QMM LABOR REL
G.R. No. 135547 January 23, 2002
GERARDO F. RIVERA, ALFRED A. RAMISO, AMBROCIO PALAD, DENNIS R. ARANAS, DAVID
SORIMA, JR., JORGE P. DELA ROSA, and ISAGANI ALDEA, Petitioners,
vs.
HON. EDGARDO ESPIRITU in his capacity as Chairman of the PAL Inter-Agency Task Force
created under Administrative Order No. 16; HON. BIENVENIDO LAGUESMA in his capacity as
Secretary of Labor and Employment; PHILIPPINE AIRLINES (PAL), LUCIO TAN, HENRY SO UY,
ANTONIO V. OCAMPO, MANOLO E. AQUINO, JAIME J. BAUTISTA, and ALEXANDER O.
BARRIENTOS, Respondents.
DECISION
QUISUMBING, J.:
In this special civil action for certiorari and prohibition, petitioners charge public respondents with grave
abuse of discretion amounting to lack or excess of jurisdiction for acts taken in regard to the enforcement
of the agreement dated September 27, 1998, between Philippine Airlines (PAL) and its union, the PAL
Employees Association (PALEA).
The factual antecedents of this case are as follows:
On June 5, 1998, PAL pilots affiliated with the Airline Pilots Association of the Philippines (ALPAP) went
on a three-week strike, causing serious losses to the financially beleaguered flag carrier. As a result,
PAL’s financial situation went from bad to worse. Faced with bankruptcy, PAL adopted a rehabilitation
plan and downsized its labor force by more than one-third.
On July 22, 1998, PALEA went on strike to protest the retrenchment measures adopted by the airline,
which affected 1,899 union members. The strike ended four days later, when PAL and PALEA agreed to a
more systematic reduction in PAL’s work force and the payment of separation benefits to all retrenched
employees.
On August 28, 1998, then President Joseph E. Estrada issued Administrative Order No. 16 creating an
Inter-Agency Task Force (Task Force) to address the problems of the ailing flag carrier. The Task Force
was composed of the Departments of Finance, Labor and Employment, Foreign Affairs, Transportation
and Communication, and Tourism, together with the Securities and Exchange Commission (SEC). Public
respondent Edgardo Espiritu, then the Secretary of Finance, was designated chairman of the Task Force.
It was "empowered to summon all parties concerned for conciliation, mediation (for) the purpose of
arriving at a total and complete solution of the problem."1 Conciliation meetings were then held between
PAL management and the three unions representing the airline’s employees, 2 with the Task Force as
mediator.
On September 4, 1998, PAL management submitted to the Task Force an offer by private respondent
Lucio Tan, Chairman and Chief Executive Officer of PAL, of a plan to transfer shares of stock to its
employees. The pertinent portion of said plan reads:
1. From the issued shares of stock within the group of Mr. Lucio Tan’s holdings, the ownership
of 60,000 fully paid shares of stock of Philippine Airlines with a par value of PHP5.00/share will
be transferred in favor of each employee of Philippine Airlines in the active payroll as of
September 15, 1998. Should any share-owning employee leave PAL, he/she has the option to
CBA 1
keep the shares or sells (sic) his/her shares to his/her union or other employees currently
employed by PAL.
2. The aggregate shares of stock transferred to PAL employees will allow them three (3)
members to (sic) the PAL Board of Directors. We, thus, become partners in the boardroom and
together, we shall address and find solutions to the wide range of problems besetting PAL.
3. In order for PAL to attain (a) degree of normalcy while we are tackling its problems, we
would request for a suspension of the Collective Bargaining Agreements (CBAs) for 10 years.3
On September 10, 1998, the Board of Directors of PALEA voted to accept Tan’s offer and requested the
Task Force’s assistance in implementing the same. Union members, however, rejected Tan’s offer. Under
intense pressure from PALEA members, the union’s directors subsequently resolved to reject Tan’s offer.
On September 17, 1998, PAL informed the Task Force that it was shutting down its operations effective
September 23, 1998, preparatory to liquidating its assets and paying off its creditors. The airline claimed
that given its labor problems, rehabilitation was no longer feasible, and hence, the airline had no
alternative but to close shop.
On September 18, 1998, PALEA sought the intervention of the Office of the President in immediately
convening the parties, the PAL management, PALEA, ALPAP, and FASAP, including the SEC under the
direction of the Inter-Agency Task Force, to prevent the imminent closure of PAL.4
On September 19, 1998, PALEA informed the Department of Labor and Employment (DOLE) that it had
no objection to a referendum on the Tan’s offer. 2,799 out of 6,738 PALEA members cast their votes in
the referendum under DOLE supervision held on September 21-22, 1998. Of the votes cast, 1,055 voted
in favor of Tan’s offer while 1,371 rejected it.
On September 23, 1998, PAL ceased its operations and sent notices of termination to its employees.
Two days later, the PALEA board wrote President Estrada anew, seeking his intervention. PALEA offered
a 10-year moratorium on strikes and similar actions and a waiver of some of the economic benefits in the
existing CBA.5 Tan, however, rejected this counter-offer.
On September 27, 1998, the PALEA board again wrote the President proposing the following terms and
conditions, subject to ratification by the general membership:
1. Each PAL employee shall be granted 60,000 shares of stock with a par value of P5.00, from
Mr. Lucio Tan’s shareholdings, with three (3) seats in the PAL Board and an additional seat
from government shares as indicated by His Excellency;
2. Likewise, PALEA shall, as far as practicable, be granted adequate representation in
committees or bodies which deal with matters affecting terms and conditions of employment;
3. To enhance and strengthen labor-management relations, the existing Labor-Management
Coordinating Council shall be reorganized and revitalized, with adequate representation from
both PAL management and PALEA;
 QMM
4. To assure investors and creditors of industrial peace, PALEA agrees, subject to the
ratification by the general membership, (to) the suspension of the PAL-PALEA CBA for a period
of ten (10) years, provided the following safeguards are in place:
a. PAL shall continue recognizing PALEA as the duly certified bargaining agent of
the regular rank-and-file ground employees of the Company;
b. The ‘union shop/maintenance of membership’ provision under the PAL-PALEA
CBA shall be respected.
c. No salary deduction, with full medical benefits.
5. PAL shall grant the benefits under the 26 July 1998 Memorandum of Agreement forged by
and between PAL and PALEA, to those employees who may opt to retire or be separated from
the company.
6. PALEA members who have been retrenched but have not received separation benefits shall
be granted priority in the hiring/rehiring of employees.
7. In the absence of applicable Company rule or regulation, the provisions of the Labor Code
shall apply.6
Among the signatories to the letter were herein petitioners Rivera, Ramiso, and Aranas, as officers and/or
members of the PALEA Board of Directors. PAL management accepted the PALEA proposal and the
necessary referendum was scheduled.
On October 2, 1998, 5,324 PALEA members cast their votes in a DOLE-supervised referendum. Of the
votes cast, 61% were in favor of accepting the PAL-PALEA agreement, while 34% rejected it.
On October 7, 1998, PAL resumed domestic operations. On the same date, seven officers and members
of PALEA filed this instant petition to annul the September 27, 1998 agreement entered into between PAL
and PALEA on the following grounds:
I nullification of the PAL-PALEA agreement. As such, petitioners’ proper remedy is an ordinary civil action
PUBLIC RESPONDENTS GRAVELY ABUSED THEIR DISCRETION AND EXCEEDED THEIR
JURISDICTION IN ACTIVELY PURSUING THE CONCLUSION OF THE PAL-PALEA AGREEMENT AS
THE CONSTITUTIONAL RIGHTS TO SELF-ORGANIZATION AND COLLECTIVE BARGAINING, BEING
FOUNDED ON PUBLIC POLICY, MAY NOT BE WAIVED, NOR THE WAIVER, RATIFIED.
II
PUBLIC RESPONDENTS GRAVELY ABUSED THEIR DISCRETION AND EXCEEDED THEIR
JURISDICTION IN PRESIDING OVER THE CONCLUSION OF THE PAL-PALEA AGREEMENT UNDER
THREAT OF ABUSIVE EXERCISE OF PAL’S MANAGEMENT PREROGATIVE TO CLOSE BUSINESS
USED AS SUBTERFUGE FOR UNION-BUSTING.
The issues now for our resolution are:
LABOR REL CBA 2
(1) Is an original action for certiorari and prohibition the proper remedy to annul the PAL-
PALEA agreement of September 27, 1998;
(2) Is the PAL-PALEA agreement of September 27, 1998, stipulating the suspension of the
PAL-PALEA CBA unconstitutional and contrary to public policy?
Anent the first issue, petitioners aver that public respondents as functionaries of the Task Force, gravely
abused their discretion and exceeded their jurisdiction when they actively pursued and presided over the
PAL-PALEA agreement.
Respondents, in turn, argue that the public respondents merely served as conciliators or mediators,
consistent with the mandate of A.O. No. 16 and merely supervised the conduct of the October 3, 1998
referendum during which the PALEA members ratified the agreement. Thus, public respondents did not
perform any judicial and quasi-judicial act pertaining to jurisdiction. Furthermore, respondents pray for the
dismissal of the petition for violating the "hierarchy of courts" doctrine enunciated in People v.
Cuaresma7 and Enrile v. Salazar.8
Petitioners allege grave abuse of discretion under Rule 65 of the 1997 Rules of Civil Procedure. The
essential requisites for a petition for certiorari under Rule 65 are: (1) the writ is directed against a tribunal,
a board, or an officer exercising judicial or quasi-judicial functions; (2) such tribunal, board, or officer has
acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of
jurisdiction; and (3) there is no appeal or any plain, speedy, and adequate remedy in the ordinary course
of law.9 For writs of prohibition, the requisites are: (1) the impugned act must be that of a "tribunal,
corporation, board, officer, or person, whether exercising judicial, quasi-judicial or ministerial functions;"
and (2) there is no plain, speedy, and adequate remedy in the ordinary course of law."10
The assailed agreement is clearly not the act of a tribunal, board, officer, or person exercising judicial,
quasi-judicial, or ministerial functions. It is not the act of public respondents Finance Secretary Edgardo
Espiritu and Labor Secretary Bienvenido Laguesma as functionaries of the Task Force. Neither is there a
judgment, order, or resolution of either public respondents involved. Instead, what exists is a contract
between a private firm and one of its labor unions, albeit entered into with the assistance of the Task
Force. The first and second requisites for certiorari and prohibition are therefore not present in this case.
Furthermore, there is available to petitioners a plain, speedy, and adequate remedy in the ordinary course
of law. While the petition is denominated as one for certiorari and prohibition, its object is actually the
for annulment of contract, an action which properly falls under the jurisdiction of the regional trial
courts.11 Neither certiorari nor prohibition is the remedy in the present case.
Petitioners further assert that public respondents were partial towards PAL management. They allegedly
pressured the PALEA leaders into accepting the agreement. Petitioners ask this Court to examine the
circumstances that led to the signing of said agreement. This would involve review of the facts and factual
issues raised in a special civil action for certiorari which is not the function of this Court.12
Nevertheless, considering the prayer of the parties principally we shall look into the substance of the
petition, in the higher interest of justice13 and in view of the public interest involved, inasmuch as what is at
stake here is industrial peace in the nation’s premier airline and flag carrier, a national concern.
On the second issue, petitioners contend that the controverted PAL-PALEA agreement is void because it
abrogated the right of workers to self-organization14 and their right to collective bargaining.15 Petitioners
 QMM LABOR REL CBA 3

claim that the agreement was not meant merely to suspend the existing PAL-PALEA CBA, which expires The acts of public respondents in sanctioning the 10-year suspension of the PAL-PALEA CBA did not
on September 30, 2000, but also to foreclose any renegotiation or any possibility to forge a new CBA for a contravene the "protection to labor" policy of the Constitution. The agreement afforded full protection to
decade or up to 2008. It violates the "protection to labor" policy16 laid down by the Constitution. labor; promoted the shared responsibility between workers and employers; and the
exercised voluntary modes in settling disputes, including conciliation to foster industrial peace."21
Article 253-A of the Labor Code reads:
Petitioners further allege that the 10-year suspension of the CBA under the PAL-PALEA agreement
virtually installed PALEA as a company union for said period, amounting to unfair labor practice, in
ART. 253-A. Terms of a Collective Bargaining Agreement. – Any Collective Bargaining Agreement that the
violation of Article 253-A of the Labor Code mandating that an exclusive bargaining agent serves for five
parties may enter into shall, insofar as the representation aspect is concerned, be for a term of five (5)
years only.
years. No petition questioning the majority status of the incumbent bargaining agent shall be entertained
and no certification election shall be conducted by the Department of Labor and Employment outside of
the sixty-day period immediately before the date of expiry of such five-year term of the Collective The questioned proviso of the agreement reads:
Bargaining Agreement. All other provisions of the Collective Bargaining Agreement shall be renegotiated
not later than three (3) years after its execution. Any agreement on such other provisions of the Collective
a. PAL shall continue recognizing PALEA as the duly certified-bargaining agent of the regular rank-and-file
Bargaining Agreement entered into within six (6) months from the date of expiry of the term of such other
ground employees of the Company;
provisions as fixed in such Collective Bargaining Agreement, shall retroact to the day immediately
following such date. If any such agreement is entered into beyond six months, the parties shall agree on
the duration of the retroactivity thereof. In case of a deadlock in the renegotiation of the collective Said proviso cannot be construed alone. In construing an instrument with several provisions, a
bargaining agreement, the parties may exercise their rights under this Code. construction must be adopted as will give effect to all. Under Article 1374 of the Civil Code, 22 contracts
cannot be construed by parts, but clauses must be interpreted in relation to one another to give effect to
the whole. The legal effect of a contract is not determined alone by any particular provision disconnected
Under this provision, insofar as representation is concerned, a CBA has a term of five years, while the
from all others, but from the whole read together.23 The aforesaid provision must be read within the
other provisions, except for representation, may be negotiated not later than three years after the
context of the next clause, which provides:
execution.17Petitioners submit that a 10-year CBA suspension is inordinately long, way beyond the
maximum statutory life of a CBA, provided for in Article 253-A. By agreeing to a 10-year suspension,
PALEA, in effect, abdicated the workers’ constitutional right to bargain for another CBA at the mandated b. The ‘union shop/maintenance of membership’ provision under the PAL-PALEA CBA shall be respected.
time.
The aforesaid provisions, taken together, clearly show the intent of the parties to maintain "union security"
We find the argument devoid of merit. during the period of the suspension of the CBA. Its objective is to assure the continued existence of
PALEA during the said period. We are unable to declare the objective of union security an unfair labor
practice. It is State policy to promote unionism to enable workers to negotiate with management on an
A CBA is "a contract executed upon request of either the employer or the exclusive bargaining
even playing field and with more persuasiveness than if they were to individually and separately bargain
representative incorporating the agreement reached after negotiations with respect to wages, hours of
with the employer. For this reason, the law has allowed stipulations for "union shop" and "closed shop" as
work and all other terms and conditions of employment, including proposals for adjusting any grievances
means of encouraging workers to join and support the union of their choice in the protection of their rights
or questions arising under such agreement."18 The primary purpose of a CBA is the stabilization of labor-
and interests vis-à-vis the employer.24
management relations in order to create a climate of a sound and stable industrial peace.19 In construing a
CBA, the courts must be practical and realistic and give due consideration to the context in which it is
negotiated and the purpose which it is intended to serve.20 Petitioners’ contention that the agreement installs PALEA as a virtual company union is also
untenable.1âwphi1 Under Article 248 (d) of the Labor Code, a company union exists when the employer
acts "[t]o initiate, dominate, assist or otherwise interfere with the formation or administration of any labor
The assailed PAL-PALEA agreement was the result of voluntary collective bargaining negotiations
organization, including the giving of financial or other support to it or its organizers or supporters." The
undertaken in the light of the severe financial situation faced by the employer, with the peculiar and unique
case records are bare of any showing of such acts by PAL.
intention of not merely promoting industrial peace at PAL, but preventing the latter’s closure. We find no
conflict between said agreement and Article 253-A of the Labor Code. Article 253-A has a two-fold
purpose. One is to promote industrial stability and predictability. Inasmuch as the agreement sought to We also do not agree that the agreement violates the five-year representation limit mandated by Article
promote industrial peace at PAL during its rehabilitation, said agreement satisfies the first purpose of 253-A. Under said article, the representation limit for the exclusive bargaining agent applies only when
Article 253-A. The other is to assign specific timetables wherein negotiations become a matter of right and there is an extant CBA in full force and effect. In the instant case, the parties agreed to suspend the CBA
requirement. Nothing in Article 253-A, prohibits the parties from waiving or suspending the mandatory and put in abeyance the limit on the representation period.
timetables and agreeing on the remedies to enforce the same.
In sum, we are of the view that the PAL-PALEA agreement dated September 27, 1998, is a valid exercise
In the instant case, it was PALEA, as the exclusive bargaining agent of PAL’s ground employees, that of the freedom to contract. Under the principle of inviolability of contracts guaranteed by the
voluntarily entered into the CBA with PAL. It was also PALEA that voluntarily opted for the 10-year Constitution,25 the contract must be upheld.
suspension of the CBA. Either case was the union’s exercise of its right to collective bargaining. The right
to free collective bargaining, after all, includes the right to suspend it. WHEREFORE, there being no grave abuse of discretion shown, the instant petition is DISMISSED. No
pronouncement as to costs. SO ORDERED.
 QMM LABOR REL CBA 4

G.R. No. 165442 August 25, 2010 On November 19, 1999, then DOLE Secretary Bienvenido E. Laguesma issued a Resolution13 directing
petitioner and respondent to execute a new CBA incorporating therein his dispositions regarding benefits
of the employees as to wage increase, productivity bonus, vacation and sick leave, medical allowances
NASECO GUARDS ASSOCIATION-PEMA (NAGA-PEMA), Petitioner,
and signing bonus. Respondent was further ordered to negotiate, for purposes of collective bargaining
vs.
agreement, with NEMU-PEMA led by its president, Ligaya Valencia. The charge of unfair labor practice
NATIONAL SERVICE CORPORATION (NASECO), Respondent.
against respondent and PNB was dismissed.14
DECISION

VILLARAMA, JR., J.:
This petition for review on certiorari under Rule 45 assails the Decision1 dated May 27, 2004 of the Court
of Appeals (CA) in CA-G.R. SP No. 76667. The appellate court set aside the January 15, 20032 and
March 11, 20033 Orders of the Department of Labor and Employment (DOLE) and ordered the latter to
allow the parties to adduce evidence in support of their respective positions.
The facts follow.
Respondent promptly filed a petition for certiorari before the CA questioning the DOLE Secretary’s order
and arguing that the ruling of the DOLE Secretary in favor of the unions and awarding them monetary
benefits totaling five hundred thirty-one million four hundred forty-six thousand six hundred sixty-six and
67/100 (P531,446,666.67) was inimical and deleterious to its financial standing and will result in closure
and cessation of business for the company.
By Decision15 dated March 19, 2001 (first CA Decision), the CA partly granted the petition and ruled that a
recomputation and reevaluation of the benefits awarded was in order.

WHEREFORE, the instant petition is partly GRANTED in that the case is remanded to the Secretary of
Respondent National Service Corporation (NASECO) is a wholly-owned subsidiary of the Philippine Labor for purposes of recomputation and reevaluation of the CBA benefits.
National Bank (PNB) organized under the Corporation Code in 1975. It supplies security and manpower
services to different clients such as the Securities and Exchange Commission, the Philippine Deposit
SO ORDERED.16
Insurance Corporation, Food Terminal Incorporated, Forex Corporation and PNB. Petitioner NASECO
Guards Association-PEMA (NAGA-PEMA) is the collective bargaining representative of the regular rank
and file security guards of respondent. NASECO Employees Union-PEMA (NEMU-PEMA) is the collective In compliance with the CA directive, then DOLE Secretary Patricia A. Sto. Tomas conducted several
bargaining representative of the regular rank and file (non-security) employees of respondent such as clarificatory hearings. On January 15, 2003, Secretary Sto. Tomas issued an Order which provides:
messengers, janitors, typists, clerks and radio-telephone operators.4
From the above, it is indubitable that the total cost to NASECO of our questioned award would amount to
On December 2, 1993, respondent entered into a memorandum of agreement5 with petitioner. The terms only P322,725,000, not P531,446,666.67 as claimed by the company. Thus, our November 19, 1999
of the agreement covered the monetary claims of the petitioner such as salary adjustments, conversion of Order is hereby affirmed en toto.
salary scheme under Republic Act (R.A.) No. 67586 to R.A. No. 6727,7 signing bonus, leaves and other
benefits. A year after, petitioner demanded full negotiation for a collective bargaining agreement (CBA)
WHEREFORE, judgment is hereby rendered:
with the respondent and submitted its proposals thereto.

1. [D]irecting NAGA-PEMA and NASECO to execute a new collective bargaining agreement

On June 8, 1995, petitioner and respondent agreed to sign a CBA on non-economic terms.8
effective November 1, 1993, incorporating therein the dispositions contained in our November
19, 1999 Order as well as all other items agreed upon by the parties.
On September 24, 1996, petitioner filed a notice of strike because of respondent’s refusal to bargain for
economic benefits in the CBA. Following conciliation hearings, the parties again commenced CBA
2. Ordering NASECO to negotiate with NEMA-PEMA for a new collective bargaining
negotiations and started to resolve the issues on wage increase, productivity bonus, incentive bonus,
agreement.
allowances, and other benefits but failed to reach an agreement.

Meanwhile, respondent and NEMU-PEMA entered into a CBA on non-economic terms.9 Unfortunately, a
dispute among the leaders of NEMU-PEMA arose and at a certain point, leadership of the organization
was unclear. Hence, the negotiations concerning the economic terms of the CBA were put on hold until
the internal dispute could be resolved.
On April 29, 1997, petitioner filed a notice of strike before the National Conciliation and Mediation Board
(NCMB) against respondent and PNB due to a bargaining deadlock. The following day, NEMU-PEMA
likewise filed a notice of strike against respondent and PNB on the ground of unfair labor
practices.10 Efforts by the NCMB to conciliate failed and pursuant to Article 263(g) of the Labor Code,11 as
amended, then DOLE Secretary Cresenciano B. Trajano assumed jurisdiction over the strike notices on
June 25, 1998.12
The charges of unfair labor practice against NASECO and PNB are dismissed for lack of merit.
SO ORDERED.17
Respondent filed a motion for reconsideration with the DOLE Secretary which was denied on March 11,
2003.
Respondent thus filed a petition for certiorari with the CA arguing that the DOLE Secretary, in issuing the
January 15, 2003 Order deprived respondent of due process of law for there was no reevaluation that took
place in the DOLE. It also argued that the order merely recomputed the DOLE Secretary’s initial award
of P531,446,666.67 and reduced it to P322,725,000.00, contrary to the ruling of the CA to recompute and
 QMM
reevaluate. Respondent claimed that what the DOLE Secretary should have done was to let the parties
introduce evidence to show the proper computation of the monetary awards under the approved CBA.
In its second Decision dated May 27, 2004, the CA granted the petition, thus:
WHEREFORE, the orders dated 15 January 2003 and 11 March 2003 are hereby SET ASIDE and the
case remanded to the public respondent to allow the parties to adduce evidence in support of their
respective positions.
SO ORDERED.18
A motion for reconsideration was filed by herein petitioner but the same was denied by the CA on
September 22, 200419 finding no reason to reverse and set aside its earlier decision.
Petitioner now comes to this Court for relief by way of a petition for review on certiorari seeking to set
aside and reverse the May 27, 2004 Decision and the September 22, 2004 Resolution of the CA.
The main issue in this case is whether or not the respondent’s right to due process was violated. A side
issue raised by the petitioner is whether or not PNB, being the undisputed owner of and exercising control
over respondent, should be made liable to pay the CBA benefits awarded to the petitioner.
Petitioner argues first that there was no violation of due process because respondent was never prohibited
by the DOLE Secretary to submit supporting documents when the instant case was pending on remand.
Petitioner contends that due process is properly observed when there is an opportunity to be heard, to
present evidence and to file pleadings, which was never denied to respondent.
Second, petitioner argues that the CA erred in stating that respondent was a company operating at a loss
and therefore cannot be expected to act generously and confer upon its employees additional benefits
exceeding what is mandated by law. It is the petitioner’s position that based on the "no loss, no profit"
policy of respondent with PNB, respondent in truth has no "pocket" of its own and is, in effect, one (1) and
the same with PNB with regard to financial gains and/or liabilities. Thus, petitioners contend that the CBA
benefits should be shouldered by PNB considering the poor financial condition of respondent. To support
such claim, petitioner submitted evidence20 to show that PNB is in superb financial condition and is very
much capable of shouldering the CBA award.21
Respondent on the other hand maintains that the DOLE Secretary violated its right to due process when
she merely recomputed the CBA award instead of reevaluating the entire case and allowing it to present
supporting documents in accordance with the first CA decision.22 It claims that the order of the CA to
reevaluate included and required a full assessment of the case together with reception of evidence such
as financial statements, and the omission of such is a violation of its right to due process.
As to the petitioner’s argument that respondent and PNB are essentially the same when it comes to
financial condition, respondent contends that although a subsidiary, it has a separate and distinct
personality from PNB with its own charter. Hence, the issue of PNB’s financial well-being is immaterial in
this case.
The petition is partly meritorious.
LABOR REL CBA 5
In simple terms, the constitutional guarantee of due process requires that a litigant be given "a day in
court." It is the availability of the opportunity to be heard that determines whether or not due process was
violated. A litigant may or may not avail of the opportunity to be heard but as long as such was made
available to him/her, there is no violation of the due process clause. In the case of Lumiqued v.
Exevea,23 this Court declared that "[a]s long as a party was given the opportunity to defend his interests in
due course, he cannot be said to have been denied due process of law, for this opportunity to be heard is
the very essence of due process. Moreover, this constitutional mandate is deemed satisfied if a person is
granted an opportunity to seek reconsideration of the action or ruling complained of."
The respondent’s right to due process in this case has not been denied. The order in the first CA decision
to recompute and reevaluate was satisfied when the DOLE Secretary reexamined their initial findings and
adjusted the awarded benefits. A reevaluation, contrary to what the respondent claims, is a process by
which a person or office (in this case the DOLE secretary) revisits its own initial pronouncement and
makes another assessment of its findings. In simple terms, to reevaluate is to take another look at a
previous matter in issue. A reevaluation does not necessitate the introduction of new materials for review
nor does it require a full hearing for new arguments.
From a procedural standpoint, a reevaluation is a continuation of the original case and not a new
proceeding. Hence, the evidence, financial reports and other documents submitted by the parties in the
course of the original proceeding are to be visited and reviewed again. In this light, the respondent has
been given the opportunity to be heard by the DOLE Secretary.
Also, contrary to the claim of the respondent that it was barred by the DOLE Secretary to introduce
supporting documents during the recomputation and reevaluation, the records show that an Order by then
Secretary of Labor Patricia A. Sto. Tomas dated July 11, 2002 specifically allowed both parties to submit
their respective computations as regards the awarded benefits. To wit:
WHEREFORE, the Bureau of Working Conditions is hereby directed to submit to this Office a detailed
computation of the CBA benefits indicated in the resolution of November 19, 2001 within twenty (20) days
from receipt of this Order. The parties may submit their own computations to the Bureau for validation.
SO ORDERED.24 (Italics supplied.)
It is thus inaccurate for the respondent to claim that it was denied due process because it had all the
opportunity to introduce any supporting document in the course of the recomputation and reevaluation of
the DOLE Secretary. Respondent admits that it did attach the financial statements and other documents in
support of its alleged financial incapacity to pay the CBA awarded benefits, the same evidence it had
earlier submitted before the CA (Memorandum in the first CA decision) in the motion for reconsideration of
the DOLE Secretary’s January 15, 2003 Order.25 There is thus no showing that the DOLE Secretary
denied respondent this basic constitutional right.
On the issue of liability, petitioner contends that PNB should be held liable to shoulder the CBA benefits
awarded to them by virtue of it being a company having full financial, managerial and functional control
over respondent as its subsidiary, and by reason of the unique "no loss, no profit" scheme implemented
between respondent and PNB.
We are not persuaded.
Verily, what the petitioner is asking this Court to do is to pierce the veil of corporate fiction of respondent
and hold PNB (being the mother company) liable for the CBA benefits.
 QMM LABOR REL CBA 6

In Concept Builders, Inc. v. NLRC,26 we explained the doctrine of piercing the corporate veil, as follows: order to remand the case to the Secretary of Labor for introduction of supporting evidence. Accordingly,
the Orders of the Secretary of Labor dated January 15, 2003 and March 11, 2003 are REINSTATED and
UPHELD.
It is a fundamental principle of corporation law that a corporation is an entity separate and distinct from its
stockholders and from other corporations to which it may be connected. But, this separate and distinct
personality of a corporation is merely a fiction created by law for convenience and to promote justice. So, No costs.
when the notion of separate juridical personality is used to defeat public convenience, justify wrong,
protect fraud or defend crime, or is used as a device to defeat the labor laws, this separate personality of
SO ORDERED.
the corporation may be disregarded or the veil of corporate fiction pierced. This is true likewise when the
corporation is merely an adjunct, a business conduit or an alter ego of another corporation.

Also in Pantranco Employees Association (PEA-PTGWO) v. National Labor Relations Commission,27 this
Court ruled:

Whether the separate personality of the corporation should be pierced hinges on obtaining facts
appropriately pleaded or proved. However, any piercing of the corporate veil has to be done with caution,
albeit the Court will not hesitate to disregard the corporate veil when it is misused or when necessary in G.R. No. 181806 March 12, 2014
the interest of justice. After all, the concept of corporate entity was not meant to promote unfair objectives.
WESLEYAN UNIVERSITY-PHILIPPINES, Petitioner,
Applying the doctrine to the case at bar, we find no reason to pierce the corporate veil of respondent and vs.
go beyond its legal personality. Control, by itself, does not mean that the controlled corporation is a mere WESLEYAN UNIVERSITY-PHILIPPINES FACULTY and STAFF ASSOCIATION, Respondent.
instrumentality or a business conduit of the mother company. Even control over the financial and
operational concerns of a subsidiary company does not by itself call for disregarding its corporate fiction. DECISION
There must be a perpetuation of fraud behind the control or at least a fraudulent or illegal purpose behind
the control in order to justify piercing the veil of corporate fiction. Such fraudulent intent is lacking in this
case. DEL CASTILLO, J.:

Petitioner argues that the appreciation, analysis and inquiry of this case may go beyond the presentation
of respondent, and therefore must include the PNB, the bank being the undisputed whole owner of
respondent and the sole provider of funds for the company’s operations and for the payment of wages and
benefits of the employees, under the "no loss, no profit" scheme.28
A Collective Bargaining Agreement (CBA) is a contract entered into by an employer and a legitimate labor
organization concerning the terms and conditions of employment.1 Like any other contract, it has the force
of law between the parties and, thus, should be complied with in good faith. 2 Unilateral changes or
suspensions in the implementation of the provisions of the CBA, therefore, cannot be allowed without the
consent of both parties.

We disagree. There is no showing that such "no loss, no profit" scheme between respondent and PNB
was implemented to defeat public convenience, justify wrong, protect fraud or defend crime, or is used as
a device to defeat the labor laws, nor does the scheme show that respondent is a mere business conduit
or alter ego of PNB. Absent proof of these circumstances, respondent’s corporate personality cannot be
pierced.1âwphi1
This Petition for Review on Certiorari3 under Rule 45 of the Rules of Court assails the September 25, 2007
Decision4 and the February 5, 2008 Resolution5 of the Court of Appeals (CA) in CA-G.R. SP No. 97053.
Factual Antecedents

It is apparent that petitioner wants the Court to disregard the corporate personality of respondent and
directly go after PNB in order for it to collect the CBA benefits. On the same breath, however, petitioner
argues that ultimately it is PNB, by virtue of the "no loss, no profit" scheme, which shoulders and provides
the funds for financial liabilities of respondent including wages and benefits of employees. If such scheme
was indeed true as the petitioner presents it, then there was absolutely no need to pierce the veil of
corporate fiction of respondent. Moreover, the Court notes the pendency of a separate suit for absorption
or regularization of NASECO employees filed by petitioner and NEMU-PEMA against PNB and
respondent, docketed as NLRC NCR Case No. 06-03944-96), which is still on appeal with the National
Labor Relations Commission (NLRC), as per manifestation by respondent. In the said case, petitioner
submitted for resolution by the labor tribunal the issues of whether PNB is the employer of NASECO’s
work force and whether NASECO is a labor-only contractor.29
Petitioner Wesleyan University-Philippines is a non-stock, non-profit educational institution duly organized
and existing under the laws of the Philippines.6 Respondent Wesleyan University-Philippines Faculty and
Staff Association, on the other hand, is a duly registered labor organization7 acting as the sole and
exclusive bargaining agent of all rank-and-file faculty and staff employees of petitioner.8
In December 2003, the parties signed a 5-year CBA9 effective June 1, 2003 until May 31, 2008.10
On August 16, 2005, petitioner, through its President, Atty. Guillermo T. Maglaya (Atty. Maglaya), issued a
Memorandum11 providing guidelines on the implementation of vacation and sick leave credits as well as
vacation leave commutation. The pertinent portions of the Memorandum read:

WHEREFORE, the petition is PARTLY GRANTED. The Decision dated May 27, 2004 and Resolution 1. VACATION AND SICK LEAVE CREDITS
dated September 22, 2004 in CA-G.R. SP No. 76667 are hereby REVERSED and SET ASIDE as to the
 QMM
Vacation and sick leave credits are not automatic. They have to be earned. Monthly, a qualified
employee earns an equivalent of 1.25 days credit each for VL and SL. Vacation Leave and Sick
Leave credits of 15 days become complete at the cut off date of May 31 of each year.
(Example, only a total of 5 days credit will be given to an employee for each of sick leave [or]
vacation leave, as of month end September, that is, 4 months from June to September
multiplied by 1.25 days). An employee, therefore, who takes VL or SL beyond his leave credits
as of date will have to file leave without pay for leaves beyond his credit.
2. VACATION LEAVE COMMUTATION
Only vacation leave is commuted or monetized to cash. Vacation leave commutation is effected
after the second year of continuous service of an employee. Hence, an employee who started
working June 1, 2005 will get his commutation on May 31, 2007 or thereabout.12
On August 25, 2005, respondent’s President, Cynthia L. De Lara (De Lara) wrote a letter13to Atty.
Maglaya informing him that respondent is not amenable to the unilateral changes made by petitioner. 14 De
Lara questioned the guidelines for being violative of existing practices and the CBA,15 specifically Sections
1 and 2, Article XII of the CBA, to wit:
ARTICLE
VACATION LEAVE AND SICK LEAVE
SECTION 1. VACATION LEAVE - All regular and non-tenured rank-and-file faculty and staff who are
entitled to receive shall enjoy fifteen (15) days vacation leave with pay annually.
1.1 All unused vacation leave after the second year of service shall be converted into cash and be paid to
the entitled employee at the end of each school year to be given not later than August 30 of each year.
SECTION 2. SICK LEAVE - All regular and non-tenured rank-and-file faculty and staff shall enjoy fifteen
(15) days sick leave with pay annually.16
On February 8, 2006, a Labor Management Committee (LMC) Meeting was held during which petitioner
advised respondent to file a grievance complaint on the implementation of the vacation and sick leave
policy.17 In the same meeting, petitioner announced its plan of implementing a one-retirement
policy,18 which was unacceptable to respondent.
Ruling of the Voluntary Arbitrator
Unable to settle their differences at the grievance level, the parties referred the matter to a Voluntary
Arbitrator. During the hearing, respondent submitted affidavits to prove that there is an established
practice of giving two retirement benefits, one from the Private Education Retirement Annuity Association
(PERAA) Plan and another from the CBA Retirement Plan. Sections 1, 2, 3 and 4 of Article XVI of the
CBA provide:
ARTICLE XVI
SEPARATION, DISABILITY AND RETIREMENT PAY
SECTION 1. ELIGIBILITY FOR MEMBERSHIP - Membership in the Plan shall be automatic for all full-
time, regular staff and tenured faculty of the University, except the University President. Membership in
LABOR REL CBA 7
the Plan shall commence on the first day of the month coincident with or next following his statement of
Regular/Tenured Employment Status.
SECTION 2. COMPULSORY RETIREMENT DATE - The compulsory retirement date of each Member
shall be as follows:
a. Faculty – The last day of the School Year, coincident with his attainment of age sixty (60)
with at least five (years) of unbroken, credited service.
b. Staff – Upon reaching the age of sixty (60) with at least five (5) years of unbroken, credited
service.
SECTION 3. OPTIONAL RETIREMENT DATE - A Member may opt for an optional retirement prior to his
compulsory retirement. His number of years of service in the University shall be the basis of computing x x
x his retirement benefits regardless of his chronological age.
SECTION 4. RETIREMENT BENEFIT - The retirement benefit shall be a sum equivalent to 100% of the
member’s final monthly salary for compulsory retirement.
XII
For optional retirement, the vesting schedule shall be:
x x x x19
On November 2, 2006, the Voluntary Arbitrator rendered a Decision20 declaring the one-retirement policy
and the Memorandum dated August 16, 2005 contrary to law. The dispositive portion of the Decision
reads:
WHEREFORE, the following award is hereby made:
1. The assailed University guidelines on the availment of vacation and sick leave credits and
vacation leave commutation are contrary to law. The University is consequently ordered to
reinstate the earlier scheme, practice or policy in effect before the issuance of the said
guidelines on August 16, 2005;
2. The "one retirement" policy is contrary to law and is hereby revoked and rescinded. The
University is ordered x x x to resume and proceed with the established practice of extending to
qualified employees retirement benefits under both the CBA and the PERAA Plan.
3. The other money claims are denied.21
Ruling of the Court of Appeals
Aggrieved, petitioner appealed the case to the CA via a Petition for Review under Rule 43 of the Rules of
Court.
On September 25, 2007, the CA rendered a Decision22 finding the rulings of the Voluntary Arbitrator
supported by substantial evidence. It also affirmed the nullification of the one-retirement policy and the
 QMM
Memorandum dated August 16, 2005 on the ground that these unilaterally amended the CBA without the
consent of respondent.23Thus:
WHEREFORE, the instant appeal is DISMISSED for lack of merit.
SO ORDERED.24
Petitioner moved for reconsideration but the same was denied by the CA in its February 5, 2008
Resolution.25
Issues
Hence, this recourse by petitioner raising the following issues:
a.
Whether x x x the [CA] committed grave and palpable error in sustaining the Voluntary Arbitrator’s ruling
that the Affidavits submitted by Respondent WU-PFSA are substantial evidence as defined by the rules
and jurisprudence that would substantiate that Petitioner WU-P has long been in the practice of granting
its employees two (2) sets of Retirement Benefits.
b.
Whether x x x the [CA] committed grave and palpable error in sustaining the Voluntary Arbitrator’s ruling
that a university practice of granting its employees two (2) sets of Retirement Benefits had already been
established as defined by the law and jurisprudence especially in light of the illegality and lack of authority
of such alleged grant.
c.
Whether x x x the [CA] committed grave and palpable error in sustaining the Voluntary Arbitrator’s ruling
that it is incumbent upon Petitioner WU-P to show proof that no Board Resolution was issued granting two
(2) sets of Retirement Benefits.
d.
Whether x x x the [CA] committed grave and palpable error in revoking the 16 August 2005 Memorandum
of Petitioner WU-P for being contrary to extant policy.26
Petitioner’s Arguments
Petitioner argues that there is only one retirement plan as the CBA Retirement Plan and the PERAA Plan
are one and the same.27 It maintains that there is no established company practice or policy of giving two
retirement benefits to its employees.28 Assuming, without admitting, that two retirement benefits were
released,29 petitioner insists that these were done by mere oversight or mistake as there is no Board
Resolution authorizing their release.30 And since these benefits are unauthorized and irregular, these
cannot ripen into a company practice or policy.31 As to the affidavits submitted by respondent, petitioner
claims that these are self-serving declarations,32and thus, should not be given weight and credence.33
LABOR REL CBA 8
In addition, petitioner claims that the Memorandum dated August 16, 2005, which provides for the
guidelines on the implementation of vacation and sick leave credits as well as vacation leave
commutation, is valid because it is in full accord with existing policy. 34
Respondent’s Arguments
Respondent belies the claims of petitioner and asserts that there are two retirement plans as the PERAA
Retirement Plan, which has been implemented for more than 30 years, is different from the CBA
Retirement Plan.35 Respondent further avers that it has always been a practice of petitioner to give two
retirement benefits36and that this practice was established by substantial evidence as found by both the
Voluntary Arbitrator and the CA.37
As to the Memorandum dated August 16, 2005, respondent asserts that it is arbitrary and contrary to the
CBA and existing practices as it added qualifications or limitations which were not agreed upon by the
parties.38
Our Ruling
The Petition is bereft of merit.
The Non-Diminution Rule found in Article 10039 of the Labor Code explicitly prohibits employers from
eliminating or reducing the benefits received by their employees. This rule, however, applies only if the
benefit is based on an express policy, a written contract, or has ripened into a practice. 40 To be
considered a practice, it must be consistently and deliberately made by the employer over a long period of
time.41
An exception to the rule is when "the practice is due to error in the construction or application of a doubtful
or difficult question of law."42 The error, however, must be corrected immediately after its
discovery;43 otherwise, the rule on Non-Diminution of Benefits would still apply.
The practice of giving two retirement
benefits to petitioner’s employees is
supported by substantial evidence.
In this case, respondent was able to present substantial evidence in the form of affidavits to support its
claim that there are two retirement plans. Based on the affidavits, petitioner has been giving two
retirement benefits as early as 1997.44 Petitioner, on the other hand, failed to present any evidence to
refute the veracity of these affidavits. Petitioner’s contention that these affidavits are self-serving holds no
water. The retired employees of petitioner have nothing to lose or gain in this case as they have already
received their retirement benefits. Thus, they have no reason to perjure themselves. Obviously, the only
reason they executed those affidavits is to bring out the truth. As we see it then, their affidavits,
corroborated by the affidavits of incumbent employees, are more than sufficient to show that the granting
of two retirement benefits to retiring employees had already ripened into a consistent and deliberate
practice.
Moreover, petitioner’s assertion that there is only one retirement plan as the CBA Retirement Plan and the
PERAA Plan are one and the same is not supported by any evidence. There is nothing in Article XVI of
the CBA to indicate or even suggest that the "Plan" referred to in the CBA is the PERAA Plan. Besides,
any doubt in the interpretation of the provisions of the CBA should be resolved in favor of respondent. In
fact, petitioner’s assertion is negated by the announcement it made during the LMC Meeting on February
 QMM LABOR REL CBA 9

8, 2006 regarding its plan of implementing a "one-retirement plan." For if it were true that petitioner was G.R. No. 185556 March 28, 2011
already implementing a one-retirement policy, there would have been no need for such announcement.
Equally damaging is the letter-memorandum45 dated May 11, 2006, entitled "Suggestions on the defenses
SUPREME STEEL CORPORATION, Petitioner,
we can introduce to justify the abolition of double retirement policy," prepared by the petitioner’s legal
vs.
counsel.
NAGKAKAISANG MANGGAGAWA NG SUPREME INDEPENDENT UNION (NMS-IND-
APL), Respondent.
These circumstances, taken together, bolster the finding that the two-retirement policy is a
practice.1âwphi1 Thus, petitioner cannot, without the consent of respondent, eliminate the two-retirement
DECISION
policy and implement a one-retirement policy as this would violate the rule on non-diminution of benefits.

NACHURA, J.:
As a last ditch effort to abolish the two-retirement policy, petitioner contends that such practice is illegal or
unauthorized and that the benefits were erroneously given by the previous administration. No evidence,
however, was presented by petitioner to substantiate its allegations. This petition for review on certiorari assails the Court of Appeals (CA) Decision 1 dated September 30,
2008, and Resolution dated December 4, 2008, which affirmed the finding of the National Labor Relations
Commission (NLRC) that petitioner violated certain provisions of the Collective Bargaining Agreement
Considering the foregoing disquisition, we agree with the findings of the Voluntary Arbitrator, as affirmed
(CBA).
by the CA, that there is substantial evidence to prove that there is an existing practice of giving two
retirement benefits, one under the PERAA Plan and another under the CBA Retirement Plan.
Petitioner Supreme Steel Pipe Corporation is a domestic corporation engaged in the business of
manufacturing steel pipes for domestic and foreign markets. Respondent Nagkakaisang Manggagawa ng
The Memorandum dated August 16,
Supreme Independent Union is the certified bargaining agent of petitioner’s rank-and-file employees. The
2005 is contrary to the existing CBA.
CBA2 in question was executed by the parties to cover the period from June 1, 2003 to May 31, 2008.

Neither do we find any reason to disturb the findings of the CA that the Memorandum dated August 16,
The Case
2005 is contrary to the existing CBA.

On July 27, 2005, respondent filed a notice of strike with the National Conciliation and Mediation Board
Sections 1 and 2 of Article XII of the CBA provide that all covered employees are entitled to 15 days sick
(NCMB) on the ground that petitioner violated certain provisions of the CBA. The parties failed to settle
leave and 15 days vacation leave with pay every year and that after the second year of service, all unused
their dispute. Consequently, the Secretary of Labor certified the case to the NLRC for compulsory
vacation leave shall be converted to cash and paid to the employee at the end of each school year, not
arbitration pursuant to Article 263(g) of the Labor Code.
later than August 30 of each year.

Respondent alleged eleven CBA violations, delineated as follows:

The Memorandum dated August 16, 2005, however, states that vacation and sick leave credits are not
automatic as leave credits would be earned on a month-to-month basis. This, in effect, limits the available
leave credits of an employee at the start of the school year. For example, for the first four months of the A. Denial to four employees of the CBA- provided wage increase
school year or from June to September, an employee is only entitled to five days vacation leave and five
days sick leave.46 Considering that the Memorandum dated August 16, 2005 imposes a limitation not Article XII, Section 1 of the CBA provides:
agreed upon by the parties nor stated in the CBA, we agree with the CA that it must be struck down.

Section 1. The COMPANY shall grant a general wage increase, over and above to all employees,
In closing, it may not be amiss to mention that when the provision of the CBA is clear, leaving no doubt on according to the following schedule:
the intention of the parties, the literal meaning of the stipulation shall govem.47

A. Effective June 1, 2003 P14.00 per working day;

However, if there is doubt in its interpretation, it should be resolved in favor of labor,48 as this is mandated
by no less than the Constitution.49
WHEREFORE, the Petition is hereby DENIED. The assailed September 25, 2007 Decision and the B. Effective June 1, 2004 P12.00 per working day; and
February 5, 2008 Resolution of the Court of Appeals in CA-G.R. SP No. 97053 are hereby AFFIRMED.
C. Effective June 1, 2005 P12.00 per working day.3
SO ORDERED.
Respondent alleged that petitioner has repeatedly denied the annual CBA increases to at least four
individuals: Juan Niño, Reynaldo Acosta, Rommel Talavera, and Eddie Dalagon. According to respondent,
petitioner gives an anniversary increase to its employees upon reaching their first year of employment.
The four employees received their respective anniversary increases and petitioner used such anniversary
increase to justify the denial of their CBA increase for the year.4
 QMM
Petitioner explained that it has been the company’s long standing practice that upon reaching one year of
service, a wage adjustment is granted, and, once wages are adjusted, the increase provided for in the
CBA for that year is no longer implemented. Petitioner claimed that this practice was not objected to by
respondent as evidenced by the employees’ pay slips.5
Respondent countered that petitioner failed to prove that, as a matter of company practice, the
anniversary increase took the place of the CBA increase. It contended that all employees should receive
the CBA stipulated increase for the years 2003 to 2005.6
B. Contracting-out labor
Article II, Section 6 of the CBA provides:
Section 6. Prohibition of Contracting Out of Work of Members of Bargaining Unit. Thirty (30) days from the
signing of this CBA, contractual employees in all departments, except Warehouse and Packing Section,
shall be phased out. Those contractual employees who are presently in the workforce of the COMPANY
shall no longer be allowed to work after the expiration of their contracts without prejudice to being hired as
probationary employees of the COMPANY.7
Respondent claimed that, contrary to this provision, petitioner hired temporary workers for five months
based on uniformly worded employment contracts, renewable for five months, and assigned them to
almost all of the
departments in the company. It pointed out that, under the CBA, temporary workers are allowed only in
the Warehouse and Packing Section; consequently, employment of contractual employees outside this
section, whether direct or agency-hired, was absolutely prohibited. Worse, petitioner never regularized
them even if the position they occupied and the services they performed were necessary and desirable to
its business. Upon the expiration of their contracts, these workers would be replaced with other workers
with the same employment status. This scheme is a clear circumvention of the laws on regular
employment. 8
Respondent argued that the right to self-organization goes beyond the maintenance of union membership.
It emphasized that the CBA maintains a union shop clause which gives the regular employees 30 days
within which to join respondent as a condition for their continued employment. Respondent maintained
that petitioner’s persistent refusal to grant regular status to its employees, such as Dindo Buella, who is
assigned in the Galvanizing Department, violates the employees’ right to self-organization in two ways: (1)
they are deprived of a representative for collective bargaining purposes; and (2) respondent is deprived
the right to expand its membership. Respondent contended that a union’s strength lies in its number,
which becomes crucial especially during negotiations; after all, an employer will not bargain seriously with
a union whose membership constitutes a minority of the total workforce of the company. According to
respondent, out of the 500 employees of the company, only 147 are union members, and at least 60
employees would have been eligible for union membership had they been recognized as regular
employees.9
For its part, petitioner admitted that it hired temporary workers. It purportedly did so to cope with the
seasonal increase of the job orders from abroad. In order to comply with the job orders, petitioner hired
the temporary workers to help the regular workers in the production of steel pipes. Petitioner maintained
that these workers do not affect respondent’s membership. Petitioner claimed that it agreed to terminate
these temporary employees on the condition that the regular employees would have to perform the work
that these employees were performing, but respondent refused. Respondent’s refusal allegedly proved
LABOR REL CBA 10
that petitioner was not contracting out the services being performed by union members. Finally, petitioner
insisted that the hiring of temporary workers is a management prerogative.10
C. Failure to provide shuttle service
Petitioner has allegedly reneged on its obligation to provide shuttle service for its employees pursuant to
Article XIV, Section 7 of the CBA, which provides:
Section 7. Shuttle Service. As per company practice, once the company vehicle used for the purpose has
been reconditioned.11
Respondent claimed that the company vehicle which would be used as shuttle service for its employees
has not been reconditioned by petitioner since the signing of the CBA on February 26, 2004. 12 Petitioner
explained that it is difficult to implement this provision and simply denied that it has reneged on its
obligation.13
D. Refusal to answer for the medical expenses incurred by three employees
Respondent asserted that petitioner is liable for the expenses incurred by three employees who were
injured while in the company premises. This liability allegedly stems from Article VIII, Section 4 of the CBA
which provides:
Section 4. The COMPANY agrees to provide first aid medicine and first aid service and consultation free
of charge to all its employees.14
According to respondent, petitioner’s definition of what constitutes first aid service is limited to the bare
minimum of treating injured employees while still within the company premises and referring the injured
employee to the Chinese General Hospital for treatment, but the travel expense in going to the hospital is
charged to the employee. Thus, when Alberto Guevarra and Job Canizares, union members, were injured,
they had to pay P90.00 each for transportation expenses in going to the hospital for treatment and going
back to the company thereafter. In the case of Rodrigo Solitario, petitioner did not even shoulder the cost
of the first aid medicine, amounting to P2,113.00, even if he was injured during the company sportsfest,
but the amount was deducted, instead, from his salary. Respondent insisted that this violates the above
cited provision of the CBA.15
Petitioner insisted that it provided medicine and first aid assistance to Rodrigo Solitario.1avvphi1 It alleged
that the latter cannot claim hospitalization benefits under Article VIII, Section 1 16 of the CBA because he
was not confined in a hospital.17
E. Failure to comply with the time-off with pay provision
Article II, Section 8 of the CBA provides:
Section 8. Time-Off with Pay. The COMPANY shall grant to the UNION’s duly authorized representative/s
or to any employee who are on duty, if summoned by the UNION to testify, if his/her presence is
necessary, a paid time-off for the handling of grievances, cases, investigations, labor-management
conferences provided that if the venue of the case is outside Company premises involving [the]
implementation and interpretation of the CBA, two (2) representatives of the UNION who will attend the
said hearing shall be considered time-off with pay. If an employee on a night shift attends grievance on
 QMM LABOR REL CBA 11

labor-related cases and could not report for work due to physical condition, he may avail of union leave b. A whole day if the work stoppage occurs after four (4) hours of work.23
without need of the two (2) days prior notice.18
Respondent averred that petitioner paid the employees’ salaries for one hour only of the four-hour
Respondent contended that under the said provision, petitioner was obliged to grant a paid time-off to brownout that occurred on July 25, 2005 and refused to pay for the remaining three hours. In defense,
respondent’s duly authorized representative or to any employee who was on duty, when summoned by petitioner simply insisted that brownouts are not included in the above list of emergencies.24
respondent to testify or when the employee’s presence was necessary in the grievance hearings,
meetings, or investigations.19
Respondent rejoined that, under the principle of ejusdem generis, brownouts or power outages come
within the "emergencies" contemplated by the CBA provision. Although brownouts were not specifically
Petitioner admitted that it did not honor the claim for wages of the union officers who attended the identified as one of the emergencies listed in the said CBA provision, it cannot be denied that brownouts
grievance meetings because these meetings were initiated by respondent itself. It argued that since the fall within the same kind or class of the enumerated emergencies. Respondent maintained that the
union officers intention of the provision was to compensate the employees for occurrences which are beyond their
control, and power outage is one of such occurrences. It insisted that the list of emergencies is not an
exhaustive list but merely gives an idea as to what constitutes an actual emergency that is beyond the
were performing their functions as such, and not as employees of the company, the latter should not be
control of the employee.25
liable. Petitioner further asserted that it is not liable to pay the wages of the union officers when the
meetings are held beyond company time (3:00 p.m.). It claimed that time-off with pay is allowed only if the
venue of the meeting is outside company premises and the meeting involves the implementation and H. Dismissal of Diosdado Madayag
interpretation of the CBA.20
Diosdado Madayag was employed as welder by petitioner. He was served a Notice of Termination dated
In reply, respondent averred that the above quoted provision does not make a qualification that the March 14, 2005 which read:
meetings should be held during office hours (7:00 a.m. to 3:00 p.m.); hence, for as long as the presence of
the employee is needed, time spent during the grievance meeting should be paid. 21
Please consider this as a Notice of Termination of employment effective March 14, 2005 under Art. 284 of
the Labor Code and its Implementing Rules.
F. Visitors’ free access to company premises Respondent charged petitioner with violation of Article II,
Section 7 of the CBA which provides:
This is based on the medical certificate submitted by your attending physician, Lucy Anne E. Mamba,
M.D., Jose R. Reyes Memorial Medical Center dated March 7, 2005 with the following diagnosis:
Section 7. Free Access to Company Premises. Local Union and Federation officers (subject to company’s
security measure) shall be allowed during working hours to enter the COMPANY premises for the
‘Diabetes Mellitus Type 2’
following reasons:

Please be guided accordingly.26

a. To investigate grievances that have arisen;

b. To interview Union Officers, Stewards and members during reasonable hours; and
c. To attend to any meeting called by the Management or the UNION.22
Respondent contended that Madayag’s dismissal from employment is illegal because petitioner failed to
obtain a certification from a competent public authority that his disease is of such nature or at such stage
that it cannot be cured within six months even after proper medical treatment. Petitioner also failed to
prove that Madayag’s continued employment was prejudicial to his health or that of his colleagues.27

G. Failure to comply with reporting time-off provision
Respondent maintained that a brownout is covered by Article XII, Section 3 of the CBA which states:
Petitioner, on the other hand, alleged that Madayag was validly terminated under Art. 28428 of the Labor
Code and that his leg was amputated by reason of diabetes, which disease is not work-related. Petitioner
claimed that it was willing to pay Madayag 13 days for every year of service but respondent was asking for
additional benefits.29

Section 3. Reporting Time-Off. The employees who have reported for work but are unable to continue
I. Denial of paternity leave benefit to two employees
working because of emergencies such as typhoons, flood, earthquake, transportation strike, where the
COMPANY is affected and in case of fire which occurs in the block where the home of the employee is
situated and not just across the street and serious illness of an immediate member of the family of the Article XV, Section 2 of the CBA provides:
employee living with him/her and no one in the house can bring the sick family member to the hospital,
shall be paid as follows:
Section 2. Paternity Leave. As per law[,] [t]he Company shall, as much as possible, pay paternity leave
within 2 weeks from submission of documents.30
a. At least half day if the work stoppage occurs within the first four (4) hours of work; and
 QMM
Petitioner admitted that it denied this benefit to the claimants for failure to observe the requirement
provided in the Implementing Rules and Regulations of Republic Act No. 8187 (Paternity Leave Act of
1995), that is, to notify the employer of the pregnancy of their wives and the expected date of delivery.31
Respondent argued that petitioner is relying on technicalities by insisting that the denial was due to the
two employees’ failure to notify it of the pregnancy of their respective spouses. It maintained that the
notification requirement runs counter to the spirit of the law. Respondent averred that, on grounds of social
justice, the oversight to notify petitioner should not be dealt with severely by denying the two claimants this
benefit.32
J. Discrimination and harassment
According to respondent, petitioner was contemptuous over union officers for protecting the rights of union
members. In an affidavit executed by Chito Guadaña, union secretary, he narrated that Alfred Navarro,
Officer-in-Charge of the Packing Department, had been harsh in dealing with his fellow employees and
would even challenge some workers to a fight. He averred that Navarro had an overbearing attitude during
work and grievance meetings. In November 2004, Navarro removed Guadaña, a foreman, from his
position and installed another foreman from another section. The action was allegedly brought about by
earlier grievances against Navarro’s abuse. Petitioner confirmed his transfer to another section in violation
of Article VI, Section 6 of the CBA,33 which states in part:
Section 6. Transfer of Employment. – No permanent positional transfer outside can be effected by the
COMPANY without discussing the grounds before the Grievance Committee. All transfer shall be with
advance notice of two (2) weeks. No transfer shall interfere with the employee’s exercise of the right to
self-organization.34
Respondent also alleged that Ariel Marigondon, union president, was also penalized for working for his
fellow employees. One time, Marigondon inquired from management about matters concerning tax
discrepancies because it appeared that non-taxable items were included as part of taxable income.
Thereafter, Marigondon was transferred from one area of operation to another until he was allegedly
forced to accept menial jobs of putting control tags on steel pipes, a kind of job which did not require his
16 years of expertise in examining steel pipes.35
Edgardo Masangcay, respondent’s Second Vice President, executed an affidavit wherein he cited three
instances when his salary was withheld by petitioner. The first incident happened on May 28, 2005 when
petitioner refused to give his salary to his wife despite presentation of a proof of identification (ID) and
letter of authorization. On June 18, 2005, petitioner also refused to release his salary to Pascual Lazaro
despite submission of a letter of authority and his ID and, as a result, he was unable to buy medicine for
his child who was suffering from asthma attack. The third instance happened on June 25, 2005 when his
salary was short of P450.00; this amount was however released the following week.36
Petitioner explained that the transfer of the employee from one department to another was the result of
downsizing the Warehouse Department, which is a valid exercise of management prerogative. In
Guadaña’s case, Navarro denied that he was being harsh but claimed that he merely wanted to stress
some points. Petitioner explained that Guadaña was transferred when the section where he was assigned
was phased out due to the installation of new machines. Petitioner pointed out that the other workers
assigned in said section were also transferred.37
For the petitioner, Emmanuel Mendiola, Production Superintendent, also executed an affidavit attesting
that the allegation of Ariel Marigondon, that he was harassed and was a victim of discrimination for being
LABOR REL CBA 12
respondent’s President, had no basis. Marigondon pointed out that after the job order was completed, he
was reassigned to his original shift and group.38
Petitioner also submitted the affidavits of Elizabeth Llaneta Aguilar, disbursement clerk and hiring staff,
and Romeo T. Sy, Assistant Personnel Manager. Aguilar explained that she did not mean to harass
Masangcay, but she merely wanted to make sure that he would receive his salary. Affiant Sy admitted that
he refused to release Masangcay’s salary to a woman who presented herself as his (Masangcay’s) wife
since nobody could attest to it. He claimed that such is not an act of harassment but a precautionary
measure to protect Masangcay’s interest.39
K. Non-implementation of COLA in Wage Order Nos. RBIII-10 and 11
Respondent posited that any form of wage increase granted through the CBA should not be treated as
compliance with the wage increase given through the wage boards. Respondent claimed that, for a
number of years, petitioner has complied with Article XII, Section 2 of the CBA which provides:
Section 2. All salary increase granted by the COMPANY shall not be credited to any future contractual or
legislated wage increases. Both increases shall be implemented separate and distinct from the increases
stated in this Agreement. It should be understood by both parties that contractual salary increase are
separate and distinct from legislated wage increases, thus the increase brought by the latter shall be
enjoyed also by all covered employees.40
Respondent maintained that for every wage order that was issued in Region 3, petitioner never hesitated
to comply and grant a similar increase. Specifically, respondent cited petitioner’s compliance with Wage
Order No. RBIII-10 and grant of the mandated P15.00 cost of living allowance (COLA) to all its employees.
Petitioner, however, stopped implementing it to non-minimum wage earners on July 24, 2005. It
contended that this violates Article 100 of the Labor Code which prohibits the diminution of benefits
already enjoyed by the workers and that such grant of benefits had already ripened into a company
practice.41
Petitioner explained that the COLA provided under Wage Order No. RBIII-10 applies to minimum wage
earners only and that, by mistake, it implemented the same across the board or to all its employees. After
realizing its mistake, it stopped integrating the COLA to the basic pay of the workers who were earning
above the minimum wage.42
The NLRC’s Ruling
Out of the eleven issues raised by respondent, eight were decided in its favor; two (denial of paternity
leave benefit and discrimination of union members) were decided in favor of petitioner; while the issue on
visitor’s free access to company premises was deemed settled during the mandatory conference. The
dispositive portion of the NLRC Decision dated March 30, 2007 reads:
WHEREFORE, Supreme Steel Pipe Corporation (the Company) is hereby ordered to:
1) implement general wage increase to Juan Niño, Eddie Dalagon and Rommel Talavera
pursuant to the CBA in June 2003, 2004 and 2005;
2) regularize workers Dindo Buella and 60 other workers and to respect CBA provision on
contracting-out labor;
 QMM LABOR REL CBA 13

3) recondition the company vehicle pursuant to the CBA;

3) Baltazar, Roderick - P 90.1875

4) answer for expenses involved in providing first aid services including transportation 4) Bañez, Oliver - P 90.9375
expenses for this purpose, as well as to reimburse Rodrigo Solitario the sum of P2,113.00;
5) Prucal, Eduardo - P126.015

5) pay wages of union members/officers who attended grievance meetings as follows: 6) Calimquin, Rodillo - P131.0362

7) Clave, Arturo - P125.64

1) D. Serenilla - P115.24375
8) Cadavero, Rey - P108.5625
2) D. Miralpes - P115.80625
9) De Leon, Romulo - P124.35
3) E. Mallari - P108.7625
10) Lactao, Noli - P126.015
4) C. Cruz - P114.65313
11) Layco, Jr., Dandino - P130.5375
5) J. Patalbo - P161.0625
12) Legaspi, Melencio - P127.63
6) J.J. Muñoz - P111.19375
13) Quiachon, Rogelio - P130.5525
7) C. Guadaña - P56.94375
14) Sacmar, Roberto - P108.9375
8) J. Patalbo - P161.0625
15) Tagle, Farian - P129.3375
9) E. Mallari - P108.7625
16) Villavicencio, Victor - P126.015
10) C. Guadaña - P113.8875
17) Agra, Romale - P126.015
11) A. Marigondon - P170.30625
18) Basabe, Luis - P128.5575
12) A. Marigondon - P181.66
19) Bornasal, Joel - P127.53
13) A. Marigondon - P181.66
20) Casitas, Santiago - P128.5575
14) E. Masangcay - P175.75
21) Celajes, Bonifacio - P128.1825
15) A. Marigondon - P181.66
22) Avenido, Jerry - P133.2487
16) E. Masangcay - P175.75
23) Gagarin, Alfredo - P108.9375
17) A. Marigondon - P181.66
24) Layson, Paulo - P131.745
18) F. Servano - P174.02
25) Lledo, Asalem - P128.5575
19) R. Estrella - P181.50
26) Marigondon, Ariel - P131.745
20) A. Marigondon - P181.66

6) pay workers their salary for the 3 hours of the 4 hour brownout as follows: 27) Orcena, Sonnie - P126.015

28) Servano, Fernando - P126.015

1) Alagon, Jr., Pedro - P130.0875
29) Versola, Rodrigo - P126.015
2) Aliwalas, Cristeto - P108.5625 7) reinstate Diosdado Madayag to his former position without loss of seniority rights and to pay
full backwages and other benefits from 14 March 2005, date of dismissal, until the date of this
 QMM
Decision; if reinstatement is impossible[,] to pay separation pay of one month pay for every
year of service in addition to backwages;
8) dismiss the claim for paternity leave for failure of claimants to observe the requirements;
9) dismiss the charge of harassment and discrimination for lack of merit; and to
10) continue to implement COLA under Wage Order Nos. [RBIII]-10 & 11 across the board.
The issue on Visitors’ Free Access to Company Premises is dismissed for being moot and academic after
it was settled during the scheduled conferences.
SO ORDERED.43
Forthwith, petitioner elevated the case to the CA, reiterating its arguments on the eight issues resolved by
the NLRC in respondent’s favor.
The CA’s Ruling
On September 30, 2008, the CA rendered a decision dismissing the petition, thus:
WHEREFORE, premises considered, the present petition is hereby DENIED DUE COURSE and
accordingly DISMISSED, for lack of merit. The assailed Decision dated March 30, 2007 and Resolution
dated April 28, 2008 of the National Labor Relations Commission in NLRC NCR CC No. 000305-05 are
hereby AFFIRMED.
With costs against the petitioner.
SO ORDERED.44
According to the CA, petitioner failed to show that the NLRC committed grave abuse of discretion in
finding that it violated certain provisions of the CBA. The NLRC correctly held that every employee is
entitled to the wage increase under the CBA despite receipt of an anniversary increase. The CA
concluded that, based on the wording of the CBA, which uses the words "general increase" and "over and
above," it cannot be said that the parties have intended the anniversary increase to be given in lieu of the
CBA wage increase.45
The CA declared that the withdrawal of the COLA under Wage Order No. RBIII-10 from the employees
who were not minimum wage earners amounted to a diminution of benefits because such grant has
already ripened into a company practice. It pointed out that there was no ambiguity or doubt as to who
were covered by the wage order. Petitioner, therefore, may not invoke error or mistake in extending the
COLA to all employees and such act can only be construed as "as a voluntary act on the part of the
employer."46 The CA opined that, considering the foregoing, the ruling in Globe Mackay Cable and Radio
Corp. v. NLRC47 clearly did not apply as there was no doubtful or difficult question involved in the present
case.48
The CA sustained the NLRC’s interpretation of Art. VIII, Section 4 of the CBA as including the expenses
for first aid medicine and transportation cost in going to the hospital. The CA stressed that the CBA should
LABOR REL CBA 14
be construed liberally rather than narrowly and technically, and the courts must place a practical and
realistic construction upon it, giving due consideration to the context in which it was negotiated and the
purpose which it intended to serve.49
Based on the principle of liberal construction of the CBA, the CA likewise sustained the NLRC’s rulings on
the issues pertaining to the shuttle service, time-off for attendance in grievance meetings/hearings, and
time-off due to brownouts.50
The CA further held that management prerogative is not unlimited: it is subject to limitations found in law,
a CBA, or the general principles of fair play and justice. It stressed that the CBA provided such limitation
on management prerogative to contract-out labor, and compliance with the CBA is mandated by the
express policy of the law.51
Finally, the CA affirmed the NLRC’s finding that Madayag’s dismissal was illegal. It emphasized that the
burden to prove that the employee’s disease is of such nature or at such stage that it cannot be cured
within a period of six months rests on the employer. Petitioner failed to submit a certification from a
competent public authority attesting to such fact; hence, Madayag’s dismissal is illegal.52
Petitioner moved for a reconsideration of the CA’s decision. On December 4, 2008, the CA denied the
motion for lack of merit.53
Dissatisfied, petitioner filed this petition for review on certiorari, contending that the CA erred in finding that
it violated certain provisions of the CBA.
The Court’s Ruling
The petition is partly meritorious.
It is a familiar and fundamental doctrine in labor law that the CBA is the law between the parties and
compliance therewith is mandated by the express policy of the law. If the terms of a CBA are clear and
there is no doubt as to the intention of the contracting parties, the literal meaning of its stipulation shall
prevail.54 Moreover, the CBA must be construed liberally rather than narrowly and technically and the
Court must place a practical and realistic construction upon it. 55 Any doubt in the interpretation of any law
or provision affecting labor should be resolved in favor of labor.56
Upon these well-established precepts, we sustain the CA’s findings and conclusions on all the issues,
except the issue pertaining to the denial of the COLA under Wage Order No. RBIII-10 and 11 to the
employees who are not minimum wage earners.
The wording of the CBA on general wage increase cannot be interpreted any other way: The CBA
increase should be given to all employees "over and above" the amount they are receiving, even if that
amount already includes an anniversary increase. Stipulations in a contract must be read together, not in
isolation from one another.57 Consideration of Article XIII, Section 2 (non-crediting provision), bolsters
such interpretation. Section 2 states that "[a]ll salary increase granted by the company shall not be
credited to any future contractual or legislated wage increases." Clearly then, even if petitioner had
already awarded an anniversary increase to its employees, such increase cannot be credited to the
"contractual" increase as provided in the CBA, which is considered "separate and distinct."
Petitioner claims that it has been the company practice to offset the anniversary increase with the CBA
increase. It however failed to prove such material fact. Company practice, just like any other fact, habits,
 QMM
customs, usage or patterns of conduct must be proven. The offering party must allege and prove specific,
repetitive conduct that might constitute evidence of habit,58 or company practice. Evidently, the pay slips
of the four employees do not serve as sufficient proof.
Petitioner’s excuse in not providing a shuttle service to its employees is unacceptable. In fact, it can hardly
be considered as an excuse. Petitioner simply says that it is difficult to implement the provision. It relies on
the fact that "no time element [is] explicitly stated [in the CBA] within which to fulfill the undertaking." We
cannot allow petitioner to dillydally in complying with its obligation and take undue advantage of the fact
that no period is provided in the CBA. Petitioner should recondition the company vehicle at once, lest it be
charged with and found guilty of unfair labor practice.
Petitioner gave a narrow construction to the wording of the CBA when it denied (a) reimbursement for the
first-aid medicines taken by Rodrigo Solitario when he was injured during the company sportsfest and the
transportation cost incurred by Alberto Guevara and Job Canizares in going to the hospital, (b) payment of
the wages of certain employees during the time they spent at the grievance meetings, and (c) payment of
the employees’ wages during the brownout that occurred on July 25, 2002. As previously stated, the CBA
must be construed liberally rather than narrowly and technically. It is the duty of the courts to place a
practical and realistic construction upon the CBA, giving due consideration to the context in which it is
negotiated and the purpose which it is intended to serve. Absurd and illogical interpretations should be
avoided.59 A CBA, like any other contract, must be interpreted according to the intention of the parties. 60
The CA was correct in pointing out that the concerned employees were not seeking hospitalization
benefits under Article VIII, Section 1 of the CBA, but under Section 4 thereof; hence, confinement in a
hospital is not a prerequisite for the claim. Petitioner should reimburse Solitario for the first aid medicines;
after all, it is the duty of the employer to maintain first- aid medicines in its premises.61 Similarly, Guevara
and Canizares should also be reimbursed for the transportation cost incurred in going to the hospital. The
Omnibus Rules Implementing the Labor Code provides that, where the employer does not have an
emergency hospital in its premises, the employer is obliged to transport an employee to the nearest
hospital or clinic in case of emergency.62
We likewise agree with the CA on the issue of nonpayment of the time-off for attending grievance
meetings. The intention of the parties is obviously to compensate the employees for the time that they
spend in a grievance meeting as the CBA provision categorically states that the company will pay the
employee "a paid time-off for handling of grievances, investigations, labor-management conferences." It
does not make a qualification that such meeting should be held during office hours or within the company
premises.
The employees should also be compensated for the time they were prevented from working due to the
brownout. The CBA enumerates some of the instances considered as "emergencies" and these are
"typhoons, flood earthquake, transportation strike." As correctly argued by respondent, the CBA does not
exclusively enumerate the situations which are considered "emergencies." Obviously, the key element of
the provision is that employees "who have reported for work are unable to continue working" because of
the incident. It is therefore reasonable to conclude that brownout or power outage is considered an
"emergency" situation.
Again, on the issue of contracting-out labor, we sustain the CA. Petitioner, in effect, admits having hired
"temporary" employees, but it maintains that it was an exercise of management prerogative, necessitated
by the increase in demand for its product.
Indeed, jurisprudence recognizes the right to exercise management prerogative. Labor laws also
discourage interference with an employer's judgment in the conduct of its business. For this reason, the
LABOR REL CBA 15
Court often declines to interfere in legitimate business decisions of employers. The law must protect not
only the welfare of employees, but also the right of employers.63 However, the exercise of management
prerogative is not unlimited. Managerial prerogatives are subject to limitations provided by law, collective
bargaining agreements, and general principles of fair play and justice.64 The CBA is the norm of conduct
between the parties and, as previously stated, compliance therewith is mandated by the express policy of
the law.65
The CBA is clear in providing that temporary employees will no longer be allowed in the company except
in the Warehouse and Packing Section. Petitioner is bound by this provision. It cannot exempt itself from
compliance by invoking management prerogative. Management prerogative must take a backseat when
faced with a CBA provision. If petitioner needed additional personnel to meet the increase in demand, it
could have taken measures without violating the CBA.
Respondent claims that the temporary employees were hired on five-month contracts, renewable for
another five months. After the expiration of the contracts, petitioner would hire other persons for the same
work, with the same employment status.
Plainly, petitioner’s scheme seeks to prevent employees from acquiring the status of regular employees.
But the Court has already held that, where from the circumstances it is apparent that the periods of
employment have been imposed to preclude acquisition of security of tenure by the employee, they should
be struck down or disregarded as contrary to public policy and morals. 66 The primary standard to
determine a regular employment is the reasonable connection between the particular activity performed by
the employee in relation to the business or trade of the employer. The test is whether the former is usually
necessary or desirable in the usual business or trade of the employer. If the employee has been
performing the job for at least one year, even if the performance is not continuous or merely intermittent,
the law deems the repeated and continuing need for its performance as sufficient evidence of the
necessity, if not indispensability, of that activity to the business of the employer. Hence, the employment is
also considered regular, but only with respect to such activity and while such activity exists.67
We also uphold the CA’s finding that Madayag’s dismissal was illegal. It is already settled that the burden
to prove the validity of the dismissal rests upon the employer. Dismissal based on Article 284 of the Labor
Code is no different, thus:
The law is unequivocal: the employer, before it can legally dismiss its employee on the ground of disease,
must adduce a certification from a competent public authority that the disease of which its employee is
suffering is of such nature or at such a stage that it cannot be cured within a period of six months even
with proper treatment.
xxxx
In Triple Eight Integrated Services, Inc. v. NLRC, the Court explains why the submission of the requisite
medical certificate is for the employer’s compliance, thus:
The requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with;
otherwise, it would sanction the unilateral and arbitrary determination by the employer of the gravity or
extent of the employee’s illness and thus defeat the public policy on the protection of labor.
x x x x68
 QMM LABOR REL CBA 16

However, with respect to the issue of whether the COLA under Wage Order Nos. RBIII-10 and 11 should G.R. No. 183122 June 15, 2011
be implemented across the board, we hold a different view from that of the CA. No diminution of benefits
would result if the wage orders are not implemented across the board, as no such company practice has
GENERAL MILLING CORPORATION-INDEPENDENT LABOR UNION (GMC-ILU), Petitioner,
been established.
vs.
GENERAL MILLING CORPORATION, Respondent.
Diminution of benefits is the unilateral withdrawal by the employer of benefits already enjoyed by the
employees. There is diminution of benefits when it is shown that: (1) the grant or benefit is founded on a
x - - - - - - - - - - - - - - - - - - - - - - -x
policy or has ripened into a practice over a long period of time; (2) the practice is consistent and
deliberate; (3) the practice is not due to error in the construction or application of a doubtful or difficult
question of law; and (4) the diminution or discontinuance is done unilaterally by the employer. 69 G.R. No. 183889

To recall, the CA arrived at its ruling by relying on the fact that there was no ambiguity in the wording of GENERAL MILLING CORPORATION, Petitioner,
the wage order as to the employees covered by it. From this, the CA concluded that petitioner actually vs.
made no error or mistake, but acted voluntarily, in granting the COLA to all its employees. It therefore took GENERAL MILLING CORPORATION-INDEPENDENT LABOR UNION (GMC-ILU), ET.
exception to the Globe Mackay case which, according to it, applies only when there is a doubtful or difficult AL, Respondents.
question involved.
PEREZ, J.:
The CA failed to note that Globe Mackay primarily emphasized that, for the grant of the benefit to be
considered voluntary, "it should have been practiced over a long period of time, and must be shown to Assailed in these petitions for review on certiorari filed pursuant to Rule 45 of the 1997 Rules of Civil
have been consistent and deliberate."70 The fact that the practice must not have been due to error in the Procedure are the Court of Appeals’(CA) resolution of the separate petitions for certiorari questioning the
construction or application of a doubtful or difficult question of law is a distinct requirement. 20 July 2006 Decision1 rendered and the 23 August 2006 Resolution2 issued by the Fourth Division of the
National Labor Relations Commission (NLRC), Cebu City, in NLRC Case No. V-000632-2005. In G.R. No.
The implementation of the COLA under Wage Order No. RBIII-10 across the board, which only lasted for 183122, petitioner General Milling Corporation-Independent Labor Union (the Union) seeks the reversal of
less than a year, cannot be considered as having been practiced "over a long period of time." While it is the 10 October 2007 Decision rendered by the Special Twentieth Division of the CA in CA-G.R. CEB-SP
true that jurisprudence has not laid down any rule requiring a specific minimum number of years in order No. 02226,3 the dispositive portion of which states:
for a practice to be considered as a voluntary act of the employer, under existing jurisprudence on this
matter, an act carried out within less than a year would certainly not qualify as such. Hence, the WHEREFORE, all the foregoing premises considered, the instant Petition is hereby PARTIALLY
withdrawal of the COLA Wage Order No. RBIII-10 from the salaries of non-minimum wage earners did not GRANTED.
amount to a "diminution of benefits" under the law.

There is also no basis in enjoining petitioner to implement Wage Order No. RBIII-11 across the board.
Similarly, no proof was presented showing that the implementation of wage orders across the board has
ripened into a company practice. In the same way that we required petitioner to prove the existence of a
company practice when it alleged the same as defense, at this instance, we also require respondent to
show proof of the company practice as it is now the party claiming its existence. Absent any proof of
specific, repetitive conduct that might constitute evidence of the practice, we cannot give credence to
respondent’s claim. The isolated act of implementing a wage order across the board can hardly be
considered a company practice,71 more so when such implementation was erroneously made.
WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The CA Decision September
30, 2008 and Resolution dated December 4, 2008 are AFFIRMED with MODIFICATION that the order for
petitioner to continue implementing Wage Order No. RBIII-10 and 11 across the board is SET ASIDE.
Accordingly, item 10 of the NLRC Decision dated March 30, 2007 is modified to read "dismiss the claim
for implementation of Wage Order Nos. RBIII-10 and 11 to the employees who are not minimum wage
earners."
SO ORDERED.
The July 20, 2006 Decision of respondent NLRC in NLRC Case No. V-000632-2005 is hereby AFFIRMED
insofar as it affirmed the October 27, 2005 Order of Executive Labor Arbiter Ortiz in RAB Case No. VII-06-
0475-1992 with the modification of: a) excluding the vacation leave salary rate differentials, sick leave
salary rate differentials, b) excluding employees who have executed quitclaims which are hereby declared
valid, and c) deducting salary increases and other employment benefits voluntarily given by respondent
GMC in the computation of benefits.
Accordingly, the instant case is hereby REFERRED to the GRIEVANCE MACHINERY under the imposed
CBA for the recomputation of benefits claimed by petitioner GMC-ILU under the said imposed CBA taking
into consideration the guidelines laid down by the Court in this Decision as well as the validity of the
subject quitclaims hereinbefore discussed.
SO ORDERED.4
In G.R. No. 183889, petitioner General Milling Corporation (GMC) prays for the setting aside of the 16
November 2007 Decision rendered by the Eighteenth Division of the CA in CA-G.R. CEB-SP No.
02232,5 the decretal portion of which states:

WHEREFORE, the Decision dated July 20, 2006 and the Resolution dated August 23, 2006 of public
respondent NLRC are hereby AFFIRMED IN TOTO and the instant petition is DISMISSED.
 QMM
SO ORDERED.6
The Facts
On 28 April 1989, GMC and the Union entered into a collective bargaining agreement (CBA) which
provided, among other terms, the latter’s representation of the collective bargaining unit for a three-year
term made to retroact to 1 December 1988. On 29 November 1991 or one day before the expiration of the
subject CBA, the Union sent a draft CBA proposal to GMC, with a request for counter-proposals from the
latter, for the purpose of renegotiating the existing CBA between the parties. In view of GMC’s failure to
comply with said request, the Union commenced the complaint for unfair labor practice which, under
docket of RAB Case No. VII-06-0475-92, was dismissed for lack of merit in a decision dated 21 December
1993 issued by the Regional Arbitration Branch-VII (RAB-VII) of the National Labor Relations Commission
(NLRC).7 On appeal, however, said dismissal was reversed and set aside in the 30 January 1998 decision
rendered by the Fourth Division of the NLRC in NLRC Case No. V-0112-94,8 the dispositive portion of
which states:
WHEREFORE, premises considered, the instant appeal is hereby GRANTED. The Decision dated
December 21, 1993 is hereby VACATED and SET ASIDE and a new one issued ordering the imposition
upon the respondent company of the complainant union[‘s] draft CBA proposal for the remaining two years
duration of the original CBA which is from December 1, 1991 to November 30, 1993; and for the
respondent to pay attorney’s fees.
SO ORDERED.9
With the reconsideration and setting aside of the foregoing decision in the NLRC’s resolution dated 6
October 1998,10 the Union filed the petitions for certiorari docketed before the CA as CA-G.R. SP Nos.
50383 and 51763. In a decision dated 19 July 2000, the then Fourteenth Division of the CA reversed and
set aside the NLRC’s 6 October 1998 resolution and reinstated the aforesaid 30 January 1998 decision,
except with respect to the undetermined award of attorney’s fees which was deleted for lack of statement
of the basis therefor in the assailed decision.11 Aggrieved by the CA’s 26 October 2000 resolution denying
its motion for reconsideration, GMC elevated the case to this Court via the petition for review on certiorari
docketed before this Court as G.R. No. 146728. In a decision dated 11 February 2004 rendered by the
Court’s then Second Division, the CA’s 30 January 1998 decision and 26 October 2000 resolution were
affirmed,12 upon the following findings and conclusions, to wit:
GMC’s failure to make a timely reply to the proposals presented by the union is indicative of its utter lack
of interest in bargaining with the union. Its excuse that it felt the union no longer represented the worker,
was mainly dilatory as it turned out to be utterly baseless.
We hold that GMC’s refusal to make a counter proposal to the union’s proposal for CBA negotiation is an
indication of its bad faith. Where the employer did not even bother to submit an answer to the bargaining
proposals of the union, there is a clear evasion of the duty to bargain collectively.
Failing to comply with the mandatory obligation to submit a reply to the union’s proposals, GMC violated
its duty to bargain collectively, making it liable for unfair labor practice. Perforce, the Court of Appeals did
not commit grave abuse of discretion amounting to lack or excess of jurisdiction in finding that GMC is,
under the circumstances, guilty of unfair labor practice.
xxxx
LABOR REL CBA 17
x x x (I)t would be unfair to the union and its members if the terms and conditions contained in the old CBA
would continue to be imposed on GMC’s employees for the remaining two (2) years of the CBA’s duration.
We are not inclined to gratify GMC with an extended term of the old CBA after it resorted to delaying
tactics to prevent negotiations. Since it was GMC which violated the duty to bargain collectively, based on
Kiok Loy and Divine World University of Tacloban, it had lost its statutory right to negotiate or renegotiate
the terms and conditions of the draft CBA proposed by the union.
xxxx
Under ordinary circumstances, it is not obligatory upon either side of a labor controversy to precipitately
accept or agree to the proposals of the other. But an erring party should not be allowed with impunity to
schemes feigning negotiations by going through empty gestures. Thus, by imposing on GMC the
provisions of the draft CBA proposed by the union, in our view, the interests of equity and fair play were
properly served and both the parties regained equal footing, which was lost when GMC thwarted the
negotiations for new economic terms of the CBA.13
With the ensuing finality of the foregoing decision, the Union filed a motion for issuance of a writ of
execution dated 21 March 2005, to enforce the claims of the covered employees which it computed in the
sum of P433,786,786.36 and to require GMC to produce said employee’s time cards for the purpose of
computing their overtime pay, night shift differentials and labor standard benefits for work rendered on rest
days, legal holidays and special holidays.14 On 18 April 2005, however, GMC opposed said motion on the
ground, among other matters, that the bargaining unit no longer exist in view of the resignation,
retrenchment, retirement and separation from service of workers who have additionally executed waivers
and quitclaims acknowledging full settlement of their claims; that the covered employees have already
received salary increases and benefits for the period 1991 to 1993; and, that aside from the aforesaid
supervening events which precluded the enforcement thereof, the decision rendered in the case simply
called for the execution of a CBA incorporating the Union’s proposal, not the outright computation of
benefits thereunder.15
In a "Submission" dated 27 May 2005, GMC further manifested that the Union membership in the
bargaining unit did not exceed 286 and that following employees should be excluded from the coverage of
the decision sought to be enforced: (a) 47 employees who were hired after 1992; (b) 234 employees who
had been separated from the service; (c) 37 employees who, as daily paid rank and file employees, were
represented by another union and covered by a different CBA; and, (d) 41 workers holding
managerial/supervisory/confidential positions.16 In its comment to the foregoing "Submission", however,
the Union argued that the benefits derived from its proposed CBA extended to both union members and
non-members; that the newly hired employees were entitled to the benefits accruing after their
employment by GMC; that the employees who had, in the meantime, been separated from service could
not have validly waived the benefits which were only determined with finality in the 11 February 2004
decision rendered in G.R. No. 146728; that the CBA benefits can be extended the daily paid employees
upon their re-classification as monthly paid employees as well as to GMC’s managerial and supervisory
employees, prior to their promotion; and, that the imposition of its CBA proposals necessarily calls for the
computation of the benefits therein provided.17
Acting on the memoranda the parties filed in support of their respective positions, 18 Executive Labor
Arbiter Violeta Ortiz-Bantug issued the 27 October 2005 order, limiting the computation of the benefits of
the Union’s CBA proposal to the remaining two years of the duration of the original CBA or from 1
December 1991 up to 30 November 1993. The computation covered the 436 employees included in the
Union’s list, less the following: (a) 77 employees who were hired or regularized after 30 November 1993;
(b) 36 daily paid rank and file employees who were covered by a separate CBA; (c) 41
managerial/supervisory employees; and (d) 1 employee for whom no salary-rate information was
 QMM
submitted in the premises.19 As a consequence, said Executive Labor Arbiter disposed of the aforesaid
pending motion and incidents in the following wise:
Based on all the foregoing, computations have been made, details of which are prepared and reflected in
separate pages but which still form part of this Order. By way of summary, the grand total consists of the
following:
Salary Increase Differentials P17,575,000.00
Rest Day 4,320,148.50
Vacation Leave Differentials 920,013.42
Sick Leave Differentials 920,013.42
School Opening Bonus 5,094,044.69
13th Month Pay Differentials 1,468,999.98
Christmas Bonus 4,560,816.78
Signing Bonus 1,310,000.00
Total Money Claims P36,169,036.79
Sacks of Rice 6,372
Issue the appropriate writ of execution based on the foregoing computations.
SO ORDERED.20
Aggrieved, the Union filed a partial appeal dated 2 November 2005, on the ground that the Executive
Labor Arbiter abused her discretion in: (a) confining the computation of the benefits from 1 December
1991 to 30 November 1993 in favor of only 281 employees out of the 436 included in its list; (b) computing
only 10 out of the 15 benefits provided under its CBA proposal; and (c) failing to direct the GMC to
produce the employees’ time cards and other pertinent documents essential for the computation of the
benefits due in the premises.21 In turn, GMC filed its 17 November 2005 "Objections" to the aforesaid 22
October 2005 order, arguing that the Executive Labor Arbiter not only varied the dispositive portion of the
NLRC decision dated 30 January 1998 but also ignored the quitclaims executed and the benefits actually
paid in the premises.22 Reiterating the foregoing arguments in its 16 May 2006 opposition to the Union’s
partial appeal, GMC further maintained that its not being duly heard on the computation of the award in
the subject 27 October 2005 order rendered the Union’s partial appeal premature; and, that its CBA with
the Union had expired on 30 November 1993, with the latter exerting no effort at all for its renewal.23
On 20 July 2006, the NLRC rendered a decision in NLRC Case No. V-000632-2005, affirming the
aforesaid 27 October 2005 order of execution. Finding that the duty to maintain the status quo and to
continue in full force and effect the terms of the existing agreement under Article 253 of the Labor Code of
the Philippines applies only when the parties agreed to the terms and conditions of the CBA, the NLRC
upheld the Executive Labor Arbiter’s computation on the ground, among others, that the decision sought
to be enforced covered only the remaining two years of the duration of the original CBA, i.e., from 1
December 1991 to 30 November 1993; that like GMC’s supposed grant of additional benefits during the
remaining term of the original CBA, the Union’s claims for payment of vacation leave salary differentials,
sick leave salary rate differentials, dislocation allowance, separation pay for voluntary resignation and
LABOR REL CBA 18
separation pay salary rate differentials were not sufficiently established; that required by law to preserve
its records for a period of five years, GMC cannot possibly be expected to preserve employees’ records
for the period 1 December 1991 to 30 November 1993; and, that the claimant has the burden of proving
entitlement to holiday pay, premium for holiday and rest day as well night shift differentials. Giving short
shrift to GMC’s objections as aforesaid, the NLRC likewise ruled that computation of the monetary award
was necessary for the enforcement of this Court’s 11 February 2004 decision and avoidance of multiplicity
of suits.24
Dissatisfied with the NLRC’s 23 August 2006 denial of their motions for reconsideration of the foregoing
decision,25 GMC and the Union filed separate Rule 65 petitions for certiorari before the CA. Docketed as
CA-G.R. CEB-SP No. 02226 before the CA’s Special Twentieth Division, the Union’s petition was partially
granted in the 10 October 2007 decision rendered in the case,26 upon the finding that the parties’ old CBA
was superseded by the imposed CBA which provided a term of five years from 1 December 1991 and
remained in force until a new CBA is concluded between the parties. Brushing aside the Executive Labor
Arbiter’s computation of the benefits as "too sweeping" and "inaccurate", the CA ruled that: (a) employees
hired after the effectivity of the imposed CBA are entitled to its benefits on their first day of work; (b) daily
paid employees are entitled to said benefits from the first day they became regular monthly paid
employees; (c) managerial and supervisory employees are entitled to the same benefits until their
promotion as such; (d) employees for whom no information as to salary rate were submitted are entitled to
the CBA benefits upon submission of proof in respect thereto; and, (e) employees who signed Deeds of
waiver, release and quitclaim are no longer entitled to said benefits.27
Rejecting the argument that the NLRC erred in upholding the Executive Labor Arbiter’s computation of
only 10 out of the 15 benefits provided under the imposed CBA, the CA went on to take appropriate note
of the fact that no proof was submitted by the Union to justify the grant of said benefits. While ruling that
the imposed CBA had the same force and effect as a negotiated CBA, the CA, however, faulted the Union
for its "hasty" and "premature" filing of its motion for issuance of a writ of execution, instead of first
demanding the enforcement of the imposed CBA from GMC and, failing the same, referring the matter to
the grievance machinery or voluntary arbitration provided under the imposed CBA, in accordance with
Articles 260 and 261 of the Labor Code. Acknowledging the difficulty of computing the benefits demanded
by the Union in the absence of evidence upon which to base the same, the CA referred the case to the
Grievance Machinery under the imposed CBA and directed the exclusion of the following items from said
computation: (a) the Union’s claims for vacation leave salary rate differentials and sick leave salary rate
differentials; (b) the benefits in favor of the employees who have already executed quitclaims in favor of
GMC; and (c) the salary increases and other employment benefits GMC had, in the meantime, extended
its employees.28 Discontented with the CA’s 14 May 2008 resolution denying its motion for reconsideration
of the foregoing decision,29 the Union filed its Rule 45 petition currently docketed before this Court as G.R.
No. 183122.30
On the other hand, GMC’s petition for certiorari assailing the NLRC’s 20 July 2006 decision was docketed
as CA-G.R. SP No. CEB-SP No. 02232 before the CA’s Eighteenth Division31 which subsequently
rendered the decision dated on 16 November 2007, dismissing the same for lack of merit. Finding that
both parties were given an opportunity to present their respective positions during the pre-execution
conference conducted a quo, the CA ruled that the Executive Labor Arbiter’s 27 October 2005 order had
attained finality insofar as GMC is concerned, in view of its failure to perfect an appeal therefrom by
paying the required appeal fee and posting the cash or surety bond in an amount equivalent to the
benefits computed. In addition to rejecting GMC’s argument that the quitclaims executed by its employees
were in the nature of a supervening event which rendered execution proceedings impossible, the CA held
that said quitclaims did not extend to the benefits provided under the imposed CBA and that the additional
benefits supposedly received by GMC’s employees should not be deducted therefrom, for lack of sufficient
evidence to prove the same.32 Aggrieved by the denial of its motion for reconsideration of the foregoing
decision in the CA’s resolution dated 10 July, 2008,33 GMC filed the petition for review on certiorari
docketed before us as G.R. No. 183889.34
 QMM
The Issues
In G.R. No. 183122, the Union proffers the following grounds for the grant of its petition, to wit:
I. THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND COMMITTED
REVERSIBLE ERROR IN AFFIRMING THE COMPUTATION OF THE NLRC IN ITS
DECISION DATED JULY 20, 2006 AND DISTORTING THE APPLICATION OF ARTICLE 253
OF THE LABOR CODE IN THE EXECUTION OF THE DECISION OF THIS HONORABLE
COURT IN G.R. NO. 146728.
II. THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND COMMITTED
REVERSIBLE ERROR IN EXCLUDING FROM THE COMPUTATION THE EMPLOYEES WHO
HAVE EXECUTED QUITCLAIMS, IN EXCLUDING FROM THE COMPUTATION VACATION
AND SICK LEAVE SALARY DIFFERENTIALS, AND IN DEDUCTING ALLEGED SALARY
INCREASES AND OTHER BENEFITS GIVEN BY [GMC].
III. THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND COMMITTED
REVERSIBLE ERROR IN REFERRING THE INSTANT CASE TO THE GRIEVANCE
MACHINERY FOR COMPUTATION OF THE BENEFITS DUE UNDER THE IMPOSED CBA.
IV. THE DECISION IN THE INSTANT CASE IS IN DIRECT CONFLICT WITH THE DECISION
OF ANOTHER DIVISION OF THE COURT OF APPEALS INVOLVING THE SAME ISSUES.35
In G.R. No. 183889, GMC prays for the setting aside of the CA’s 16 November 2007 decision in CA-G.R.
CEB-SP No. 02232, on the following grounds, to wit:
A. THE DECISION OF NOVEMBER 16, 2007 AND THE RESOLUTION OF JULY 10, 2008 OF
THE COURT OF APPEALS ARE CONTRARY TO LAW.
B. THE DECISION OF NOVEMBER 16, 2007 AND THE RESOLUTION OF JULY 10, 2008 OF
THE COURT OF APPEALS ARE NOT IN ACCORD WITH THE APPLICABLE DECISIONS OF
THIS HONORABLE COURT.
C. THE DECISION OF NOVEMBER 16, 2007 AND THE RESOLUTION OF JULY 10, 2008 OF
THE COURT OF APPEALS ARE CONTRARY TO THE ESTABLISHED FACTS.
D. THE DECISION OF NOVEMBER 16, 2007 AND THE RESOLUTION OF JULY 10, 2008 OF
THE COURT OF APPEALS VIOLATE THE LAW OF THE CASE.
E. THE DECISION OF NOVEMBER 16, 2007 AND THE RESOLUTION OF JULY 10, 2008 OF
THE COURT OF APPEALS CONTRAVENE THEIR OWN DECISION IN AN EXACTLY
SIMILAR CASE INVOLVING THE SAME PARTIES.36
As may be gleaned from the grounds GMC and the Union interpose in support of their respective petitions,
it is evident that we are called upon to determine the following matters: (a) the period of effectivity of the
imposed CBA; (b) the employees covered by the imposed CBA; and, (c) the benefits to be included in the
execution of the 11 February 2004 decision rendered in G.R. No. 146728. Preliminary to the foregoing
considerations is the effect of the rendition of diametrically opposed decisions in CA-G.R. CEB. SP Nos.
LABOR REL CBA 19
02226 and 02232 by the CA’s Special Twentieth and Eighteenth Divisions on the parties’ conflicting
claims.
The Court’s Ruling
We find the reversal of the assailed decisions in order.
Both GMC and the Union call our attention to the fact that the 10 October 2007 decision rendered by the
CA’s Special Twentieth Division in CA-G.R. CEB-SP No. 02226 is in conflict with the 16 November 2007
decision rendered by the same court’s Eighteenth Division in CA-G.R. CEB-SP No. 02232. In G.R. No.
183122, the Union argues that, given the identity of parties and issues raised in said cases, the 16
November 2007 decision in CA-G.R. CEB-SP No. 02232 should have been taken considered and adopted
by the CA’s Special Twentieth Division in resolving its motion for reconsideration of the 10 October 2007
decision in CA-G.R. CEB-SP No. 02226.37 In G.R. No. 183889, on the other hand, GMC maintains that,
having been rendered ahead of the 16 November 2007 decision in CA-G.R. CEB-SP No. 02232, the CA’s
Special Twentieth Division’s 10 October 2007 in CA-G.R. CEB-SP No. 02226 is the law of the case which
the Eighteenth Division erroneously contravened when it dismissed its petition for certiorari. 38
The conflicting decisions in CA-G.R. CEB-SP Nos. 02226 and 02232 would have been, in the first place,
avoided had the CA consolidated said cases pursuant to Section 3, Rule III of its 2002 Internal Rules
(IRCA).39 Being intimately and substantially related cases, their consolidation should have been ordered to
avert the possibility of conflicting decisions in the two cases.40 Although rendered on the merits by a court
of competent jurisdiction acting within its authority, neither one of said decisions can, however, be invoked
as law of the case insofar as the other case is concerned. The doctrine of "law of the case" means that
whatever is once irrevocably established as the controlling legal rule or decision between the same parties
in the same case continues to be the law of the case, whether correct on general principles or not, 41 so
long as the facts on which such decision was predicated continue to be the facts of the case before the
court.42 Considering that a decision becomes the law of the case once it attains finality, 43 it is evident that,
without having achieved said status, the herein assailed decisions cannot be invoked as the law of the
case by either GMC or the Union.
Anent its period of effectivity, Article XIV of the imposed CBA provides that "(t)his Agreement shall be in
full force and effect for a period of five (5) years from 1 December 1991, provided that sixty (60) days prior
to the lapse of the third year of effectivity hereof, the parties shall open negotiations on economic aspect
for the fourth and fifth years effectivity of this Agreement."44 Considering that no new CBA had been, in the
meantime, agreed upon by GMC and the Union, we find that the CA’s Special Twentieth Division correctly
ruled in CA-G.R. CEB-SP No. 02226 that, pursuant to Article 253 of the Labor Code,45 the provisions of
the imposed CBA continues to have full force and effect until a new CBA has been entered into by the
parties. Article 253 mandates the parties to keep the status quo and to continue in full force and effect the
terms and conditions of the existing agreement during the 60-day period prior to the expiration of the old
CBA and/or until a new agreement is reached by the parties.46In the same manner that it does not provide
for any exception nor qualification on which economic provisions of the existing agreement are to retain its
force and effect,47 the law does not distinguish between a CBA duly agreed upon by the parties and an
imposed CBA like the one under consideration.
The foregoing disquisition notwithstanding, it bears emphasizing, however, that the dispositive portion of
the 30 January 1998 decision rendered by the Fourth Division of the NLRC in NLRC Case No. V-0112-94
specifically ordered "the imposition upon [GMC] of the [Union’s] draft CBA proposal for the remaining two
years duration of the original CBA which is from 1 December 1991 to 30 November 1993."48 Initially set
aside in the 6 October 1998 resolution issued in the same case by the NLRC49 and reinstated in the 19
July 2000 decision rendered by the CA’s then Fourteenth Division in CA-G.R. SP Nos. 50383 and
51763,50 said 30 January 1998 decision was upheld in the 11 February 2004 decision rendered by this
 QMM
Court in G.R. No. 146728 which, in turn, affirmed the CA’s 19 July 2000 decision as
aforesaid.51 Considering that the 30 January 1998 decision sought to be enforced confined the application
of the imposed CBA to the remaining two-year duration of the original CBA, we find that the computation
of the benefits due GMC’s covered employees was correctly limited to the period 1 December 1991 to 30
November 1993 in the 27 October 2005 order issued by Executive Labor Arbiter Violeta Ortiz-Bantug and
the 20 July 2006 decision rendered by the NLRC in NLRC Case No. V-000632-2005.
Consequently, insofar as the execution of the 30 January 1998 decision is concerned, the Union is out on
a limb in espousing a computation which extends the benefits of the imposed CBA beyond the remaining
two-year duration of the original CBA. The rule is, after all, settled that an order of execution which varies
the tenor of the judgment or exceeds the terms thereof is a nullity. 52 Since execution not in harmony with
the judgment is bereft of validity,53 it must conform, more particularly, to that ordained or decreed in the
dispositive portion of the decision sought to be enforced. Considering that the decision sought to be
enforced pertains to the period 1 December 1991 to 30 November 1993, it necessarily follows that the
computation of benefits under the imposed CBA should be limited to covered employees who were in
GMC’s employ during said period of time. While it is true that the provisions of the imposed CBA extend
beyond said remaining two-year duration of the original CBA in view of the parties’ admitted failure to
conclude a new CBA, the corresponding computation of the benefits accruing in favor of GMC’s covered
employees after the term of the original CBA was correctly excluded in the aforesaid 27 October 2005
order issued in RAB VII-06-0475-1992. Rather than the abbreviated pre-execution proceedings before
Executive Labor Arbiter Violeta Ortiz-Bantug, the computation of the same benefits beyond 30 November
1993 should, instead, be threshed out by GMC and the Union in accordance with the Grievance
Procedure outlined as follows under Article XII of the imposed CBA, to wit:
Article XII
GRIEVANCE PROCEDURE
Section 1. Whenever an employee covered by the terms of this Agreement believes that the COMPANY
has violated the express terms thereof, or is aggrieved on the enforcement or application of the
COMPANY’s personnel policies, he/she shall be required to follow the procedure hereinafter set forth in
processing the grievance. The COMPANY will not be required to consider a grievance unless it is
presented within 7 days from the alleged breach of the express terms of this Agreement or the COMPANY
personnel policies,
STEP I. The employee, through the UNION Steward, shall present the alleged grievance in writing to the
immediate superior and they shall endeavor to settle the grievance within ten (10) days.
STEP II. Failing the settlement in Step I, the UNION President and the Personnel Officer shall meet and
adjust the grievance within fifteen (15) days.
STEP III. Any unresolved grievance shall be referred to the Arbitration Committee provided hereunder.
Section 2. Procedure before the Grievance Committee.
A. In the event a dispute arises concerning the application or interpretation of the
terms of this Agreement or enforcement/application of the COMPANY personnel
policies which cannot be settled pursuant to Section I and II, Section 1 hereof, an
Arbitration Committee shall be formed for the purpose of settling that particular
dispute only. The Grievance Committee shall be composed of three (3) members,
one to be appointed by the COMPANY as its representative, another to be
appointed by the UNION, and the third to be appointed by common agreement of
LABOR REL CBA 20
the two representatives selected from among the list of accredited voluntary
arbitrators in the Province of Cebu, or from government officials or civic leaders and
responsible citizens in the community.
B. In all meetings of the Grievance Committee organized for the purpose of
resolving a particular dispute, all members must be present and no business shall
be deliberated upon if any member thereof is absent. However, if any member is
unable to attend the meeting, he/she shall immediately appoint one to represent
him/her, but if the one appointed by agreement of both representatives of the
COMPANY and the UNION is the one absent, the two representatives present shall
agree between themselves on any person to take the place of the absent member.
Any business or matter shall be considered as passed and approved by the
Committee when there is a vote thereo[n] by at least two (2) members present and
the same shall be final and binding on the parties concerned.
C. All decisions of the Committee shall be final: provided, however, that all decisions
of the Committee shall be limited to the terms and provisions of this Agreement and
in no event may the terms and provisions of this Agreement be altered, amended or
modified by the Committee.54
Article II of the imposed CBA, relatedly, provides that "(t)he employees covered by this Agreement are
those employed as regular monthly paid employees at the [GMC] offices in Cebu City and Lapulapu City,
including cadet engineers, salesmen, veterinarians, field and laboratory workers, with the exception of
managerial employees, supervisory employees, executive and confidential secretaries, probationary
employees and the employees covered by a separate Collective Bargaining Agreement at the Company’s
Mill in Lapulapu City."55 Gauged from the express language of the foregoing provision, we find that
Executive Labor Arbiter Violeta Ortiz-Bantug correctly excluded the following employees from the list of
436 employees submitted by the Union56 and the computation of the benefits for the period 1 December
1991 to 30 November 1993, to wit: (a) 77 employees who were hired or regularized after 30 November
1993; (b) 36 daily paid rank and file employees who were covered by a separate CBA; (c) 41
managerial/supervisory employees; and, (d) 1 employee for whom no salary-rate information was
submitted in the premises.57 However, we find that the 234 employees who had already been separated
from GMC’s employ by the time of the rendition of the 11 February 2004 decision in G.R. No. 146728
should further be added to these excluded employees.
The record shows that said 234 employees were union members whose employment with GMC ceased
as a consequence of death, termination due to redundancy, termination due to closure of plant,
termination for cause, voluntary resignation, separation or dismissal from service as well as
retirement.58 Upon compliance with GMC’s clearance requirements59 and in consideration of sums ranging
from P38,980.12 to P631,898.72, due payment and receipt of which were duly acknowledged, it appears
that said employees executed deeds of waiver, release and quitclaim60 which uniformly stated as follows:
THAT, for and in consideration of the said payment, I have remised, released and do hereby discharge,
and by these presents do for myself, my heirs, executors and administrators, remise, release and forever
discharge said GENERAL MILLING CORPORATION, its successors and assigns, and/or any of its
officers or employees of and from any and all manner of actions, cause or causes of actions, sum or sums
of money, account damages, claims and demands whatsoever by way of separation pay, benefits,
bonuses, and all other rights to compensation, salary, wage, emolument, reimbursement, or monetary
benefits, which I ever had, now have or which my heirs , executors and administrators hereafter can, shall
or may have, upon or by reason of any matter, cause or things whatsoever in connection with my former
employment in and retirement from the said GENERAL MILLING CORPORATION.1avvphi1
 QMM LABOR REL CBA 21

THAT, I have signed this Deed of Waiver, Release and Quitclaim after I have read the contents thereof WHEREFORE, premises considered the assailed decisions dated 10 October 2007 and 16 November
and understood the same and its legal effects. 2007 are REVERSED and SET ASIDE. In lieu thereof, the 27 October 2005 order issued by Labor Arbiter
Violeta Ortiz-Bantug is ordered REINSTATED and MODIFIED to further exclude the 234 employees who
have executed deeds of waiver, release and quitclaim from the computation of the benefits for the
In its assailed 16 November 2007 decision in CA-G.R. CEB-SP No. 02232, the CA’s then Eighteenth
remaining term of the original CBA.
Division brushed aside said deeds of waiver, release and quitclaim on the ground, among other matters,
that the same only covered the employees’ separation pay and retirement benefits but did not extend to
the benefits which had accrued in their favor under the imposed CBA; and, that to be valid, the waiver
"should be couched in clear and unequivocal terms leaving no doubt as to the intention of those giving up
a right or a benefit that legally pertains to them."61 In so doing, however, the CA’s Eighteenth Division
egregiously disregarded the clear intent on the part of the employees who executed said deeds of waiver,
release and quitclaim to relinquish all present and future claims arising out of their employment with GMC.
Although generally looked upon with disfavor,62 it cannot be gainsaid that legitimate waivers that represent G.R. No. 200746 August 6, 2014
a voluntary and reasonable settlement of laborers' claims should be so respected by the Court as the law
between the parties.63 It is only where there is clear proof that the waiver was wangled from an BENSON INDUSTRIES EMPLOYEES UNION-ALU-TUCP and/or VILMA GENON, EDISA
unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the law will HORTELANO, LOURDES ARANAS, TONY FORMENTERA, RENEBOY LEYSON, MA. ALONA
step in to annul the questionable transaction.64 The absence of showing of these factors in the case at ACALDO, MA. CONCEPCION ABAO, TERESITA CALINAWAN, NICIFORO CABANSAG, STELLA
bench impels us to uphold the validity of said deeds of waiver, release and quitclaim and, to exclude the BARONGO, MARILYN POTOT, WELMER ABANID, LORENZO ALIA, LINO PARADERO, DIOSDADO
employees who executed the same from those still entitled to the benefits under the imposed CBA both ANDALES, LUCENA ABESIA, and ARMANDO YBAÑEZ, Petitioners,
before and after the remaining term of the original CBA. The waiver was all inclusive. There was not even vs.
a hint of a limitation of coverage. BENSON INDUSTRIES, INC., Respondent.

Inasmuch as mere allegation is not evidence, the basic evidentiary rule is to the effect that the burden of
evidence lies with the party who asserts the affirmative of an issue has the burden of proving the
same65 with such quantum of evidence required by law. In administrative or quasi-judicial proceedings like
those conducted before the NLRC, the standard of proof is substantial evidence which is understood to be
more than just a scintilla or such amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion.66Since it does not mean just any evidence in the record of the case for,
otherwise, no finding of fact would be wanting in basis, the test to be applied is whether a reasonable
mind, after considering all the relevant evidence in the record of a case, would accept the findings of fact
as adequate.67 Viewed in the light of Union’s failure to prove the factual bases for the computation of the
same, we find that the NLRC correctly affirmed Executive Labor Arbiter Violeta Ortiz-Bantug’s exclusion of
the following benefits from the order dated 27 October, 2005, to wit: (a) vacation leave salary rate
differentials; (b) sick leave salary rate differentials; (c) dislocation allowance; (d) separation pay for
voluntary resignation; and (e) separation pay salary rate differentials. 68 For want of substantial evidence to
prove the same, the CA’s Eighteenth Division also correctly brushed aside GMC’s insistence on the
deduction of the additional benefits it purportedly extended to its employees from 1 December 1991 to 30
November 1993.69
DECISION
PERLAS-BERNABE, J.:
Before the Court is a petition for review on certiorari1 assailing the Decision2 dated September 27, 2011
and the Resolution3 dated January 31, 2012 of the Court of Appeals (CA)in CA-G.R. SP No. 03842 which
reversed and set aside the Decision4 dated October 24, 2008 of the Voluntary Arbitrator (VA) of the
National Conciliation and Mediation Board (NCMB), and accordingly deleted the award to petitioners
Vilma Genon, Edisa Hortelano, Lourdes Aranas, Tony Formentera, Reneboy Leyson, Ma. Alona Acaldo,
Ma. Concepcion Abao, Teresita Calinawan, Niciforo Cabansag, Stella Barongo, Marilyn Potot, Welmer
Abanid, Lorenzo Alia, Lino Paradero, Diosdado Andales, Lucena Abesia, and Armando Ybañez
(petitioners) of additional separation pay equivalent to four (4) days of work for every year of service.
The Facts

Respondent Benson Industries, Inc. (Benson) is a domestic corporation engaged in the manufacturing of
As for the benefits after the expiration of the term of the parties’ original CBA, we find that the extent
greencoils with the brand name Lion-Tiger Mosquito Killer. OnFebruary 12, 2008, Benson sent its
thereof as well as identity of the employees entitled thereto will be better and more thoroughly threshed
employees, including herein petitioners, a notice5 informing them of their intended termination from
out by the parties themselves in accordance with the grievance procedure outlined in Article XII of the
employment, to be effected on March 15, 2008 on the ground of closure and/or cessation of business
imposed CBA. Aside from being already beyond the scope of the decision sought to be enforced, these
operations. In consequence, the majority of Benson’s employees resigned. 6 Meanwhile, petitioners,
matters will not be accurately ascertained from the summaries of claims the parties have been wont to
through Benson Industries Employees Union-ALU-TUCP (Union), filed a notice of strike, claiming that the
submit at the pre-execution conference conducted a quo. Taking into consideration such factors as hiring
company’s supposed closure was merely a ploy to replace the union members with lower paid workers,
of new employees, personnel movement and/or promotions as well as separations from employment
and, as a result, increase its profit at their expense.7The strike did not, however, push through due to the
which may have, in the meantime, occurred after the expiration of the remaining term of the original CBA,
parties’ amicable settlement during the conciliation proceedings before the NCMB, whereby petitioners
the identity of the covered employees as well as the extent of the benefits due them should clearly be
accepted Benson’s payment of separation pay, computed at 15 days for every year of service, as per the
reckoned from acquisition and/or until loss of their status as regular monthly paid GMC employees. Since
parties’ Memorandum of Agreement8 dated April 9, 2008.9
the computation must likewise necessarily take into consideration the increases in salaries and benefits
that may have been given in the intervening period, both GMC and the Union are enjoined to make the
pertinent employment and company records available to each other, to facilitate the expeditious and This notwithstanding, petitioners proffered a claim for the payment of additional separation pay atthe rate
accurate determination of said benefits. of four (4) days for every year of service. As basis, petitioners invoked Section 1, Article VIII of the existing
collective bargaining agreement (CBA) executed by and between the Union and Benson which states that
 QMM
"[Benson]shall pay to any employee/laborer who is terminated from the service without any fault
attributable to him, a ‘Separation Pay’ equivalentto not less than nineteen (19) days’ pay for every year of
service based upon the latest rate of pay of the employee/laborer concerned."10 Benson opposed
petitioners’ claim, averring that the separation pay already paid to them was already more than what the
law requires. Reaching an impasse on the conflict, the parties referred the issue to voluntary arbitration,
wherein the validityof Benson’s closure was brought up as well.11
The VA Ruling
In a Decision12 dated October 24, 2008 (October 24, 2008 VA Decision), the VA ruled in favor of
petitioners, and, thus, ordered Benson to pay each of them separation benefits in "an amount equivalent
to four (4) days for every year of service based on the latest rate of pay of the [individual petitioner]
concerned subject to whatever legally valid deductions chargeable against [said individual petitioner]
whenever applicable."13
The VA ratiocinated that in computing the amount of separation benefits due to petitioners, the basis
should be the provision of the existing CBA between Benson and the Union which explicitly states that
should the employees be terminated through no fault of their own, they should be awarded separation
benefits at the rate of 19 days for every year of service. In this regard, the VA opined that the provisions of
the CBA should be given effect because it expresses the latest agreement of the union and the company,
not to mention the fact that it gives more benefits to the employees.14
Separately, the VA found adequate proof to support Benson’s position that it was indeed in a state of
insolvency, which, therefore, justified its closure and/or cessation of business operations on the ground of
serious business losses and/or financial reverses.15
Dissatisfied, Benson elevated the matter on appeal before the CA.
The CA Ruling In a Decision16 dated September 27, 2011, the CA reversed and set aside the VA’s ruling,
and accordingly deleted the award of additional separation benefits equivalent to four (4) days of work for
every year of service. It held that despite the express provision in the CBA stating that Benson should pay
its employees who were terminated without their fault separation benefits equivalent to at least 19 days’
pay for every year of service, Benson cannot be compelled to do so considering its current financial
status.17
Aggrieved, petitioners moved for reconsideration, which was, however, denied by the CA in a
Resolution18 dated January 31, 2012, hence, this petition.
The Issue Before the Court
The sole issue for the Court’s resolution is whether or not the CA correctly deleted the award to petitioners
of additional separation benefits equivalent to four (4) days of work for every year of service.
The Court’s Ruling
The petition is impressed with merit.
Closure of business may be consideredas a reversal of an employer’s fortune whereby there is a complete
cessation of business operations and/or an actual locking-up of the doors ofthe establishment, usually due
LABOR REL CBA 22
to financial losses. Under the Labor Code, it is treated as an authorized cause for termination, aimed at
preventing further financial drain upon an employer who cannot anymore pay its employees since
business has already stopped. As a form of recompense, the employer is required to pay its employees
separation benefits, except when the closure is due to serious business losses. 19 Article 297 (formerly
Article 283)20 of the Labor Code, as amended, states this rule:
Art. 297. Closure of Establishment and Reduction of Personnel. The employer may also terminate the
employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation ofoperation of the establishment or undertaking unless the
closing is for the purpose of circumventing the provisions of this Title, x x x. 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) monthsshall be considered one (1) whole year. (Emphasis and underscoring supplied)
While serious business losses generally exempt the employer from paying separation benefits, it must
bepointed that the exemption only pertains to the obligation of the employer under Article 297 of the Labor
Code. This is because of the law’s express parameter thatmandates payment of separation benefits "in
case of closures or cessation of operations of establishment or undertaking not due to serious business
losses or financial reverses." The policy distinction underlying Article 297 – that is, the distinction between
closures due to serious business losses and those which are not – was deftly discussed by the Court in
the case of Cama v. Joni’s Food Services, Inc.,21 as follows:
The Constitution, while affording full protection to labor, nonetheless, recognizes "theright of enterprises to
reasonable returns on investments, and to expansion and growth." In line with this protection afforded to
business by the fundamental law, Article283 [(now, Article 297)] of the Labor Code clearly makes a policy
distinction. It is only in instances of "retrenchment to prevent losses and in cases of closures or cessation
of operations of establishment or undertaking not due to serious business losses or financial reverses"
that employees whose employment has been terminated as a result are entitled to separation pay. In
other words, Article 283 [(now, Article 297)] of the Labor Code does not obligate an employer to pay
separation benefits when the closure is due to serious losses. To require anemployer to be generous
when it is no longer in a position todo so, in our view, would be unduly oppressive, unjust, and unfair to the
employer. Ours is a system of laws, and the law in protecting the rights of the working man, authorizes
neither the oppression nor the self-destruction of the employer. x x x.22 (Emphasis supplied)
When the obligation to pay separation benefits, however, is not sourced from law (particularly, Article297
of the Labor Code), but from contract,23 such as an existing collective bargaining agreement between the
employer and its employees, an examination of the latter’s provisions becomes necessary in order to
determine the governing parameters for the said obligation. To reiterate, an employer which closes shop
due to serious business losses is exempt from paying separation benefits under Article 297 of the Labor
Code for the reason that the said provision explicitly requires the same only when the closure is not due to
serious business losses; conversely, the obligation is maintained when the employer’s closure is not due
to serious business losses. For a similar exemption to obtain against a contract, such as a CBA, the tenor
ofthe parties’ agreement ought to be similar to the law’s tenor. When the parties, however, agree to
deviate therefrom, and unqualifiedly covenant the payment of separation benefits irrespective of the
employer’sfinancial position, thenthe obligatory force of that contract prevails and its terms should be
carried out to its full effect. Verily, it is fundamental that obligations arising from contracts have the force of
law between the contracting parties and thus should be complied with in good faith; 24 and parties are
bound by the stipulations, clauses, terms and conditions they have agreed to, the only limitation being that
these stipulations, clauses, terms and conditions are not contrary to law, morals, public order or public
policy.25 Hence, if the terms of a CBA are clear and there is no doubt as to the intention ofthe contracting
 QMM
parties, the literal meaning of its stipulations shall prevail.26 As enunciated in Honda Phils., Inc. v.
Samahan ng Malayang Manggagawa sa Honda:27
A collective bargaining agreement refers to the negotiated contract between a legitimate labor
organization and the employer concerning wages, hours of work and all other terms and conditions of
employment in a bargaining unit. As in all contracts, the parties in a CBA may establish such stipulations,
clauses, terms and conditions as they may deem convenient provided these are not contrary to law,
morals, good customs, public order or public policy. Thus, where the CBA is clear and unambiguous, it
becomes the law between the parties and compliance therewith is mandated by the express policy of the
law.28
In this case, it is undisputed thata CBA was forged by the employer, Benson, and its employees, through
the Union, to govern their relations effective July 1, 2005 to June 30, 2010.It is equally undisputed that
Benson agreed to and was thus obligated under the CBA to pay its employees who had been terminated
without any fault attributable to them separation benefits at the rate of 19 days for every year of service.
This is particularly found in Section 1, Article VIII of the same contract, to wit:
Section 1. Separation Pay – The Company shall pay to any employee/laborer who is terminated from the
service without any fault attributable to him, a "Separation Pay"equivalent to not less than nineteen (19)
days’ pay for every year of service based upon the latest rate of pay of the employee/laborer concerned.29
As may be gleaned from the following whereas clauses in a Memorandum of Agreement 30 dated
November 20, 2003 between the parties, Benson had been fully aware of its distressed financial condition
even at the time of the previous CBA (effective from July 1, 2000 to June 30, 2005):
WHEREAS, on February 01, 2001 the Company and the Union entered into a Collective Bargaining
Agreement (CBA) with effectivity from July 01, 2000 to June 30, 2005;
xxxx
WHEREAS, the Company and the Union recognize that the Philippines is at present in grave economic
crisis;
WHEREAS, the Union recognizes and acknowledges that the Company in particular is in grave financial
difficulties and that the Company is hard up to meet its financial obligations to creditor banksthat said
creditor banks have even threatened to foreclose the mortgages on and toseize the Company’s factory,
realties, machineries and assets and in fact, the Bank of the Philippine Islands, one of the creditor banks
scheduled on November 17, 1998 a foreclosure sale of the Company’s factory, realties, machineries and
assets in Extrajudicial Foreclosure Case No. EJF-2773-CEB;
x x x x (Emphases supplied)
Benson even admits in its Comment that it was already saddled with loan from banks as early as
199731 and that it had been unable to service its loan obligations. 32 And yet, nothing appears on record to
discount the fact that it still unqualifiedly and freely agreedto the separation pay provision in the July 1,
2005 to June 30, 2010 CBA, its distressed financial condition notwithstanding.
Thus, in view of the foregoing, the Court disagrees with the CA in negating Benson’s obligation to pay
petitioners their full separation benefits under the said agreement. The postulation that Benson had closed
its establishment and ceased operations due to serious business losses cannot be accepted as an excuse
LABOR REL CBA 23
to clear itself of any liability since the ground of serious business losses is not, unlike Article 297 of the
Labor Code, considered as an exculpatory parameter under the aforementioned CBA. Clearly, Benson,
with full knowledge of its financial situation, freely and voluntarily entered into such agreement with
petitioners. Hence, having failed to show that the subject CBA provision on separation benefits is contrary
to law, morals, public order orpublic policy, or that the same can be interpreted as one with a condition –
for instance, that the parties actually contemplated non-payment of separation benefits in the event of
closure due to serious business losses – the Court isconstrained to reinstate the October 24, 2008 VA
Decision ordering Benson to pay each of the petitioners separation benefits in "an amount equivalent to
four (4) days for every year of service based on the latest rate of pay of the [individual petitioner]
concerned, subject to whatever legallyvalid deductions chargeable against [said individual petitioner],
whenever applicable."33
Analogous to the foregoing is the Court’s disquisition in Lepanto Ceramics, Inc. v. Lepanto Ceramics
Employees Association,34 whereby the employer therein was held liable for the payment of Christmas
bonus benefits, considering that the grant thereof was voluntarily and unqualifiedly agreed upon by the
parties under the CBA despite the employer’s full awareness of its distressed financial position (as Benson
in this case), viz.:
It is a familiar and fundamental doctrine in labor law that the CBA is the law between the parties and they
are obliged to comply with its provisions. This principle stands strong and true in the case at bar.
A reading of the provision of the CBA reveals that the same provides for the giving of a "Christmas gift
package/bonus" without qualification. Terse and clear, the said provision did not state that the Christmas
package shall be made to depend on the petitioner’s financial standing. The records are also bereft of any
showing that the petitioner made it clear during the CBA negotiations that the bonus was dependent on
any condition. Indeed, if the petitioner and respondent Association intended that the 3,000.00 bonus would
be dependent on the company earnings, such intention should have been expressed in the CBA.
It is noteworthy that in petitioner’s 1998 and 1999 financial Statements, it took note that"the 1997 financial
crisis in the Asian region adversely affected the Philippine economy."
From the foregoing, petitioner cannot insist on business losses as a basis for disregarding its undertaking.
It is manifestly clear that petitioner was very much aware of the imminence and possibility of business
losses owing to the 1997 financial crisis.In 1998, petitioner suffered a net loss of P14,347,548.00. Yet it
gave a P3,000.00 bonus to the members of the Association. In 1999, when petitioner’s very own financial
statement reflected that "the positive developments in the economy have yet to favorably affect the
operations of the company," and reported a loss of P346,025,733.00, it entered into the CBA with the
respondent Association whereby it contracted to grant a Christmas gift package/bonus to the latter.
Petitioner supposedly continued to incur losses on the years 2000 and 2001. Still and all, this did not deter
it from honoring the CBA provision onChristmas bonus as it continued to give P3,000.00 each to the
members of the respondent Association in the years 1999, 2000 and 2001.
All given, business losses are a feeble ground for petitioner to repudiate its obligation under the CBA.The
rule is settled that any benefit and supplement being enjoyed by the employees cannot be reduced,
diminished, discontinued oreliminated by the employer. The principle of non-diminution of benefits is
founded on the constitutional mandate to protect the rights of workers and to promote their welfare and to
afford labor full protection.
Hence, absent any proof that petitioner’s consent was vitiated by fraud, mistake or duress, it is presumed
that it entered into the CBA voluntarily and had full knowledge of the contents thereof and was aware of its
commitments under the contract.35 (Emphases and underscoring supplied; citations omitted)
 QMM
A similar disposition was also made in the case of Eastern Telecommunications Philippines, Inc.v. Eastern
Telecoms Employees Union,36 wherein the Court held as follows:
The parties to the contract must be presumed to have assumed the risks of unfavorable
developments.1âwphi1 Itis, therefore, only in absolutely exceptional changes of circumstances that equity
demands assistance for the debtor. In the case at bench, the Court determines that ETPI’s claimed
depressed financial state will not release it from the binding effect of the 2001-2004 CBA Side Agreement.
ETPI appears to be well aware ofits deteriorating financial condition when it entered into the 2001-2004
CBA Side Agreement with ETEU and obliged itself to pay bonuses to the members of ETEU. Considering
that ETPI had been continuously suffering huge losses from 2000 to 2002, its business losses in the year
2003 were not exactly unforeseen or unexpected. Consequently, it cannot be said that the difficulty in
complying with its obligation under the Side Agreement was "manifestly beyond the contemplation ofthe
parties." Besides, as held in Central Bank of the Philippines v. Court of Appeals, mere pecuniary inability
to fulfill anengagement does not discharge a contractual obligation. Contracts, once perfected, are binding
between the contracting parties. Obligations arising therefrom have the force of law and should be
complied with in good faith. ETPI cannot renege from the obligation it has freely assumed when it signed
the 2001-2004 CBA Side Agreement.37 (Emphases and underscoring supplied; citations omitted)
To quell any doubts, it bears pointing out that the CA’s reliance on Galaxie Steel Workers Union (GSWU-
NAFLU-KMU) v. NLRC38 and Cama v. Joni’s Food Services, Inc.39 was actually misplaced since no CBA
was involved in those cases. As such, consistent with the parameters of Article 297 of the Labor Code
asabove-discussed, the payment of separation benefits in view of the employer’s serious business losses
in those cases was not in order. In the same light, North Davao Mining Corporation v. NLRC40 was
speciously applied by the CA given that the payment of separation benefits in that case was not
sourcedfrom a contractual CBA obligation but merely from a unilateral company practice which was
deemed as an act of generosity on the part. of the employer. It was in this context that the Court held that
"to require [the company] to continue being generous when it is no longer in a position to do so would
certainly be unduly oppressive, unfair and most revolting to the conscience."41 The factual dissimilarity of
these cases to Benson and petitioners' situation therefore precludes the application of the same ruling.
Accordingly, finding no cogent reason for Benson not to comply with its obligations under the July 1, 2005
to June 30, 2010 CBA, and considering further that the interpretation of any law or provision affecting
labor should be interpreted in favor of labor,42 the Court hereby reverses the CA Decision and reinstates
the October 24, 2008 VA Decision.
WHEREFORE, the petition is GRANTED. The Decision dated September 27, 2011 and the Resolution
dated January 31, 2012 of the Court of Appeals in CA-G.R. SP No. 03842 are hereby REVERSED and
SET ASIDE. The Decision dated October 24, 2008 of the Voluntary Arbitrator of the National Conciliation
and Mediation Board is REINSTATED.
SO ORDERED.
LABOR REL CBA 24
G.R. No.173587 July 15, 2013
ZUELLIG PHARMA CORPORATION, Petitioner,
vs.
ALICE M. SIBAL, MA. TERESA J. BARISO, PRESCILLANO L. GONZALES, LAURA B. BERNARDO,
MAMERTA R. ZITA, JOSEPHINE JUDY C. GARCIA, MA. ASUNCION B. HERCE, EDITHA D.
CARPITANOS, MA. LUZ B. BUENO, DANTE C. VERASTIGUE,** AGNES R. ALCOBER, ARWIN Y.
CRUZ, ADONIS F. OCAMPO, SOPHIA P. ANGELES, JOEL B. BUST AMANTE, EDITHA B. COLE,
LUDIVINA C. PACIA, ROSELLE M. DIZON, RODOLFO A. ABCEDE, WILFREDO RICAFRENTE,
RODOLFO R. ROBERTO, ROSALIE R. LUNAR, BENJAMINR. CALAYCAY, GUILLERO YAP
CADORNA, THROV ADORE TOBOSO, CAROLINAS. UY, MARIA LORETTO M. REGIS, ALMAR C.
CALUAG,** VILMA R. SAPIWOSO ANATALIA L. CALPITO, FELIPE S. CALINAWAN, VIVIELIZA
DELMAR MANULAT, MA. LIZA L. RAFINAN,** AMMIE V. GATILAO, ALEX B. SADAYA and REGINO
EDDIE PANGA, Respondents.
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari1 assails the December 4, 2003 Decision2 of the Court of Appeals
(CA) in CA-G.R. SP No. 50448 which nullified the January 21, 1998 Decision3 of the National Labor
Relations Commission (NLRC) in NLRC NCR CA NO. 011914-96. The NLRC affirmed the August 6, 1996
Decision4 of the Labor Arbiter which, in turn, denied respondents' claim for retirement gratuity and
monetary equivalent of their unused sick leave on top of the redundancy pay they already received.
Also assailed in this Petition is the CA's July 13,2006 Resolution5 denying petitioner's motion to reconsider
aforesaid CA Decision.
Factual Antecedents
Petitioner Zuellig Pharma Corporation (Zuellig) is a domestic corporation engaged in the manufacture and
distribution of pharmaceutical products. It also distributes pharmaceutical products manufactured by other
companies like Syntex Pharmaceuticals (Syntex). Respondents (36 in all), on the other hand, were the
employees of Zuellig at its Syntex Division.
In 1995, Roche Philippines, Inc. (Roche) purchased Syntex and took over from Zuellig the distribution of
Syntex products. Consequently, Zuellig closed its Syntex Division and terminated the services of
respondents due to redundancy. They were properly notified of their termination6 and were paid their
respective separation pay in accordance with Section 3(b), Article XIV of the March 21, 1995 Collective
Bargaining Agreement (CBA)7 for which, respondents individually signed Release and Quitclaim8 in full
settlement of all claims arising from their employment with Zuellig.
Proceedings before the Labor Arbiter and the NLRC
Controversy arose when respondents filed before the Arbitration Branch of the NLRC separate
Complaints9(which were later consolidated) for payment of retirement gratuity and monetary equivalent of
their unused sick leave on top of the separation pay already given them. Respondents claimed that they
are still entitled to retirement benefits and that their receipt of separation pay and execution of Release
and Quitclaim do not preclude pursuing such claim.
 QMM
On August 6, 1996, Labor Arbiter Eduardo J. Carpio (Labor Arbiter Carpio) rendered a Decision denying
respondents’ claims. He opined that only employees whose separation from employment was brought
about by sickness, death, compulsory or optional retirement, or resignation are entitled to gratuity pay.
However, employees whose separation from employment was by reason of redundancy are not entitled to
the monetary equivalent of their unused sick leave if cessation from employment was caused by
redundancy.
Upon respondents’ appeal, the NLRC rendered a Decision dated January 21, 1998 affirming the Decision
of the Labor Arbiter.
Proceedings before the Court of Appeals
Twice rebuffed but still undeterred, the respondents filed a Petition for Certiorari10 with the CA.
In a Decision dated December 4, 2003, the CA granted respondents’ Petition and nullified the Decisions of
both the Labor Arbiter and the NLRC. Relying on the case of Aquino v. National Labor Relations
Commission,11 the CA ruled that since there is nothing in the CBA which expressly prohibits the grant of
both benefits, those who received separation pay are, therefore, still entitled to retirement gratuity. The CA
also took note of Section 5, Article V of Zuellig’s January 1, 1968 Retirement Gratuity Plan, 12 which
provides that an employee who may be separated from the service for any cause not attributable to his or
her own fault or misconduct shall be entitled to full retirement benefits. Since the cause of respondents’
separation from work was redundancy, the CA ordered Zuellig to pay respondents retirement gratuity and
the monetary equivalent of their unused sick leave on top of the redundancy pay previously granted to
them. The dispositive portion of the CA Decision reads:
WHEREFORE, the petition is GIVEN DUE COURSE and GRANTED, and the assailed Decision of the
Labor Arbiter dated August 6, 1996 and the affirming Decision of the NLRC dated January 21, 1998 are
SET ASIDE and VACATED. In its stead, judgment is rendered ORDERING respondent Zuellig Pharma
Corporation to pay the retirement gratuity and unused sick leave pay prayed for, and to this end the
respondent NLRC is directed to compute and specify the respective amounts due them.
SO ORDERED.13
Grounds
Zuellig moved for a reconsideration,14 but to no avail.15 Hence, this Petition anchored on the following
grounds:
I cause beyond their control, they cannot be considered to have exclusively chosen separation pay and
THE COURT OF APPEALS COMMITTED GRAVE ERROR WHEN IT HELD THAT UNDER THE TERMS
AND CONDITIONS OF THE CBA AND THE RETIREMENT AND GRATUITY PLAN X X X
RESPONDENTS COULD AVAIL OF BOTH REDUNDANCY PAY AND RETIRMENT BENEFITS.
II
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN FINDING THAT RESPONDENTS ARE
ENTITLED TO THE MONETARY EQUIVALENT OF UNUSED SICK LEAVE.
LABOR REL CBA 25
III
THE COURT OF APPEALS COMMITTED GRAVE ERROR IN FAILING TO HOLD THAT QUITCLAIMS
BAR RESPONDENTS FROM CLAIMING FROM PETITIONER ANY MORE THAN THEY HAVE
LAWFULLY RECEIVED.16
The Parties’ Arguments
Zuellig concedes that, in the absence of contractual prohibition, payment of both separation pay and
retirement pay may be allowed as ruled by this Court in Aquino. Nonetheless, it asserts that Aquino is not
applicable in this case. It explains that in Aquino, the parties’ CBA incorporates by reference a retirement
plan agreed upon by the parties prior to the execution of the CBA. On the other hand, Zuellig insists that in
this case, Section 2, Article XIV of the parties’ CBA prohibits the recovery of both retirement gratuity and
severance pay. In addition, Section 2, Article VII of the Retirement and Gratuity Plan likewise expressly
limits the benefits the employees may receive to their choice between (i) the benefits enumerated therein
and (ii) separation pay or other benefits that Zuellig may be required by law or competent authority to pay
them. In any event, Zuellig further argues that respondents are not qualified to receive early retirement
benefits as none of them resigned from the service, have reached the retirement age of 60 or have been
in the employ of Zuellig for at least 25 years as required by Section 1(b), Article XIV of the CBA.
Zuellig furthermore contends that the CA’s award of monetary equivalent of respondents’ unused sick
leave lacks basis. It asserts that under Section 2(c) and (d), Article VIII of the CBA, only employees who
are due for compulsory retirement and those availing of early retirement are entitled to the cash equivalent
of their unused sick leave. Those separated from employment by reason of redundancy like the
respondents are not.
Finally, Zuellig insists that the CA committed grave error in invalidating the Release and Quitclaim
voluntarily executed by the respondents. Said quitclaims represent a fair reasonable settlement of all the
claims respondents had against Zuellig. In fact, the amount of redundancy pay given to respondents is
substantially higher than the retirement package received by those who resigned.
Respondents counter that there is nothing in the CBA which categorically prohibits the recovery of
retirement benefits in addition to separation pay. They assert that Section 2, Article XIV of the CBA
alluded to by Zuellig does not constitute as an express prohibition that would foreclose recovery of
retirement gratuity after the employees had received redundancy pay. Hence, following the ruling of this
Court in Aquino, they are entitled to said retirement gratuity.
With regard to Zuellig’s contention that retirement benefits can be extended only to those who resigned,
respondents echo the observation of the CA that since their separation from employment was due to a
abandoned their right to retirement gratuity. To bolster their point, respondents cite Section 5, Article V of
the Retirement Gratuity Plan, which reads:
An employee, executive or supervisory personnel, who may be separated from the service of the
Company for any cause not attributable to his own fault or misconduct shall be entitled to full benefits as
provided for under Article V, Sections 1 and 2 above, provided, however, that any employee, executive or
supervisory personnel separated for cause shall not be entitled to any benefit as provided for under said
Article V, Sections 1, 2 and 3.17
 QMM LABOR REL CBA 26

Respondents likewise insist that since there is no specific provision in the CBA prohibiting them from a] 5 to 7 years of service 60%
claiming the monetary value of their unused sick leave, the same should be given to them.
b] 8 to 10 years of service 70%
Zuellig ripostes that nothing prevented respondents from resigning to make them eligible to receive
retirement gratuity. They had ample time to decide whether to resign or to accept redundancy pay. But
c] 11 to 15 years of service 90%
they chose redundancy pay over early retirement benefits because they knew they would be getting more.
As to respondents’ reliance on Section 5, Article V, in relation to Sections 1 and 2, of the Retirement
Gratuity Plan, Zuellig posits that the same cannot prevail over Section 2, Article XIV of the CBA. d] 16 years of service and above 100%

On August 23, 2006, this Court issued a Temporary Restraining Order enjoining the CA from
implementing its now assailed Decision until further orders from this Court.18
Our Ruling
The Petition is impressed with merit.
The CBA does not allow recovery of both separation pay and retirement gratuity.
In Aquino,19 the petitioner employees were retrenched after their employer Otis Elevator Company (Otis)
adopted cost-cutting measures and streamlined its operations. They were thus given separation pay
double the amount required by the Labor Code. Subsequently, however, the employees filed a claim for
retirement benefits, alleging entitlement thereto by virtue of the Retirement Plan. Otis denied the claim by
asserting that separation pay and retirement benefits are mutually exclusive of each other; hence,
acceptance of one bars recovery of the other. When the case reached its final review, this Court held that
in the absence of specific prohibition in the retirement plan or the CBA, retirement benefits and separation
pay are not mutually exclusive of each other and the employees whose services were terminated without
cause are entitled to both separation pay and retirement gratuity.
An employee who opts to retire before reaching the age of 60 is entitled to one (1) month’s basic pay per
year of service or Four Hundred Thirty Thousand Pesos (P430,000.00), whichever is higher, provided
however that his service record in the COMPANY is not less than twenty-nine (29) years. Those whose
service record is from twenty-five (25) to twenty-eight (28) years will be paid an amount equivalent to one
(1) month’s basic pay per year of service or Three Hundred Sixty Thousand Pesos (P360,000.00),
whichever is higher.
An employee may be entitled to retirement gratuity on account of illness under this article only upon a
certification by the COMPANY’s physician, that the illness of the retiring individual will disable said
individual from employment for a protracted length of time.
A transfer of an employee from the employment of the COMPANY to that of any other sister company
shall be deemed a retirement for the purpose of this section.
In case an employee retires at the age of 60, he shall receive a retirement pay equivalent to his last
monthly basic pay multiplied by his total service credits or Two Hundred Ten Thousand Pesos
(P210,000.00) whichever is higher, provided however, that his service record in the COMPANY is from
sixteen (16) to nineteen (19) years. Those whose service record is less than sixteen (16) years will be paid
an amount equivalent to one (1) month’s basic pay per year of service.

In the present case, the CBA contains specific provisions which effectively bar the availment of retirement
An employee who retires at the age of 60 or who is separated from employment on account of illness or
benefits once the employees have chosen separation pay or vice versa. The provisions of the CBA on
death will be entitled to one (1) month’s basic pay per year of service or Two Hundred Fifty Thousand
Retirement Gratuity read:
Pesos (P250,000.00) whichever is higher, provided however, that his service record in the COMPANY is
not less than 20 years.
ARTICLE XIV
RETIREMENT GRATUITY
Section 2 – Any payment under this provision shall be chargeable against separation pay (other than the
Social Security System benefits) which may be demandable under an applicable law.
Section 1[a] – Any employee who is separated from employment due to sickness or death shall receive
from the COMPANY a retirement gratuity in an amount equivalent to one [1] month’s basic salary per year
Section 3[a] – The COMPANY shall grant to all employees whose employment is terminated due to
of service. For the purpose of this agreement, years of service shall be deemed equivalent to the total
retrenchment or closure of business a termination pay in accordance with the following schedule:
service credits in the COMPANY; a fraction of at least six [6] months shall be considered as one [1] year,
including probationary employment; basic salary is understood to mean the monthly compensation being
received by the employee under the payroll for services rendered during the normal regular working hours 1. For employees who have rendered one [1] year to five [5] years of continuous and
of the company, excluding but not limited to any other emoluments for extra work, premiums, incentives, satisfactory service – 100% of monthly basic pay for every year of service;
benefits and allowances of whatever kind and nature.
2. For employees who have rendered six [6] years to nine [9] years of continuous and
[b] No person may retire under this paragraph for old age before reaching the age of sixty [60] years satisfactory service – 130% of monthly basic pay for every year of service;
provided that the COMPANY may compel the retirement of an employee who reaches or is past 60 years
of age. An employee who resigns prior to attaining such retirement age shall be entitled to any of the 3. For employees who have rendered ten [10] [years] to fifteen [15] years of continuous and
following percentage of the gratuity provided above: satisfactory service – 155% of monthly basic pay for every year of service;

Early Retirement or Separation

 QMM
4. For employees who have rendered [at least] sixteen [16] years x x x of continuous and
satisfactory service – 160% of monthly basic pay for every year of service.
[b] The COMPANY shall grant to all employees whose employment is terminated due to merger,
redundancy or installation of labor-saving device a termination pay in accordance with the following
schedule:
1. For employees who have rendered one [1] year to five [5] years of continuous and
satisfactory service – 120% of monthly basic pay for every year of service;
2. For employees who have rendered six [6] years to nine [9] years of continuous and
satisfactory service – 150% of monthly basic pay for every year of service;
3. For employees who have rendered ten [10] [years] to fifteen [15] years of continuous and
satisfactory service – 175% of monthly basic pay for every year of service;
4. For employees who have rendered [at least] sixteen [16] [years] x x x of continuous and
satisfactory service – 185% of monthly basic pay for every year of service.20 (Emphasis and
Italics supplied)
Section 2 of Article XIV explicitly states that any payment of retirement gratuity shall be chargeable
against separation pay. Clearly, respondents cannot have both retirement gratuity and separation pay, as
selecting one will preclude recovery of the other. To illustrate the mechanics of how Section 2 of Article
XIV bars double recovery, if the employees choose to retire, whatever amount they will receive as
retirement gratuity will be charged against the separation pay they would have received had their
separation from employment been for a cause which would entitle them to severance pay. These causes
are enumerated in Section 3, Article XIV of the CBA (i.e., retrenchment, closure of business, merger,
redundancy, or installation of labor-saving device). However, if the cause of the termination of their
employment was any of the causes enumerated in said Section 3, they could no longer claim retirement
gratuity as the fund from which the same would be taken had already been used in paying their separation
pay. Put differently, employees who were separated from the company cannot have both retirement
gratuity and separation pay as there is only one fund from which said benefits would be taken. Inarguably,
Section 2 of Article XIV effectively disallows recovery of both separation pay and retirement gratuity.
Consequently, respondents are entitled only to one. Since they have already chosen and accepted
redundancy pay and have executed the corresponding Release and Quitclaim, they are now barred from
claiming retirement gratuity.
In Suarez, Jr. v. National Steel Corporation,21 the same issue cropped up – whether the retrenched
employees are entitled to retirement gratuity even after they have received their separation pay in
accordance with the retrenchment program of the company. In ruling in the negative, this Court observed
that Sections 1 and 3 of Article XIV on Retirement Benefits of the CBA separately provide for retirement
benefits and severance pay for retrenched employees.
Section 1 thereof states, among others, that those retiring with at least 10 years of service credits are
entitled to a retirement pay equivalent to one and one-half months of basic pay for every year of service,
while Section 3 extends two months base pay for every year of service for laid-off employees pursuant to
retrenchment program. This Court elaborated thus:
A perusal of Article XIV of the parties’ 1994-1996 CBA readily shows that retirement benefits shall be
granted only to those employees who, after rendering at least ten (10) years of continuous services, would
LABOR REL CBA 27
retire upon reaching the mandatory retirement age, or would avail of optional voluntary retirement.
Nowhere can it be deduced from the CBA that those employees whose employment was terminated
through one of the authorized causes are entitled to retirement benefits. In fact, Section 3 of the afore-
quoted Article XIV specifically provides that retrenched employees shall be given two (2) months pay for
every year of service. Section 3 shows the intention of the parties to exclude retrenched employees, like
herein petitioners, from receiving retirement benefits under the existing retirement plan as set forth in
Section 1.22 (Italics supplied)
Similarly, in this case, there is also nothing in the CBA which would indicate that those employees whose
services were terminated by reason of redundancy are entitled to retirement gratuity. As in Suarez,
Sections 1 and 3 of Article XIV of the CBA of the parties herein separately provide for the amount of
benefits to be received by retired employees on the one hand and those who were terminated due to
retrenchment, closure of business, merger, redundancy, or installation of labor-saving device on the other.
In short, Sections 1 and 3 clearly spell out the difference in the treatment of employees who retired as
provided in Section 1 and those who were constrained to leave the company due to any of the causes
enumerated in Section 3. Such difference in the treatment, as well as in the corresponding pay or gratuity,
indicates the parties’ intention to exclude retired employees from receiving separation pay and vice versa.
A contrary construction would distort the clear intent of the parties and render useless the classification
specifically spelled out in the CBA.
The same ruling was arrived at in Salomon v. Associate of International Shipping Lines,
Incorporated.23 Section 1 of the parties’ CBA in that case provides for separation pay in case an employee
is separated from the service for cause, i.e., redundancy. Section 3, on the other hand, prescribes the
amount of retirement benefits for employees who have rendered at least 15 years of continuous service in
the association. This Court held that, as prescribed by the CBA, the employees are entitled only to either
separation pay, if they are terminated for cause, or optional retirement benefits, if they rendered at least
15 years of continuous service. Since they were separated from the service for cause, the employees are
entitled to separation pay only.
The CA opined that since respondents were not at fault and had nothing to do with their separation from
the company by reason of redundancy, they are therefore entitled to full retirement benefits. It anchored its
conclusion on Section 5 of Article V of the Retirement Gratuity Plan, which reads:
An employee, executive or supervisory personnel, who may be separated from the service of the
Company for any cause not attributable to his own fault or misconduct shall be entitled to full benefits as
provided for under Article V, Sections 1 and 2 above, provided, however, that any employee, executive or
supervisory personnel separated for cause shall not be entitled to any benefit as provided for under said
Article V, Sections 1, 2 and 3.24
However, the same Retirement Gratuity Plan provides that in case Zuellig is required by law or by lawful
order to pay separation pay, its employees shall not be entitled to both separation pay and the benefits
provided therein. The employees are entitled only either to separation pay or retirement gratuity,
depending on their own choice. But they cannot have both. Section 2, Article VII of the Retirement Gratuity
Plan on Effect of Social Legislation is clear on the matter. Thus:
Section 2 – Other Laws and/or Government Awards, Rules and Regulations
Except only as provided in the next preceding Section hereof, in the event that the Company is required
under the laws or by lawful order of competent authority to give to its employees any separation pay, or
other benefits or emoluments similar or analogous to those herein already provided, the employees
concerned shall not be entitled to both what the law or the lawful order of competent authority requires the
 QMM
company to give and the benefits herein provided, but shall be entitled only to the benefit of his
choice.25 (Italics supplied)
Having chosen and accepted redundancy pay, respondents are thus precluded from seeking payment of
retirement pay. Moreover, as correctly pointed out by Zuellig, Section 5, Article V of the 1968 Retirement
Gratuity Plan was already superseded by Section 2, Article XIV of the 1995 CBA, a much later contract
which reiterates the express prohibition against "double recovery." In addition, unlike in Aquino where the
employees have served the company for at least ten years making them eligible for retirement, 26 none of
the respondents herein appear to be qualified for optional retirement. Under Section 1[a] and [b], Article
XIV of the CBA earlier quoted, to be entitled to retirement gratuity, the employee must have reached 60
years of age, resigned, suffered illness, or opted to retire even before reaching the age of 60 but has been
in the employ of Zuellig for at least 25 years. None of the respondents who initiated the complaints appear
to have met the above requirements. They never even bothered to controvert Zuellig’s contention that they
are not qualified for retirement.
Respondents are not entitled to the monetary equivalent of their unused sick leave credits.
The pertinent provisions of Article VIII of the CBA on unused sick leave provide:
Section 2[a] – Sick leave – Every regular employee who has rendered:
1. One [1] year to fifteen [15] years of continuous and satisfactory service shall be
entitled to fifteen [15] working days sick leave with pay for every year;
2. Sixteen [16] years and above of continuous and satisfactory service shall be
entitled to twenty [20] working days sick leave with pay for every year; provided that
the illness is certified by the COMPANY physician or in exceptional cases, by any
other duly licensed physician.
[b] Unspent sick leave shall accrue to a period not exceeding one hundred twenty [120] working
days.
[c] An employee who is sixty [60] years old and due for compulsory retirement shall be entitled
to encashment of unused sick leave based on his/her service record in the company in
accordance with the following schedule:
1. 16 years and above of continuous service – 100% encashment up to a maximum
of four [4] months basic salary
2. 11 years to 15 years of continuous service – 50% encashment up to a maximum
of two [2] months basic salary
3. 10 years and below of continuous service – 50 % encashment up to a maximum
of one [1] month basic salary
[d] An employee who retires before reaching the age of sixty [60] shall be entitled to
encashment of unused sick leave based on his/her service record in the COMPANY in
accordance with the following schedule:
LABOR REL CBA 28
1. 25 years and above of continuous service – 100% encashment up to a maximum
of one and one-half [1½] months basic salary
2. 11 years to 24 years of continuous service – 50% encashment up to a maximum
of one [1] month basic salary provided the retirement is due to illness or disability as
certified by the company physician.27
According to the CA, since "the above enumerations fall short of providing in the instances of the other
causes of separation from service such as redundancy as in the case of the petitioners, death, merger,
installation of labor cost-saving device, retrenchment or closure of business, all of which are causes not
attributable and beyond the control of the employees,"28 the respondents should be given the monetary
equivalent of their unused sick leave.
This Court cannot agree.
The CA’s ruling in effect put something into the CBA that is not written in it, contrary to the old and familiar
Latin maxim of expressio unius est exclusio alterius. The express mention of one person, thing, act, or
consequence excludes all others. Put differently, where the terms are expressly limited to certain matters,
it may not, by interpretation or construction, be extended to other matters. In this case, Article VIII of the
CBA covers only (1) an employee who is 60 years old and due for compulsory retirement; (2) an employee
who retires prior to attaining the compulsory retirement age but has served at least 25 years; and, (3) an
employee who retires before attaining compulsory retirement age due to illness or disability. Necessarily,
the enumeration cannot be extended to include those who will be leaving the company due to redundancy,
death, merger, installation of labor cost-saving device, retrenchment, or closure of business as mistakenly
ruled by the CA.
As the law between the parties, the CBA must be strictly complied with.
It is a familiar and fundamental doctrine in labor law that the CBA is the law between the parties and they
are obliged to comply with its provisions. In Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa
Honda29this Court elucidated as follows:
A collective bargaining agreement [or CBA] refers to the negotiated contract between a legitimate labor
organization and the employer concerning wages, hours of work and all other terms and conditions of
employment in a bargaining unit. As in all contracts, the parties in a CBA may establish such stipulations,
clauses, terms and conditions as they may deem convenient provided these are not contrary to law,
morals, good customs, public order or public policy. Thus, where the CBA is clear and unambiguous, it
becomes the law between the parties and compliance therewith is mandated by the express policy of the
law.30
Here, and as discussed above, the parties’ CBA provides in no uncertain terms that whatever amount of
money the employees will receive as retirement gratuity shall be chargeable against separation pay. It is
the unequivocal manifestation of their agreement that acceptance of retirement gratuity forecloses receipt
of separation pay and vice versa. The CBA likewise exclusively enumerates departing employees who are
entitled to the monetary equivalent of their unused sick leave. These agreements must prevail and be
given full effect.
The Release and Quitclaim executed by each of the respondents remains valid.
 QMM
It is true that quitclaims executed by employees are often frowned upon as contrary to public policy. But
that is not to say that all waivers and quitclaims are invalid as against public policy. 31 Quitclaims will be
upheld as valid if the following requisites are present: "(1) the employee executes a deed of quitclaim
voluntarily; (2) there is no fraud or deceit on the part of any of the parties; (3) the consideration of the
quitclaim is credible and reasonable; and, (4) the contract is not contrary to law, public order, public policy,
morals or good customs or prejudicial to a third person with a right recognized by law."32
In this case, there is no showing that Zuellig coerced or forced respondents to sign the Release and
Quitclaim. In fact, there is no allegation that Zuellig employed fraud or deceit in making respondents sign
the Release and Quitclaim. On the other hand, respondents declared that they had received the
separation pay in full settlement of all claims arising from their employment with Zuellig. For which reason,
they have remised, released and discharged Zuellig.
Notably, the Release and Quitclaim represents a reasonable and fair settlement of respondents’ claims.
Under Article 283 of the Labor Code, the employers are required to pay employees separated from
employment by reason of redundancy at least one (1) month pay or at least one (1) month pay for every
year of service, whichever is higher.33 Here, respondents received 100% of their one (1) month basic pay
for every year of service, plus a premium ranging from 20% to 85% of such basic pay for every year of
service (depending on the number of years in service), as separation pay. In Goodrich Manufacturing
Corporation, v. Ativo,34 this Court declared that –
It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person,
or the terms of settlement are unconscionable on its face, that the law will step in to annul the
questionable transaction. But where it is shown that the person making 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.
WHEREFORE, the instant Petition is hereby GRANTED. The December 4, 2003 Decision and the July 13,
2006 Resolution of the Court of Appeals in CA-G.R. SP No. 50448 are ANNULLED and SET ASIDE and
the January 21, 1998 Decision of the National Labor Relations Commission in NLRC NCR CA NO.
011914-96 is REINSTATED and AFFIRMED.
The Temporary Restraining Order issued by this Court on August 23,2006 is made PERMANENT.
SO ORDERED.
LABOR REL CBA 29
G.R. No. 193897 January 23, 2013
UNIVERSITY OF THE EAST, DEAN ELEANOR JAVIER, RONNIE GILLEGO and DR. JOSE C.
BENEDICTO,Petitioners,
vs.
ANALIZA F. PEPANIO and MARITI D. BUENO, Respondents.
ABAD, J.:
This case is about the employment status of college teachers with no postgraduate degrees who have
been repeatedly extended semester-to-semester appointments as such.
The Facts and the Case
In 1992, the Department of Education, Culture and Sports (DECS) issued the Revised Manual of
Regulations for Private Schools,1 Article IX, Section 44, paragraph 1 (a), of which requires college faculty
members to have a master's degree as a minimum educational qualification for acquiring regular status. 2
In 1994 petitioner University of the East (UE) and the UE Faculty Association executed a five-year
Collective Bargaining Agreement (CBA) with effect up to 1999 which provided, among others, that UE
shall extend only semester-to-semester appointments to college faculty staffs who did not possess the
minimum qualifications. Those with such qualifications shall be given probationary appointments and their
performance on a full-time or full-load basis shall be reviewed for four semesters.3
Meantime, on February 7, 1996 several concerned government agencies issued DECS-CHED-TESDA-
DOLE Joint Order 14 which reiterated the policy embodied in the Manual of Regulations that "teaching or
academic personnel who do not meet the minimum academic qualifications shall not acquire tenure or
regular status." In consonance with this, the UE President issued a University Policy stating that,
beginning the School Year 1996-1997, it would hire those who have no postgraduate units or master’s
degree for its college teaching staffs, in the absence of qualified applicants, only on a semester-to-
semester basis.
UE hired respondent Mariti D. Bueno in 19975 and respondent Analiza F. Pepanio in 2000,6 both on a
semester-to-semester basis to teach in its college. They could not qualify for probationary or regular status
because they lacked postgraduate degrees. Bueno enrolled in six postgraduate subjects at the Philippine
Normal University’s graduate school but there is no evidence that she finished her course. Pepanio
earned 27 units in her graduate studies at the Gregorio Araneta University Foundation but these could no
longer be credited to her because she failed to continue with her studies within five years.
In 2001 UE and the UE Faculty Association entered into a new CBA7 that would have the school extend
probationary full-time appointments to full-time faculty members who did not yet have the required
postgraduate degrees provided that the latter comply with such requirement within their probationary
period. The CBA granted UE, however, the option to replace these appointees during their probationary
period if a qualified teacher becomes available at the end of the semester.8
Pursuant to the new CBA, UE extended probationary appointments to respondents Bueno and Pepanio.
Two years later in October 2003, the Dean of the UE College of Arts and Sciences, petitioner Eleanor
Javier, sent notices9 to probationary faculty members, reminding them of the expiration of the probationary
status of those lacking in postgraduate qualification by the end of the first semester of the School Year
2003-2004. Pepanio replied that she was enrolled at the Polytechnic University of the Philippines
 QMM
Graduate School. Bueno, on the other hand, replied that she was not interested in acquiring tenure as she
was returning to her province.
In any event, Dean Javier subsequently issued a memorandum, stating that she would recommend the
extension of the probationary appointees for two more semesters for those who want it based on the
wishes of the University President. Respondent Pepanio requested a three-semester extension but Dean
Javier denied this request and directed Pepanio to ask for just a two-semester extension. The records do
not show if Bueno submitted a request for extension. At any rate, the school eventually wrote
respondents, extending their probationary period but neither Pepanio nor Bueno reported for work.
Bueno later wrote UE, demanding that it consider her a regular employee based on her six-and-a-half-
year service on a full-load basis, given that UE hired her in 1997 when what was in force was still the 1994
CBA. Pepanio made the same demand, citing her three-and-a-half years of service on a full-load
basis.10 When UE did not heed their demands, respondents filed cases of illegal dismissal against the
school before the Labor Arbiter ’s (LA) office.
For its defense, UE countered that it never regarded respondents as regular employees since they did not
hold the required master’s degree that government rules required as minimum educational qualification for
their kind of work.
On March 10, 2005 the LA held that Bueno and Pepanio were regular employees, given that they taught
at UE for at least four semesters under the old CBA.11 The new CBA, said the LA, could not deprive them
of the employment benefits they already enjoyed. Since UE enjoined Pepanio from attending her classes
and since it did not give Bueno any teaching load, they were dismissed without just cause. The LA
directed UE to reinstate respondents with backwages.12 Dissatisfied, UE appealed to the National Labor
Relations Commission (NLRC).
Bueno and Pepanio questioned the timeliness of the appeal to the NLRC. They pointed to the
postmaster’s certification that its office received the mail containing the LA’s Decision on March 17, 2005
and "informed the Office of Atty. Mison right away but they only got the letter on April 4, 2005." Bueno and
Pepanio claim that the 10-day period for appeal should be counted from March 22, 2005, five days after
the postmaster’s first notice to Atty. Mison to claim his mail.
On September 27, 2006 the NLRC Third Division set aside the LA Decision.1âwphi1 It rejected the
technical objection and ruled that the four-semester probationary period provided under the old CBA did
not automatically confer permanent status to Bueno and Pepanio. They still had to meet the standards for
permanent employment provided under the Manual of Regulations and the Joint Order mentioned above.
The non-renewal of their contract was based on their failure to obtain the required postgraduate degrees
and cannot, therefore, be regarded as illegal.
On petition for certiorari, the Court of Appeals (CA) rendered a Decision13 on July 9, 2010, reinstating the
LA’s Decision by reason of technicality. It held that the 10-day period for appeal already lapsed when UE
filed it on April 14, 2005 since the reckoning period should be counted five days from March 17, when the
postmaster gave notice to UE’s legal counsel to claim his mail or from March 22, 2005. This prompted UE
to file the present petition.
Respondents point out, however, that the petition should be denied since it failed to enclose a certification
from the UE Board of Trustees, authorizing petitioner Dean Javier to sign the verification and certification
of non-forum shopping.
LABOR REL CBA 30
The Issues
The following issues are presented for the Court’s resolution:
1. Whether or not UE filed a timely appeal to the NLRC from the Decision of the LA;
2. Whether or not UE’s petition before this Court can be given due course given its failure to
enclose a certification from the UE Board of Trustees’ empowering petitioner Dean Javier to
execute the verification and certification of non-forum shopping; and
3. Whether or not UE illegally dismissed Bueno and Pepanio.
The Court’s Rulings
One. Respondents Bueno and Pepanio contend that UE filed its appeal to the NLRC beyond the required
10-day period. They point out that the postmaster gave notice to Atty. Mison on March 17, 2005 to claim
his mail that contained the LA Decision. He was deemed in receipt of that decision five days after the
notice or on March 22, 2005. UE had 10 days from the latter date or until April 1, 2005 within which to file
its appeal from that decision. UE contends, on the other hand, that the period of appeal should be counted
from April 4, 2005, the date appearing on the registry return receipt of the mail addressed to its counsel.
For completeness of service by registered mail, the reckoning period starts either (a) from the date of
actual receipt of the mail by the addressee or (b) after five days from the date he received the first notice
from the postmaster.14 There must be a conclusive proof, however, that the registry notice was received
by or at least served on the addressee before the five-day period begins to run.15
Here, the records fail to show that Atty. Mison in fact received the alleged registry notice from the post
office on March 22, 2005 that required him to claim his mail. Respondents have not presented a copy of
the receipt evidencing that notice. The Court has no choice but to consider the registry return receipt
bearing the date April 4, 2005 which showed the date of Atty. Mison’s receipt of a copy of the LA Decision
a conclusive proof of service on that date. Reckoned from April 4, UE filed its appeal to the NLRC on time.
Two. Respondents alleged that UE failed to attach to its petition a Secretary’s Certificate evidencing the
resolution from its Board of Trustees, authorizing a representative or agent to sign the verification and
certification of non-forum shopping.
As a general rule, the Board of Directors or Board of Trustees of a corporation must authorize the person
who signs the verification and certification against non-forum shopping of its petition. But the Court has
held16 that such authorization is not necessary when it is self-evident that the signatory is in a position to
verify the truthfulness and correctness of the allegations in the petition. Here the verification and
certification were signed by petitioner Dean Javier who, based on the given facts of the case, was "in a
position to verify the truthfulness and correctness of the allegations in the petition."17
Three. Respondents argue that UE hired them in 1997 and 2000, when what was in force was the 1994
CBA between UE and the faculty union. Since that CBA did not yet require a master’s degree for acquiring
a regular status and since respondents had already complied with the three requirements of the CBA,
namely, (a) that they served full-time; (b) that they rendered three consecutive years of service; and (c)
that their services were satisfactory,18 they should be regarded as having attained permanent or regular
status.
 QMM LABOR REL CBA 31

But the policy requiring postgraduate degrees of college teachers was provided in the Manual of
Regulations as early as 1992. Indeed, recognizing this, the 1994 CBA provided even then that UE was to
extend only semester-to-semester appointments to college faculty staffs, like respondents, who did not
possess the minimum qualifications for their positions.

Besides, as the Court held in Escorpizo v. University of Baguio, 19 a school CBA must be read in
conjunction with statutory and administrative regulations governing faculty qualifications. Such regulations
form part of a valid CBA without need for the parties to make express reference to it. While the contracting
parties may establish such stipulations, clauses, terms and conditions, as they may see fit, the right to
contract is still subject to the limitation that the agreement must not be contrary to law or public policy.

The State through Batas Pambansa Bilang 232 (The Education Act of 1982) delegated the administration
of the education system and the supervision and regulation of educational institutions to the Ministry of
Education, Culture and Sports (now Department of Education). Accordingly, in promulgating the Manual of
Regulations, DECS was exercising its power of regulation over educational institutions, which includes
prescribing the minimum academic qualifications for teaching personnel.20

In 1994 the legislature transferred the power to prescribe such qualifications to the Commission on Higher
Education (CHED). CHED’s charter authorized it to set minimum standards for programs and institutions
of higher learning.21 The Manual of Regulations continued to apply to colleges and universities and
suppletorily the Joint Order until 2010 when CHED issued a Revised Manual of Regulations which
specifically applies only to institutions involved in tertiary education.

The requirement of a masteral degree for tertiary education teachers is not unreasonable. The operation
of educational institutions involves public interest. The government has a right to ensure that only qualified
persons, in possession of sufficient academic knowledge and teaching skills, are allowed to teach in such
institutions. Government regulation in this field of human activity is desirable for protecting, not only the
students, but the public as well from ill-prepared teachers, who are lacking in the required scientific or
technical knowledge. They may be required to take an examination22or to possess postgraduate degrees
as prerequisite to employment.

Respondents were each given only semester-to-semester appointments from the beginning of their
employment with UE precisely because they lacked the required master's degree. It was only when UE
and the faculty union signed their 2001 CBA that the school extended petitioners a conditional
probationary status subject to their obtaining a master's degree within their probationary period. It is clear,
therefore, that the parties intended to subject respondents' permanent status appointments to the
standards set by the law and the university.

Here, UE gave respondents Bueno and Pepanio more than ample opportunities to acquire the
postgraduate degree required of them. But they did not take advantage of such opportunities. Justice,
fairness, and due process demand that an employer should not be penalized for situations where it had
little or no participation or control.23

WHEREFORE, the Court GRANTS the petition and REVERSES the Decision of the Court of Appeals in
CA-G.R. SP 98872 dated July 9, 2010 and REINSTATES the Decision of the National Labor Relations
Commission dated September 27, 2006 as well as its Resolutions dated December 29, 2006 and
February 27, 2007 that dismissed the complaints of respondents Analiza F. Pepanio and Mariti D. Bueno.

SO ORDERED.