Petitioners,

Present:

CARPIO, J.,
Chairperson,
BRION,
PERALTA,*
- versus -

PEREZ, and
SERENO, JJ.

Promulgated:

April 18, 2012

ESTELITO L. JAMIN,
Respondent.

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

DECISION

BRION, J.:

We resolve the present appeal[1] from the decision[2] dated February 26,
2010 and the resolution[3] dated June 3, 2010 of the Court of Appeals (CA) in
CA-G.R. SP No. 100099.

The Antecedents
On December 17, 1968, petitioner D.M. Consunji, Inc. (DMCI), a
construction company, hired respondent Estelito L. Jamin as a laborer.
Sometime in 1975, Jamin became a helper carpenter. Since his initial hiring,
Jamins employment contract had been renewed a number of times.
[4]
On March 20, 1999, his work at DMCI was terminated due to the
completion of the SM Manila project. This termination marked the end of
his employment with DMCI as he was not rehired again.
On April 5, 1999, Jamin filed a complaint [5] for illegal dismissal, with
several money claims (including attorneys fees), against DMCI and its
President/General Manager, David M. Consunji. Jamin alleged that DMCI
terminated his employment without a just and authorized cause at a time
when he was already 55 years old and had no independent source of
livelihood. He claimed that he rendered service to DMCI continuously for
almost 31 years. In addition to the schedule of projects (where he was
assigned) submitted by DMCI to the labor arbiter,[6] he alleged that he
worked for three other DMCI projects: Twin Towers, Ritz Towers, from July
29, 1980 to June 12, 1982; New Istana Project, B.S.B. Brunei, from June 23,
1982 to February 16, 1984; and New Istana Project, B.S.B. Brunei, from
January 24, 1986 to May 25, 1986.
DMCI denied liability. It argued that it hired Jamin on a project-to-project
basis, from the start of his engagement in 1968 until the completion of its
SM Manila project on March 20, 1999 where Jamin last worked. With the
completion of the project, it terminated Jamins employment. It alleged that it
submitted a report to the Department of Labor and Employment (DOLE)
everytime it terminated Jamins services.

The Compulsory Arbitration Rulings

In a decision dated May 27, 2002,[7] Labor Arbiter Francisco A. Robles
dismissed the complaint for lack of merit. He sustained DMCIs position that
Jamin was a project employee whose services had been terminated due to
the completion of the project where he was assigned. The labor arbiter added
that everytime DMCI rehired Jamin, it entered into a contract of
employment with him. Moreover, upon completion of the phase of the
project for which Jamin was hired or upon completion of the project itself,
the company served a notice of termination to him and a termination report
to the DOLE Regional Office. The labor arbiter also noted that Jamin had to
file an application if he wanted to be re-hired.
On appeal by Jamin, the National Labor Relations Commission (NLRC), in
its decision of April 18, 2007,[8] dismissed the appeal and affirmed the labor
arbiters finding that Jamin was a project employee. Jamin moved for
reconsideration, but the NLRC denied the motion in a resolution dated May
30, 2007.[9] Jamin sought relief from the CA through a petition
for certiorari under Rule 65 of the Rules of Court.
The CA Decision
On February 26, 2010, the CA Special Fourth Division rendered the disputed
decision[10] reversing the compulsory arbitration rulings. It held that Jamin
was a regular employee. It based its conclusion on: (1) Jamins repeated and
successive rehiring in DMCIs various projects; and (2) the nature of his
work in the projects he was performing activities necessary or desirable in
DMCIs construction business. Invoking the Courts ruling in an earlier case,
[11]
the CA declared that the pattern of Jamins rehiring and the recurring need

for his services are sufficient evidence of the necessity and indispensability
of such services to DMCIs business or trade, a key indicator of regular
employment. It opined that although Jamin started as a project employee, the
circumstances of his employment made it regular or, at the very least, has
ripened into a regular employment.
The CA considered the project employment contracts Jamin entered into
with DMCI for almost 31 years not definitive of his actual status in the
company. It stressed that the existence of such contracts is not always
conclusive of a workers employment status as this Court explained
in Liganza v. RBL Shipyard Corporation, et al. [12] It found added support
from Integrated Contractor and Plumbing Works, Inc. v. NLRC, [13] where the
Court said that while there were several employment contracts between the
worker and the employer, in all of them, the worker performed tasks which
were usually necessary or desirable in the usual business or trade of the
employer and, a review of the workers assignments showed that he belonged
to a work pool, making his employment regular.
Contrary to DMCIs submission and the labor arbiters findings, the CA noted
that DMCI failed to submit a report to the DOLE Regional Office everytime
Jamins employment was terminated, as required by DOLE Policy
Instructions No. 20. The CA opined that DMCIs failure to submit the reports
to the DOLE is an indication that Jamin was not a project employee. It
further noted that DOLE Department Order No. 19, Series of 1993, which
superseded DOLE Policy Instructions No. 20, provides that the termination
report is one of the indicators of project employment.[14]
Having found Jamin to be a regular employee, the CA declared his dismissal
illegal as it was without a valid cause and without due process. It found that
DMCI failed to provide Jamin the required notice before he was dismissed.

Accordingly, the CA ordered Jamins immediate reinstatement with

backwages, and without loss of seniority rights and other benefits.
DMCI moved for reconsideration, but the CA denied the motion in its
resolution of June 3, 2010.[15] DMCI is now before the Court through a
petition for review on certiorari under Rule 45 of the Rules of Court.[16]
The Petition
DMCI seeks a reversal of the CA rulings on the ground that the appellate
court committed a grave error in annulling the decisions of the labor arbiter
and the NLRC. It presents the following arguments:
1. The CA misapplied the phrase usually necessary or desirable in the usual
business or trade of the employer when it considered Jamin a regular
employee. The definition of a regular employee under Article 280 of the
Labor Code does not apply to project employment or employment which has
been fixed for a specific project, as interpreted by the Supreme Court
in Fernandez v. National Labor Relations Commission [17] and D.M.
Consunji, Inc. v. NLRC.[18] It maintains the same project employment
methodology in its business operations and it cannot understand why a
different ruling or treatment would be handed down in the present case.
2. There is no work pool in DMCIs roster of project employees. The CA
erred in insinuating that Jamin belonged to a work pool when it
cited Integrated Contractor and Plumbing Works, Inc. ruling.[19] At any rate,
Jamin presented no evidence to prove his membership in any work pool at
DMCI.

3. The CA misinterpreted the rules requiring the submission of termination

of employment reports to the DOLE. While the report is an indicator of
project employment, as noted by the CA, it is only one of several indicators
under the rules.[20] In any event, the CA penalized DMCI for a few lapses in
its submission of reports to the DOLE with a very rigid application of the
rule despite the almost unanimous proofs surrounding the circumstances of
private respondent being a project employee as shown by petitioners
documentary evidence.[21]
4. The CA erred in holding that Jamin was dismissed without due process for
its failure to serve him notice prior to the termination of his employment. As
Jamin was not dismissed for cause, there was no need to furnish him a
written notice of the grounds for the dismissal and neither is there a need for
a hearing. When there is no more job for Jamin because of the completion of
the project, DMCI, under the law, has the right to terminate his employment
without incurring any liability. Pursuant to the rules implementing the Labor
Code,[22] if the termination is brought about by the completion of the contract
or phase thereof, no prior notice is required.
Finally, DMCI objects to the CAs reversal of the findings of the labor arbiter
and the NLRC in the absence of a showing that the labor authorities
committed a grave abuse of discretion or that evidence had been disregarded
or that their rulings had been arrived at arbitrarily.
The Case for Jamin
In his Comment (to the Petition),[23] Jamin prays that the petition be denied
for having been filed out of time and for lack of merit.

He claims, in support of his plea for the petitions outright dismissal, that
DMCI received a copy of the CA decision (dated February 26, 2010)
on March 4, 2010, as stated by DMCI itself in its motion for reconsideration
of the decision.[24] Since DMCI filed the motion with the CA on March 22,
2010, it is obvious, Jamin stresses, that the motion was filed three days
beyond the 15-day reglementary period, the last day of which fell on March
19, 2010. He maintains that for this reason, the CAs February 26, 2010
decision had become final and executory, as he argued before the CA in his
Comment and Opposition (to DMCIs Motion for Reconsideration).[25]
On the merits of the case, Jamin submits that the CA committed no error in
nullifying the rulings of the labor arbiter and the NLRC. He contends that
DMCI misread this Courts rulings in Fernandez v. National Labor Relations
Commission, et al.[26] and D.M. Consunji, Inc. v. NLRC,[27] cited to support its
position that Jamin was a project employee.
Jamin argues that in Fernandez, the Court explained that the proviso in the
second paragraph of Article 280 of the Labor Code relates only to casual
employeeswho shall be considered regular employees if they have rendered
at least one year of service, whether such service is continuous or broken. He
further argues that in Fernandez, the Court held that inasmuch as the
documentary evidence clearly showed gaps of a month or months between
the hiring of Ricardo Fernandez in the numerous projects where he was
assigned, it was the Courts conclusion that Fernandez had not continuously
worked for the company but only intermittently as he was hired solely for
specific projects.[28] Also, in Fernandez, the Court affirmed its rulings in
earlier cases that the failure of the employer to report to the [nearest]
employment office the termination of workers everytime a project is
completed proves that the employees are not project employees.[29]

Jamin further explains that in the D.M. Consunji, Inc. case, the company
deliberately omitted portions of the Courts ruling stating that the
complainants were not claiming that they were regular employees; rather,
they were questioning the termination of their employment before the
completion of the project at the Cebu Super Block, without just cause and
due process.[30]
In the matter of termination reports to the DOLE, Jamin disputes DMCIs
submission that it committed only few lapses in the reportorial requirement.
He maintains that even the NLRC noted that there were no termination
reports with the DOLE Regional Office after every completion of a phase of
work, although the NLRC considered that the report is required only for
statistical purposes. He, therefore, contends that the CA committed no error
in holding that DMCIs failure to submit reports to the DOLE was an
indication that he was not a project employee.
Finally, Jamin argues that as a regular employee of DMCI for almost 31
years, the termination of his employment was without just cause and due
process.
The Courts Ruling
The procedural issue
Was DMCIs appeal filed out of time, as Jamin claims, and should have been
dismissed outright? The records support Jamins submission on the issue.
DMCI received its copy of the February 26, 2010 CA decision
on March 4, 2010 (a Thursday), as indicated in its motion for
reconsideration of the decision itself,[31] not on March 5, 2010 (a Friday), as
stated in the present petition.[32] The deadline for the filing of the motion for

reconsideration was onMarch 19, 2010 (15 days from receipt of copy of the
decision), but it was filed only on March 22, 2010 or three days late.
Clearly, the motion for reconsideration was filed out of time, thereby
rendering the CA decision final and executory.
Necessarily, DMCIs petition for review on certiorari is also late as it had
only fifteen (15) days from notice of the CA decision to file the petition or
the denial of its motion for reconsideration filed in due time. [33] The
reckoning date is March 4, 2010, since DMCIs motion for reconsideration
was not filed in due time. We see no point in exercising liberality and
disregarding the late filing as we did in Orozco v. Fifth Division of the Court
of Appeals,[34] where we ruled that [t]echnicality should not be allowed to
stand in the way of equitably and completely resolving the rights and
obligations of the parties. The petition lacks merit for its failure to show
that the CA committed any reversible error or grave abuse of discretion
when it reversed the findings of the labor arbiter and the NLRC.
As earlier mentioned, Jamin worked for DMCI for almost 31 years, initially
as a laborer and, for the most part, as a carpenter. Through all those years,
DMCI treated him as a project employee, so that he never obtained tenure.
On the surface and at first glance, DMCI appears to be correct. Jamin
entered into a contract of employment (actually an appointment paper to
which he signified his conformity) with DMCI either as a field worker, a
temporary worker, a casual employee, or a project employee everytime
DMCI needed his services and a termination of employment paper was
served on him upon completion of every project or phase of the project
where he worked.[35] DMCI would then submit termination of employment
reports to the DOLE, containing the names of a number of employees
including Jamin.[36] The NLRC and the CA would later on say, however, that
DMCI failed to submit termination reports to the DOLE.

The CA pierced the cover of Jamins project employment contract and

declared him a regular employee who had been dismissed without cause and
without notice. To reiterate, the CAs findings were based on: (1) Jamins
repeated and successive engagements in DMCIs construction projects, and
(2) Jamins performance of activities necessary or desirable in DMCIs usual
trade or business.
We agree with the CA. In Liganza v. RBL Shipyard Corporation,[37] the
Court held that [a]ssuming, without granting[,] that [the] petitioner was
initially hired for specific projects or undertakings, the repeated rehiring and continuing need for his services for over eight (8) years have
undeniably made him a regular employee. We find the Liganza ruling
squarely applicable to this case, considering that for almost 31 years, DMCI
had repeatedly, continuously and successively engaged Jamins services since
he was hired on December 17, 1968 or for a total of 38 times 35 as shown by
the schedule of projects submitted by DMCI to the labor arbiter [38] and three
more projects or engagements added by Jamin, which he claimed DMCI
intentionally did not include in its schedule so as to make it appear that there
were wide gaps in his engagements. One of the three projects was local,
the Ritz Towers,[39] from July 29, 1980 to June 12, 1982, while the other two
were overseas the New Istana Project in Brunei, Darussalam, from June 23,
1982 to February 16, 1984;[40] and again, the New Istana Project, from
January 24, 1986 to May 25, 1986.[41]
We reviewed Jamins employment contracts as the CA did and we noted that
while the contracts indeed show that Jamin had been engaged as a project
employee, there was an almost unbroken string of Jamins rehiring
from December 17, 1968 up to the termination of his employment on March
20, 1999. While the history of Jamins employment (schedule of projects)

[42]

relied upon by DMCI shows a gap of almost four years in his

employment for the period between July 28, 1980 (the supposed completion
date of the Midtown Plaza project) and June 13, 1984 (the start of the IRRI
Dorm IV project), the gap was caused by the companys omission of the
three projects above mentioned.
For not disclosing that there had been other projects where DMCI engaged
his services, Jamin accuses the company of suppressing vital evidence that
supports his contention that he rendered service in the companys
construction projects continuously and repeatedly for more than three
decades. The non-disclosure might not have constituted suppression of
evidence it could just have been overlooked by the company but the
oversight is unfair to Jamin as the non-inclusion of the three projects gives
the impression that there were substantial gaps not only of several months
but years in his employment with DMCI.
Thus, as Jamin explains, the Ritz Tower Project (July 29, 1980 to June 12,
1982) and the New Istana Project (June 23, 1982 to February 16, 1984)
would explain the gap between the Midtown Plaza project (September 3,
1979 to July 28, 1980) and the IRRI Dorm IV project (June 13, 1984 to
March 12, 1985) and the other New Istana Project (January 24, 1986 to May
25, 1986) would explain the gap between P. 516 Hanger (September 13,
1985 to January 23, 1986) and P. 516 Maint (May 26, 1986 to November 18,
1987).
To reiterate, Jamins employment history with DMCI stands out for his
continuous, repeated and successive rehiring in the companys construction
projects. In all the 38 projects where DMCI engaged Jamins services, the
tasks he performed as a carpenter were indisputably necessary and desirable
in DMCIs construction business. He might not have been a member of a

work pool as DMCI insisted that it does not maintain a work pool, but his
continuous rehiring and the nature of his work unmistakably made him a
regular employee. In Maraguinot, Jr. v. NLRC,[43] the Court held that once
a project or work pool employee has been: (1) continuously, as opposed to
intermittently, rehired by the same employer for the same tasks or nature of
tasks; and (2) these tasks are vital, necessary and indispensable to the usual
business or trade of the employer, then the employee must be deemed a
regular employee.
Further, as we stressed in Liganza,[44] [r]espondent capitalizes on our ruling
in D.M. Consunji, Inc. v. NLRC which reiterates the rule that the length of
service of a project employee is not the controlling test of employment
tenure but whether or not the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee.
Surely, length of time is not the controlling test for project
employment. Nevertheless, it is vital in determining if the employee was
hired for a specific undertaking or tasked to perform functions vital,
necessary and indispensable to the usual business or trade of the employer.
Here, [private] respondent had been a project employee several times over.
His employment ceased to be coterminous with specific projects when he
was repeatedly re-hired due to the demands of petitioners business.
[45]
Without doubt, Jamins case fits squarely into the employment situation
just quoted.
The termination reports
With our ruling that Jamin had been a regular employee, the issue of whether
DMCI submitted termination of employment reports, pursuant to Policy

Instructions No. 20 (Undated[46]), as superseded by DOLE Department Order

No. 19 (series of 1993), has become academic. DOLE Policy Instructions
No. 20 provides in part:
Project employees are not entitled to termination pay if they are
terminated as a result of the completion of the project or any
phase thereof in which they are employed, regardless of the
number of projects in which they have been employed by a
particular construction company. Moreover, the company is not
required to obtain a clearance from the Secretary of Labor in
connection with such termination. What is required of the
company is a report to the nearest Public Employment Office
for statistical purposes.[47]

To set the records straight, DMCI indeed submitted reports to the

DOLE but as pointed out by Jamin, the submissions started only in 1992.
[48]
DMCI explained that it submitted the earlier reports (1982), but it lost
and never recovered the reports. It reconstituted the lost reports and
submitted them to the DOLE in October 1992; thus, the dates appearing in
the reports.[49]
Is David M. Consunji, DMCIs
President/General Manager, liable
for Jamins dismissal?

While there is no question that the company is liable for Jamins dismissal,
we note that the CA made no pronouncement on whether DMCIs
President/General Manager, a co-petitioner with the company, is also liable.
[50]
Neither had the parties brought the matter up to the CA nor with this
Court. As there is no express finding of Mr. Consunjis involvement in
Jamins dismissal, we deem it proper to absolve him of liability in this case.
As a final point, it is well to reiterate a cautionary statement we made
in Maraguinot,[51] thus:
At this time, we wish to allay any fears that this decision unduly
burdens an employer by imposing a duty to re-hire a project
employee even after completion of the project for which he was
hired. The import of this decision is not to impose a positive
and sweeping obligation upon the employer to re-hire project
employees. What this decision merely accomplishes is a
judicial recognition of the employment status of a project or
work pool employee in accordance with what is fait
accompli, i.e., the continuous re-hiring by the employer of
project or work pool employees who perform tasks necessary or
desirable to the employers usual business or trade.

In sum, we deny the present appeal for having been filed late and for lack of
any reversible error. We see no point in extending any liberality by
disregarding the late filing as the petition lacks merit.
WHEREFORE, premises considered, the petition is hereby DENIED for
late filing and for lack of merit. The decision dated February 26, 2010 and
the resolution dated June 3, 2010 of the Court of Appeals are AFFIRMED.
Petitioner David M. Consunji is absolved of liability in this case.
SO ORDERED.
[G.R. No. 100333. March 13, 1997]
HILARIO MAGCALAS, PROSPERO MARINDA, CELSO GAMALO,
EPIFANIO OMEGA, VIRGILIO CAMPOS, ANTONIO
LLAGAS, BERNARD BENDANILLO, SHALDY AUTENCIO,
CIRIACO REYES, JUANITO DE LEON, EDMUNDO
GUZMAN, ALFREDO SANTOS, BENEDICTO DAGCUTAN,
NORBIE LOPENA, ISMAEL ALONZO, ELMER BALETA,
GENITO DALMERO, and CESAR LEDESMA, petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION and
KOPPEL, INC., respondents.
DECISION
PANGANIBAN, J.:
May regular employment be restricted to a definite or fixed term? Upon
the expiration of such term, may the employment be deemed terminated
upon payment of separation pay? The respondent NLRC answered these
questions in the affirmative but the labor arbiter held otherwise -- that such
termination constituted illegal dismissal, thereby entitling the petitioners to
reinstatement, backwages and attorney's fees.

This divergence of position between the NLRC and the labor arbiter will
now be ruled upon by this Court as it resolves this petition for certiorari
challenging
the
Decision[1] and
Resolution[2] of
public
[3]
respondent promulgated on April 5, 1991, and May 13, 1991,
respectively. The Decision of public respondent reversed that of the labor
arbiter while the Resolution denied the motion for reconsideration. The
dispositive portion of the impugned Decision reads:[4]
"WHEREFORE, premises considered, the appealed decision is
hereby set aside, and a new judgment is entered, ordering the
respondent to pay separation pay to herein complainants, as
explained above."
On the other hand, the dispositive portion of the reversed decision of the
labor arbiter[5] reads:[6]
"WHEREFORE, in view of all the foregoing considerations,
judgment is hereby rendered, ordering the respondent to reinstate all
the individual complainants named in the above entitled case to their
former positions without loss of seniority rights and privileges, and
to pay them backwages from the time of their dismissal/termination
to their actual reinstatement, plus attorney's fee equivalent to Ten
Percent (10%) of the total monetary award; the claim for legal
interest is dismissed for lack of merit."
The Facts
The facts are set out in the decision of the labor arbiter, as follows:[7]
"In their basic complaint and counter position paper, the
complainants alleged (inter alia) that they were all regular employees
of the respondent company, having rendered continuous services in
various capacities, ranging from leadman, tinsmith, tradeshelper to
general clerk; that the respondent has been engaged in the business of
installing air conditioning (should be air-conditioning) and
refrigeration equipment in its different projects and jobsites where

the complainants have been assigned; that the complainants have

worked for a number of years, the minimum of which was one and a
half years and the maximum (was) eight years under several
supervisors; that on August 30, 1988, they were dismissed (en masse)
without prior notice and investigation, and that their dismissals were
effected for no other cause than their persistent demands for payment
of money claims (as) mandated by law.
On the other hand, the respondents interposed the defense of
contract/project employment and averred the following statement of
facts in support thereof:
'The respondent company is engaged in the business of
manufacturing and installation of air(-) conditioning and
refrigeration equipments (sic).
The manufacturing aspect of its operation is handled by its
regular employees, while the installation aspect, by reason of
its intermittence, is carried out by its project or contract
employees.
The installation of the air(-)conditioning equipment at the
Asian Development Bank Building and (the) Interbank
building was awarded to the respondent herein. The
complainants herein were among the contract employees hired
by the respondent to install the air(-) conditioning equipment
at the Asian Development Bank and Interbank projects. Their
specific assignments were as follows:
Name Position Project
1. HILARIO MAGCALAS Leadman Asian Dev. Bank
2. PROSPERO MARINDA Tinsmith Asian Dev. Bank
3. VIRGILIO CAMPOS Tradeshelper "

4. ANTONIO LLAGAS " "

5. BERNARD BENDANILLO " "
6. ISMAEL ALONZO " "
7. SHALDY AUTENCIO " "
8. CIRIACO REYES " Interbank
9. CELSO GAMALO " "
10. EPIFANIO OMEGA " "
11. EDMUNDO GUZMAN " "
12. ALFREDO SANTOS " "
13. JUANITO DE LEON " "
14. BENEDICTO DAGCUTAN " "
15. ELMER BALETA " "
16. GENITO DALMERO " "
17. CESAR LEDESMA Tinsmith "
18. NOR(B)IE LOPENA General Clerk "
The aforesaid employees were engaged to work on (sic) the
installation projects until August 31, 1988, when their task
was expected to be completed. This is evidenced by their
respective employment contracts, copies of which are hereto
attached as ANNEXES 1 to 18.
With the completion of their task on August 31, 1988 in
their respective installation projects, the employment of the

complainants (ipso facto) expired as they had no more work

to do. They now claim that they were illegally dismissed.'
Reply by the respondent and rejoinder by the complainants were
subsequently filed, after which the case was considered as submitted
for decision based on the pleadings and evidences (sic) on record."
As earlier stated, public respondent reversed the decision of the labor
arbiter favorable to herein petitioners. Hence, this petition for certiorari.
The Issues
Petitioners raise and argue the following issues in their Memorandum:[8]
"(a) whether (p)etitioners (were) regular workers under the
contemplation of Art. 280 of the Labor Code; and,
(b) whether (p)etitioners' termination and/or cessation of their
employments on August 30th, (sic) 1988 were justified under the
contemplation of Art. 279 of the Labor Code as amended."
Petitioners contend that they were regular employees because "(t)he job
of installing an(d)/or repairing its manufactured units and equipments (sic)
to its different customers are not merely adjunct but are necessary activities
of (p)rivate (r)espondent's daily business operations."[9] They maintain that
their employment is regular because of "the nature of the activities (they)
performed,"[10] regardless of the stipulation in their job contracts. Petitioners
argue that the phrase "specific project or undertaking" in Article 280 of the
Labor Code means "special type of venture or undertaking" that is not
"usually necessary or desirable in the employer's business operation and
activities."[11] Petitioners add that doubts as to their employment status must
be resolved in their favor.[12]
The Solicitor General ("Sol. Gen."), invoking the case of Orbos vs. Civil
Service Commission,[13] sided with petitioners. He argues that "(t)o say that
petitioners (were) regular employees and yet subject to a definite or fixed
term is incongruous, inconsistent, or illogical. x x x Indeed, a worker is

either regular or casual; (i)f he is employed only for a specific project or

undertaking, then he is considered a casual employee and may be dismissed
at the time of the completion of the project." [14] Besides, the "(r)ecords
cannot deny that petitioners worked continuously, without a single day of
interruption, in not just one, but on the various jobsites assigned to
them. Some of them have even worked continuously for eight (8) years,
without any stoppage."[15] Even admitting that petitioners were project
employees, the Sol. Gen. states that "no iota of proof was ever presented by
private respondent to refute petitioners' claim that the ADB and Interbank
projects were still in operation when they were terminated or, vice-versa, to
support its claim that these projects were already terminated."[16]
On the other hand, private respondent contends that certiorari is not
proper in this case. "The findings and conclusions of fact and law of the
respondent NLRC are supported by substantial evidence and were not
arrived
at
arbitrarily."[17] It
adds
that
"petitioners
were project or contract workers who were hired whenever private
respondent was able to obtain sub-contracts for the installation of air(-)
conditioning and ventilation system or refrigeration equipment in
construction or building projects x x x. They were last hired in the Asian
Development Bank and Interbank air(-)conditioning and ventilation system
projects which were completely turned over in August 1989 and (on)
November 13, 1989, respectively. (Please see Annexes '2' and '3' hereof).[18]
Because of the position taken by the Sol. Gen., public respondent filed
its own Comment. It argues that "the factual findings of respondent
Commission (were) based on substantial evidence and supported by the clear
letter of the law as well as pertinent jurisprudence on the matter." [19] Thus,
public respondent contends that the petition should be dismissed and the
challenged judgment should be upheld as a proper exercise of the powers
conferred upon it by law.[20]
Public respondent ruled against petitioners thus:[21]
"A cursory reading of the Collective Bargaining Agreement between
the respondent company and the Koppel Employees Association

shows that it recognized Contract Employees as one of the three

categories of employees in the Company. Article IV, Section 1, of the
said Collective Bargaining Agreement defines a 'Contract Employee'
as 'one hired on individual employment contract basis to perform
work on specific projects or as indicated in his contract of
employment. The duration of such employment is determined by and
indicated in his contract of employment.' (Record, page 49)
Article 280 of the Labor Code provides:
'Art. 280. Regular and Casual Employment. - The provisions
of written agreement to the contrary notwithstanding and
regardless of the oral agreements of the parties, an
employment shall be deemed to be regular where the employee
has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the
employer except where the employment has been fixed for a
specific project or undertaking the completion of which has
been determined at the time of the engagement of the
employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of
the season.' (Underscoring supplied)
The above provision is intended for all industries except the
construction industry. Policy Instruction No. 20 was precisely
promulgated for the reason that the problems of regularity of
employment in the construction industry has continued to plague
it. The policy implements the exception to Article 280 of the Labor
Code. (Magante v. NLRC, 185 SCRA 21 )
Complainant herein were engaged by the respondent to handle the
installation of air(-)conditioning and refrigeration equipments (sic) in
the construction projects at the Asian Development Bank and
Interbank buildings. As the nature and character of their work is
necessary or desirable of (sic) the usual business of the respondent,
which is to manufacture and install air(-)conditioning and

refrigeration equipments (sic) in buildings, complainants' jobs can be

categorized as regular workers (should be work) but subject to a
definite or fixed term. But their services were not terminated at the
end of the project or contract. As the ADB and Interbank projects
have been completed, their lay-off has resulted in the termination of
their employment for lack of work; hence, they are entitled to
separation pay equivalent to one month pay or one-half month pay
for every year of service, whichever is greater, and a fraction of six
months or more to be considered as one year.
The Court's Ruling
We find for petitioners.
First Issue: Are Petitioners Regular Workers?
In certiorari proceedings under Rule 65, this Court does not, as a rule,
evaluate the sufficiency of evidence upon which the labor arbiter and public
respondent based their determinations. The inquiry is limited essentially to
whether or not said public respondent acted without or in excess of its
jurisdiction or with grave abuse of discretion. [22] However, where the
findings of the NLRC are contrary to those of the tribunal below, the Court
-- in the exercise of its equity jurisdiction -- may wade into and reevaluate
such findings,[23] as in the present instance.
In this case, Public Respondent NLRC did not sufficiently indicate the
evidentiary basis for its reversal of the labor arbiter's decision. After citing
provisions in the collective bargaining agreement (CBA) concerning
contract workers and Policy Instruction No. 20, public respondent correctly
stated that petitioners were performing work necessary or desirable in the
usual business of private respondent. From this undisputed fact, the NLRC
jumped to strange and strained inferences. First, it held that the employment
of the petitioners was subject to fixed terms. It then leapt to the nonsequitur conclusion that petitioners were project employees. Going further, it
held that they were entitled to separation pay, overlooking that under the
very law it invoked, "project employees are not entitled to termination

pay."[24] This convolution of facts and law cannot reverse the decision of the
labor arbiter which is grounded on documentary evidence submitted by the
parties.
Indeed, an examination of the assailed Decision reveals that public
respondent failed to back up its conclusions with substantial evidence, or
that which a reasonable mind may accept as adequate to justify a
conclusion. This quantum of evidence is required to establish a fact in cases
before administrative and quasi-judicial bodies.[25]
Thus, a mere provision in the CBA recognizing contract employment
does not sufficiently establish that petitioners were ipso facto contractual or
project employees. In the same vein, the invocation of Policy No. 20
governing the employment of project employees in the construction industry
does not, by itself, automatically classify private respondent as part of the
construction industry and entitle it to dismiss petitioners at the end of each
project. These facts cannot be presumed; they must be supported by
substantial evidence.
On the other hand, private respondent did not even allege, much less did
it seek to prove, that petitioners had been hired on a project-to-project basis
during the entire length of their employment. Rather, it merely sought to
establish that petitioners had been hired to install the air-conditioning
equipment at Asian Development Bank and Interbank and that they were
legally dismissed upon the conclusion of these projects.
Private respondent did not even traverse, and public respondent did not
controvert, the labor arbiter's finding that petitioners were continuously
employed without interruption, from the date of their hiring up to the date of
their dismissal, in spite of the alleged completion of the so-called projects in
which they had been hired.[26] The undisputed finding of the labor arbiter on
this continuous employment of petitioners is worth quoting:[27]
"(T)he record discloses that the complainants worked not only in one
special project, either at the Asian Development Bank or the
Interbank building, as the evidence of the respondent tends to prove,

but also variably in other projects/jobsites contracted by Koppel

Incorporated: such as the PNB on Roxas Boulevard, Manila; MIA
now NAIA; PICC; and San Miguel Complex on Ortigas Avenue,
Pasig, Metro Manila. Some of them, after their tour of duty on these
different job-sites, were reassigned to the respondent's plant at
Koppel Compound, Para()aque, Metro Manila, as shown by the
individual complainants(') affidavits attached to their position paper.
A close examination of the record further reveals that the 'special
projects' at the Asian Development Bank and Interbank to which the
complainants were last assigned by the respondent were still in
operation before their alleged termination from employment. Under
these factual milieu, we believe that they had been engaged to work
and perform activities which were necessary and desirable in the
air(-)conditioning and refrigeration installation/repair business of the
respondent employer, especially where, as in this case, the very
nature of such trade indicates that it can hardly fall under the
exception of Policy Instruction No. 20 which applies only to the
construction industry. For this reason, and considering that the facts
narrated in the complainants(') sworn statements were neither
disputed nor refuted by contrary evidence by the respondent, it
becomes apparent and increasing(ly) clear that indeed they would
and ought to be classified as regular employees. x x x" (Underscoring
supplied.)
Petitioners were hired on different dates. Some of them worked for eight
(8) years, while others for only one and a half (1) years. Private respondent,
on the other hand, insisted that petitioners were hired on per project
basis. Private respondent, however, did not present any evidence to show the
termination of the employment contracts at the end of each project. Only
before public respondent and in this petition did private respondent allege,
through a photocopy of an affidavit[28] of Mr. Jose Lecaros, the General
Manager of Koppel, Inc., that the Asian Development Bank and the
Interbank projects had been completed. This affidavit as well as the other
annexes[29] cannot be given weight in this petition because this Court is not a
trier of facts. In any case, private respondent had not proved, by the said

affidavit, that the termination of each project had invariably resulted in the
dismissal of its alleged project employees.
Regular employees cannot at the same time be project
employees. Article 280 of the Labor Code states that regular employees are
those whose work is necessary or desirable to the usual business of the
employer. The two exceptions following the general description of regular
employees refer to either project or seasonal employees. It has been ruled in
the case of ALU-TUCP vs. National Labor Relations Commission that:[30]
"In the realm of business and industry, we note, that 'project' could
refer to one or the other of at least two (2) distinguishable types of
activities. Firstly, a project could refer to particular job or
undertaking that is within the regular or usual business of the
employer company, but which is distinct and separate, and
identifiable as such, from the other undertakings of the
company. Such job or undertaking begins and ends at determined or
determinable times. The typical example of this first type of project
is a particular construction job or project of a construction
company. A construction company ordinarily carries out two or more
discrete (should be distinct) identifiable construction projects:e.g., a
twenty-five-storey hotel in Makati; a residential condominium
building in Baguio City; and a domestic air terminal in Iloilo
City. Employees who are hired for the carrying out of one of these
separate projects, the scope and duration of which has been
determined and made known to the employees at the time of
employment, are properly treated as 'project employees,' and their
services may be lawfully terminated at completion of the
project." (Underscoring supplied).
The employment of seasonal employees, on the other hand, legally ends
upon completion of the project or the season, thus:[31]
"Clearly, therefore, petitioners being project employees, or to use the
correct term, seasonal employees, their employment legally ends

upon completion of the project or the season.The termination of their

employment cannot and should not constitute an illegal dismissal."
In terms of terminating employment, this Court has already
distinguished project from regular employees, to wit:[32]
"The basic issue is thus whether or not petitioners are properly
characterized as 'project employees' rather than 'regular employees'
of NSC. This issue relates, of course, to an important
consequence: the services of project employees are co-terminous
with the project and may be terminated upon the end or completion
of the project for which they were hired.[33] Regular employees, in
contrast, are legally entitled to remain in the service of their
employer until that service is terminated by one or another of the
recognized modes of termination of service under the Labor
Code."[34]
The overwhelming fact of petitioners' continuous employment as found
by the labor arbiter ineludibly shows that the petitioners were regular
employees. On the other hand, we find that substantial evidence, applicable
laws and jurisprudence do not support the ruling in the assailed Decision that
petitioners were project employees. The Court here reiterates the rule that all
doubts, uncertainties, ambiguities and insufficiencies should be resolved in
favor of labor. It is a well-entrenched doctrine that in illegal dismissal cases,
the employer has the burden of proof. This burden was not discharged in the
present case.
Second Issue: Is Ground for Dismissal Valid?
As regular employees, petitioners' employment cannot be terminated at
the whim of the employer. For a dismissal of an employee to be valid, two
requisites must be met: (1) the employee is afforded due process, meaning,
he is given notice of the cause of his dismissal and an adequate opportunity
to be heard and to defend himself; and (2) the dismissal is for a valid cause
as indicated in Article 282[35] of the Labor Code.[36] The services of
petitioners were purportedly terminated at the end of the ADB and Interbank

projects, but this could not have been a valid cause for, as discussed above,
they were regular and not project employees. Thus, the Court does not
hesitate to conclude that petitioners were illegally dismissed.
As a consequence of their illegal termination, petitioners are entitled to
reinstatement and backwages in accordance with the Labor Code. The
backwages however are to be computed only for three years from August 30,
1988, the date of their dismissal, without deduction or qualification. Where
the illegal dismissal transpired before the effectivity of RA 6715, [37] or before
March 21, 1989, the award of backwages in favor of the dismissed
employees is limited to three (3) years without deduction or qualification.[38]
WHEREFORE, premises considered, the petition is GRANTED. The
assailed Decision and Resolution are REVERSED and SET ASIDE and the
decision of the labor arbiter is REINSTATED, with backwages to be
computed as above discussed. No costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 150658

February 9, 2007

NOELITO FABELA, MARCELO DELA CRUZ III, ROGELIO

LASAT, HENRY MALIWANAG, MANUEL DELOS SANTOS, and
ROMMEL QUINES, Petitioners,
vs.
SAN MIGUEL CORPORATION and ARMAN HICARTE, Respondents.
DECISION
CARPIO MORALES, J.:

On review is the July 30, 2001 Decision of the Court of Appeals reversing
the ruling of the National Labor Relations Commission (NLRC) and the
Labor Arbiter finding petitioners to have been illegally dismissed.
Petitioners, along with Joselito de Lara and John Alovera, were hired by
respondent San Miguel Corporation (SMC) as "Relief Salesmen" for the
Greater Manila Area (GMA) under separate but almost similarly worded
"Contracts of Employment With Fixed Period." After having entered into
successive contracts of the same nature with SMC, the services of
petitioners, as well as de Lara and Alovera, were terminated after SMC no
longer agreed to forge another contract with them.
The dates of hiring of petitioners, et al. and the termination of their
employment are set forth below:1
NAME

DATE HIRED

DATE OF
TERMINATION OF
EMPLOYMENT

NOELITO
FABELA

MAY, 1992

AUGUST, 1996

ROGELIO
LASAT

AUGUST,
1995

SEPTEMBER, 1997

HENRY
MALIWANAG

MAY, 1995

SEPTEMBER, 1997

MANUEL
DELOS SANTOS

MAY, 1995

SEPTEMBER, 1997

JOSELITO DE
LARA

MAY, 1994

JULY 30,1997

ROMMEL
QUINES

OCTOBER,
1994

SEPTEMBER, 1997

MARCELO
DELA CRUZ

DECEMBER,
1991

MAY, 1997

JOHN
ALOVERA

JUNE, 1992

MAY, 1997

Respondent SMC and its co-respondent Arman Hicarte, who was its Human
Resources Manager, claimed that the hiring of petitioners was not intended
to be permanent, as the same was merely occasioned by the need to fill in a
vacuum arising from SMCs gradual transition to a new system of selling
and delivering its products.
Respondents explained that SMC previously operated under the "Route
System,"2 but began implementing in 1993 the "Pre-Selling System"3 in
which the salesmen under the earlier system would be replaced by Accounts
Specialists which called for upgraded qualifications.4
In support of their claim, respondents presented the affidavit of Mariano N.
Lopez, Assistant Vice President and Area Sales Manager for the GMA Sales
Operations of San Miguel Brewing Philippines.5
While some of the qualified regular salesmen were readily upgraded to the
position of Accounts Specialist, respondents claimed that SMC still had to
sell its beer products using the conventional routing system during the
transition stage, thus giving rise to the need for temporary employees; and
the members of the regular Route Crew then existing were required to
undergo a training program to determine whether they possessed or could be
trained for the necessary attitude and aptitude required of an Accounts
Specialist, hence, the hiring of petitioners and others for a fixed period, coterminus with the completion of the transition period and Training Program
for all prospective Accounts Specialists.6
Claiming that they were illegally dismissed, petitioners, as well as de Lara
and Alovera, filed separate complaints for illegal dismissal against
respondents. The complaints were consolidated.
By Decision dated September 23, 1998, Labor Arbiter Manuel P. Asuncion
held that except for de Lara and Alovera, the complainants-herein petitioners
were illegally dismissed. Thus the decision disposed:
IN LIGHT OF THE FOREGOING CONSIDERATIONS, the respondents
are hereby ordered to reinstate Marcelo Dela Cruz, Norlito Fabela, Henry
Maliwanag, Rogelio Lasat, Manuel Delos Santos and Rommel Quines to
their former positions with full backwages from the time their salaries were
withheld until they are actually reinstated. As of this date, their backwages
has reached the sum of P562,336.64. (See attached computation). The

complaints of Jun Alovera and Joselito De Lara must be dismissed for lack
of merit.
SO ORDERED.
The Decision of the Labor Arbiter was affirmed on appeal by the NLRC, by
Resolution of April 28, 2000. Respondents Motion for Reconsideration was
denied, hence, they filed a Petition for Certiorari with the Court of Appeals
before which they contended that herein petitioners were validly hired for a
fixed period which was not renewed, hence, the termination of their services
was valid.
By Decision of July 30, 2001,7 the Court of Appeals granted respondents
petition and accordingly reversed the decision of the Labor Arbiter and of
the NLRC. The appellate court accordingly dismissed petitioners
complaints. In granting respondents petition, the appellate court
ratiocinated:
At bar, there is not any least indication that the employment contract was not
knowingly and voluntarily agreed upon between the parties nary any force
or improper pressure upon the employee nor any circumstances vitiating his
consent. Neither is there any indication or signal of improper pressure in the
execution of the contract nor that the employer and the employee did not
deal with each other on equal terms absent any moral dominance by the
employer upon the employee. Finally, at the time the contracts were entered
into, the parties were pretty aware of the day certain which must necessarily
come although still unknown when at which time the contract will selfexpire.8 (Underscoring supplied)
Their motion for reconsideration having been denied by the Court of
Appeals by Resolution of October 29, 2001, petitioners filed the present
petition.
The validity of the termination of petitioners services depends on whether
they were hired for a fixed period, as claimed by respondents, or as regular
employees who may not be dismissed except for just or authorized causes.
Article 280 of the Labor Code defines regular employment as follows:
ART. 280. Regular and casual employment. The provisions of written
agreement to the contrary notwithstanding and regardless of the oral

agreement of the parties, an employment shall be deemed to be regular

where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and the employment
is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That any employee who has rendered at
least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in
which he is employed and his employment shall continue while such activity
actually exists. (Emphasis, italics and underscoring supplied)
In Pure Foods Corp. v. NLRC,9 this Court held that under the above-quoted
provision, there are two kinds of regular employees, namely: (1) those who
are engaged to perform activities which are necessary or desirable in the
usual business or trade of the employer, and (2) those casual employees who
have rendered at least one year of service, whether continuous or broken,
with respect to the activity in which they are employed.
Article 280 also recognizes project employees, those whose "employment
has been fixed for a specific project or undertaking." (Underscoring
supplied)
Project employment is distinct from casual employment referred to in the
second paragraph of Article 280 for, as clarified in Mercado, Sr. v.
NLRC,10 the proviso that "any employee who has rendered at least one year
of service . . . shall be considered a regular employee" does not apply to
project employees, but only to casual employees.
Although Article 280 does not expressly recognize employment for a
fixed period, which is distinct from employment which has been fixed for a
specific project or undertaking, Brent School, Inc. v. Zamora11 has clarified
that employment for a fixed period is not in itself illegal, viz:
There can of course be no quarrel with the proposition that where from the
circumstances it is apparent that periods have been imposed to preclude
acquisition of tenurial security by the employee, they should be struck

down or disregarded as contrary to public policy, morals, etc. But where

no such intent to circumvent the law is shown, or stated otherwise,
where the reason for the law does not exist, e.g.,where it is indeed the
employee himself who insists upon a period or where the nature of the
engagement is such that, without being seasonal or for a specific project,
a definite date of termination is a sine qua non, would an agreement
fixing a period essentially evil or illicit, therefore anathema?Would such
an agreement come within the scope of Article 280 which admittedly was
enacted "to prevent the circumvention of the right of the employee to be
secured in x x (his) employment?"
xxxx
Accordingly, and since the entire purpose behind the development of
legislation culminating in the present Article 280 of the Labor Code clearly
appears to have been,. as already observed, to prevent circumvention of the
employees right to be secure in his tenure, the clause in said
article indiscriminately and completely ruling out all written or oral
agreements conflicting with the concept of regular employment as defined
therein should be construed to refer to the substantive evil that the Code
itself has singled out: agreements entered into precisely to circumvent
security of tenure. It should have no application to instances where a fixed
period of employment was agreed upon knowingly and voluntarily by the
parties, without any force, duress or improper pressure being brought to bear
upon the employee and absent any other circumstances vitiating his consent,
or where it satisfactorily appears that the employer and employee dealt with
each other on more or less equal terms with no moral dominance whatever
being exercised by the former over the latter. x x x (Emphasis and
underscoring supplied)1awphi1.net
Thus, even if the duties of an employee consist of activities usually
necessary or desirable in the usual business of the employer, it does not
necessarily follow that the parties are forbidden from agreeing on a period of
time for the performance of such activities through a contract of employment
for a fixed term.12
Respondents, without disputing that the duties of petitioners consisted of
activities necessary or desirable in its usual business or trade, claim that the
contracts of employment entered into by respondent SMC with the herein
petitioners are valid fixed-term contracts under the Brent doctrine.

Albeit the Court of Appeals ruled in respondents favor on the basis of a

finding that petitioners were validly hired
as project employees,13 respondents deny that petitioners were project
employees, asserting that they were hired only as fixed-term employees.14
Since respondents attribute the termination of petitioners employment to the
expiration of their respective contracts, a determination of whether
petitioners were hired as project or seasonal employees, or as fixed-term
employees without any force, duress or improper pressure having been
exerted against them is in order. If petitioners fall under any of these
categories, then indeed their termination follows from the expiration of their
contracts.
Since, as earlier stated, respondents themselves deny that petitioners were
project employees, and they do not allege that they were seasonal
employees, what remains for determination is whether petitioners were
fixed-term employees under the Brent doctrine.
As the resolution of this issue necessarily involves a calibration of
respondents evidence, the factual findings of the Labor Arbiter and the
NLRC assume importance.15
This Court has consistently adhered to the rule that in reviewing
administrative decisions such as those rendered by the NLRC, the findings
of fact made therein are to be accorded not only great weight and
respect, but even finality, for as long as they are supported by
substantial evidence. It is not the function of the Court to once again review
and weigh the conflicting evidence, determine the credibility of the
witnesses or otherwise substitute its own judgment for that of the
administrative agency on the sufficiency of the evidence. Nevertheless,
when the inference made or the conclusion drawn on the basis of certain
state of facts is manifestly mistaken, the Court is not estopped from
exercising its power of review. (Emphasis and underscoring supplied)
Significantly, both the Labor Arbiter and the NLRC found that petitioners
were all regular employees. The NLRC even explicitly stated that the
periods stated in petitioners contracts were fixed not because of temporary
exigencies but because of a scheme to preclude petitioners from acquiring
tenurial security.

The Court of Appeals, however, found that "[a]ll indications and established
facts lead to the inevitable conclusion that the contracts of employment
subject matter of this case were executed in good faith and for a lawful and
moral purpose,"16 and thus concluded that the NLRC committed grave abuse
of discretion for holding otherwise.
A considered assessment of the findings of the Labor Arbiter and the NLRC,
however, shows that the same are supported by substantial evidence.
Respondents contention that there are fixed periods stated in the contracts of
employment does not lie. Brentinstructs that a contract of employment
stipulating a fixed-term, even if clear as regards the existence of a period, is
invalid if it can be shown that the same was executed with the intention of
circumventing security of tenure, and should thus be ignored. And so does
Paguio v. NLRC,17 thus:
x x x A stipulation [for a fixed-term] in an agreement can be ignored as and
when it is utilized to deprive the employee of his security of tenure. The
sheer inequality that characterizes employer-employee relations, where the
scales generally tip against the employee, often scarcely provides him real
and better options.
Indeed, substantial evidence exists in the present case showing that the
subject contracts were utilized to deprive petitioners of their security of
tenure.
The contract of employment of petitioner Fabela, for instance, states that the
transition period from the Route System to the Pre-Selling System would be
twelve (12) months from April 4, 1995, thus:
WHEREAS, the FIRST PARTY [San Miguel Corporation] is undertaking a
project to manage the transition in fully implementing the pre-selling
system;
WHEREAS, during the transition period, which is twelve (12)
months before the new system will be fully implemented in the districts
planned for in 1995, the FIRST PARTY will conduct a training for the
regular Salesmen and will continue to sell its therefore (sic) beer products
using the conventional system and will therefore need to hire relief
personnel to undertake the activities thereinafter mentioned which are to be

undertaken/performed for a limited/specific period which activities shall

hereinafter be referred to as PROJECT ACTIVITIES.
xxxx
SECTION ONE: "TERM OF CONTRACT"
The FIRST PARTY hereby hires the SECOND PARTY as "PROJECT
RELIEF SALESMAN" to perform/undertake the activities listed in Annex
"A" hereof at its Greater Manila Area Sales Operations, San Miguel Brewing
Group and the latter hereby accepts and agrees such undertaking for a period
of twelve (12) months, starting from April 4, 1995 to April 3, 1996 or upon
completion of the project hereinafter referred to, whichever comes first,
subject to the general supervision, order, advice and directions of the FIRST
PARTY.
x x x x18 (Emphasis and underscoring supplied)
It bears noting, however, that petitioner Fabela, besides being hired again for
another fixed period of four (4) months after the lapse in April 1996 of the
one-year contract, had already been working for respondent SMC on a fixedterm basis as early as 1992, or one year before respondent SMC even began
its shift to the Pre-selling System in 1993.
Similarly, petitioner Marcelo dela Cruz III was hired prior to the alleged
transition to the new system. In fact, he was hired in December 1991, even
earlier than petitioner Fabela.
The NLRC, therefore, had sufficient basis to believe that the shift of SMC to
the Pre-Selling System was not the real basis for the forging of fixed-term
contracts of employment with petitioners and that the periods were fixed
only as a means to preclude petitioners from acquiring security of tenure.
Moreover, other than the earlier-mentioned affidavit of Mariano N. Lopez,
respondents have presented no evidence that the shift to the Pre-Selling
System occurred as early as 1993. The employment contracts presented by
respondents in support of their claim that petitioners were hired only for the
transition stage are dated not earlier than April 1995.19 Even the contract of
petitioner Fabela expressly states that the transition period istwelve months,
beginning in 1995, rather than 1993. If the shift to the new system only
began in 1995, however, then not only petitioners Fabela and dela Cruz were

hired prior to the transition, but also petitioner Quines, who was hired in
1994.
As Brent pronounces, a fixed-term employment is valid only under certain
circumstances, such as when the employee himself insists upon the period,
or where the nature of the engagement is such that, without being seasonal
or for a specific project, a definite date of termination is a sine qua non.
That petitioners themselves insisted on the one-year fixed-term is not even
alleged by respondents. In fact, the sustained desire of each of the petitioners
to enter into another employment contract upon the termination of the earlier
ones clearly indicates their interest in continuing to work for SMC.
Moreover, respondents have not established that the engagement of
petitioners services, which is not in the nature of a project employment,
required a definite date of termination as a sine qua non.
In fine, the finding of the Labor Arbiter and the NLRC that the execution of
the contracts was merely intended to circumvent petitioners security of
tenure merits this Courts concurrence.
WHEREFORE, the petition is GRANTED. The assailed Decision of the
Court of Appeals is SET ASIDE. The Decision dated September 23, 1998 of
the Labor Arbiter, which was affirmed by the National Labor Relations
Commission by Resolution of April 28, 2000, is REINSTATED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 186439

January 15, 2014

UNIVERSAL ROBINA SUGAR MILLING CORPORATION and

RENE CABATI, Petitioners,
vs.
FERDINAND ACIBO, ROBERTO AGUILAR, EDDIE BALDOZA,

RENE ABELLAR, DIOMEDES ALICOS, MIGUEL ALICOS,

ROGELIO AMAHIT, LARRY AMASCO, FELIPE BALANSAG,
ROMEO BALANSAG, MANUEL BANGOT, ANDY BANJAO,
DIONISIO BENDIJO, JR., JOVENTINO BROCE, ENRICO
LITERAL, RODGER RAMIREZ, BIENVENIDO RODRIGUEZ,
DIOCITO PALAGTIW, ERNIE SABLAN, RICHARD PANCHO,
RODRIGO ESTRABELA, DANNY KADUSALE and ALLYROBYL
OLPUS, Respondents.
DECISION
BRION, J.:
We resolve in this petition for review on certiorari1 the challenge to the
November 29, 2007 decision2 and the January 22, 2009 resolution3 of the
Court of Appeals (CA) in CA-G.R. CEB-SP No. 02028. This CA decision
affirmed with modification the July 22, 2005 decision4 and the April 28,
2006 resolution5 of the National Labor Relations Commission (NLRC) in
NLRC Case No. V-00006-03 which, in turn, reversed the October 9, 2002
decision6 of the Labor Arbiter (LA). The LAs decision dismissed the
complaint filed by complainants Ferdinand Acibo, et al.7 against petitioners
Universal Robina Sugar Milling Corporation (URSUMCO) and Rene
Cabati.
The Factual Antecedents
URSUMCO is a domestic corporation engaged in the sugar cane milling
business; Cabati is URSUMCOs Business Unit General Manager.
The complainants were employees of URSUMCO. They were hired on
various dates (between February 1988 and April 1996) and on different
capacities,8 i.e., drivers, crane operators, bucket hookers, welders,
mechanics, laboratory attendants and aides, steel workers, laborers,
carpenters and masons, among others. At the start of their respective
engagements, the complainants signed contracts of employment for a period
of one (1) month or for a given season. URSUMCO repeatedly hired the

complainants to perform the same duties and, for every engagement,

required the latter to sign new employment contracts for the same duration
of one month or a given season.
On August 23, 2002,9 the complainants filed before the LA complaints for
regularization, entitlement to the benefits under the existing Collective
Bargaining Agreement (CBA),and attorneys fees.
In the decision10 dated October 9, 2002, the LA dismissed the complaint for
lack of merit. The LA held that the complainants were seasonal or project
workers and not regular employees of URSUMCO. The LA pointed out that
the complainants were required to perform, for a definite period, phases of
URSUMCOs several projects that were not at all directly related to the
latters main operations. As the complainants were project employees, they
could not be regularized since their respective employments were
coterminous with the phase of the work or special project to which they were
assigned and which employments end upon the completion of each project.
Accordingly, the complainants were not entitled to the benefits granted
under the CBA that, as provided, covered only the regular employees of
URSUMCO.
Of the twenty-two original complainants before the LA, seven appealed the
LAs ruling before the NLRC, namely: respondents Ferdinand Acibo, Eddie
Baldoza, Andy Banjao, Dionisio Bendijo, Jr., Rodger Ramirez, Diocito
Palagtiw, Danny Kadusale and Allyrobyl Olpus.
The Ruling of the NLRC
In its decision11 of July 22, 2005, the NLRC reversed the LAs ruling; it
declared the complainants as regular URSUMCO employees and granted
their monetary claims under the CBA. The NLRC pointed out that the
complainants performed activities which were usually necessary and
desirable in the usual trade or business of URSUMCO, and had been
repeatedly hired for the same undertaking every season. Thus, pursuant to
Article 280 of the Labor Code, the NLRC declared that the complainants
were regular employees. As regular employees, the NLRC held that the

complainants were entitled to the benefits granted, under the CBA, to the
regular URSUMCO employees.
The petitioners moved to reconsider this NLRC ruling which the NLRC
denied in its April 28, 2006 resolution.12The petitioners elevated the case to
the CA via a petition for certiorari.13
The Ruling of the CA
In its November 29, 2007 decision,14 the CA granted in part the petition; it
affirmed the NLRCs ruling finding the complainants to be regular
employees of URSUMCO, but deleted the grant of monetary benefits under
the CBA.
The CA pointed out that the primary standard for determining regular
employment is the reasonable connection between a particular activity
performed by the employee vis--vis the usual trade or business of the
employer. This connection, in turn, can be determined by considering the
nature of the work performed and the relation of this work to the business or
trade of the employer in its entirety.
In this regard, the CA held that the various activities that the complainants
were tasked to do were necessary, if not indispensable, to the nature of
URSUMCOs business. As the complainants had been performing their
respective tasks for at least one year, the CA held that this repeated and
continuing need for the complainants performance of these same tasks,
regardless of whether the performance was continuous or intermittent,
constitutes sufficient evidence of the necessity, if not indispensability, of the
activity to URSUMCOs business.
Further, the CA noted that the petitioners failed to prove that they gave the
complainants opportunity to work elsewhere during the off-season, which
opportunity could have qualified the latter as seasonal workers. Still, the CA
pointed out that even during this off-season period, seasonal workers are not
separated from the service but are simply considered on leave until they are
re-employed. Thus, the CA concluded that the complainants were regular

employees with respect to the activity that they had been performing and
while the activity continued.
On the claim for CBA benefits, the CA, however, ruled that the
complainants were not entitled to receive them. The CA pointed out that
while the complainants were considered regular, albeit seasonal, workers,
the CBA-covered regular employees of URSUMCO were performing tasks
needed by the latter for the entire year with no regard to the changing sugar
milling season. Hence, the complainants did not belong to and could not be
grouped together with the regular employees of URSUMCO, for collective
bargaining purposes; they constitute a bargaining unit separate and distinct
from the regular employees. Consequently, the CA declared that the
complainants could not be covered by the CBA.
The petitioners filed the present petition after the CA denied their motion for
partial reconsideration15 in the CAs January 22, 2009 resolution.16
The Issues
The petition essentially presents the following issues for the Courts
resolution: (1) whether the respondents are regular employees of
URSUMCO; and (2) whether affirmative relief can be given to the fifteen
(15) of the complainants who did not appeal the LAs decision.17
The Courts Ruling
We resolve to partially GRANT the petition.
On the issue of the status of the respondents employment
The petitioners maintain that the respondents are contractual or
project/seasonal workers and not regular employees of URSUMCO. They
thus argue that the CA erred in applying the legal parameters and guidelines
for regular employment to the respondents case. They contend that the legal
standards length of the employees engagement and the desirability or
necessity of the employees work in the usual trade or business of the
employer apply only to regular employees under paragraph 1, Article 280

of the Labor Code, and, under paragraph 2 of the same article, to casual
employees who are deemed regular by their length of service.
The respondents, the petitioners point out, were specifically engaged for a
fixed and predetermined duration of, on the average, one (1) month at a time
that coincides with a particular phase of the companys business operations
or sugar milling season. By the nature of their engagement, the respondents
employment legally ends upon the end of the predetermined period; thus,
URSUMCO was under no legal obligation to rehire the respondents.
In their comment,18 the respondents maintain that they are regular employees
of URSUMCO. Relying on the NLRC and the CA rulings, they point out
that they have been continuously working for URSUMCO for more than one
year, performing tasks which were necessary and desirable to URSUMCOs
business. Hence, under the above-stated legal parameters, they are regular
employees.
We disagree with the petitioners position.1wphi1 We find the respondents
to be regular seasonal employees of URSUMCO.
As the CA has explained in its challenged decision, Article 280 of the Labor
Code provides for three kinds of employment arrangements, namely:
regular, project/seasonal and casual. Regular employment refers to that
arrangement whereby the employee "has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the
employer[.]"19 Under the definition, the primary standard that determines
regular employment is the reasonable connection between the particular
activity performed by the employee and the usual business or trade of the
employer;20 the emphasis is on the necessity or desirability of the employees
activity. Thus, when the employee performs activities considered necessary
and desirable to the overall business scheme of the employer, the law
regards the employee as regular.
By way of an exception, paragraph 2, Article 280 of the Labor Code also
considers regular a casual employment arrangement when the casual
employees engagement has lasted for at least one year, regardless of the

engagements continuity. The controlling test in this arrangement is the

length of time during which the employee is engaged.
A project employment, on the other hand, contemplates on arrangement
whereby "the employment has been fixed for a specific project or
undertaking whose completion or termination has been determined at the
time of the engagement of the employee[.]"21 Two requirements, therefore,
clearly need to be satisfied to remove the engagement from the presumption
of regularity of employment, namely: (1) designation of a specific project or
undertaking for which the employee is hired; and (2) clear determination of
the completion or termination of the project at the time of the employees
engagement.22 The services of the project employees are legally and
automatically terminated upon the end or completion of the project as the
employees services are coterminous with the project.
Unlike in a regular employment under Article 280 of the Labor Code,
however, the length of time of the asserted "project" employees engagement
is not controlling as the employment may, in fact, last for more than a year,
depending on the needs or circumstances of the project. Nevertheless, this
length of time (or the continuous rehiring of the employee even after the
cessation of the project) may serve as a badge of regular employment when
the activities performed by the purported "project" employee are necessary
and indispensable to the usual business or trade of the employer.23 In this
latter case, the law will regard the arrangement as regular employment.24
Seasonal employment operates much in the same way as project
employment, albeit it involves work or service that is seasonal in nature or
lasting for the duration of the season.25 As with project employment,
although the seasonal employment arrangement involves work that is
seasonal or periodic in nature, the employment itself is not automatically
considered seasonal so as to prevent the employee from attaining regular
status. To exclude the asserted "seasonal" employee from those classified as
regular employees, the employer must show that: (1) the employee must be
performing work or services that are seasonal in nature; and (2) he had been
employed for the duration of the season.26 Hence, when the "seasonal"

workers are continuously and repeatedly hired to perform the same tasks or
activities for several seasons or even after the cessation of the season, this
length of time may likewise serve as badge of regular employment.27 In fact,
even though denominated as "seasonal workers," if these workers are called
to work from time to time and are only temporarily laid off during the offseason, the law does not consider them separated from the service during the
off-season period. The law simply considers these seasonal workers on leave
until re-employed.28
Casual employment, the third kind of employment arrangement, refers to
any other employment arrangement that does not fall under any of the first
two categories, i.e., regular or project/seasonal.
Interestingly, the Labor Code does not mention another employment
arrangement contractual or fixed term employment (or employment for a
term) which, if not for the fixed term, should fall under the category of
regular employment in view of the nature of the employees engagement,
which is to perform an activity usually necessary or desirable in the
employers business.
In Brent School, Inc. v. Zamora,29 the Court, for the first time, recognized
and resolved the anomaly created by a narrow and literal interpretation of
Article 280 of the Labor Code that appears to restrict the employees right to
freely stipulate with his employer on the duration of his engagement. In this
case, the Court upheld the validity of the fixed-term employment agreed
upon by the employer, Brent School, Inc., and the employee, Dorotio Alegre,
declaring that the restrictive clause in Article 280 "should be construed to
refer to the substantive evil that the Code itself x x x singled out: agreements
entered into precisely to circumvent security of tenure. It should have no
application to instances where [the] fixed period of employment was agreed
upon knowingly and voluntarily by the parties x x x absent any x x x
circumstances vitiating [the employees] consent, or where [the facts
satisfactorily show] that the employer and [the] employee dealt with each
other on more or less equal terms[.]"30 The indispensability or desirability of
the activity performed by the employee will not preclude the parties from

entering into an otherwise valid fixed term employment agreement; a

definite period of employment does not essentially contradict the nature of
the employees duties31 as necessary and desirable to the usual business or
trade of the employer.
Nevertheless, "where the circumstances evidently show that the employer
imposed the period precisely to preclude the employee from acquiring
tenurial security, the law and this Court will not hesitate to strike down or
disregard the period as contrary to public policy, morals, etc."32 In such a
case, the general restrictive rule under Article 280 of the Labor Code will
apply and the employee shall be deemed regular.
Clearly, therefore, the nature of the employment does not depend solely on
the will or word of the employer or on the procedure for hiring and the
manner of designating the employee. Rather, the nature of the employment
depends on the nature of the activities to be performed by the employee,
considering the nature of the employers business, the duration and scope to
be done,33 and, in some cases, even the length of time of the performance
and its continued existence.
In light of the above legal parameters laid down by the law and applicable
jurisprudence, the respondents are neither project, seasonal nor fixed-term
employees, but regular seasonal workers of URSUMCO. The following
factual considerations from the records support this conclusion:
First, the respondents were made to perform various tasks that did not at all
pertain to any specific phase of URSUMCOs strict milling operations that
would ultimately cease upon completion of a particular phase in the milling
of sugar; rather, they were tasked to perform duties regularly and habitually
needed in URSUMCOs operations during the milling season. The
respondents duties as loader operators, hookers, crane operators and drivers
were necessary to haul and transport the sugarcane from the plantation to the
mill; laboratory attendants, workers and laborers to mill the sugar; and
welders, carpenters and utility workers to ensure the smooth and continuous
operation of the mill for the duration of the milling season, as distinguished
from the production of the sugarcane which involves the planting and raising

of the sugarcane until it ripens for milling. The production of sugarcane, it

must be emphasized, requires a different set of workers who are experienced
in farm or agricultural work. Needless to say, they perform the activities that
are necessary and desirable in sugarcane production. As in the milling of
sugarcane, the plantation workers perform their duties only during the
planting season.
Second, the respondents were regularly and repeatedly hired to perform the
same tasks year after year. This regular and repeated hiring of the same
workers (two different sets) for two separate seasons has put in place,
principally through jurisprudence, the system of regular seasonal
employment in the sugar industry and other industries with a similar nature
of operations.
Under the system, the plantation workers or the mill employees do not work
continuously for one whole year but only for the duration of the growing of
the sugarcane or the milling season. Their seasonal work, however, does not
detract from considering them in regular employment since in a litany of
cases, this Court has already settled that seasonal workers who are called to
work from time to time and are temporarily laid off during the off-season are
not separated from the service in said period, but are merely considered on
leave until re-employment.34 Be this as it may, regular seasonal employees,
like the respondents in this case, should not be confused with the regular
employees of the sugar mill such as the administrative or office personnel
who perform their tasks for the entire year regardless of the season. The
NLRC, therefore, gravely erred when it declared the respondents regular
employees of URSUMCO without qualification and that they were entitled
to the benefits granted, under the CBA, to URSUMCOS regular employees.
Third, while the petitioners assert that the respondents were free to work
elsewhere during the off-season, the records do not support this assertion.
There is no evidence on record showing that after the completion of their
tasks at URSUMCO, the respondents sought and obtained employment
elsewhere.

Contrary to the petitioners position, Mercado, Sr. v. NLRC, 3rd Div.35 is not
applicable to the respondents as this case was resolved based on different
factual considerations. In Mercado, the workers were hired to perform
phases of the agricultural work in their employers farm for a definite period
of time; afterwards, they were free to offer their services to any other farm
owner. The workers were not hired regularly and repeatedly for the same
phase(s) of agricultural work, but only intermittently for any single phase.
And, more importantly, the employer in Mercado sufficiently proved these
factual circumstances. The Court reiterated these same observations in Hda.
Fatima v. Natl Fed. of Sugarcane Workers-Food and Gen. Trade36 and
Hacienda Bino/Hortencia Starke, Inc. v. Cuenca.37
At this point, we reiterate the settled rule that in this jurisdiction, only
questions of law are allowed in a petition for review on certiorari.38 This
Courts power of review in a Rule 45 petition is limited to resolving matters
pertaining to any perceived legal errors, which the CA may have committed
in issuing the assailed decision.39 In reviewing the legal correctness of the
CAs Rule 65 decision in a labor case, we examine the CA decision in the
context that it determined, i.e., the presence or absence of grave abuse of
discretion in the NLRC decision before it and not on the basis of whether the
NLRC decision on the merits of the case was correct.40 In other words, we
have to be keenly aware that the CA undertook a Rule 65 review, not a
review on appeal, of the NLRC decision challenged before it.41
Viewed in this light, we find the need to place the CAs affirmation, albeit
with modification, of the NLRC decision of July 22, 2005 in perspective. To
recall, the NLRC declared the respondents as regular employees of
URSUMCO.42 With such a declaration, the NLRC in effect granted the
respondents prayer for regularization and, concomitantly, their prayer for
the grant of monetary benefits under the CBA for URSUMCOs regular
employees. In its challenged ruling, the CA concurred with the NLRC
finding, but with the respondents characterized as regular seasonal
employees of URSUMCO.

The CA misappreciated the real import of the NLRC ruling. The labor
agency did not declare the respondents as regular seasonal employees, but as
regular employees. This is the only conclusion that can be drawn from the
NLRC decisions dispositive portion, thus:
WHEREFORE, premises considered, the appeal is hereby GRANTED.
Complainants are declared regular employees of respondent.1wphi1 As
such, they are entitled to the monetary benefits granted to regular employees
of respondent company based on the CBA, reckoned three (3) years back
from the filing of the above-entitled case on 23 August 2002 up to the
present or to their entire service with respondent after the date of filing of
the said complaint if they are no longer connected with respondent
company.43
It is, therefore, clear that the issue brought to the CA for resolution is
whether the NLRC gravely abused its discretion in declaring the respondents
regular employees of URSUMCO and, as such, entitled to the benefits under
the CBA for the regular employees.
Based on the established facts, we find that the CA grossly misread the
NLRC ruling and missed the implications of the respondents regularization.
To reiterate, the respondents are regular seasonal employees, as the CA itself
opined when it declared that "private respondents who are regular workers
with respect to their seasonal tasks or activities and while such activities
exist, cannot automatically be governed by the CBA between petitioner
URSUMCO and the authorized bargaining representative of the regular and
permanent employees."44 Citing jurisprudential standards,45 it then proceeded
to explain that the respondents cannot be lumped with the regular employees
due to the differences in the nature of their duties and the duration of their
work vis-a-vis the operations of the company.
The NLRC was well aware of these distinctions as it acknowledged that the
respondents worked only during the milling season, yet it ignored the
distinctions and declared them regular employees, a marked departure from
existing jurisprudence. This, to us, is grave abuse of discretion, as it gave no
reason for disturbing the system of regular seasonal employment already in

place in the sugar industry and other industries with similar seasonal
operations. For upholding the NLRCs flawed decision on the respondents
employment status, the CA committed a reversible error of judgment.
In sum, we find the complaint to be devoid of merit. The issue of granting
affirmative relief to the complainants who did not appeal the CA ruling has
become academic.
WHEREFORE, premises considered, the petition is PARTIALLY
GRANTED. Except for the denial of the respondents' claim for CBA
benefits, the November 29, 2007 decision and the January 22, 2009
resolution of the Court of Appeals are SET ASIDE. The complaint is
DISMISSED for lack of merit.
SO ORDERED.

SECOND DIVISION

KAY PRODUCTS, INC. and/or G.R. No. 162472

KAY LEE,
Petitioners,
Present:
PUNO, J., Chairman,
- versus - AUSTRIA-MARTINEZ,
CALLEJO, SR.,

TINGA, and
CHICO-NAZARIO, JJ.
HONORABLE COURT OF
APPEALS, KAY PRODUCTS
EMPLOYEES UNION, MYRNA
ABILA, FLORDELIZA Promulgated:
MORANTE and FE REGIDOR,
Respondents. July 28, 2005

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

DECISION

CALLEJO, SR., J.:

Before us is a petition for review on certiorari under Rule 45 of the

Rules of Court of the Decision [1] of the Court of Appeals (CA) in CA-G.R.
SP No. 73028 and its resolution denying the motion for reconsideration of its
decision by petitioners Kay Products, Incorporated (KPI) and Kay Lee.

The Antecedents

The employees of KPI had a meeting for the purpose of forming a

union within their workplace. Among those in attendance were Myrna Abila,
Flordeliza Morante, Fe Regidor, Rowena Escuadro and Jeofrey del Valle,
who were employed by KPI as factory sewers in June to August 1999.

When the management of KPI got wind of the employees plan to form
a union, it called a meeting to announce that the said employees were to be
transferred to an employment agency with which it had a manpower
contract, the Gerrico Resources & Manpower Services, Inc. (GRMSI).
Through a Memorandum[2] dated July 13, 2000, KPI, through its president,
Mr. Kay Y. Lee, promised that the employees would receive bigger and
better benefits under GRMSI as regular employees thereof. On July 14,
2000, KPI directed all employees concerned to sign resignation letters
preparatory to their employment with GRMSI. Thus, the employees
submitted handwritten letters of resignation, and KPI took custody of their
identification cards.

The employees continued to report for work in the KPI factory but
received less

wages/salaries. On July

31, 2000, KPI

issued a

Memorandum[3] to the employees, stating that GRMSI had been dissolved

and that there was a need for them to sign separate contracts with RCVJ,
another corporation with which KPI had a manpower contract.
This time, some employees, including Abila, Morante, Regidor,
Escuadro and Del Valle, refused to sign any contract with RCVJ.

In the meantime, the employees of KPI were able to organize their

union, the Kay Products Employees Union, and affiliated themselves to the
Philippine Transport & General Workers Organization (PTGWO) on July 25,
2000.[4]

On August 25, 2000, seventy-three (73) employees, together with the

Kay Products Employees Union-PTGWO, filed a Complaint [5] with Regional
Arbitration Branch No. IV of the Department of Labor and Employment
(DOLE) against the petitioners. The employees claimed that the petitioners
were guilty of unfair labor practice (ULP), underpayment of salaries and
service incentive leave pay, and failure to classify them as regular
employees. The case was docketed as NLRC Case No. RAB-IV-8-12829-00L.

On September 4, 2000, the employees were ordered to take a twoweek leave from work without pay. The employees complained. When they
tried to report for work after the two-week period, they were refused entry
and were told that they had ceased to be KPI employees since they had
resigned upon agreeing to be employed by GRMSI.

On October 18, 2000, the employees and their union amended their
complaint (docketed as NLRC Case No. RAB-IV-8-12829-00-L) to illegal
dismissal.[6] Only Abila, Morante, Regidor, Escuadro and Del Valle, who
were able to sign and verify the amended complaint, remained as
complainants.

In their position paper,[7] the complainants alleged, inter alia, that they
were illegally dismissed; their dismissal was not grounded on any just and
authorized cause under the law, and they were deprived of their right to due
process. They also asserted that in interfering with their right to selforganization by deceitfully transferring them to an employment agency, KPI
thereby engaged in ULP. They claimed that such acts were in violation of the
principles enunciated under the Labor Code of the Philippines. The
complainants further contended that they were coerced and intimidated into
signing letters of resignation. Moreover, they were entitled to money claims,
particularly 13th month pay, service incentive leave pay, vacation and sick
leave pay from the time of their illegal dismissal until their reinstatement.

On the other hand, the petitioners denied the material allegations of

the complainants, and maintained that the latter voluntarily resigned from
their work. They asserted that aside from the typewritten resignation letter,
the complainants also wrote other letters in their own handwriting. They
pointed out that the complainants voluntarily secured their clearances from
KPI, transferred to RCVJ, and never went back to work. KPI asserted that
it never interfered with its workers right to self-organization or any of their
plans to form any union. Hence, in view of their voluntary resignations, the
complainants were not entitled to reinstatement, backwages, moral and
exemplary damages, and attorneys fees.

On September 28, 2001, the Labor Arbiter[8] rendered his decision.

The decretal portion reads as follows:

WHEREFORE, premises considered, judgment is hereby

rendered dismissing complainants charge for illegal dismissal
and for ULP for lack of merit. However, in view of their
implied admission of complainants entitlement thereto,
respondent is hereby ordered to pay the corresponding
13th month pay and service incentive leave pay due the
complainants herein.

SO ORDERED.[9]

The Labor Arbiter declared that the complainants wrote their

resignation letters in their own hand, and found no showing of force or
intimidation in so doing. He declared that if there was, indeed, force or
intimidation, the complainants ought to have made their real sentiments or
opposition thereto on record by writing under protest, with reservations, or
other words to that effect either below, beside, or somewhere near their
signatures. Moreover, the fact that the contents of their resignation letters
were dictated would not justify the conclusion that they had tendered their
resignation against their will. On the contrary, the Labor Arbiter observed
that this was more convenient on the part of the parties.

On May 31, 2002, the National Labor Relations Commission (NLRC)

Third Division rendered its Decision[10] affirming the Labor Arbiters decision
and dismissing the appeal for lack of merit:

WHEREFORE, premises considered, the appeal from the

Decision dated September 28, 2001 is hereby DISMISSED for
lack of merit and the Decision AFFIRMED.

SO ORDERED.[11]

The NLRC declared that the complainants act of submitting

resignation letters and accomplishing their respective clearances from KPI
negated involuntariness. The NLRC also noted some inconsistencies in the
amended complaint and the position paper of the complainants, viz.:

Complainants alleged that they still worked for several

months with respondent as regular employees thereof even after
the execution of their resignation letter. This allegation of
complainants deserves scant consideration. Records show that
complainant[s] filed the instant case on August 25, 2000. It is
worth stressing that complainant[s] failed to indicate in their
complaint the date they were allegedly dismissed. (Records, p.
1) [T]hen, in their amended complaint (Records, p. 12) and
position paper (Records, p. 18), they claimed that they were
dismissed on September 4, 2000. If it is really true that they

were dismissed on September 4, 2000, how come they charged

respondents of illegal dismissal on August 25, 2000[?] These
apparent inconsistencies of complainants only goes (sic) to
show the weakness of their allegations.[12]

A motion for reconsideration was filed, which was denied for lack of
merit.[13]

Private respondents Myrna Abila, Flordeliza Morante and Fe Regidor,

thereafter, filed a petition for certiorari with the CA, assailing the
decision and resolution of the NLRC. The appellate court rendered judgment
on December 16, 2003, reversing the decision of the NLRC. The fallo of the
decision reads:

WHEREFORE, judgment is hereby rendered:

(1) REVERSING the assailed resolutions of public

respondent with respect to its findings that petitioners were not
illegally dismissed; and,

(2) AFFIRMING the assailed resolutions of public

respondent NLRC with respect to the petitioners charge for
unfair labor practices.

Without costs in this instance.

SO ORDERED.[14]

The appellate court ruled that the private respondents were regular
employees, since they were performing activities normally necessary or
desirable in the usual business or trade of KPI for more than a year until
their severance from work on September 4, 2000. The CA declared that as
regular employees, their services could only be terminated for just and

authorized causes under the Labor Code, as amended. The employees

transfer to an employment agency put KPIs motive in question and gave
credence to the allegation that the employees had been illegally terminated
or dismissed.

Anent the charge of unfair labor practice, the CA absolved the

respondent therein of said charge.

The KPI filed a motion for the reconsideration of the above decision,
which the appellate court denied, as the arguments in support thereof had
been duly addressed and resolved by it.[15]

In the present recourse, petitioners ascribe to the CA the following as

errors:

I
THE PUBLIC RESPONDENT COMMITTED A SERIOUS
ERROR OF LAW IN HOLDING PRIVATE RESPONDENTS
RESIGNATIONS NOT VOLUNTARY DESPITE THEIR
CONFIRMATION IN THEIR OWN HANDWRITING.

II
THE PUBLIC RESPONDENT COMMITTED A SERIOUS
ERROR OF LAW IN DECLARING THAT PRIVATE
RESPONDENTS DISMISSAL WAS ILLEGAL.[16]

The petitioners reiterated their claim that the private respondents were
not coerced, threatened, or intimidated into filing their resignation letters.
They claim that the CA erred in finding that the petitioners forced or
intimidated the private respondents into signing blank sheets of paper which
were used as their resignation letters. The petitioners contend that such
finding is not supported by any evidence. They rely on the Labor Arbiters
conclusion that if the private respondents had really been forced to render
their resignation, they should have written under protest, with reservations or
other words to that effect near their signatures to show their real sentiments
or opposition. Moreover, the fact that the private respondents waited for one
(1) month and twelve (12) days, before filing their complaint with the
DOLE, casts doubt on the integrity of their position.

Anent the second issue, the petitioners argue that the CA erred in
declaring that the private respondents had been illegally dismissed, and that
there was nothing to support such conclusion. They contend that the
appellate court disregarded the findings of the Labor Arbiter and the NLRC,
and instead should have accorded respect and finality to such findings,
supported as they were by substantial evidence. The petitioners cited the
cases of Pan Pacific Industrial Sales Co., Inc. v. NLRC,[17] Aboitiz Shipping
Corporation v. Dela Serna[18] and Rabago v. NLRC,[19] where this Court held
that findings of administrative agencies are accorded respect and even
finality if they are supported by substantial evidence. Thus, the petitioners
pray that the CA decision be reversed and set aside, and the decisions of the
Labor Arbiter and the NLRC reinstated.

On the other hand, the private respondents maintain that they were
intimidated and coerced into signing their respective resignation letters and
clearances, and that the findings of the Labor Arbiter and the NLRC were
based on flimsy grounds. The private respondents claim that they had to
secure clearances as they were needed for the release of whatever benefits
due them. They maintain that the appellate court did not err in its finding
that they were illegally dismissed.

The petition is bereft of merit.

Preliminarily, the remedy resorted to by the petitioners is a petition for

review under Rule 45 of the Rules of Court, which allows only questions of
law. Findings of fact of the lower courts are conclusive, except in the
following instances: (1) when the findings are grounded entirely on
speculation, surmises, or conjectures; (2) when the inference made is
manifestly mistaken, absurd, or impossible; (3) when there is grave abuse of
discretion; (4) when the judgment is based on a misapprehension of facts;
(5) when the findings of fact are conflicting; (6) when in making its findings
the CA went beyond the issues of the case, or its findings are contrary to the
admissions of both the appellant and the appellee; (7) when the findings are
contrary to those of the trial court; (8) when the findings are conclusions
without citation of specific evidence on which they are based; (9) when the
facts set forth in the petition as well as in the petitioners main and reply
briefs are not disputed by the respondents; and (10) when the findings of fact
are premised on the supposed absence of evidence and contradicted by the
evidence on record.[20]

In the present case, the Labor Arbiter and the NLRC ruled that the
private respondents voluntarily resigned their employment with petitioner
KPI, in contrast to the appellate courts ruling that they did not. There is thus
a need for the Court to ascertain which of the findings and conclusions are in
accord with the evidence on record and the law.

On the first issue, we affirm the encompassing and perceptive ruling

of the appellate court:

To be stressed in the fundamental premise that petitioners

are regular employees of private respondents, having been
performing activities which are normally necessary or desirable
in the usual business or trade of the employer for more than a
year already, until their severance from work on September 4,
2000. Undeniably, petitioners were regular employees at the
time they allegedly voluntarily resigned on July 14, 2000. As
such regular employees, the Labor Code grants petitioners
security of tenure, which essentially means that their employer
can not terminate their services except for just and authorized
causes, as provided for under the Labor Code. Viewed in this
light, private respondents act or action in transferring
petitioners to a manpower agency (Gerrico Resources then later
on to RCVJ) with the promise that they would receive the same
benefits as regular employees, puts in question private
respondents real motive. If anything, it gives currency to the
belief that petitioners had been illegally terminated or dismissed
from employment.

Turning now to the question of the voluntariness of the

resignation letters: We are inclined to agree with the petitioners
that they were coerced, threatened or intimidated into signing
blank sheets of paper which materialized into resignation
letters, the contents of which were dictated by the Director and
Personnel Manager of the respondent company. For to us, it is
inconceivable that a worker who has already attained a regular
status in his employment would opt to be transferred to another

employment agency, there to start work anew work that would

relegate him to a mere casual laborer or employee. Obviously,
petitioners were not given any other choice by management, but
to agree to their transfer to Gerrico Resources, lest they lose
their only means of livelihood. Considering that petitioners are
ordinary sewers of respondent company, the fear of losing their
jobs cannot but be a serious, legitimate concern. In Rance, et al.
v. NLRC, it was held that when a person has no property, his job
may possibly be his only possession or means of livelihood.
Therefore, he should be protected against any arbitrary
deprivation of his job. In the same spirit, Art. 280 of the Labor
Code construes security of tenure as meaning that the employer
shall not terminate the services of an employee except for a just
cause or when authorized by the Code.[21]

The fact that petitioners in this case failed to indicate in

their resignation letters the phrase under protest or with
reservations is of no moment. To be stressed anew is the fact
that petitioners were ordinary factory workers who could not
and should not be expected to know the legal import or
significance of some such phrase as under protest or with
reservations.

Additionally, private respondents claim that petitioners

voluntarily resigned is belied by the fact that the latter
immediately filed a complaint for regularization with the NLRC
upon their supposed transfer to the Gerrico Resources. We note
that while petitioners were allegedly employed with Gerrico
Resources, they continued working with respondent company
and within the premises of respondent company for that matter.
Hence, it came as no surprise that when they were disallowed

entry into the premises of respondent company on September 4,

2000, they amended their complaint to one of illegal dismissal.
Therefore, there is something askew in public respondents
ratiocination that

Complainants alleged that they still worked

for several months with respondent as regular
employees thereof even after the execution of their
resignation
letter[s].
This
allegation
of
complainants
deserves
scant
consideration. Records show that complainant filed
the instant case on August 25, 2000. It is worth
stressing that complainant failed to indicate in their
complaint the date they were allegedly dismissed.
(Records, p. 1) Then, in their amended complaint
(Records, p. 12) and position paper (Records, p.
18), they claimed that they were dismissed on
September 4, 2000. If it is really true that they
were dismissed on September 4, 2000, how come
they charged respondents of illegal dismissal on
August 25, 2000[?] These apparent inconsistencies
of complainants only goes (sic) to show the
weakness of their allegations. xxx (underscoring
supplied)

For, stock can be taken of the fact that the complaint filed
on August 25, 2000 was for regularization, while that of
September 4, 2000 was for illegal dismissal and reinstatement.
Notably, no date was indicated in the space provided for Date
Dismissed in the complaint for August 25, 2000, precisely
because petitioners were not yet dismissed then; rather, they

were merely transferred to Gerrico Resources as contractual

workers.

In Molave Tours v. NLRC, resignation has been defined

as the voluntary act of an employee who finds himself in a
situation where he believes that personal reasons cannot be
sacrificed in favor of the exigency of the service, then he has no
other choice but to disassociate himself from his employment.
In the context of Section II, Rule XIV, Book V of the Revised
Rules Implementing the Labor Code, resignation is a formal
pronouncement or relinquishment of an office. It must be made
with the deliberate animus or intention of relinquishing the
office accompanied by an act of relinquishment. In the same
case, it was also held that the voluntariness of a resignation is
negated by the filing of a complaint for illegal dismissal.
Declared the Court:

The fact that private respondent immediately

filed a complaint for illegal dismissal against
petitioner and repudiated his alleged resignation
completely negated petitioners claim that
respondent Bolocon voluntarily resigned. By
vigorously pursuing the litigation of his action
against petitioner, private respondent clearly
manifested that he has no intention of
relinquishing his employment, which act is wholly
incompatible to petitioners assertion that he
voluntarily resigned. Neither was petitioner able to
discharge the burden of proving that respondent
Bolocons employment was validly terminated.
Other than the mute words of Bolocons alleged
letter of resignation, the rest of petitioners

evidence failed to establish that Bolocon, indeed,

voluntarily resigned. Worse, petitioner failed to
refute private respondents allegation of force and
intimidation in the execution of the letter of
resignation by opting not to present the testimony
of its personnel manager who could have
contradicted Bolocons version of what actually
transpired.[22]

The CA was correct in declaring that the private respondents had

attained the status of regular employees of petitioner KPI. It must be stressed
that at the time of their dismissal, they had been working for the petitioners
for more than one (1) year. However, the CA failed to rule on whether the
private respondents should be reinstated and paid backwages and other
monetary benefits.

While the actual regularization of these employees entails the

mechanical act of issuing regular appointment papers and compliance with
such other operating procedures as may be adopted by the employer, it is
more in keeping with the intent and spirit of the law to rule that the status of
regular employment attaches to the casual worker on the day immediately
after the end of his first year of service. To rule otherwise, and to instead
make their regularization dependent on the happening of some contingency
or the fulfillment of certain requirements, is to impose a burden on the
employee which is not sanctioned by law.[23]

Article 280 of the Labor Code, as amended, provides as follows:

Art. 280. Regular and Casual Employment. The

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

An employment shall be deemed to be casual if it is not

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

As regular employees, the private respondents are entitled to security

of tenure provided under the labor laws and may only be validly terminated
from service upon compliance with the legal requisites for dismissal and
considering that they were illegally dismissed, the private respondents

should be reinstated, in accordance with the provision of the Labor Code, as

amended, particularly Article 279, to wit:

Article 279. Security of Tenure. In cases of regular

employment, the employer shall not terminate the services of an
employee except for a just cause or when authorized by this
Title. An employee who is unjustly dismissed from work shall
be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.[24]

Thus, the said provision provides that illegally dismissed employees

are entitled to backwages plus other benefits computed from the time
compensation was withheld up to the time of actual reinstatement. An
illegally dismissed employee who, in contemplation of the law, never left his
office, should be granted the compensation which rightfully belongs to
him from the moment he was unduly deprived of it up to the time it was
restored to him;[25] the backwages to be awarded should not be diminished or
reduced by earnings derived by the illegally dismissed employee elsewhere
during the term of his illegal dismissal.[26]

In their amended complaint filed with the DOLE, the private

respondents prayed for moral and exemplary damages, among others, but the
CA failed to award the same. This Court has consistently accorded the
working class a right to recover damages for dismissals tainted with bad
faith. The award of such damages is based not on the Labor Code but on
Article 2220 of the Civil Code.[27] Indeed, moral damages are recoverable
when the dismissal of an employee 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. Exemplary damages may be
awarded if the dismissal is effected in a wanton, oppressive or malevolent
manner.[28] Bad faith on the part of petitioners may be gleaned from the fact
that they transferred the private respondents to two (2) employment agencies
just so they could evade their legal responsibility as employers to accord
them the status and benefits of regular employees under the Labor Code. The
dismissal, no doubt, was effected in a wanton, oppressive or malevolent
manner as the private respondents were deprived of due process. Thus, the

amount of P10,000.00 as moral damages and P5,000.00 as exemplary

damages are hereby awarded to each private respondent.[29]

Petitioner Kay Lee, as the president, actively managed the business of

KPI. In fact, she was the one who decided the private respondents transfer to
the employment agencies, and signed the memoranda ordering such transfer,
in bad faith, as earlier discussed. In labor cases, particularly, corporate
directors and officers are solidarily liable with the corporation for the
termination of employment of corporate employees done with malice or in
bad faith.[30] In fact, inNaguiat v. NLRC,[31] the Court held that the president
of a corporation, who actively manages the business, falls within the
meaning of an employer as contemplated by the Labor Code, and may be
held jointly and severally liable for the obligations of the corporation to its
dismissed employees. Thus, in the present case, petitioners Kay Lee and KPI
are jointly and severally liable for the latters obligations to the private
respondents.

IN VIEW OF THE FOREGOING DISQUISITIONS, the petition

is hereby DENIED. The Court of Appeals Decision and Resolution in CAG.R. SP No. 73028 are hereby AFFIRMED WITH MODIFICATION.
Petitioners Kay Products, Inc. and Kay Lee are ORDERED to reinstate
private respondents Myrna Abila, Flordeliza Morante and Fe Regidor, and to
pay, jointly and severally, their full backwages without deductions from
the time of dismissal to actual reinstatement; if reinstatement is no longer
practicable or feasible, in lieu thereof, to pay, jointly and severally,
separation pay of one (1) month salary for every year of their employment,
with a fraction of at least six (6) months being considered as one (1) year. In
addition thereto, petitioners are also hereby ordered, jointly and severally, to
pay the amount of Ten Thousand Pesos (P10,000.00) as moral damages and
Five Thousand Pesos (P5,000.00) as exemplary damages to each of the
private respondents.

SO ORDERED.
SECOND DIVISION
[G.R. NO. 184977 : December 7, 2009]
COCA-COLA BOTTLERS PHILIPPINES, INC., Petitioner, v. RICKY
E. DELA CRUZ, ROLANDO M. GUASIS, MANNY C. PUGAL,
RONNIE L. HERMO, ROLANDO C. SOMERO, JR., DIBSON D.
DIOCARES, and IAN B. ICHAPARE, Respondents.
DECISION
BRION, J.:

The present Petition for Review on Certiorari 1 challenges the decision2 and
resolution3 of the Court of Appeals (CA) rendered on August 29, 2008 and
October 13, 2008, respectively, in CA-G.R. SP No. 102988.
THE ANTECEDENTS
Respondents Ricky E. Dela Cruz, Rolando M. Guasis, Manny C. Pugal,
Ronnie L. Hermo, Rolando C. Somero, Jr., Dibson D. Diocares, and Ian
Ichapare (respondents) filed in July 2000 two separate complaints4 for
regularization with money claims against Coca-Cola Bottlers Philippines,
Inc., (petitioner or the company). The complaints were consolidated and
subsequently amended to implead Peerless Integrated Service, Inc.
(Peerless) as a party-respondent.
Before the Labor Arbiter, the respondents alleged that they are route helpers
assigned to work in the petitioner's trucks. They go from the Coca - Cola
sales offices or plants to customer outlets such as sari-sari stores, restaurants,
groceries, supermarkets and similar establishments; they were hired either
directly by the petitioner or by its contractors, but they do not enjoy the full
remuneration, benefits and privileges granted to the petitioner's regular sales
force. They argued that the services they render are necessary and desirable
in the regular business of the petitioner.5
In defense, the petitioner contended that it entered into contracts of services
with Peerless6 and Excellent Partners Cooperative, Inc. (Excellent)7 to
provide allied services; under these contracts, Peerless and Excellent
retained the right to select, hire, dismiss, supervise, control and discipline
and pay the salaries of all personnel they assign to the petitioner; in return
for these services, Peerless and Excellent were paid a stipulated fee. The
petitioner posited that there is no employer-employee relationship between
the company and the respondents and the complaints should be dismissed
for lack of jurisdiction on the part of the National Labor Relations
Commission (NLRC). Peerless did not file a position paper, although
nothing on record indicates that it was ever notified of the amended
complaint.

In reply, the respondents countered that they worked under the control and
supervision of the company's supervisors who prepared their work schedules
and assignments. Peerless and Excellent, too, did not have sufficient capital
or investment to provide services to the petitioner. The respondents thus
argued that the petitioner's contracts of services with Peerless and Excellent
are in the nature of "labor-only" contracts prohibited by law.8
In rebuttal, the petitioner belied the respondents' submission that their jobs
are usually necessary and desirable in its main business. It claimed that its
main business is softdrinks manufacturing and the respondents' tasks of
handling, loading and unloading of the manufactured softdrinks are not part
of the manufacturing process. It stressed that its only interest in the
respondents is in the result of their work, and left to them the means and the
methods of achieving this result. It thus argued that there is no basis for the
respondents' claim that without them, there would be over-production in the
company and its operations would come to a halt.9 The petitioner lastly
argued that in any case, the respondents did not present evidence in support
of their claims of company control and supervision so that these claims
cannot be considered and given weight.10
The Compulsory Arbitration Rulings
Labor Arbiter Joel S. Lustria dismissed the complaint for lack of jurisdiction
in his decision of September 28, 2004,11 after finding that the respondents
were the employees of either Peerless or Excellent and not of the petitioner.
He brushed aside for lack of evidence the respondents' claim that they were
directly hired by the petitioner and that company personnel supervised and
controlled their work. The Labor Arbiter likewise ordered Peerless "to
accord to the appropriate complainants all employment benefits and
privileges befitting its regular employees."12
The respondents appealed to the NLRC.13 On October 31, 2007, the NLRC
denied the appeal and affirmed the labor arbiter's ruling,14 and subsequently
denied the respondents' motion for reconsideration.15 The respondents thus
sought relief from the CA through a Petition for Certiorariunder Rule 65 of
the Rules of Court.

The CA Decision
The main substantive issue the parties submitted to the CA was whether
Excellent and Peerless were independent contractors or "labor-only"
contractors. Procedurally, the petitioner questioned the sufficiency of the
petition and asked for its dismissal on the following grounds: (1) the petition
was filed out of time; (2) failure to implead Peerless and Excellent as
necessary parties; (3) absence of the notarized proof of service that Rule 13
of the Rules of Court requires; and (4) defective verification and
certification.
The CA examined the circumstances of the contractual arrangements
between Peerless and Excellent, on the one hand, and the company, on the
other, and found that Peerless and Excellent were engaged in labor-only
contracting, a prohibited undertaking.16 The appellate court explained that
based on the respondents' assertions and the petitioner's admissions, the
contractors simply supplied the company with manpower, and that the sale
and distribution of the company's products are the same allied services found
by this Court in Magsalin v. National Organization of Workingmen17 to be
necessary and desirable functions in the company's business.???r?bl

FIRST DIVISION
[G.R. No. 122653. December 12, 1997]
PURE FOODS CORPORATON, petitioner, vs. NATIONAL LABOR
RELATIONS
COMMISSION,
RODOLFO
CORDOVA,
*
VIOLETA CRUSIS,ET AL., respondents.
DECISION
DAVIDE, JR., J.:

The crux of this petition for certiorari is the issue of whether employees
hired for a definite period and whose services are necessary and desirable in
the usual business or trade of the employer are regular employees.
The private respondents (numbering 906) were hired by petitioner Pure
Foods Corporation to work for a fixed period of five months at its tuna
cannery plant in Tambler, General Santos City. After the expiration of their
respective contracts of employment in June and July 1991, their services
were terminated. They forthwith executed a Release and Quitclaim stating
that they had no claim whatsoever against the petitioner.
On 29 July 1991, the private respondents filed before the National Labor
Relations Commission (NLRC) Sub-Regional Arbitration Branch No. XI,
General Santos City, a complaint for illegal dismissal against the petitioner
and its plant manager, Marciano Aganon. [1] This case was docketed as RAB11-08-50284-91.
On 23 December 1992, Labor Arbiter Arturo P. Aponesto handed down a
decision [2] dismissing the complaint on the ground that the private
respondents were mere contractual workers, and not regular employees;
hence, they could not avail of the law on security of tenure. The termination
of their services by reason of the expiration of their contracts of employment
was, therefore, justified. He pointed out that earlier he had dismissed a case
entitled Lakas ng Anak-Pawis- NOWM v. Pure Foods Corp. (Case No.
RAB-11-02-00088-88) because the complainants therein were not regular
employees of Pure Foods, as their contracts of employment were for a fixed
period of five months. Moreover, in another case involving the same
contractual workers of Pure Foods (Case No. R-196-ROXI- MED- UR-5589), then Secretary of Labor Ruben Torres held, in a Resolution dated 30
April 1990, that the said contractual workers were not regular employees.
The Labor Arbiter also observed that an order for private respondents
reinstatement would result in the reemployment of more than 10,000
former contractual employees of the petitioner. Besides, by executing a
Release and Quitclaim, the private respondents had waived and relinquished
whatever right they might have against the petitioner.

The private respondents appealed from the decision to the National

Labor Relations Commission (NLRC), Fifth Division, in Cagayan de Oro
City, which docketed the case as NLRC CA No. M-001323-93.
On 28 October 1994, the NLRC affirmed the Labor Arbiter's
decision. [3] However, on private respondents motion for reconsideration, the
NLRC rendered another decision on 30 January 1995 [4] vacating and setting
aside its decision of 28 October 1994 and holding that the private
respondents and their co-complainants were regular employees. It declared
that the contract of employment for five months was a clandestine scheme
employed by [the petitioner] to stifle [private respondents] right to security
of tenure and should therefore be struck down and disregarded for being
contrary to law, public policy, and morals. Hence, their dismissal on account
of the expiration of their respective contracts was illegal.
Accordingly, the NLRC ordered the petitioner to reinstate the private
respondents to their former position without loss of seniority rights and other
privileges, with full back wages; and in case their reinstatement would no
longer be feasible, the petitioner should pay them separation pay equivalent
to one-month pay or one-half-month pay for every year of service,
whichever is higher, with back wages and 10% of the monetary award as
attorneys fees.
Its motion for reconsideration having been denied,[5] the petitioner came
to this Court contending that respondent NLRC committed grave abuse of
discretion amounting to lack of jurisdiction in reversing the decision of the
Labor Arbiter.
The petitioner submits that the private respondents are now estopped
from questioning their separation from petitioners employ in view of their
express conformity with the five-month duration of their employment
contracts. Besides, they fell within the exception provided in Article 280 of
the Labor Code which reads: [E]xcept where the employment has been fixed
for a specific project or undertaking the completion or termination of which
has been determined at the time of the engagement of the employee.

Moreover, the first paragraph of the said article must be read and
interpreted in conjunction with the proviso in the second paragraph, which
reads: Provided that any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a
regular employee with respect to the activity in which he is employed.... In
the instant case, the private respondents were employed for a period of five
months only. In any event, private respondents' prayer for reinstatement is
well within the purview of the Release and Quitclaim they had executed
wherein they unconditionally released the petitioner from any and all other
claims which might have arisen from their past employment with the
petitioner.
In its Comment, the Office of the Solicitor General (OSG) advances the
argument that the private respondents were regular employees, since they
performed activities necessary and desirable in the business or trade of the
petitioner. The period of employment stipulated in the contracts of
employment was null and void for being contrary to law and public policy,
as its purpose was to circumvent the law on security of tenure. The
expiration of the contract did not, therefore, justify the termination of their
employment.
The OSG further maintains that the ruling of the then Secretary of Labor
and Employment in LAP-NOWM v. Pure Foods Corporation is not binding
on this Court; neither is that ruling controlling, as the said case involved
certification election and not the issue of the nature of private respondents
employment. It also considers private respondents quitclaim as ineffective to
bar the enforcement for the full measure of their legal rights.
The private respondents, on the other hand, argue that contracts with a
specific period of employment may be given legal effect provided, however,
that they are not intended to circumvent the constitutional guarantee on
security of tenure. They submit that the practice of the petitioner in hiring
workers to work for a fixed duration of five months only to replace them
with other workers of the same employment duration was apparently to

prevent the regularization of these so-called casuals, which is a clear

circumvention of the law on security of tenure.
We find the petition devoid of merit.
Article 280 of the Labor Code defines regular and casual employment as
follows:
ART. 280. Regular and Casual Employment.-- The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
argument of the parties, an employment shall be deemed to be regular where
the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of
the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph; Provided, That, any employee who has rendered at
least one year of service, whether such service is continuous or broken, shall
be considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exists.
Thus, the two kinds of regular employees are (1) those who are engaged
to perform activities which are necessary or desirable in the usual business
or trade of the employer; and (2) those casual employees who have rendered
at least one year of service, whether continuous or broken, with respect to
the activity in which they are employed.[6]
In the instant case, the private respondents activities consisted in the
receiving, skinning, loining, packing, and casing-up of tuna fish which were
then exported by the petitioner. Indisputably, they were performing activities
which were necessary and desirable in petitioners business or trade.

Contrary to petitioner's submission, the private respondents could not be

regarded as having been hired for a specific project or undertaking. The term
specific project or undertaking under Article 280 of the Labor Code
contemplates an activity which is not commonly or habitually performed or
such type of work which is not done on a daily basis but only for a specific
duration of time or until completion; the services employed are then
necessary and desirable in the employers usual business only for the period
of time it takes to complete the project.[7]
The fact that the petitioner repeatedly and continuously hired workers to
do the same kind of work as that performed by those whose contracts had
expired negates petitioners contention that those workers were hired for a
specific project or undertaking only.
Now on the validity of private respondents' five-month contracts of
employment. In the leading case of Brent School, Inc. v. Zamora, [8] which
was reaffirmed in numerous subsequent cases, [9] this Court has upheld the
legality of fixed-term employment. It ruled that the decisive determinant in
term employment should not be the activities that the employee is called
upon to perform but the day certain agreed upon by the parties for the
commencement and termination of their employment relationship. But, this
Court went on to say that where from the circumstances it is apparent that
the periods have been imposed to preclude acquisition of tenurial security by
the employee, they should be struck down or disregarded as contrary to
public policy and morals.
Brent also laid down the criteria under which term employment cannot
be said to be in circumvention of the law on security of tenure:
1) The fixed period of employment was knowingly and voluntarily agreed
upon by the parties without any force, duress, or improper pressure being
brought to bear upon the employee and absent any other circumstances
vitiating his consent; or

2) It satisfactorily appears that the employer and the employee dealt with
each other on more or less equal terms with no moral dominance exercised
by the former or the latter.
None of these criteria had been met in the present case. As pointed out by
the private respondents:
[I]t could not be supposed that private respondents and all other so-called
casual workers of [the petitioner] KNOWINGLY and VOLUNTARILY
agreed to the 5-month employment contract. Cannery workers are never on
equal terms with their employers. Almost always, they agree to any terms of
an employment contract just to get employed considering that it is difficult
to find work given their ordinary qualifications. Their freedom to contract is
empty and hollow because theirs is the freedom to starve if they refuse to
work as casual or contractual workers. Indeed, to the unemployed, security
of tenure has no value. It could not then be said that petitioner and private
respondents "dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former over the latter. [10]
The petitioner does not deny or rebut private respondents' averments (1)
that the main bulk of its workforce consisted of its so-called casual
employees; (2) that as of July 1991, casual workers numbered 1,835; and
regular employees, 263; (3) that the company hired casual every month for
the duration of five months, after which their services were terminated and
they were replaced by other casual employees on the same five-month
duration; and (4) that these casual employees were actually doing work that
were necessary and desirable in petitioners usual business.
As a matter of fact, the petitioner even stated in its position paper
submitted to the Labor Arbiter that, according to its records, the previous
employees of the company hired on a five-month basis numbered about
10,000 as of July 1990. This confirms private respondents allegation that it
was really the practice of the company to hire workers on a uniformly fixed
contract basis and replace them upon the expiration of their contracts with
other workers on the same employment duration.

This scheme of the petitioner was apparently designed to prevent the

private respondents and the other casual employees from attaining the status
of a regular employee. It was a clear circumvention of the employees right to
security of tenure and to other benefits like minimum wage, cost-of-living
allowance, sick leave, holiday pay, and 13th month pay. [11] Indeed, the
petitioner succeeded in evading the application of labor laws. Also, it saved
itself from the trouble or burden of establishing a just cause for terminating
employees by the simple expedient of refusing to renew the employment
contracts.
The five-month period specified in private respondents employment
contracts having been imposed precisely to circumvent the constitutional
guarantee on security of tenure should, therefore, be struck down or
disregarded as contrary to public policy or morals. [12] To uphold the
contractual arrangement between the petitioner and the private respondents
would, in effect, permit the former to avoid hiring permanent or regular
employees by simply hiring them on a temporary or casual basis, thereby
violating the employees security of tenure in their jobs.[13]
The execution by the private respondents of a Release and Quitclaim did
not preclude them from questioning the termination of their
services. Generally, quitclaims by laborers are frowned upon as contrary to
public policy and are held to be ineffective to bar recovery for the full
measure of the workers rights. [14] The reason for the rule is that the
employer and the employee do not stand on the same footing.[15]
Notably, the private respondents lost no time in filing a complaint for
illegal dismissal. This act is hardly expected from employees who
voluntarily and freely consented to their dismissal.[16]
The NLRC was, thus, correct in finding that the private respondents
were regular employees and that they were illegally dismissed from their
jobs. Under Article 279 of the Labor Code and the recent
jurisprudence, [17] the legal consequence of illegal dismissal is reinstatement
without loss of seniority rights and other privileges, with full back wages
computed from the time of dismissal up to the time of actual reinstatement,

without deducting the earnings derived elsewhere pending the resolution of

the case.
However, since reinstatement is no longer possible because the
petitioner's tuna cannery plant had, admittedly, been closed in November
1994,[18] the proper award is separation pay equivalent to one month pay or
one-half month pay for every year of service, whichever is higher, to be
computed from the commencement of their employment up to the closure of
the tuna cannery plant. The amount of back wages must be computed from
the time the private respondents were dismissed until the time petitioner's
cannery plant ceased operation.[19]
WHEREFORE, for lack of merit, the instant petition is DISMISSED
and the challenged decision of 30 January 1995 of the National Labor
Relations Commission in NLRC CA No. M-001323-93 is hereby
AFFIRMED subject to the above modification on the computation of the
separation pay and back wages.
SO ORDERED.
Bellosillo, Vitug, and Kapunan, JJ., concur.

Republic of the Philippines

Supreme Court
Baguio City

SECOND DIVISION

YOLANDA M. MERCADO,

G.R. No. 183572

CHARITO S. DE LEON,
DIANA R. LACHICA,
MARGARITO M. ALBA,
JR., and FELIX A. TONOG,
Petitioners,

Present:

CARPIO, J., Chairperson,

BRION,
DEL CASTILLO,
PEREZ, and
*

MENDOZA, JJ.

versus -

Promulgated:
AMA COMPUTER
COLLEGE-PARAAQUE
CITY, INC. ,

April 13, 2010

Respondent.

x----------------------------------------------------------------------------------------x
DECISION
BRION, J.:
The petitioners Yolanda M. Mercado (Mercado), Charito S. De Leon
(De Leon), Diana R. Lachica (Lachica), Margarito M. Alba, Jr. (Alba, Jr.,),
and Felix A. Tonog (Tonog), all former faculty members of AMA Computer

College-Paraaque City, Inc. (AMACC) assail in this petition for review

on certiorari[1] the Court of Appeals (CA) decision of November 29,

2007[2] and its resolution of June 20, 2008 [3] that set aside the National Labor
Relations Commissions (NLRC) resolution dated July 18, 2005.[4]
THE FACTUAL ANTECEDENTS

The background facts are not disputed and are summarized below.
AMACC is an educational institution engaged in computer-based
education in the country. One of AMACCs biggest schools in the country is
its branch atParaaque City. The petitioners were faculty members who
started teaching at AMACC on May 25, 1998. The petitioner Mercado was
engaged as a Professor 3, while petitioner Tonog was engaged as an
Assistant Professor 2. On the other hand, petitioners De Leon, Lachica and
Alba, Jr., were all engaged as Instructor 1.[5] The petitioners executed
individual Teachers Contracts for each of the trimesters that they were
engaged to teach, with the following common stipulation:[6]

1.

POSITION. The TEACHER has agreed to accept a nontenured appointment to work in the College of xxx effective
xxx to xxx or for the duration of the last term that the
TEACHER is given a teaching load based on the
assignment duly approved by the DEAN/SAVP-COO.
[Emphasis supplied]

For the school year 2000-2001, AMACC implemented new faculty

screening guidelines, set forth in its Guidelines on the Implementation of
AMACC Faculty Plantilla.[7] Under the new screening guidelines, teachers
were to be hired or maintained based on extensive teaching experience,
capability, potential, high academic qualifications and research background.

The performance standards under the new screening guidelines were also
used to determine the present faculty members entitlement to salary
increases. The petitioners failed to obtain a passing rating based on the
performance standards; hence AMACC did not give them any salary
increase.[8]

Because of AMACCs action on the salary increases, the petitioners

filed a complaint with the Arbitration Branch of the NLRC on July 25, 2000,
for underpayment of wages, non-payment of overtime and overload
compensation, 13th month pay, and for discriminatory practices.[9]

On September 7, 2000, the petitioners individually received a

memorandum from AMACC, through Human Resources Supervisor Mary
Grace Beronia, informing them that with the expiration of their contract to
teach, their contract would no longer be renewed.[10] The
memorandum[11] entitled Notice of Non-Renewal of Contract states in full:

In view of the expiration of your contract to teach with

AMACC-Paranaque, We wish to inform you that your contract
shall no longer be renewed effective Thirty (30) days upon
receipt of this notice. We therefore would like to thank you for
your service and wish you good luck as you pursue your career.

You are hereby instructed to report to the HRD for

further instruction. Please bear in mind that as per company
policy, you are required to accomplish your clearance and turnover all documents and accountabilities to your immediate
superior.

For your information and guidance

The petitioners amended their labor arbitration complaint to include

the charge of illegal dismissal against AMACC. In their Position Paper, the
petitioners claimed that their dismissal was illegal because it was made in
retaliation for their complaint for monetary benefits and discriminatory
practices against AMACC.The petitioners also contended that AMACC
failed to give them adequate notice; hence, their dismissal was ineffectual.[12]

AMACC contended in response that the petitioners worked under a

contracted term under a non-tenured appointment and were still within the
three-year probationary period for teachers. Their contracts were not
renewed for the following term because they failed to pass the Performance
Appraisal System for Teachers (PAST) while others failed to comply with the
other requirements for regularization, promotion, or increase in salary. This
move, according to AMACC, was justified since the school has to maintain
its high academic standards.[13]

The Labor Arbiter Ruling

On March 15, 2002, Labor Arbiter (LA) Florentino R. Darlucio

declared in his decision[14] that the petitioners had been illegally dismissed,
and ordered AMACC to reinstate them to their former positions without loss
of seniority rights and to pay them full backwages, attorneys fees and
13th month pay. The LA ruled that Article 281 of the Labor Code on
probationary employment applied to the case; that AMACC allowed the
petitioners to teach for the first semester of school year 2000-200; that
AMACC did not specify who among the petitioners failed to pass the PAST
and who among them did not comply with the other requirements of
regularization, promotions or increase in salary; and that the petitioners
dismissal could not be sustained on the basis of AMACCs vague and general
allegations without substantial factual basis.[15] Significantly, the LA found
no discrimination in the adjustments for the salary rate of the faculty

members based on the performance and other qualification which is an

exercise of management prerogative.[16] On this basis, the LA paid no heed to
the claims for salary increases.

The NLRC Ruling

On appeal, the NLRC in a Resolution dated July 18, 2005 [17] denied
AMACCs appeal for lack of merit and affirmed in toto the LAs ruling. The
NLRC, however, observed that the applicable law is Section 92 of the
Manual of Regulations for Private Schools (which mandates a probationary
period of nine consecutive trimesters of satisfactory service for academic
personnel in the tertiary level where collegiate courses are offered on a
trimester basis), not Article 281 of the Labor Code (which prescribes a
probationary period of six months) as the LA ruled. Despite this observation,
the NLRC affirmed the LAs finding of illegal dismissal since the petitioners
were terminated on the basis of standards that were only introduced near the
end of their probationary period.

The NLRC ruled that the new screening guidelines for the school year
2000-20001 cannot be imposed on the petitioners and their employment
contracts since the new guidelines were not imposed when the petitioners
were first employed in 1998. According to the NLRC, the imposition of the
new guidelines violates Section 6(d) of Rule I, Book VI of the Implementing
Rules of the Labor Code, which provides that in all cases of probationary
employment, the employer shall make known to the employee the standards
under which he will qualify as a regular employee at the time of his
engagement. Citing our ruling inOrient Express Placement Philippines v.
NLRC,[18] the NLRC stressed that the rudiments of due process demand that
employees should be informed beforehand of the conditions of their
employment as well as the basis for their advancement.

AMACC elevated the case to the CA via a petition

for certiorari under Rule 65 of the Rules of Court. It charged that the NLRC
committed grave abuse of discretion in: (1) ruling that the petitioners were
illegally dismissed; (2) refusing to recognize and give effect to the
petitioners valid term of employment; (3) ruling that AMACC cannot apply
the performance standards generally applicable to all faculty members; and
(4) ordering the petitioners reinstatement and awarding them backwages and
attorneys fees.

The CA Ruling

In a decision issued on November 29, 2007,[19] the CA granted

AMACCs petition for certiorari and dismissed the petitioners complaint for
illegal dismissal.

The CA ruled that under the Manual for Regulations for Private
Schools, a teaching personnel in a private educational institution (1) must be
a full time teacher; (2) must have rendered three consecutive years of
service; and (3) such service must be satisfactory before he or she can
acquire permanent status.

The CA noted that the petitioners had not completed three (3)
consecutive years of service (i.e. six regular semesters or nine consecutive
trimesters of satisfactory service) and were still within their probationary
period; their teaching stints only covered a period of two (2) years and three
(3) months when AMACC decided not to renew their contracts on
September 7, 2000.

The CA effectively found reasonable basis for AMACC not to renew

the petitioners contracts. To the CA, the petitioners were not actually

dismissed; their respective contracts merely expired and were no longer

renewed by AMACC because they failed to satisfy the schools standards for
the school year 2000-2001 that measured their fitness and aptitude to teach
as regular faculty members. The CA emphasized that in the absence of any
evidence of bad faith on AMACCs part, the court would not disturb or
nullify its discretion to set standards and to select for regularization only the
teachers who qualify, based on reasonable and non-discriminatory
guidelines.

The CA disagreed with the NLRCs ruling that the new guidelines for
the school year 2000-20001 could not be imposed on the petitioners and
their employment contracts. The appellate court opined that AMACC has the
inherent right to upgrade the quality of computer education it offers to the
public; part of this pursuit is the implementation of continuing evaluation
and screening of its faculty members for academic excellence. The CA noted
that the nature of education AMACC offers demands that the school
constantly adopt progressive performance standards for its faculty to ensure
that they keep pace with the rapid developments in the field of information
technology.

Finally, the CA found that the petitioners were hired on a non-tenured

basis and for a fixed and predetermined term based on the Teaching Contract
exemplified by the contract between the petitioner Lachica and
AMACC. The CA ruled that the non-renewal of the petitioners teaching
contracts is sanctioned by the doctrine laid down in Brent School, Inc. v.
Zamora[20] where the Court recognized the validity of contracts providing for
fixed-period employment.
THE PETITION
The petitioners cite the following errors in the CA decision:[21]
1)

The CA gravely erred in reversing the LA and NLRC illegal

dismissal rulings; and

2)

The CA gravely erred in not ordering their reinstatement with

full, backwages.

The petitioners submit that the CA should not have disturbed the
findings of the LA and the NLRC that they were illegally dismissed; instead,
the CA should have accorded great respect, if not finality, to the findings of
these specialized bodies as these findings were supported by evidence on
record. Citing our ruling in Soriano v. National Labor Relations
Commission,[22] the petitioners contend that in certiorari proceedings under
Rule 65 of the Rules of Court, the CA does not assess and weigh the
sufficiency of evidence upon which the Labor Arbiter and the NLRC based
their conclusions. They submit that the CA erred when it substituted its
judgment for that of the Labor Arbiter and the NLRC who were the triers of
facts who had the opportunity to review the evidence extensively.
On the merits, the petitioners argue that the applicable law on
probationary employment, as explained by the LA, is Article 281 of the
Labor Code which mandates a period of six (6) months as the maximum
duration of the probationary period unless there is a stipulation to the
contrary; that the CA should not have disturbed the LAs conclusion that
the AMACC failed to support its allegation that they did not qualify under
the new guidelines adopted for the school year 2000-2001; and that they
were illegally dismissed; their employment was terminated based on
standards that were not made known to them at the time of their
engagement. On the whole, the petitioners argue that the LA and the NLRC
committed no grave abuse of discretion that the CA can validly cite.
THE CASE FOR THE RESPONDENT
In their Comment,[23] AMACC notes that the petitioners raised no substantial
argument in support of their petition and that the CA correctly found that the
petitioners were hired on a non-tenured basis and for a fixed or
predetermined term. AMACC stresses that the CA was correct in concluding
that no actual dismissal transpired; it simply did not renew the petitioners
respective employment contracts because of their poor performance and
failure to satisfy the schools standards.

AMACC also asserts that the petitioners knew very well that the
applicable standards would be revised and updated from time to time given
the nature of the teaching profession. The petitioners also knew at the time
of their engagement that they must comply with the schools regularization
policies as stated in the Faculty Manual. Specifically, they must obtain a
passing rating on the Performance Appraisal for Teachers (PAST) the
primary instrument to measure the performance of faculty members.
Since the petitioners were not actually dismissed, AMACC submits
that the CA correctly ruled that they are not entitled to reinstatement, full
backwages and attorneys fees.
THE COURTS RULING
We find the petition meritorious.

The CAs Review of Factual

Findings under Rule 65

We agree with the petitioners that, as a rule in certiorari proceedings

under Rule 65 of the Rules of Court, the CA does not assess and weigh each
piece of evidence introduced in the case. The CA only examines the factual
findings of the NLRC to determine whether or not the conclusions are
supported by substantial evidence whose absence points to grave abuse of
discretion amounting to lack or excess of jurisdiction. [24] In the recent case
of Protacio v. Laya Mananghaya & Co.,[25] we emphasized that:

As a general rule, in certiorari proceedings under Rule 65

of the Rules of Court, the appellate court does not assess and
weigh the sufficiency of evidence upon which the Labor Arbiter

and the NLRC based their conclusion. The query in this

proceeding is limited to the determination of whether or not the
NLRC acted without or in excess of its jurisdiction or with
grave abuse of discretion in rendering its decision. However, as
an exception, the appellate court may examine and measure
the factual findings of the NLRC if the same are not
supported by substantial evidence. The Court has not
hesitated to affirm the appellate courts reversals of the
decisions of labor tribunals if they are not supported by
substantial evidence. [Emphasis supplied]

As discussed below, our review of the records and of the CA decision

shows that the CA erred in recognizing that grave abuse of discretion
attended the NLRCs conclusion that the petitioners were illegally
dismissed. Consistent with this conclusion, the evidence on record show that
AMACC failed to discharge its burden of proving by substantial evidence
the just cause for the non-renewal of the petitioners contracts.

In Montoya v. Transmed Manila Corporation,[26] we laid down our

basic approach in the review of Rule 65 decisions of the CA in labor cases,
as follows:

In a Rule 45 review, we consider the correctness of the

assailed CA decision, in contrast with the review for
jurisdictional error that we undertake under Rule
65.Furthermore, Rule 45 limits us to the review of questions of
law raised against the assailed CA decision. In ruling for legal
correctness, we have to view the CA decision in the same
context that the petition for certiorari it ruled upon was
presented to it; we have to examine the CA decision from the
prism of whether it correctly determined the presence or

absence of grave abuse of discretion in the NLRC decision

before it, not on the basis of whether the NLRC decision on
the merits of the case was correct. In other words, we have to
be keenly aware that the CA undertook a Rule 65 review, not a
review on appeal, of the NLRC decision challenged before
it. This is the approach that should be basic in a Rule 45 review
of a CA ruling in a labor case. In question form, the question
to ask is: Did the CA correctly determine whether the
NLRC committed grave abuse of discretion in ruling on the
case?

Following this approach, our task is to determine whether the CA correctly

found that the NLRC committed grave abuse of discretion in ruling that the
petitioners were illegally dismissed.
Legal Environment in the Employment of Teachers
a. Rule on Employment on Probationary Status

A reality we have to face in the consideration of employment on

probationary status of teaching personnel is that they are not governed
purely by the Labor Code. The Labor Code is supplemented with respect to
the period of probation by special rules found in the Manual of Regulations
for Private Schools.[27] On the matter of probationary period, Section 92 of
these regulations provides:

Section 92. Probationary Period. Subject in all instances to

compliance with the Department and school requirements,
the probationary period for academic personnel shall not be

more than three (3) consecutive years of satisfactory service for

those in the elementary and secondary levels, six (6)
consecutive regular semesters of satisfactory service for those
in the tertiary level, and nine (9) consecutive trimesters of
satisfactory service for those in the tertiary level where
collegiate courses are offered on a trimester basis. [Emphasis
supplied]
The CA pointed this out in its decision (as the NLRC also did), and
we confirm the correctness of this conclusion. Other than on the period, the
following quoted portion of Article 281 of the Labor Code still fully applies:
x x x The services of an employee who has been engaged on a
probationary basis may be terminated for a just cause when he
fails to qualify as a regular employee in accordance
with reasonable standards made known by the employer to the
employee at the time of his engagement. An employee who is
allowed to work after a probationary period shall be considered
a regular employee. [Emphasis supplied]

b. Fixed-period Employment
The use of employment for fixed periods during the teachers
probationary period is likewise an accepted practice in the teaching
profession. We mentioned this in passing in Magis Young Achievers
Learning Center v. Adelaida P. Manalo,[28] albeit a case that involved
elementary, not tertiary, education, and hence spoke of a school year rather
than a semester or a trimester. We noted in this case:
The common practice is for the employer and the
teacher to enter into a contract, effective for one school
year. At the end of the school year, the employer has the option

not to renew the contract, particularly considering the teachers

performance. If the contract is not renewed, the employment
relationship terminates. If the contract is renewed, usually for
another school year, the probationary employment
continues. Again, at the end of that period, the parties may opt
to renew or not to renew the contract. If renewed, this second
renewal of the contract for another school year would then be
the last year since it would be the third school year of
probationary employment. At the end of this third year, the
employer may now decide whether to extend a permanent
appointment to the employee, primarily on the basis of the
employee having met the reasonable standards of
competence and efficiency set by the employer. For the
entire duration of this three-year period, the teacher
remains under probation. Upon the expiration of his
contract of employment, being simply on probation, he
cannot automatically claim security of tenure and compel
the employer to renew his employment contract. It is when
the yearly contract is renewed for the third time that Section 93
of the Manual becomes operative, and the teacher then is
entitled to regular or permanent employment status.

It is important that the contract of probationary

employment specify the period or term of its effectivity. The
failure to stipulate its precise duration could lead to the
inference that the contract is binding for the full three-year
probationary period.
We have long settled the validity of a fixed-term contract in the case Brent
School, Inc. v. Zamora[29] that AMACC cited. Significantly, Brent happened
in a school setting. Care should be taken, however, in reading Brent in the
context of this case as Brent did not involve any probationary employment
issue; it dealt purely and simply with the validity of a fixed-term

employment under the terms of the Labor Code, then newly issued and
which does not expressly contain a provision on fixed-term employment.
c.

Academic and Management Prerogative

Last but not the least factor in the academic world, is that a school
enjoys academic freedom a guarantee that enjoys protection from the
Constitution no less. Section 5(2) Article XIV of the Constitution guarantees
all institutions of higher learning academic freedom.[30]

The institutional academic freedom includes the right of the school or

college to decide and adopt its aims and objectives, and to determine how
these objections can best be attained, free from outside coercion or
interference, save possibly when the overriding public welfare calls for some
restraint. The essential freedoms subsumed in the term academic freedom
encompass the freedom of the school or college to determine for itself: (1)
who may teach; (2) who may be taught; (3) how lessons shall be taught; and
(4) who may be admitted to study.[31]
AMACCs right to academic freedom is particularly important in the
present case, because of the new screening guidelines for AMACC faculty
put in place for the school year 2000-2001. We agree with the CA that
AMACC has the inherent right to establish high standards of competency
and efficiency for its faculty members in order to achieve and maintain
academic excellence. The schools prerogative to provide standards for its
teachers and to determine whether or not these standards have been met is in
accordance with academic freedom that gives the educational institution the
right to choose who should teach.[32] In Pea v. National Labor Relations
Commission,[33] we emphasized:

It is the prerogative of the school to set high standards of

efficiency for its teachers since quality education is a mandate

of the Constitution. As long as the standards fixed are

reasonable and not arbitrary, courts are not at liberty to set them
aside. Schools cannot be required to adopt standards which
barely satisfy criteria set for government recognition.

The same academic freedom grants the school the autonomy to decide
for itself the terms and conditions for hiring its teacher, subject of course to
the overarching limitations under the Labor Code. Academic freedom, too, is
not the only legal basis for AMACCs issuance of screening guidelines. The
authority to hire is likewise covered and protected by its management
prerogative the right of an employer to regulate all aspects of employment,
such as hiring, the freedom to prescribe work assignments, working
methods, process to be followed, regulation regarding transfer of employees,
supervision of their work, lay-off and discipline, and dismissal and recall of
workers.[34] Thus, AMACC has every right to determine for itself that it shall
use fixed-term employment contracts as its medium for hiring its teachers. It
also acted within the terms of the Manual of Regulations for Private Schools
when it recognized the petitioners to be merely on probationary status up to
a maximum of nine trimesters.

The Conflict: Probationary Status

and Fixed-term Employment

The existence of the term-to-term contracts covering the petitioners

employment is not disputed, nor is it disputed that they were on probationary
status not permanent or regular status from the time they were employed on
May 25, 1998 and until the expiration of their Teaching Contracts on
September 7, 2000. As the CA correctly found, their teaching stints only
covered a period of at least seven (7) consecutive trimesters or two (2) years
and three (3) months of service.This case, however, brings to the fore the
essential question of which, between the two factors affecting employment,

should prevail given AMACCs position that the teachers contracts expired
and it had the right not to renew them. In other words, should the teachers
probationary status be disregarded simply because the contracts were fixedterm?
The provision on employment on probationary status under the Labor
Code is a primary example of the fine balancing of interests between labor
and management that the Code has institutionalized pursuant to the
underlying intent of the Constitution.[36]
[35]

On the one hand, employment on probationary status affords

management the chance to fully scrutinize the true worth of hired personnel
before the full force of the security of tenure guarantee of the Constitution
comes into play.[37] Based on the standards set at the start of the probationary
period, management is given the widest opportunity during the probationary
period to reject hirees who fail to meet its own adopted but reasonable
standards.[38] These standards, together with the just[39] and authorized
causes[40] for termination of employment the Labor Code expressly provides,
are the grounds available to terminate the employment of a teacher on
probationary status. For example, the school may impose reasonably stricter
attendance or report compliance records on teachers on probation, and reject
a probationary teacher for failing in this regard, although the same
attendance or compliance record may not be required for a teacher already
on permanent status. At the same time, the same just and authorizes causes
for dismissal under the Labor Code apply to probationary teachers, so that
they may be the first to be laid-off if the school does not have enough
students for a given semester or trimester. Termination of employment on
this basis is an authorized cause under the Labor Code.[41]
Labor, for its part, is given the protection during the probationary
period of knowing the company standards the new hires have to meet during
the probationary period, and to be judged on the basis of these standards,
aside from the usual standards applicable to employees after they achieve
permanent status.Under the terms of the Labor Code, these standards should
be made known to the teachers on probationary status at the start of their
probationary period, or at the very least under the circumstances of the

present case, at the start of the semester or the trimester during which the
probationary standards are to be applied. Of critical importance in invoking
a failure to meet the probationary standards, is that the school should
show as a matter of due process how these standards have been
applied. This is effectively the second notice in a dismissal situation that the
law requires as a due process guarantee supporting the security of tenure
provision,[42] and is in furtherance, too, of the basic rule in employee
dismissal that the employer carries the burden of justifying a dismissal.
[43]
These rules ensure compliance with the limited security of tenure
guarantee the law extends to probationary employees.[44]
When fixed-term employment is brought into play under the above
probationary period rules, the situation as in the present case may at first
blush look muddled as fixed-term employment is in itself a valid
employment mode under Philippine law and jurisprudence. [45] The conflict,
however, is more apparent than real when the respective nature of fixed-term
employment and of employment on probationary status are closely
examined.
The fixed-term character of employment essentially refers to the
period agreed upon between the employer and the employee; employment
exists only for the duration of the term and ends on its own when the term
expires. In a sense, employment on probationary status also refers to a
period because of the technical meaning probation carries in Philippine labor
law a maximum period of six months, or in the academe, a period of three
years for those engaged in teaching jobs.Their similarity ends there,
however, because of the overriding meaning that being on
probation connotes, i.e., a process of testing and observing the character or
abilities of a person who is new to a role or job.[46]
Understood in the above sense, the essentially protective character of
probationary status for management can readily be appreciated. But this
same protective character gives rise to the countervailing but equally
protective rule that the probationary period can only last for a specific
maximum period and under reasonable, well-laid and properly
communicated standards. Otherwise stated, within the period of the

probation, any employer move based on the probationary standards and

affecting the continuity of the employment must strictly conform to the
probationary rules.
Under the given facts where the school year is divided into trimesters,
the school apparently utilizes its fixed-term contracts as a convenient
arrangement dictated by the trimestral system and not because the workplace
parties really intended to limit the period of their relationship to any fixed
term and to finish this relationship at the end of that term. If we pierce the
veil, so to speak, of the parties so-called fixed-term employment contracts,
what undeniably comes out at the core is a fixed-term contract conveniently
used by the school to define and regulate its relations with its
teachers during their probationary period.
To be sure, nothing is illegitimate in defining the school-teacher
relationship in this manner. The school, however, cannot forget that its
system of fixed-term contract is a system that operates during the
probationary period and for this reason is subject to the terms of Article 281
of the Labor Code. Unless this reconciliation is made, the requirements of
this Article on probationary status would be fully negated as the school
may freely choose not to renew contracts simply because their terms have
expired. The inevitable effect of course is to wreck the scheme that the
Constitution and the Labor Code established to balance relationships
between labor and management.
Given the clear constitutional and statutory intents, we cannot but
conclude that in a situation where the probationary status overlaps with a
fixed-term contract not specifically used for the fixed term it offers, Article
281 should assume primacy and the fixed-period character of the contract
must give way. This conclusion is immeasurably strengthened by the
petitioners and the AMACCs hardly concealed expectation that the
employment on probation could lead to permanent status, and that the
contracts are renewable unless the petitioners fail to pass the schools
standards.

To highlight what we mean by a fixed-term contract specifically used

for the fixed term it offers, a replacement teacher, for example, may be
contracted for a period of one year to temporarily take the place of a
permanent teacher on a one-year study leave. The expiration of the
replacement teachers contracted term, under the circumstances, leads to no
probationary status implications as she was never employed on probationary
basis; her employment is for a specific purpose with particular focus on the
term and with every intent to end her teaching relationship with the school
upon expiration of this term.
If the school were to apply the probationary standards (as in fact it
says it did in the present case), these standards must not only be reasonable
but must have also been communicated to the teachers at the start of the
probationary period, or at the very least, at the start of the period when they
were to be applied.These terms, in addition to those expressly provided by
the Labor Code, would serve as the just cause for the termination of the
probationary contract. As explained above, the details of this finding of just
cause must be communicated to the affected teachers as a matter of due
process.
AMACC, by its submissions, admits that it did not renew the
petitioners contracts because they failed to pass the Performance Appraisal
System for Teachers (PAST) and other requirements for regularization that
the school undertakes to maintain its high academic standards.[47] The
evidence is unclear on the exact terms of the standards, although the school
also admits that these were standards under the Guidelines on the
Implementation of AMACC Faculty Plantilla put in place at the start of
school year 2000-2001.
While we can grant that the standards were duly communicated to the
petitioners and could be applied beginning the 1st trimester of the school year
2000-2001, glaring and very basic gaps in the schools evidence still
exist. The exact terms of the standards were never introduced as evidence;
neither does the evidence show how these standards were applied to the
petitioners.[48] Without these pieces of evidence (effectively, the finding of
just cause for the non-renewal of the petitioners contracts), we have nothing

to consider and pass upon as valid or invalid for each of the

petitioners. Inevitably, the non-renewal (or effectively, the termination of
employment of employees on probationary status) lacks the supporting
finding of just cause that the law requires and, hence, is illegal.
In this light, the CA decision should be reversed. Thus, the LAs
decision, affirmed as to the results by the NLRC, should stand as the
decision to be enforced, appropriately re-computed to consider the period of
appeal and review of the case up to our level.
Given the period that has lapsed and the inevitable change of
circumstances that must have taken place in the interim in the academic
world and at AMACC, which changes inevitably affect current school
operations, we hold that - in lieu of reinstatement - the petitioners should be
paid separation pay computed on a trimestral basis from the time of
separation from service up to the end of the complete trimester preceding the
finality of this Decision.[49] The separation pay shall be in addition to the
other awards, properly recomputed, that the LA originally decreed.
WHEREFORE, premises considered, we hereby GRANT the
petition, and, consequently, REVERSE and SET ASIDE the Decision of the
Court of Appeals dated November 29, 2007 and its Resolution dated June 20,
2008 in CA-G.R. SP No. 96599. The Labor Arbiters decision of March 15,
2002, subsequently affirmed as to the results by the National Labor Relations
Commission, stands and should be enforced with appropriate re-computation
to take into account the date of the finality of this Decision.

In lieu of reinstatement, AMA Computer College-Paraaque City, Inc. is

hereby DIRECTED to pay separation pay computed on a trimestral basis
from the time of separation from service up to the end of the complete
trimester preceding the finality of this Decision. For greater certainty, the
petitioners are entitled to:

(a)

backwages and 13th month pay computed from

September 7, 2000 (the date AMA Computer CollegeParaaque City, Inc. illegally dismissed the petitioners) up to
the finality of this Decision;

(b)

monthly honoraria (if applicable) computed

from September 7, 2000 (the time of separation from
service) up to the finality of this Decision; and

(c) separation pay on a trimestral basis from September 7, 2000 (the

time of separation from service) up to the end of the
complete trimester preceding the finality of this Decision.

The labor arbiter is hereby ORDERED to make another recomputation according to the above directives. No costs.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 170388

September 4, 2013

COLEGIO DEL SANTISIMO ROSARIO AND SR. ZENAIDA S.

MOFADA, OP, PETITIONERS,
vs.
EMMANUEL ROJO,* RESPONDENT.

DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari1 assails the August 31, 2005
Decision2 and the November 10, 2005 Resolution3 of the Court of Appeals
(CA) in CA-G.R. SP No. 85188, which affirmed the July 31, 2003
Decision4 of the National Labor Relations Commission (NLRC). Said NLRC
Decision affirmed with modification the October 7, 2002 Decision5 of the
Labor Arbiter (LA) which, in turn, granted respondent Emmanuel Rojos
(respondent) Complaint6 for illegal dismissal.
Factual Antecedents
Petitioner Colegio del Santisimo Rosario (CSR) hired respondent as a high
school teacher on probationary basis for the school years 1992-1993, 199319947 and 1994-1995.8
On April 5, 1995, CSR, through petitioner Sr. Zenaida S. Mofada, OP
(Mofada), decided not to renew respondents services.9
Thus, on July 13, 1995, respondent filed a Complaint10 for illegal dismissal.
He alleged that since he had served three consecutive school years which is
the maximum number of terms allowed for probationary employment, he
should be extended permanent employment. Citing paragraph 75 of the 1970
Manual of Regulations for Private Schools (1970 Manual), respondent
asserted that "full- time teachers who have rendered three (3) consecutive
years of satisfactory services shall be considered permanent."11
On the other hand, petitioners argued that respondent knew that his
Teachers Contract for school year 1994-1995 with CSR would expire on
March 31, 1995.12 Accordingly, respondent was not dismissed but his
probationary contract merely expired and was not renewed.13 Petitioners also
claimed that the "three years" mentioned in paragraph 75 of the 1970
Manual refer to "36 months," not three school years.14 And since respondent
served for only three school years of 10 months each or 30 months, then he

had not yet served the "three years" or 36 months mentioned in paragraph 75
of the 1970 Manual.15
Ruling of the Labor Arbiter
The LA ruled that "three school years" means three years of 10 months, not
12 months.16 Considering that respondent had already served for three
consecutive school years, then he has already attained regular employment
status. Thus, the non-renewal of his contract for school year 1995-1996
constitutes illegal dismissal.17
The LA also found petitioners guilty of bad faith when they treated
respondents termination merely as the expiration of the third employment
contract and when they insisted that the school board actually deliberated on
the non-renewal of respondents employment without submitting admissible
proof of his alleged regular performance evaluation.18
The dispositive portion of the LAs Decision19 reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering
the [petitioners]:
1. To pay [respondent] the total amount of P39,252.00 corresponding
to his severance compensation and 13th month pay, moral and
exemplary damages.
2. To pay 10% of the total amount due to [respondent] as attorneys
fees.
All other claims are dismissed for lack of merit.
SO ORDERED.20
Ruling of the National Labor Relations Commission
On appeal, the NLRC affirmed the LAs Decision with modification. It held
that after serving three school years, respondent had attained the status of

regular employment21 especially because CSR did not make known to

respondent the reasonable standards he should meet.22 The NLRC also
agreed with the LA that respondents termination was done in bad faith. It
held that respondent is entitled to reinstatement, if viable; or separation pay,
if reinstatement was no longer feasible, and backwages, viz:
WHEREFORE, premises considered, the appealed Decision is hereby,
AFFIRMED with MODIFICATION only insofar as the award of separation
pay is concerned. Since [respondent] had been illegally dismissed,
[petitioner] Colegio Del Santisimo Rosario is hereby ordered to reinstate
him to his former position without loss of seniority rights with full
backwages until he is actually reinstated. However, if reinstatement is no
longer feasible, the respondent shall pay separation pay, in [addition] to the
payment of his full backwages.
The Computation Division is hereby directed to compute [respondents] full
backwages to be attached and to form part of this Decision.
The rest of the appealed Decision stands.
SO ORDERED.23
Petitioners moved for reconsideration which the NLRC denied in its April
28, 2004 Resolution24 for lack of merit.
Ruling of the Court of Appeals
Petitioners filed a Petition for Certiorari25 before the CA alleging grave
abuse of discretion on the part of the NLRC in finding that respondent had
attained the status of a regular employee and was illegally dismissed from
employment.
In a Decision26 dated August 31, 2005, the CA denied the Petition for lack of
merit. Citing Cagayan Capitol College v. National Labor Relations
Commission,27 it held that respondent has satisfied all the requirements
necessary to acquire permanent employment and security of tenure viz:

1. The teacher is a full-time teacher;

2. The teacher must have rendered three (3) consecutive years of
service; and
3. Such service must be satisfactory.28
According to the CA, respondent has attained the status of a regular
employee after he was employed for three consecutive school years as a fulltime teacher and had served CSR satisfactorily. Aside from being a high
school teacher, he was also the Prefect of Discipline, a task entailing much
responsibility. The only reason given by Mofada for not renewing
respondents contract was the alleged expiration of the contract, not any
unsatisfactory service. Also, there was no showing that CSR set performance
standards for the employment of respondent, which could be the basis of his
satisfactory or unsatisfactory performance. Hence, there being no reasonable
standards made known to him at the time of his engagement, respondent was
deemed a regular employee and was, thus, declared illegally dismissed when
his contract was not renewed.
Petitioners moved for reconsideration. However, the CA denied the motion
for lack of merit in its November 10, 2005 Resolution.29
Hence, the instant Petition. Incidentally, on May 23, 2007, we issued a
Resolution30 directing the parties to maintain the status quo pending the
resolution of the present Petition.
Issue
WHETHER THE COURT OF APPEALS [AS WELL AS THE NATIONAL
LABOR RELATIONS COMMISSION] COMMITTED GRIEVOUS AND
REVERSIBLE ERROR WHEN IT RULED THAT A BASIC EDUCATION
(ELEMENTARY) TEACHER HIRED FOR THREE (3) CONSECUTIVE
SCHOOL YEARS AS A PROBATIONARY EMPLOYEE
AUTOMATICALLY AND/OR BY LAW BECOMES A PERMANENT
EMPLOYEE UPON COMPLETION OF HIS THIRD YEAR OF

PROBATION NOTWITHSTANDING [A] THE PRONOUNCEMENT OF

THIS HONORABLE COURT IN COLEGIO SAN AGUSTIN V. NLRC,
201 SCRA 398 1991 THAT A PROBATIONARY TEACHER ACQUIRES
PERMANENT STATUS "ONLY WHEN HE IS ALLOWED TO WORK
AFTER THE PROBATIONARY PERIOD" AND [B] DOLE-DECS-CHEDTESDA ORDER NO. 01, S. 1996 WHICH PROVIDE THAT TEACHERS
WHO HAVE SERVED THE PROBATIONARY PERIOD "SHALL BE
MADE REGULAR OR PERMANENT IF ALLOWED TO WORK AFTER
SUCH PROBATIONARY PERIOD."31
Petitioners maintain that upon the expiration of the probationary period, both
the school and the respondent were free to renew the contract or let it lapse.
Petitioners insist that a teacher hired for three consecutive years as a
probationary employee does not automatically become a regular employee
upon completion of his third year of probation. It is the positive act of the
school the hiring of the teacher who has just completed three consecutive
years of employment on probation for the next school year that makes the
teacher a regular employee of the school.
Our Ruling
We deny the Petition.
In Mercado v. AMA Computer College-Paraaque City, Inc.,32 we had
occasion to rule that cases dealing with employment on probationary status
of teaching personnel are not governed solely by the Labor Code as the law
is supplemented, with respect to the period of probation, by special rules
found in the Manual of Regulations for Private Schools (the Manual). With
regard to the probationary period, Section 92 of the 1992 Manual33 provides:
Section 92. Probationary Period. Subject in all instances to compliance
with the Department and school requirements, the probationary period for
academic personnel shall not be more than three (3) consecutive years of
satisfactory service for those in the elementary and secondary levels, six (6)
consecutive regular semesters of satisfactory service for those in the tertiary
level, and nine (9) consecutive trimesters of satisfactory service for those in

the tertiary level where collegiate courses are offered on a trimester basis.
(Emphasis supplied)
In this case, petitioners teachers who were on probationary employment
were made to enter into a contract effective for one school year. Thereafter,
it may be renewed for another school year, and the probationary employment
continues. At the end of the second fixed period of probationary
employment, the contract may again be renewed for the last time.
Such employment for fixed terms during the teachers probationary period is
an accepted practice in the teaching profession. In Magis Young Achievers
Learning Center v. Manalo,34 we noted that:
The common practice is for the employer and the teacher to enter into a
contract, effective for one school year. At the end of the school year, the
employer has the option not to renew the contract, particularly considering
the teachers performance. If the contract is not renewed, the employment
relationship terminates. If the contract is renewed, usually for another school
year, the probationary employment continues. Again, at the end of that
period, the parties may opt to renew or not to renew the contract. If renewed,
this second renewal of the contract for another school year would then be the
last year since it would be the third school year of probationary
employment. At the end of this third year, the employer may now decide
whether to extend a permanent appointment to the employee, primarily on
the basis of the employee having met the reasonable standards of
competence and efficiency set by the employer. For the entire duration of
this three-year period, the teacher remains under probation. Upon the
expiration of his contract of employment, being simply on probation, he
cannot automatically claim security of tenure and compel the employer to
renew his employment contract. It is when the yearly contract is renewed for
the third time that Section 93 of the Manual becomes operative, and the
teacher then is entitled to regular or permanent employment status.
(Emphases supplied)

However, this scheme "of fixed-term contract is a system that operates

during the probationary period and for this reason is subject to Article 281 of
the Labor Code,"35 which provides:
x x x The services of an employee who has been engaged on a probationary
basis may be terminated for a just cause or when he fails to qualify as a
regular employee in accordance with reasonable standards made known by
the employer to the employee at the time of his engagement. An employee
who is allowed to work after a probationary period shall be considered a
regular employee. [Emphasis supplied]
In Mercado, we held that "[u]nless this reconciliation is made, the
requirements of [Article 281 on probationary status would be fully negated
as the school may freely choose not to renew contracts simply because their
terms have expired."36 This will have an unsettling effect in the equilibrium
vis-a-vis the relations between labor and management that the Constitution
and Labor Code have worked hard to establish.
That teachers on probationary employment also enjoy the protection
afforded by Article 281 of the Labor Code is supported by Section 93 of the
1992 Manual which provides:
Sec. 93. Regular or Permanent Status. - Those who have served the
probationary period shall be made regular or permanent. Full-time teachers
who have satisfactorily completed their probationary period shall be
considered regular or permanent. (Emphasis supplied)
The above provision clearly provides that full-time teachers become regular
or permanent employees once they have satisfactorily completed the
probationary period of three school years.37 The use of the term satisfactorily
necessarily connotes the requirement for schools to set reasonable standards
to be followed by teachers on probationary employment. For how else can
one determine if probationary teachers have satisfactorily completed the
probationary period if standards therefor are not provided?

As such, "no vested right to a permanent appointment shall accrue until the
employee has completed the prerequisite three-year period necessary for the
acquisition of a permanent status. [However, it must be emphasized that]
mere rendition of service for three consecutive years does not automatically
ripen into a permanent appointment. It is also necessary that the employee
be a full-time teacher, and that the services he rendered are satisfactory."38
In Mercado, this Court, speaking through J. Brion, held that:
The provision on employment on probationary status under the Labor Code
is a primary example of the fine balancing of interests between labor and
management that the Code has institutionalized pursuant to the underlying
intent of the Constitution.
On the one hand, employment on probationary status affords management
the chance to fully scrutinize the true worth of hired personnel before the full
force of the security of tenure guarantee of the Constitution comes into play.
Based on the standards set at the start of the probationary period,
management is given the widest opportunity during the probationary period
to reject hirees who fail to meet its own adopted but reasonable standards.
These standards, together with the just and authorized causes for termination
of employment [which] the Labor Code expressly provides, are the grounds
available to terminate the employment of a teacher on probationary status. x
xx
Labor, for its part, is given the protection during the probationary period of
knowing the company standards the new hires have to meet during the
probationary period, and to be judged on the basis of these standards, aside
from the usual standards applicable to employees after they achieve
permanent status. Under the terms of the Labor Code, these standards should
be made known to the teachers on probationary status at the start of their
probationary period, or at the very least under the circumstances of the
present case, at the start of the semester or the trimester during which the
probationary standards are to be applied. Of critical importance in invoking
a failure to meet the probationary standards, is that the school should show
as a matter of due process how these standards have been applied. This is

effectively the second notice in a dismissal situation that the law requires as
a due process guarantee supporting the security of tenure provision, and is in
furtherance, too, of the basic rule in employee dismissal that the employer
carries the burden of justifying a dismissal. These rules ensure compliance
with the limited security of tenure guarantee the law extends to probationary
employees.
When fixed-term employment is brought into play under the above
probationary period rules, the situation as in the present case may at first
blush look muddled as fixed-term employment is in itself a valid
employment mode under Philippine law and jurisprudence. The conflict,
however, is more apparent than real when the respective nature of fixed-term
employment and of employment on probationary status are closely
examined.
The fixed-term character of employment essentially refers to the period
agreed upon between the employer and the employee; employment exists
only for the duration of the term and ends on its own when the term expires.
In a sense, employment on probationary status also refers to a period
because of the technical meaning "probation" carries in Philippine labor law
a maximum period of six months, or in the academe, a period of three
years for those engaged in teaching jobs. Their similarity ends there,
however, because of the overriding meaning that being "on probation"
connotes, i.e., a process of testing and observing the character or abilities of
a person who is new to a role or job.
Understood in the above sense, the essentially protective character of
probationary status for management can readily be appreciated. But this
same protective character gives rise to the countervailing but equally
protective rule that the probationary period can only last for a specific
maximum period and under reasonable, well-laid and properly
communicated standards. Otherwise stated, within the period of the
probation, any employer move based on the probationary standards and
affecting the continuity of the employment must strictly conform to the
probationary rules.

x x x If we pierce the veil, so to speak, of the parties so-called fixed-term

employment contracts, what undeniably comes out at the core is a fixed-term
contract conveniently used by the school to define and regulate its relations
with its teachers during their probationary period.39 (Emphasis supplied;
italics in the original)
In the same case, this Court has definitively pronounced that "in a situation
where the probationary status overlaps with a fixed-term contract not
specifically used for the fixed term it offers, Article 281 should assume
primacy and the fixed-period character of the contract must give way."40
An example given of a fixed-term contract specifically used for the fixed
term it offers is a replacement teacher or a reliever contracted for a period of
one year to temporarily take the place of a permanent teacher who is on
leave. The expiration of the relievers fixed-term contract does not have
probationary status implications as he or she was never employed on
probationary basis. This is because his or her employment is for a specific
purpose with particular focus on the term. There exists an intent to end his or
her employment with the school upon expiration of this term.41
However, for teachers on probationary employment, in which case a fixed
term contract is not specifically used for the fixed term it offers, it is
incumbent upon the school to have not only set reasonable standards to be
followed by said teachers in determining qualification for regular
employment, the same must have also been communicated to the teachers at
the start of the probationary period, or at the very least, at the start of the
period when they were to be applied. These terms, in addition to those
expressly provided by the Labor Code, would serve as the just cause for the
termination of the probationary contract.1wphi1 The specific details of this
finding of just cause must be communicated to the affected teachers as a
matter of due process.42 Corollarily, should the teachers not have been
apprised of such reasonable standards at the time specified above, they shall
be deemed regular employees.
In Tamsons Enterprises, Inc. v. Court of Appeals,43 we held that "[t]he law is
clear that in all cases of probationary employment, the employer shall

[convey] to the employee the standards under which he will qualify as a

regular employee at the time of his engagement. Where no standards are
made known to the employee at that time, he shall be deemed a regular
employee.
In this case, glaringly absent from petitioners evidence are the reasonable
standards that respondent was expected to meet that could have served as
proper guidelines for purposes of evaluating his performance. Nowhere in
the Teachers Contract44 could such standards be found.45 Neither was it
mentioned that the same were ever conveyed to respondent. Even assuming
that respondent failed to meet the standards set forth by CSR and made
known to the former at the time he was engaged as a teacher on probationary
status, still, the termination was flawed for failure to give the required notice
to respondent.46 This is because Book VI, Rule I, Section 2 of the IRR of the
Labor Code provides:
Section 2. Security of Tenure. (a) In cases of regular employment, the
employer shall not terminate the services of an employee except for just or
authorized causes as provided by law, and subject to the requirements of due
process.
(b) The foregoing shall also apply in cases of probationary
employment; provided, however, that in such cases, termination of
employment due to failure of the employee to qualify in accordance
with the standards of the employer made known to the former at the
time of engagement may also be a ground for termination of
employment.
xxxx
(d) In all cases of termination of employment, the following standards
of due process shall be substantially observed:
xxxx

If the termination is brought about by the completion of a contract or phase

thereof, or by failure of an employee to meet the standards of the employer
in the case of probationary employment, it shall be sufficient that a written
notice is served the employee, within a reasonable time from the effective
date of termination. (Emphasis supplied)
Curiously, despite the absence of standards, Mofada mentioned the existence
of alleged performance evaluations47 in respondents case. We are, however,
in a quandary as to what could have been the basis of such evaluation, as no
evidence were adduced to show the reasonable standards with which
respondents performance was to be assessed or that he was informed
thereof. Notably too, none of the supposed performance evaluations were
presented. These flaws violated respondents right to due process. As such,
his dismissal is, for all intents and purposes, illegal.
As a matter of due process, teachers on probationary employment, just like
all probationary employees, have the right to know whether they have met
the standards against which their performance was evaluated. Should they
fail, they also have the right to know the reasons therefor.
It should be pointed out that absent any showing of unsatisfactory
performance on the part of respondent, it can be presumed that his
performance was satisfactory, especially taking into consideration the fact
that even while he was still more than a year into his probationary
employment, he was already designated Prefect of Discipline. In such
capacity, he was able to uncover the existence of a drug syndicate within the
school and lessen the incidence of drug use therein. Yet despite respondents
substantial contribution to the school, petitioners chose to disregard the same
and instead terminated his services; while most of those who were involved
in drug activities within the school were punished with a slap on the wrist as
they were merely made to write letters promising that the incident will not
happen again.48
Mofada would also have us believe that respondent chose to resign as he
feared for his life, thus, the schools decision not to renew his contract.

However, no resignation letter was presented. Besides, this is contrary to

respondents act of immediately filing the instant case against petitioners.
WHEREFORE, the Petition is hereby DENIED. The August 31, 2005
Decision and the November 10, 2005 Resolution of the Court of Appeals in
CA-G.R. SP No. 85188 are AFFIRMED. The status quo order of this Court
is LIFTED.
SO ORDERED.