G.R. No.

174420

March 22, 2010

MIGUELA SANTUYO, CORAZON ZACARIAS, EUGENIA CINCO,

ELIZABETH PERALES, SUSANA BELEDIANO, RUFINA TABINAS,
LETICIA L. DELA ROSA, NENITA LINESES, EDITHA DELA RAMA,
MARIBEL M. OLIVAR, LOEVEL MALAPAD, FLORENDA M. GONZALO,
ELEANOR O. BUEN, EULALIA ABAGAO, LORECA MOCORRO, DIANA
MAGDUA, LUZ RAGAY, LYDIA MONTE, CORNELIA BALTAZAR and
DAISY MANGANTE, Petitioners,
vs.
REMERCO GARMENTS MANUFACTURING, INC. and/or VICTORIA
REYES.1 Respondents.
DECISION
CORONA, J.:
From 1992 to 1994, due to a serious industrial dispute, the Kaisahan ng
Manggagawa sa Remerco Garments Manufacturing Inc.- KMM Kilusan
(union) staged a strike against respondent Remerco Garments
Manufacturing, Inc. (RGMI). Because the strike was subsequently declared
illegal, all union officers were dismissed. Employees who wanted to sever
their employment were paid separation pay while those who wanted to
resume work were recalled on the condition that they would no longer be
paid a daily rate but on a piece-rate basis.
Petitioners, who had been employed as sewers, were among those recalled.
Without allowing RGMI to normalize its operations, the union filed a notice of
strike in the National Conciliation and Mediation Board (NCMB) on August 8,
1995.2 According to the union, RGMI conducted a time and motion study and
changed the salary scheme from a daily rate to piece-rate basis without
consulting it. RGMI therefore not only violated the existing collective
bargaining agreement (CBA) but also diminished the salaries agreed upon. It
therefore committed an unfair labor practice.
On August 24, 1995, RGMI filed a notice of lockout in the NCMB. 3
On November 11, 1995, while the union and RGMI were undergoing
conciliation in the NCMB, RGMI transferred its factory site.

On November 13, 1995, the union went on strike and blocked the entry to
RGMIs (new) premises.
In an order dated November 21, 1995,4 the Secretary of Labor assumed
jurisdiction pursuant to Article 263(g) of the Labor Code 5 and ordered
RGMIs striking workers to return to work immediately. He likewise ordered
the union and RGMI to submit their respective position papers.
In its position paper, the union denied going on strike and blocking entries
(and exits) at RGMIs premises. Furthermore, the union enumerated RGMIs
alleged unfair labor practices. RGMI not only changed its salary scheme but
also refused to pay wages to its employees for three weeks and transferred
the plant to a new site. The union therefore asked for the reinstatement of
all employees to their former positions at the old worksite and payment of
their unpaid salaries based on the daily rate (as provided in the CBA).
RGMI, on the other hand, insisted that its employees refused to obey the
November 21, 1995 order. Thus, it prayed that the strike be declared illegal
and that all union officers and those employees who refused to return to
work be declared to have abandoned their employment.
After evaluating the respective arguments of the union and RGMI, the
Secretary of Labor held that RGMI did not lock out its employees inasmuch
as it informed them of the transfer of the worksite. However, he did not rule
on the legality of the strike.
Furthermore, based on the time and motion study, the Secretary of Labor
found that the employees would receive higher wages if they were paid on a
piece-rate rather than on a daily rate basis. Hence, the new salary scheme
would be more advantageous to the employees. For this reason, despite the
provisions of the CBA, the change in salary scheme was validated.
In an order dated September 18, 1996,6 the Secretary of Labor ordered all
employees to return to work and RGMI to pay its employees their unpaid
salaries (from September 25, 1995 to October 14, 1995) on the piece-rate
basis. Neither the union nor RGMI appealed the aforementioned order.
On October 18, 1995, while the conciliation proceedings between the union
and respondent were pending, petitioners filed a complaint for illegal
dismissal against RGMI and respondent Victoria Reyes, accusing the latter of

harassment.7 Petitioners subsequently amended their

complaint,8 demanding payment of their accrued salaries from September
25 to October 14, 1995 (computed at the daily rate of P145 plus the CBAdecreed increase ofP11 per day) and the monetary equivalent of benefits
they were entitled to under the CBA but allegedly withheld by RGMI,
namely:
(1) P200 Christmas package and P50 per person budget for the 1994
and 1995 Christmas party which was not held and
(2) 17-day vacation leave in 1994 and 1995.
Later, petitioners again amended their complaint, stating that respondents
suspended them for questioning their decision to pay salaries on a piecerate basis.9
Respondents, on the other hand, moved to dismiss the complaint in view of
the pending conciliation proceedings (which involved the same issue) in the
NCMB. Moreover, alleged violations of the CBA should be resolved according
to the grievance procedure laid out therein. 10 Thus, the labor arbiter had no
jurisdiction over the complaint.
The labor arbiter found that respondents did not pay petitioners their
salaries and deprived them of the benefits they were entitled to under the
CBA. Thus, in a decision dated July 15, 1999, 11 he ordered respondents to
pay petitioners their unpaid salaries according to their daily rate with the
corresponding increase provided in the CBA and benefits, separation pay
and attorneys fees.
Respondents appealed the decision of the labor arbiter in the National Labor
Relations Commission (NLRC)12 but it was denied.13
Aggrieved, respondents filed a petition for certiorari in the Court of Appeals
(CA) claiming that the NLRC acted with grave abuse of discretion in
affirming the decision of the labor arbiter. They argued that since the
complaint involved the implementation of the CBA, the labor arbiter had no
jurisdiction over it.

In a decision dated April 27, 2006,14 the CA reversed and set aside the
decision of the NLRC on the ground that the labor arbiter had no jurisdiction
over the complaint.15
Petitioners moved for reconsideration but it was denied. 16 Hence, this
recourse.17
Petitioners insist that the labor arbiter had jurisdiction inasmuch as the
complaint was for illegal dismissal. Furthermore, they claim that the
September 18, 1996 order of the Secretary of Labor was inapplicable to
them. Despite being members of the union, they were not among those who
went on strike.
The petition has no merit.
Petitioners clearly and consistently questioned the legality of RGMIs
adoption of the new salary scheme (i.e.,piece-rate basis), asserting that
such action, among others, violated the existing CBA. Indeed, the
controversy was not a simple case of illegal dismissal but a labor
dispute18 involving the manner of ascertaining employees salaries, a matter
which was governed by the existing CBA.
With regard to the question of jurisdiction over the subject matter, Article
217(c) of the Labor Code provides:
Article 217. Jurisdiction of Labor Arbiters and the Commission.
xxx

xxx

xxx

(c) Cases arising from the interpretation or implementation of

collective bargaining agreements and those arising from the
interpretation or enforcement of company personnel policies shall be
disposed of by the Labor Arbiter by referring the same to the
grievance machinery and voluntary arbitration as may be provided in
said agreements. (emphasis supplied)
This provision requires labor arbiters to refer cases involving the
implementation of CBAs to the grievance machinery provided therein and to
voluntary arbitration.

Moreover, Article 260 of the Labor Code clarifies that such disputes must be
referred first to the grievance machinery and, if unresolved within seven
days, they shall automatically be referred to voluntary arbitration. 19 In this
regard, Article 261 thereof states:
Article 261. Jurisdiction of voluntary arbitrators and panel of voluntary
arbitrators. The Voluntary Arbitrator or panel of Voluntary
Arbitrators shall have original and exclusive jurisdiction to hear
and decide all unresolved grievances arising from the interpretation
or implementation of the Collective Bargaining Agreement and those
arising from the interpretation or enforcement of company personnel
policies referred to in the immediately preceding Article. Accordingly,
violations of a Collective Bargaining Agreement, except those which
are gross in character, shall no longer be treated as unfair labor
practice and shall be resolved as grievances under the Collective
Bargaining Agreement. For purposes of this Article, gross violations of a
Collective Bargaining Agreement shall mean flagrant and/or malicious
refusal to comply with the economic provisions of such agreement.
(emphasis supplied)
xxx

xxx

xxx

Under this provision, voluntary arbitrators have original and exclusive

jurisdiction over matters which have not been resolved by the grievance
machinery.
Pursuant to Articles 217 in relation to Articles 260 and 261 of the Labor
Code, the labor arbiter should have referred the matter to the grievance
machinery provided in the CBA. Because the labor arbiter clearly did not
have jurisdiction over the subject matter, his decision was void.1avvphi1
Nonetheless, the Secretary of the Labor assumed jurisdiction over the labor
dispute between the union and RGMI and resolved the same in his
September 18, 1996 order. Article 263(g) of the Labor Code20 gives the
Secretary of Labor discretion21 to assume jurisdiction over a labor dispute
likely to cause a strike or a lockout in an industry indispensable to the
national interest and to decide the controversy or to refer the same to the
NLRC for compulsory arbitration. In doing so, the Secretary of Labor shall
resolve all questions and controversies in order to settle the dispute. His

power is therefore plenary and discretionary in nature to enable him to

effectively and efficiently dispose of the issue. 221avvphi1
The Secretary of Labor assumed jurisdiction over the controversy because
RGMI had a substantial number of employees and was a major exporter of
garments to the United States and Canada. 23 In view of these
considerations, the Secretary of Labor resolved the labor dispute between
the union and RGMI in his September 18, 1996 order. 24 Since neither the
union nor RGMI appealed the said order, it became final and executory.
Settled is the rule that unions are the agent of its members for the purpose
of securing just and fair wages and good working conditions. 25 Since
petitioners were part of the bargaining unit represented by the union and
members thereof, the September 18, 1996 order of the Secretary of Labor
applies to them.
Furthermore, since the union was the bargaining agent of petitioners, the
complaint was barred under the principle of conclusiveness of judgments.
The parties to a case are bound by the findings in a previous judgment with
respect to matters actually raised and adjudged therein. 26 Hence, the labor
arbiter should have dismissed the complaint on the ground of res judicata.
WHEREFORE, the petition is hereby DENIED. Costs against petitioners.

G.R. No. 178409

June 8, 2011

YOLITO FADRIQUELAN, ARTURO EGUNA, ARMANDO MALALUAN,

DANILO ALONSO, ROMULO DIMAANO, ROEL MAYUGA, WILFREDO
RIZALDO, ROMEO SUICO, DOMINGO ESCAMILLAS and DOMINGO
BAUTRO,Petitioners,
vs.
MONTEREY FOODS CORPORATION, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 178434
MONTEREY FOODS CORPORATION, Petitioner,
vs.
BUKLURAN NG MGA MANGGAGAWA SA MONTEREY-ILAW AT BUKLOD
NG MANGGAGAWA, YOLITO FADRIQUELAN, CARLITO ABACAN,
ARTURO EGUNA, DANILO ROLLE, ALBERTO CASTILLO, ARMANDO
MALALUAN, DANILO ALFONSO, RUBEN ALVAREZ, ROMULO DIMAANO,
ROEL MAYUGA, JUANITO TENORIO, WILFREDO RIZALDO, JOHN
ASOTIGUE, NEMESIO AGTAY, ROMEO SUICO, DOMINGO ESCAMILLAS
and DOMINGO BAUTRO, Respondents.
DECISION
ABAD, J.:
These cases are about the need to clearly identify, for establishing liability,
the union officers who took part in the illegal slowdown strike after the
Department of Labor and Employment (DOLE) Secretary assumed
jurisdiction over the labor dispute.
The Facts and the Case

On April 30, 2002 the three-year collective bargaining agreement or CBA

between the union Bukluran ng Manggagawa sa Monterey-Ilaw at Buklod ng
Manggagawa (the union) and Monterey Foods Corporation (the company)
expired. On March 28, 2003 after the negotiation for a new CBA reached a
deadlock, the union filed a notice of strike with the National Conciliation and
Mediation Board (NCMB). To head off the strike, on April 30, 2003 the
company filed with the DOLE a petition for assumption of jurisdiction over
the dispute in view of its dire effects on the meat industry. In an Order dated
May 12, 2003, the DOLE Secretary assumed jurisdiction over the dispute
and enjoined the union from holding any strike. It also directed the union
and the company to desist from taking any action that may aggravate the
situation.
On May 21, 2003 the union filed a second notice of strike before the NCMB
on the alleged ground that the company committed unfair labor practices.
On June 10, 2003 the company sent notices to the union officers, charging
them with intentional acts of slowdown. Six days later or on June 16 the
company sent new notices to the union officers, informing them of their
termination from work for defying the DOLE Secretarys assumption order.
On June 23, 2003, acting on motion of the company, the DOLE Secretary
included the unions second notice of strike in his earlier assumption order.
But, on the same day, the union filed a third notice of strike based on
allegations that the company had engaged in union busting and illegal
dismissal of union officers. On July 7, 2003 the company filed a petition for
certification of the labor dispute to the National Labor Relations Commission
(NLRC) for compulsory arbitration but the DOLE Secretary denied the
motion. He, however, subsumed the third notice of strike under the first and
second notices.
On November 20, 2003 the DOLE rendered a decision that, among other
things, upheld the companys termination of the 17 union officers. The union
and its officers appealed the decision to the Court of Appeals (CA).
On May 29, 2006 the CA rendered a decision, upholding the validity of the
companys termination of 10 union officers but declaring illegal that of the
other seven. Both parties sought recourse to this Court, the union in G.R.
178409 and the company in G.R. 178434.

The Issues Presented

The issues these cases present are:
1. Whether or not the CA erred in holding that slowdowns actually
transpired at the companys farms; and
2. Whether or not the CA erred in holding that union officers committed
illegal acts that warranted their dismissal from work.
The Rulings of the Court
First. The law is explicit: no strike shall be declared after the Secretary of
Labor has assumed jurisdiction over a labor dispute. A strike conducted
after such assumption is illegal and any union officer who knowingly
participates in the same may be declared as having lost his
employment.1 Here, what is involved is a slowdown strike. Unlike other
forms of strike, the employees involved in a slowdown do not walk out of
their jobs to hurt the company. They need only to stop work or reduce the
rate of their work while generally remaining in their assigned post.
The Court finds that the union officers and members in this case held a
slowdown strike at the companys farms despite the fact that the DOLE
Secretary had on May 12, 2003 already assumed jurisdiction over their labor
dispute. The evidence sufficiently shows that union officers and members
simultaneously stopped work at the companys Batangas and Cavite farms
at 7:00 a.m. on May 26, 2003.
The union of course argues that it merely held assemblies to inform
members of the developments in the CBA negotiation, not protest
demonstrations over it. But as the CA correctly observed, if the meetings
had really been for the stated reason, why did the union officers and
members from separate company farms choose to start and end their
meetings at the same time and on the same day? And if they did not intend
a slowdown, why did they not hold their meetings after work. There is no
allegation that the company prevented the union from holding meetings
after working hours.
Second. A distinction exists, however, between the ordinary workers
liability for illegal strike and that of the union officers who participated in it.

The ordinary worker cannot be terminated for merely participating in the

strike. There must be proof that he committed illegal acts during its
conduct. On the other hand, a union officer can be terminated upon mere
proof that he knowingly participated in the illegal strike. 2
Still, the participating union officers have to be properly identified. 3 The CA
held that the company illegally terminated union officers Ruben Alvarez,
John Asotigue, Alberto Castillo, Nemesio Agtay, Carlito Abacan, Danilo Rolle,
and Juanito Tenorio, there being no substantial evidence that would connect
them to the slowdowns. The CA said that their part in the same could not be
established with certainty.
But, although the witnesses did not say that Asotigue, Alvarez, and Rolle
took part in the work slowdown, these officers gave no credible excuse for
being absent from their respective working areas during the slowdown.
Tenorio allegedly took a break and never went back to work. He claimed
that he had to attend to an emergency but did not elaborate on the nature
of such emergency. In Abacans case, however, he explained that he was
not feeling well on May 26, 2003 and so he decided to take a two-hour rest
from work. This claim of Abacan is consistent with the report 4 that only one
officer (Tenorio) was involved in the slowdown at the Calamias
farm.1avvphi1
At the Quilo farm, the farm supervisor did not include Castillo in the list of
employees who failed to report for work on May 26, 2003. 5 In Agtays case,
the evidence is that he was on his rest day. There is no proof that the
unions president, Yolito Fadriquelan, did not show up for work during the
slowdowns. The CA upheld his dismissal, relying solely on a security guards
report that the company submitted as evidence. But, notably, that report
actually referred to a Rolly Fadrequellan, another employee who allegedly
took part in the Lipa farm slowdown. Besides, Yolito Fadriquelan was then
assigned at the General Trias farm in Cavite, not at the Lipa farm. In fact, as
shown in the sworn statements6 of the Cavite farm employees, Fadriquelan
even directed them not to do anything which might aggravate the situation.
This clearly shows that his dismissal was mainly based on his being the
union president.
The Court sustains the validity of the termination of the rest of the union
officers. The identity and participations of Arturo Eguna, 7 Armando

Malaluan,8 Danilo Alonso,9 Romulo Dimaano,10 Roel Mayuga,11 Wilfredo

Rizaldo,12Romeo Suico,13 Domingo Escamillas,14 and Domingo Bautro15 in the
slowdowns were properly established. These officers simply refused to work
or they abandoned their work to join union assemblies.
In termination cases, the dismissed employee is not required to prove his
innocence of the charges against him. The burden of proof rests upon the
employer to show that the employees dismissal was for just cause. The
employers failure to do so means that the dismissal was not
justified.16 Here, the company failed to show that all 17 union officers
deserved to be dismissed.
Ordinarily, the illegally dismissed employees are entitled to two reliefs:
reinstatement and backwages. Still, the Court has held that the grant of
separation pay, instead of reinstatement, may be proper especially when as
in this case such reinstatement is no longer practical or will be for the best
interest of the parties.17 But they shall likewise be entitled to attorneys fees
equivalent to 10% of the total monetary award for having been compelled
to litigate in order to protect their interests. 18
WHEREFORE, the Court MODIFIES the decision of the Court of Appeals in
CA-G.R. SP 82526, DECLARESMonterey Foods Corporations dismissal of
Alberto Castillo, Nemesio Agtay, Carlito Abacan, and Yolito Fadriquelan
illegal, and ORDERS payment of their separation pay equivalent to one
month salary for every year of service up to the date of their termination.
The Court also ORDERS the company to pay 10% attorneys fees as well as
interest of 6% per annum on the due amounts from the time of their
termination and 12% per annum from the time this decision becomes final
and executory until such monetary awards are paid.

G.R. No. 168382

June 6, 2011

AIRLINE PILOTS ASSOCIATION OF THE PHILIPPINES, Petitioner,

vs.
PHILIPPINE AIRLINES, INC., Respondent.
DECISION
DEL CASTILLO, J.:
A judgment that has attained finality is immutable and could thus no longer
be modified.
By this Petition for Review on Certiorari,1 petitioner Airline Pilots Association
of the Philippines (ALPAP) assails the Decision 2 dated December 22, 2004
and Resolution3 dated May 30, 2005 of the Court of Appeals (CA) in CA-G.R.
SP No. 79686, which found no grave abuse of discretion on the part of
Department of Labor and Employment (DOLE) Secretary Patricia A. Sto.
Tomas (Sto. Tomas) and Acting Secretary Manuel G. Imson (Imson) in issuing
their respective letters dated July 30, 20034 and July 4, 2003,5 in connection
with ALPAPs motions6 filed in NCMB NCR NS 12-514-97.
Factual Antecedents
The present controversy stemmed from a labor dispute between respondent
Philippine Airlines, Inc. (PAL) and ALPAP, the legitimate labor organization
and exclusive bargaining agent of all commercial pilots of PAL. Claiming that
PAL committed unfair labor practice, ALPAP filed on December 9, 1997, a
notice of strike7 against respondent PAL with the DOLE, docketed as NCMB
NCR NS 12-514-97. Upon PALs petition and considering that its continued
operation is impressed with public interest, the DOLE Secretary assumed
jurisdiction over the labor dispute per Order 8 dated December 23, 1997, the
dispositive portion of which reads:

WHEREFORE, this Office hereby assumes jurisdiction over the labor dispute
at the Philippine Airlines, Inc. pursuant to Article 263 (g) of the Labor Code,
as amended.
Accordingly, all strikes and lockouts at the Philippine Airlines, Inc., whether
actual or impending, are hereby strictly prohibited. The parties are also
enjoined from committing any act that may exacerbate the situation.
The parties are further directed to submit their respective position papers
within ten (10) days from receipt of this Order.
SO ORDERED.9
In a subsequent Order dated May 25, 1998,10 the DOLE Secretary reiterated
the prohibition contained in the December 23, 1997 Order. Despite such
reminder to the parties, however, ALPAP went on strike on June 5, 1998. This
constrained the DOLE, through then Secretary Cresenciano B. Trajano, to
issue a return-to-work order11 on June 7, 1998. However, it was only on June
26, 1998 when ALPAP officers and members reported back to work as shown
in a logbook12 signed by each of them. As a consequence, PAL refused to
accept the returning pilots for their failure to comply immediately with the
return-to-work order.
On June 29, 1998, ALPAP filed with the Labor Arbiter a complaint for illegal
lockout13 against PAL, docketed as NLRC NCR Case No. 00-06-05253-98.
ALPAP contended that its counsel received a copy of the return-to-work
order only on June 25, 1998, which justified their non-compliance therewith
until June 26, 1998. It thus prayed that PAL be ordered to accept
unconditionally all officers and members of ALPAP without any loss of pay
and seniority and to pay whatever salaries and benefits due them pursuant
to existing contracts of employment.
On PALs motion, the Labor Arbiter consolidated the illegal lockout case with
NCMB NCR NS 12-514-97 (strike case) pending before the DOLE Secretary
since the controversy presented in the lockout case is an offshoot of the
labor dispute over which the DOLE Secretary has assumed jurisdiction and
because the factual allegations in both cases are interrelated. 14 In a
Resolution dated January 18, 1999,15 the NLRC sustained the consolidation
of the illegal lockout case with the strike case, opining that the DOLE

Secretary has the authority to resolve all incidents attendant to his returnto-work order.
Through then DOLE Secretary Bienvenido E. Laguesma, a Resolution 16 dated
June 1, 1999 was rendered in NCMB NCR NS 12-514-97, declaring the strike
conducted by ALPAP on June 5, 1998 illegal and pronouncing the loss of
employment status of its officers and members who participated in the
strike in defiance of the June 7, 1998 return-to-work order. The decretal
portion of the Resolution reads:
WHEREFORE, PREMISES CONSIDERED, this Office hereby:
a. x x x;
b. DECLARES the strike conducted by ALPAP on June 5, 1998 and thereafter
as illegal for being procedurally infirm and in open defiance of the return-towork order of June 7, 1998 and, consequently, the strikers are deemed to
have lost their employment status; and
c. DISMISSES the complaint for illegal lockout for lack of merit.
SO ORDERED.17
In a Resolution18 dated July 23, 1999, ALPAPs motion for reconsideration
was denied. Thus, ALPAP filed a Petition for Certiorari19 with the CA assailing
both the June 1, 1999 and July 23, 1999 DOLE Resolutions. The case was
docketed as CA-G.R. SP No. 54880.
Meanwhile, several ALPAP members filed separate individual complaints for
illegal dismissal and non-payment of monetary benefits against PAL with the
Labor Arbiters of the NLRC, questioning their termination as a result of the
strike staged by other ALPAP members on June 5, 1998. 20 While these cases
were pending, the CA, in CA-G.R. SP No. 54880, affirmed and upheld the
June 1, 1999 and July 23, 1999 DOLE Resolutions in its Decision 21 dated
August 22, 2001. ALPAP then sought a review of the CA Decision, thereby
elevating the matter to this Court docketed as G.R. No. 152306. On April 10,
2002, this Court dismissed ALPAPs petition for failure to show that the CA
committed grave abuse of discretion or a reversible error. 22 This Courts
Resolution attained finality on August 29, 2002.23

Proceedings before the DOLE Secretary

On January 13, 2003, ALPAP filed before the Office of the DOLE
Secretary a Motion24 in NCMB NCR NS 12-514-97, requesting the said office
to conduct an appropriate legal proceeding to determine who among its
officers and members should be reinstated or deemed to have lost their
employment with PAL for their actual participation in the strike conducted in
June 1998. ALPAP contended that there is a need to conduct a proceeding in
order to determine who actually participated in the illegal strike since not
only the striking workers were dismissed by PAL but all of ALPAPs officers
and members, even though some were on official leave or abroad at the
time of the strike. It also alleged that there were some who joined the strike
and returned to work but were asked to sign new contracts of employment,
which abrogated their earned seniority. Also, there were those who initially
defied the return-to-work order but immediately complied with the same
after proper receipt thereof by ALPAPs counsel. However, PAL still refused to
allow them to enter its premises. According to ALPAP, such measure, as to
meet the requirements of due process, is essential because it must be first
established that a union officer or member has participated in the strike or
has committed illegal acts before they could be dismissed from
employment. In other words, a fair determination of who must suffer the
consequences of the illegal strike is indispensable since a significant
number of ALPAP members did not at all participate in the strike. The
motion also made reference to the favorable recommendation rendered by
the Freedom of Association Committee of the International Labour
Organization (ILO) in ILO Case No. 2195 which requested the Philippine
Government "to initiate discussions in order to consider the possible
reinstatement in their previous employment of all ALPAPs workers who were
dismissed following the strike staged in June 1998." 25A Supplemental
Motion26 was afterwards filed by ALPAP on January 28, 2003, this time asking
the DOLE Secretary to resolve all issues relating to the entitlement to
employment benefits by the officers and members of ALPAP, whether
terminated or not.
In its Comment27 to ALPAPs motions, PAL argued that the motions cannot
legally prosper since the DOLE Secretary has no authority to reopen or
review a final judgment of the Supreme Court relative to NCMB NCR NS 12514-97; that the requested proceeding is no longer necessary as the CA or

this Court did not order the remand of the case to the DOLE Secretary for
such determination; that the NLRC rather than the DOLE Secretary has
jurisdiction over the motions as said motions partake of a complaint for
illegal dismissal with monetary claims; and that all money claims are
deemed suspended in view of the fact that PAL is under receivership.
On January 24, 2003, the DOLE called the parties to a hearing to discuss and
clarify the issues raised in ALPAPs motions. 28 In a letter dated July 4,
200329 addressed to ALPAP President, Capt. Ismael C. Lapus, Jr., then Acting
DOLE Secretary, Imson, resolved ALPAPs motions in the following manner:
xxxx
After a careful consideration of the factual antecedents, applicable legal
principles and the arguments of the parties, this Office concludes that
NCMB-NCR-NS-12-514-97 has indeed been resolved with finality by the
highest tribunal of the land, the Supreme Court. Being final and executory,
this Office is bereft of authority to reopen an issue that has been passed
upon by the Supreme Court.
It is important to note that in pages 18 to 19 of ALPAPs Memorandum, it
admitted that individual complaints for illegal dismissal have been filed by
the affected pilots before the NLRC. It is therefore an implied recognition on
the part of the pilots that the remedy to their present dilemma could be
found in the NLRC.
xxxx
Thus, to avoid multiplicity of suits, splitting causes of action and forumshopping which are all obnoxious to an orderly administration of justice, it is
but proper to respect the final and executory order of the Supreme Court in
this case as well as the jurisdiction of the NLRC over the illegal dismissal
cases. Since ALPAP and the pilots have opted to seek relief from the NLRC,
this Office should respect the authority of that Commission to resolve the
dispute in the normal course of law. This Office will no longer entertain any
further initiatives to split the jurisdiction or to shop for a forum that shall
only foment multiplicity of labor disputes. Parties should not jump from one
forum to another. This Office will make sure of that.

By reason of the final ruling of the Honorable Supreme Court, the erring
pilots have lost their employment status and second, because these pilots
have filed cases to contest such loss before another forum, the Motion and
Supplemental Motion of ALPAP as well as the arguments raised therein are
merely NOTED by this Office.
ALPAP filed its motion for reconsideration30 arguing that the issues raised in
its motions have remained unresolved hence, it is the duty of DOLE to
resolve the same it having assumed jurisdiction over the labor dispute.
ALPAP also denied having engaged in forum shopping as the individual
complainants who filed the cases before the NLRC are separate and distinct
from ALPAP and that the causes of action therein are different. According to
ALPAP, there was clear abdication of duty when then Acting Secretary Imson
refused to properly act on the motions. In a letter dated July 30,
2003,31 Secretary Sto. Tomas likewise merely noted ALPAPs motion for
reconsideration, reiterating the DOLEs stand to abide by the final and
executory judgment of the Supreme Court.
Proceedings before the Court of Appeals
ALPAP filed a petition for certiorari32 with the CA, insisting that the assailed
letters dated July 4, 2003 and July 30, 2003, which merely noted its motions,
were issued in grave abuse of discretion.
In their Comment,33 Sto. Tomas and Imson argued that the matter of who
among ALPAPs members and officers participated in the strike was already
raised and resolved by the CA and this Court. By filing the motions, ALPAP,
in effect, initiated a termination case which is properly cognizable by the
Labor Arbiter. And since several ALPAP members have already filed
complaints for illegal dismissal and claims for salaries and benefits with the
Labor Arbiter, ALPAP is thus engaging in forum-shopping when it filed the
subject motions.
PAL, on the other hand, also claimed in its Comment 34 that ALPAP violated
the principles governing forum shopping, res judicata and multiplicity of
suits. It opined that when ALPAP questioned the loss of employment status
of "all its officers and members and asked for their reinstatement" in its
appeal to reverse the Decision of the DOLE Secretary in the consolidated
strike and illegal lockout cases, the matter of who should be meted out the

penalty of dismissal was already resolved with finality by this Court and
could not anymore be modified.
The CA, in its Decision dated December 22, 2004, 35 dismissed the petition. It
found no grave abuse of discretion on the part of Sto. Tomas and Imson in
refusing to conduct the necessary proceedings to determine issues relating
to ALPAP members employment status and entitlement to employment
benefits. The CA held that both these issues were among the issues taken
up and resolved in the June 1, 1999 DOLE Resolution which was affirmed by
the CA in CA-G.R. SP No. 54880 and subsequently determined with finality
by this Court in G.R. No. 152306. Therefore, said issues could no longer be
reviewed. The CA added that Sto. Tomas and Imson merely acted in
deference to the NLRCs jurisdiction over the illegal dismissal cases filed by
individual ALPAP members.
ALPAP moved for reconsideration which was denied for lack of merit in CA
Resolution36 dated May 30, 2005.
Hence, this petition.
Issues
I.
WHETHER X X X THE HONORABLE COURT OF APPEALS COMMITTED
REVERSIBLE ERROR WHEN IT DECLARED THAT THE PUBLIC RESPONDENT
DID NOT COMMIT GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
AND/OR EXCESS OF JURISDICTION WHEN IT REFUSED TO ACT ON ALPAPS
MOTIONS AND MERELY NOTED THE SAME.
II.
WHETHER X X X THE HONORABLE COURT OF APPEALS COMMITTED GRAVE
MISTAKE IN DECLARING THAT THE 01 JUNE 1999 RESOLUTION OF THE
DEPARTMENT OF LABOR AND EMPLOYMENT HAS ALREADY TAKEN UP AND
RESOLVED THE ISSUE OF WHO AMONG THE ALPAP MEMBERS ARE DEEMED
TO HAVE LOST THEIR EMPLOYMENT STATUS.37
ALPAP contends that it was erroneous for Sto. Tomas and Imson to merely
take note of the motions when the issues raised therein sprang from the

DOLE Secretarys exercise of authority to assume jurisdiction over a labor

dispute which have nevertheless remained unresolved. ALPAP prays that the
assailed letters dated July 4, 2003 and July 30, 2003 be declared null and
void. It likewise seeks for a conduct of a proceeding to determine who
actually participated in the illegal strike of June 1998 and consequently who,
from its vast membership, should be deemed to have lost employment
status.
Our Ruling
We deny the petition.
There was no grave abuse of discretion on the part of Sto. Tomas and Imson
in merely noting ALPAPs twin motions in due deference to a final and
immutable judgment rendered by the Supreme Court.
From the June 1, 1999 DOLE Resolution, which declared the strike of June 5,
1998 as illegal and pronounced all ALPAP officers and members who
participated therein to have lost their employment status, an appeal was
taken by ALPAP. This was dismissed by the CA in CA-G.R. SP No. 54880,
which ruling was affirmed by this Court and which became final and
executory on August 29, 2002.
In the instant case, ALPAP seeks for a conduct of a proceeding to determine
who among its members and officers actually participated in the illegal
strike because, it insists, the June 1, 1999 DOLE Resolution did not make
such determination. However, as correctly ruled by Sto. Tomas and Imson
and affirmed by the CA, such proceeding would entail a reopening of a final
judgment which could not be permitted by this Court. Settled in law is that
once a decision has acquired finality, it becomes immutable and
unalterable, thus can no longer be modified in any respect. 38 Subject to
certain recognized exceptions,39 the principle of immutability leaves the
judgment undisturbed as "nothing further can be done except to execute
it."40
True, the dispositive portion of the DOLE Resolution does not specifically
enumerate the names of those who actually participated in the strike but
only mentions that those strikers who failed to heed the return-to-work
order are deemed to have lost their employment. This omission, however,
cannot prevent an effective execution of the decision. As was held

in Reinsurance Company of the Orient, Inc. v. Court of Appeals,41 any

ambiguity may be clarified by reference primarily to the body of the
decision or supplementary to the pleadings previously filed in the case. In
any case, especially when there is an ambiguity, "a judgment
shall be read in connection with the entire record and construed
accordingly."42
There is no necessity to conduct a proceeding to determine the participants
in the illegal strike or those who refused to heed the return to work order
because the ambiguity can be cured by reference to the body of the
decision and the pleadings filed.1avvphi1
A review of the records reveals that in NCMB NCR NS 12-514-97, the DOLE
Secretary declared the ALPAP officers and members to have lost their
employment status based on either of two grounds, viz: their participation in
the illegal strike on June 5, 1998 or their defiance of the return-to-work
order of the DOLE Secretary. The records of the case unveil the names of
each of these returning pilots. The logbook43 with the heading "Return To
Work Compliance/ Returnees" bears their individual signature signifying
their conformity that they were among those workers who returned to work
only on June 26, 1998 or after the deadline imposed by DOLE. From this
crucial and vital piece of evidence, it is apparent that each of these pilots is
bound by the judgment. Besides, the complaint for illegal lockout was filed
on behalf of all these returnees. Thus, a finding that there was no illegal
lockout would be enforceable against them. In fine, only those returning
pilots, irrespective of whether they comprise the entire membership of
ALPAP, are bound by the June 1, 1999 DOLE Resolution.
ALPAP harps on the inequity of PALs termination of its officers and members
considering that some of them were on leave or were abroad at the time of
the strike. Some were even merely barred from returning to their work
which excused them for not complying immediately with the return-to-work
order. Again, a scrutiny of the records of the case discloses that these
allegations were raised at a very late stage, that is, after the judgment has
finally decreed that the returning pilots termination was legal. Interestingly,
these defenses were not raised and discussed when the case was still
pending before the DOLE Secretary, the CA or even before this Court. We
agree with the position taken by Sto. Tomas and Imson that from the time

the return-to-work order was issued until this Court rendered its April 10,
2002 resolution dismissing ALPAPs petition, no ALPAP member has claimed
that he was unable to comply with the return-to-work directive because he
was either on leave, abroad or unable to report for some reason. These
defenses were raised in ALPAPs twin motions only after the Resolution in
G.R. No. 152306 reached finality in its last ditch effort to obtain a favorable
ruling. It has been held that a proceeding may not be reopened upon
grounds already available to the parties during the pendency of such
proceedings; otherwise, it may give way to vicious and vexatious
proceedings.44 ALPAP was given all the opportunities to present its evidence
and arguments. It cannot now complain that it was denied due process
Relevant to mention at this point is that when NCMB NCR NS 12-514-97
(strike/illegal lockout case) was still pending, several complaints for illegal
dismissal were filed before the Labor Arbiters of the NLRC by individual
members of ALPAP, questioning their termination following the strike staged
in June 1998. PAL likewise manifests that there is a pending case involving a
complaint45 for the recovery of accrued and earned benefits belonging to
ALPAP members. Nonetheless, the pendency of the foregoing cases should
not and could not affect the character of our disposition over the instant
case. Rather, these cases should be resolved in a manner consistent and in
accord with our present disposition for effective enforcement and execution
of a final judgment.
WHEREFORE, the petition is DENIED for lack of merit. The Decision of the
Court of Appeals dated December 22, 2004 and Resolution dated May 30,
2005 in CA-G.R. SP No. 79686 are AFFIRMED.

G.R. No. 169704

November 17, 2010

ALBERT TENG, doing business under the firm name ALBERT TENG
FISH TRADING, and EMILIA TENG-CHUA, Petitioners,
vs.
ALFREDO S. PAHAGAC, EDDIE D. NIPA, ORLANDO P. LAYESE, HERNAN
Y. BADILLES and ROGER S. PAHAGAC, Respondents.
DECISION
BRION, J.:
Before this Court is a Petition for Review on Certiorari 1 filed by petitioners
Albert Teng Fish Trading, its owner Albert Teng, and its manager Emilia TengChua, to reverse and set aside the September 21, 2004 decision 2 and the
September 1, 2005 resolution3 of the Court of Appeals (CA) in CA-G.R. SP
No. 78783. The CA reversed the decision of the Voluntary Arbitrator (VA),
National Conciliation and Mediation Board (NCMB), Region IX, Zamboanga
City, and declared that there exists an employer-employee relationship
between Teng and respondents Hernan Badilles, Orlando Layese, Eddie
Nipa, Alfredo Pahagac, and Roger Pahagac (collectively, respondent
workers). It also found that Teng illegally dismissed the respondent workers
from their employment.
BACKGROUND FACTS

Albert Teng Fish Trading is engaged in deep sea fishing and, for this purpose,
owns boats (basnig), equipment, and other fishing paraphernalia. As owner
of the business, Teng claims that he customarily enters into joint venture
agreements with master fishermen (maestros) who are skilled and are
experts in deep sea fishing; they take charge of the management of each
fishing venture, including the hiring of the members of its complement. He
avers that the maestros hired the respondent workers as checkers to
determine the volume of the fish caught in every fishing voyage. 4
On February 20, 2003, the respondent workers filed a complaint for illegal
dismissal against Albert Teng Fish Trading, Teng, and Chua before the NCMB,
Region Branch No. IX, Zamboanga City.
The respondent workers alleged that Teng hired them, without any written
employment contract, to serve as his "eyes and ears" aboard the fishing
boats; to classify the fish caught by baera; to report to Teng via radio
communication the classes and volume of each catch; to receive
instructions from him as to where and when to unload the catch; to prepare
the list of the provisions requested by the maestro and the mechanic for his
approval; and, to procure the items as approved by him. 5 They also claimed
that they received regular monthly salaries, 13th month pay, Christmas
bonus, and incentives in the form of shares in the total volume of fish
caught.
They asserted that sometime in September 2002, Teng expressed his
doubts on the correct volume of fish caught in every fishing voyage. 6 In
December 2002, Teng informed them that their services had been
terminated.7
In his defense, Teng maintained that he did not have any hand in hiring the
respondent workers; the maestros, rather than he, invited them to join the
venture. According to him, his role was clearly limited to the provision of the
necessary capital, tools and equipment, consisting of basnig, gears, fuel,
food, and other supplies.8
The VA rendered a decision9 in Tengs favor and declared that no employeremployee relationship existed between Teng and the respondent workers.
The dispositive portion of the VAs May 30, 2003 decision reads:

WHEREFORE, premises considered, judgment is hereby rendered dismissing

the instant complaint for lack of merit.
It follows also, that all other claims are likewise dismissed for lack of merit. 10
The respondent workers received the VAs decision on June 12, 2003. 11 They
filed a motion for reconsideration, which was denied in an order dated June
27, 2003 and which they received on July 8, 2003.12 The VA reasoned out
that Section 6, Rule VII of the 1989 Procedural Guidelines in the Conduct of
Voluntary Arbitration Proceedings (1989 Procedural Guidelines) does not
provide the remedy of a motion for reconsideration to the party adversely
affected by the VAs order or decision. 13 The order states:
Under Executive Order No. 126, as amended by Executive Order No. 251,
and in order to implement Article 260-262 (b) of the Labor Code, as
amended by R.A. No. 6715, otherwise known as the Procedural Guidelines in
the Conduct of Voluntary Arbitration Proceedings, inter alia:
An award or the Decision of the Voluntary Arbitrators becomes final and
executory after ten (10) calendar days from receipt of copies of the award or
decision by the parties (Sec. 6, Rule VII).
Moreover, the above-mentioned guidelines do not provide the remedy of a
motion for reconsideration to the party adversely affected by the order or
decision of voluntary arbitrators.14
On July 21, 2003, the respondent-workers elevated the case to the CA. In its
decision of September 21, 2004, the CA reversed the VAs decision after
finding sufficient evidence showing the existence of employer-employee
relationship:
WHEREFORE, premises considered, the petition is granted. The questioned
decision of the Voluntary Arbitrator dated May 30, 2003 is hereby
REVERSED and SET ASIDE by ordering private respondent to pay separation
pay with backwages and other monetary benefits. For this purpose, the case
is REMANDED to the Voluntary Arbitrator for the computation of petitioners
backwages and other monetary benefits. No pronouncement as to costs.
SO ORDERED.15

Teng moved to reconsider the CAs decision, but the CA denied the motion
in its resolution of September 1, 2005.16 He, thereafter, filed the present
Petition for Review on Certiorari under Rule 45 of the Rules of Court,
claiming that:
a. the VAs decision is not subject to a motion for reconsideration; and
b. no employer-employee relationship existed between Teng and the
respondent workers.
Teng contends that the VAs decision is not subject to a motion for
reconsideration in the absence of any specific provision allowing this
recourse under Article 262-A of the Labor Code. 17 He cites the 1989
Procedural Guidelines, which, as the VA declared, does not provide the
remedy of a motion for reconsideration. 18 He claims that after the lapse of
10 days from its receipt, the VAs decision becomes final and executory
unless an appeal is taken.19 He argues that when the respondent workers
received the VAs decision on June 12, 2003,20 they had 10 days, or until
June 22, 2003, to file an appeal. As the respondent workers opted instead to
move for reconsideration, the 10-day period to appeal continued to run;
thus, the VAs decision had already become final and executory by the time
they assailed it before the CA on July 21, 2003. 21
Teng further insists that the VA was correct in ruling that there was no
employer-employee relationship between him and the respondent workers.
What he entered into was a joint venture agreement with the maestros,
where Tengs role was only to provide basnig, gears, nets, and other tools
and equipment for every fishing voyage.22
THE COURTS RULING
We resolve to deny the petition for lack of merit.
Article 262-A of the Labor Code does not prohibit the filing of a motion for
reconsideration.
On March 21, 1989, Republic Act No. 671523 took effect, amending, among
others, Article 263 of the Labor Code which was originally worded as:

Art. 263 x x x Voluntary arbitration awards or decisions shall be final,

unappealable, and executory.
As amended, Article 263 is now Article 262-A, which states:
Art. 262-A. x x x [T]he award or decision x x x shall contain the facts and the
law on which it is based. It shall be final and executory after ten (10)
calendar days from receipt of the copy of the award or decision by the
parties.
Notably, Article 262-A deleted the word "unappealable" from Article 263.
The deliberate selection of the language in the amendatory act differing
from that of the original act indicates that the legislature intended a change
in the law, and the court should endeavor to give effect to such intent. 24 We
recognized the intent of the change of phraseology in Imperial Textile Mills,
Inc. v. Sampang,25 where we ruled that:
It is true that the present rule [Art. 262-A] makes the voluntary arbitration
award final and executory after ten calendar days from receipt of the copy
of the award or decision by the parties. Presumably, the decision may still
be reconsidered by the Voluntary Arbitrator on the basis of a motion for
reconsideration duly filed during that period. 26
In Coca-Cola Bottlers Phil., Inc., Sales Force Union-PTGWO-Balais v. CocaCola Bottlers Philippines, Inc.,27 we likewise ruled that the VAs decision may
still be reconsidered on the basis of a motion for reconsideration seasonably
filed within 10 days from receipt thereof.28 The seasonable filing of a motion
for reconsideration is a mandatory requirement to forestall the finality of
such decision.29 We further cited the 1989 Procedural Guidelines which
implemented Article 262-A, viz:30
[U]nder Section 6, Rule VII of the same guidelines implementing Article 262A of the Labor Code, this Decision, as a matter of course, would become
final and executory after ten (10) calendar days from receipt of copies of the
decision by the parties x x x unless, in the meantime, a motion for
reconsideration or a petition for review to the Court of Appeals under Rule
43 of the Rules of Court is filed within the same 10-day period. 31
These rulings fully establish that the absence of a categorical language in
Article 262-A does not preclude the filing of a motion for reconsideration of

the VAs decision within the 10-day period. Tengs allegation that the VAs
decision had become final and executory by the time the respondent
workers filed an appeal with the CA thus fails. We consequently rule that the
respondent workers seasonably filed a motion for reconsideration of the
VAs judgment, and the VA erred in denying the motion because no motion
for reconsideration is allowed.
The Court notes that despite our interpretation that Article 262-A does not
preclude the filing of a motion for reconsideration of the VAs decision, a
contrary provision can be found in Section 7, Rule XIX of the Department of
Labors Department Order (DO) No. 40, series of 2003:32
Rule XIX
Section 7. Finality of Award/Decision. The decision, order, resolution or
award of the voluntary arbitrator or panel of voluntary arbitrators shall be
final and executory after ten (10) calendar days from receipt of the copy of
the award or decision by the parties and it shall not be subject of a motion
for reconsideration.
Presumably on the basis of DO 40-03, the 1989 Procedural Guidelines was
revised in 2005 (2005 Procedural Guidelines),33 whose pertinent provisions
provide that:
Rule VII DECISIONS
Section 6. Finality of Decisions. The decision of the Voluntary Arbitrator
shall be final and executory after ten (10) calendar days from receipt of the
copy of the decision by the parties.
Section 7. Motions for Reconsideration. The decision of the Voluntary
Arbitrator is not subject of a Motion for Reconsideration.
We are surprised that neither the VA nor Teng cited DO 40-03 and the 2005
Procedural Guidelines as authorities for their cause, considering that these
were the governing rules while the case was pending and these directly and
fully supported their theory. Had they done so, their reliance on the
provisions would have nevertheless been unavailing for reasons we shall
now discuss.

In the exercise of its power to promulgate implementing rules and

regulations, an implementing agency, such as the Department of Labor, 34 is
restricted from going beyond the terms of the law it seeks to implement; it
should neither modify nor improve the law. The agency formulating the rules
and guidelines cannot exceed the statutory authority granted to it by the
legislature.35
By allowing a 10-day period, the obvious intent of Congress in amending
Article 263 to Article 262-A is to provide an opportunity for the party
adversely affected by the VAs decision to seek recourse via a motion for
reconsideration or a petition for review under Rule 43 of the Rules of Court
filed with the CA. Indeed, a motion for reconsideration is the more
appropriate remedy in line with the doctrine of exhaustion of administrative
remedies. For this reason, an appeal from administrative agencies to the CA
via Rule 43 of the Rules of Court requires exhaustion of available
remedies36 as a condition precedent to a petition under that Rule.
The requirement that administrative remedies be exhausted is based on the
doctrine that in providing for a remedy before an administrative agency,
every opportunity must be given to the agency to resolve the matter and to
exhaust all opportunities for a resolution under the given remedy before
bringing an action in, or resorting to, the courts of justice. 37 Where Congress
has not clearly required exhaustion, sound judicial discretion
governs,38guided by congressional intent.39
By disallowing reconsideration of the VAs decision, Section 7, Rule XIX of
DO 40-03 and Section 7 of the 2005 Procedural Guidelines went directly
against the legislative intent behind Article 262-A of the Labor Code. These
rules deny the VA the chance to correct himself40 and compel the courts of
justice to prematurely intervene with the action of an administrative agency
entrusted with the adjudication of controversies coming under its special
knowledge, training and specific field of expertise. In this era of clogged
court dockets, the need for specialized administrative agencies with the
special knowledge, experience and capability to hear and determine
promptly disputes on technical matters or intricate questions of facts,
subject to judicial review, is indispensable. 41 In Industrial Enterprises, Inc. v.
Court of Appeals,42 we ruled that relief must first be obtained in an
administrative proceeding before a remedy will be supplied by the courts
even though the matter is within the proper jurisdiction of a court. 43

There exists an employer-employee relationship between Teng and the

respondent workers.
We agree with the CAs finding that sufficient evidence exists indicating the
existence of an employer-employee relationship between Teng and the
respondent workers.
While Teng alleged that it was the maestros who hired the respondent
workers, it was his company that issued to the respondent workers
identification cards (IDs) bearing their names as employees and Tengs
signature as the employer. Generally, in a business establishment, IDs are
issued to identify the holder as a bona fide employee of the issuing entity.
For the 13 years that the respondent workers worked for Teng, they received
wages on a regular basis, in addition to their shares in the fish caught. 44 The
worksheet showed that the respondent workers received uniform amounts
within a given year, which amounts annually increased until the termination
of their employment in 2002.45 Tengs claim that the amounts received by
the respondent workers are mere commissions is incredulous, as it would
mean that the fish caught throughout the year is uniform and increases in
number each year.
More importantly, the element of control which we have ruled in a number
of cases to be a strong indicator of the existence of an employer-employee
relationship is present in this case. Teng not only owned the tools and
equipment, he directed how the respondent workers were to perform their
job as checkers; they, in fact, acted as Tengs eyes and ears in every fishing
expedition.
Teng cannot hide behind his argument that the respondent workers were
hired by the maestros. To consider the respondent workers as employees of
the maestros would mean that Teng committed impermissible labor-only
contracting. As a policy, the Labor Code prohibits labor-only contracting:
ART. 106. Contractor or Subcontractor x x x The Secretary of Labor and
Employment may, by appropriate regulations, restrict or prohibit the
contracting-out of labor.
xxxx

There is "labor-only" contracting where the person supplying

workers to an employer does not have substantial capital or
investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by
such persons are performing activities which are directly related to
the principal business of such employer. In such cases, the person or
intermediary shall be considered merely as an agent of the employer who
shall be responsible to the workers in the same manner and extent as if the
latter were directly employed by him.
Section 5 of the DO No. 18-02,46 which implements Article 106 of the Labor
Code, provides:
Section 5. Prohibition against labor-only contracting. Labor-only
contracting is hereby declared prohibited.For this purpose, labor-only
contracting shall refer to an arrangement where the contractor or
subcontractor merely recruits, supplies or places workers to perform a job,
work or service for a principal, and any of the following elements are
present:
(i) The contractor or subcontractor does not have substantial capital or
investment which relates to the job, work or service to be performed
and the employees recruited, supplied or placed by such contractor or
subcontractor are performing activities which are directly related to the
main business of the principal; or
(ii) The contractor does not exercise the right to control over the
performance of the work of the contractual employee.
In the present case, the maestros did not have any substantial capital or
investment.1avvphi1 Teng admitted that he solely provided the capital and
equipment, while the maestros supplied the workers. The power of control
over the respondent workers was lodged not with the maestros but with
Teng. As checkers, the respondent workers main tasks were to count and
classify the fish caught and report them to Teng. They performed tasks that
were necessary and desirable in Tengs fishing business. Taken together,
these incidents confirm the existence of a labor-only contracting which is
prohibited in our jurisdiction, as it is considered to be the employers
attempt to evade obligations afforded by law to employees.

Accordingly, we hold that employer-employee ties exist between Teng and

the respondent workers. A finding that the maestros are labor-only
contractors is equivalent to a finding that an employer-employee
relationship exists between Teng and the respondent workers. As regular
employees, the respondent workers are entitled to all the benefits and
rights appurtenant to regular employment.
The dismissal of an employee, which the employer must validate, has a
twofold requirement: one is substantive, the other is procedural. 47 Not only
must the dismissal be for a just or an authorized cause, as provided by law;
the rudimentary requirements of due process the opportunity to be heard
and to defend oneself must be observed as well. 48 The employer has the
burden of proving that the dismissal was for a just cause; failure to show
this, as in the present case, would necessarily mean that the dismissal was
unjustified and, therefore, illegal.49
The respondent workers allegation that Teng summarily dismissed them on
suspicion that they were not reporting to him the correct volume of the fish
caught in each fishing voyage was never denied by Teng. Unsubstantiated
suspicion is not a just cause to terminate ones employment under Article
28250 of the Labor Code. To allow an employer to dismiss an employee
based on mere allegations and generalities would place the employee at the
mercy of his employer, and would emasculate the right to security of
tenure.51 For his failure to comply with the Labor Codes substantive
requirement on termination of employment, we declare that Teng illegally
dismissed the respondent workers.
WHEREFORE, we DENY the petition and AFFIRM the September 21, 2004
decision and the September 1, 2005 resolution of the Court of Appeals in
CA-G.R. SP No. 78783. Costs against the petitioners.

G.R. No. 190515

November 15, 2010

CIRTEK EMPLOYEES LABOR UNION-FEDERATION OF FREE

WORKERS, Petitioner,
vs.
CIRTEK ELECTRONICS, INC., Respondent.
DECISION
CARPIO MORALES, J.:
Cirtek Electronics, Inc. (respondent), an electronics and semi-conductor firm
situated inside the Laguna Technopark, had an existing Collective
Bargaining Agreement (CBA) with Cirtek Employees Labor Union-Federation
of Free Workers (petitioner) for the period January 1, 2001 up to December
31, 2005. Prior to the 3rd year of the CBA, the parties renegotiated its
economic provisions but failed to reach a settlement, particularly on the
issue of wage increases. Petitioner thereupon declared a bargaining
deadlock and filed a Notice of Strike with the National Conciliation and
Mediation Board-Regional Office No. IV (NCMB-RO IV) on April 26, 2004.
Respondent, upon the other hand, filed a Notice of Lockout on June 16,
2004.
While the conciliation proceedings were ongoing, respondent placed seven
union officers including the President, a Vice President, the Secretary and
the Chairman of the Board of Directors under preventive suspension for
allegedly spearheading a boycott of overtime work. The officers were
eventually dismissed from employment, prompting petitioner to file another
Notice of Strike which was, after conciliation meetings, converted to a
voluntary arbitration case. The dismissal of the officers was later found to
be legal, hence, petitioner appealed.

In the meantime, as amicable settlement of the CBA was deadlocked,

petitioner went on strike on June 20, 2005. By Order 1 dated June 23, 2005,
the Secretary of Labor assumed jurisdiction over the controversy and issued
a Return to Work Order which was complied with.
Before the Secretary of Labor could rule on the controversy, respondent
created a Labor Management Council (LMC) through which it concluded with
the remaining officers of petitioner a Memorandum of Agreement
(MOA)2providing for daily wage increases of P6.00 per day effective January
1, 2004 and P9.00 per day effective January 1, 2005. Petitioner submitted
the MOA via Motion and Manifestation 3 to the Secretary of Labor, alleging
that the remaining officers signed the MOA under respondents assurance
that should the Secretary order a higher award of wage increase,
respondent would comply.
By Order4 dated March 16, 2006, the Secretary of Labor resolved the CBA
deadlock by awarding a wage increase of from P6.00 to P10.00 per day
effective January 1, 2004 and from P9.00 to P15.00 per day effective
January 1, 2005, and adopting all other benefits as embodied in the MOA.
Respondent moved for a reconsideration of the Decision as petitioners vicepresident submitted a "Muling Pagpapatibay ng Pagsang-ayon sa Kasunduan
na may Petsang ika-4 ng Agosto 2005,"5 stating that the union members
were waiving their rights and benefits under the Secretarys Decision.
Reconsideration of the Decision was denied by Resolution 6 of August 12,
2008, hence, respondent filed a petition for certiorari before the Court of
Appeals.
By Decision7 of September 24, 2009, the appellate court ruled in favor of
respondent and accordingly set aside the Decision of the Secretary of Labor.
It held that the Secretary of Labor gravely abused his discretion in not
respecting the MOA. It did not give credence to the minutes of the
meeting8 that attended the forging of the MOA as it was not verified, nor to
the "Paliwanag"9 submitted by respondent union members explaining why
they signed the MOA as it was not notarized.
Petitioners motion for reconsideration having been denied by
Resolution10 of December 2, 2009, the present petition was filed,
maintaining that the Secretary of Labors award is in order, being in accord

with the parties CBA history respondent having already granted P15.00
per day for 2001, P10.00 per day for 2002, and P10.00 per day for 2003,
and that the Secretary has the power to grant awards higher than what are
stated in the CBA.
Respecting the MOA, petitioner posits that it was "surreptitiously entered
into [in] bad faith," it having been forged without the assistance of the
Federation of Free Workers or counsel, adding that respondent could have
waited for the Secretarys resolution of the pending CBA deadlock or that
the MOA could have been concluded before representatives of the Secretary
of Labor.
The relevant issues for resolution are 1) whether the Secretary of Labor is
authorized to give an award higher than that agreed upon in the MOA, and
2) whether the MOA was entered into and ratified by the remaining officers
of petitioner under the condition, which was not incorporated in the MOA,
that respondent would honor the Secretary of Labors award in the event
that it is higher.
The Court resolves both issues in the affirmative.
It is well-settled that the Secretary of Labor, in the exercise of his power to
assume jurisdiction under Art. 263 (g)11of the Labor Code, may resolve all
issues involved in the controversy including the award of wage increases
and benefits.12 While an arbitral award cannot per se be categorized as an
agreement voluntarily entered into by the parties because it requires the
intervention and imposing power of the State thru the Secretary of Labor
when he assumes jurisdiction, the arbitral award can be considered an
approximation of a collective bargaining agreement which would otherwise
have been entered into by the parties, hence, it has the force and effect of a
valid contract obligation.13
That the arbitral award was higher than that which was purportedly agreed
upon in the MOA is of no moment. For the Secretary, in resolving the CBA
deadlock, is not limited to considering the MOA as basis in computing the
wage increases. He could, as he did, consider the financial
documents14 submitted by respondent as well as the parties bargaining
history and respondents financial outlook and improvements as stated in its
website.15

It bears noting that since the filing and submission of the MOA did not have
the effect of divesting the Secretary of his jurisdiction, or of automatically
disposing the controversy, then neither should the provisions of the MOA
restrict the Secretarys leeway in deciding the matters before him.1avvphi1
The appellate courts brushing aside of the "Paliwanag" and the minutes of
the meeting that resulted in the conclusion of the MOA because they were
not verified and notarized, thus violating, so the appellate court reasoned,
the rules on parol evidence, does not lie. Like any other rule on evidence,
parol evidence should not be strictly applied in labor cases.
The reliance on the parol evidence rule is misplaced. In labor cases pending
before the Commission or the Labor Arbiter, the rules of evidence prevailing
in courts of law or equity are not controlling. Rules of procedure and
evidence are not applied in a very rigid and technical sense in labor cases.
Hence, the Labor Arbiter is not precluded from accepting and evaluating
evidence other than, and even contrary to, what is stated in the
CBA.16(emphasis supplied)
While a contract constitutes the law between the parties, this is so in the
present case with respect to the CBA, not to the MOA in which even the
unions signatories had expressed reservations thereto. But even assuming
arguendo that the MOA is treated as a new CBA, since it is imbued with
public interest, it must be construed liberally and yield to the common good.
While the terms and conditions of a CBA constitute the law between the
parties, it is not, however, an ordinary contract to which is applied the
principles of law governing ordinary contracts. A CBA, as a labor contract
within the contemplation of Article 1700 of the Civil Code of the Philippines
which governs the relations between labor and capital, is not merely
contractual in nature but impressed with public interest, thus, it must yield
to the common good. As such, it must be construed liberally rather than
narrowly and technically, and the courts must place apractical and realistic
construction upon it, giving due consideration to the context in which it is
negotiated and purpose which it is intended to serve. 17 (emphasis and
underscoring supplied)
WHEREFORE, the petition is GRANTED. The Decision dated September 24,
2009 and the Resolution dated December 2, 2009 of the Court of Appeals

are REVERSED and SET ASIDE and the Order dated March 16, 2006 and
Resolution dated August 12, 2008 of the Secretary of Labor are REINSTATED.
G.R. No. 190515

June 6, 2011

CIRTEK EMPLOYEES LABOR UNION-FEDERATION OF FREE

WORKERS Petitioner,
vs.
CIRTEK ELECTRONICS, INC., Respondent.
RESOLUTION
CARPIO MORALES, J.:
This resolves the motion for reconsideration and supplemental motion for
reconsideration filed by respondent, Cirtek Electronics, Inc., of the Courts
Decision dated November 15, 2010.
Respondent-movant avers that petitioner, in filing the petition for certiorari
under Rule 65, availed of the wrong remedy, hence, the Court should have
dismissed the petition outright. It goes on to aver that the Court erred in
resolving a factual issue whether the August 24, 2005 Memorandum of
Agreement (MOA) was validly entered into , which is not the office of a
petition for certiorari.
Respondent-movant further avers that the MOA 1 signed by the remaining
officers of petitioner Union and allegedly ratified by its members should
have been given credence by the Court.
Furthermore, respondent-movant maintains that the Secretary of Labor
cannot insist on a ruling beyond the compromise agreement entered into by
the parties; and that, as early as February 5, 2010, petitioner Union had
already filed with the Department of Labor and Employment (DOLE) a
resolution of disaffiliation from the Federation of Free Workers resulting in
the latters lack of personality to represent the workers in the present case.
The motion is bereft of merit.
Respondent indeed availed of the wrong remedy of certiorari under Rule 65.
Due, however, to the nature of the case, one involving workers wages and
benefits, and the fact that whether the petition was filed under Rule 65 or

appeal by certiorari under Rule 45 it was filed within 15 days (the

reglementary period under Rule 45) from petitioners receipt of the
resolution of the Court of Appeals Resolution denying its motion for
reconsideration, the Court resolved to give it due course. As Almelor v. RTC
of Las Pias, et al. 2 restates:
Generally, an appeal taken either to the Supreme Court or the CA by the
wrong or inappropriate mode shall be dismissed. This is to prevent the party
from benefiting from ones neglect and mistakes. However, like most
rules, it carries certain exceptions. After all, the ultimate purpose of all
rules of procedures is to achieve substantial justice as expeditiously as
possible. (emphasis and underscoring supplied)
Respecting the attribution of error to the Court in ruling on a question of
fact, it bears recalling that a QUESTION OF FACT arises when the doubt or
difference arises as to the truth or falsehood of alleged facts, 3 while a
QUESTION OF LAW exists when the doubt or difference arises as to what the
law is on a certain set of facts.
The present case presents the primordial issue of whether the Secretary of
Labor is empowered to give arbitral awards in the exercise of his authority
to assume jurisdiction over labor disputes.
Ineluctably, the issue involves a determination and application of existing
law, the provisions of the Labor Code, and prevailing jurisprudence.
Intertwined with the issue, however, is the question of validity of the MOA
and its ratification which, as movant correctly points out, is a question of
fact and one which is not appropriate for a petition for review on certiorari
under Rule 45. The rule, however, is not without exceptions, viz:
This rule provides that the parties may raise only questions of law, because
the Supreme Court is not a trier of facts. Generally, we are not duty-bound
to analyze again and weigh the evidence introduced in and considered by
the tribunals below. When supported by substantial evidence, the findings of
fact of the CA are conclusive and binding on the parties and are not
reviewable by this Court, unless the case falls under any of the
followingrecognized exceptions:
(1) When the conclusion is a finding grounded entirely on speculation,
surmises and conjectures;

(2) When the inference made is manifestly mistaken, absurd or

impossible;
(3) Where there is a grave abuse of discretion;
(4) When the judgment is based on a misapprehension of facts;
(5) When the findings of fact are conflicting;
(6) When the Court of Appeals, in making its findings, went beyond the
issues of the case and the same is contrary to the admissions of both
appellant and appellee;
(7) When the findings are contrary to those of the trial court;
(8) When the findings of fact are conclusions without citation of specific
evidence on which they are based;
(9) When the facts set forth in the petition as well as in the petitioners'
main and reply briefs are not disputed by the respondents; and
(10) When the findings of fact of the Court of Appeals are premised on
the supposed absence of evidence and contradicted by the evidence
on record. (emphasis and underscoring supplied)
In the present case, the findings of the Secretary of Labor and the appellate
court on whether the MOA is valid and binding are conflicting, the former
giving scant consideration thereon, and the latter affording it more weight.
As found by the Secretary of Labor, the MOA came about as a result of the
constitution, at respondents behest, of the Labor-Management Council
(LMC) which, he reminded the parties, should not be used as an avenue for
bargaining but for the purpose of affording workers to participate in policy
and decision-making. Hence, the agreements embodied in the MOA were
not the proper subject of the LMC deliberation or procedure but of CBA
negotiations and, therefore, deserving little weight.
The appellate court, held, however, that the Secretary did not have the
authority to give an arbitral award higher than what was stated in the MOA.
The conflicting views drew the Court to re-evaluate the facts as borne by the

records, an exception to the rule that only questions of law may be dealt
with in an appeal by certiorari under Rule 45.
As discussed in the Decision under reconsideration, the then Acting
Secretary of Labor Manuel G. Imson acted well within his jurisdiction in
ruling that the wage increases to be given are P10 per day effective January
1, 2004 and P15 per day effective January 1, 2005, pursuant to his power to
assume jurisdiction under Art. 263 (g)4 of the Labor Code.
While an arbitral award cannot per se be categorized as an agreement
voluntarily entered into by the parties because it requires the interference
and imposing power of the State thru the Secretary of Labor when he
assumes jurisdiction, the award can be considered as an approximation of a
collective bargaining agreement which would otherwise have been entered
into by the parties. Hence, it has the force and effect of a valid contract
obligation between the parties.5
In determining arbitral awards then, aside from the MOA, courts considered
other factors and documents including, as in this case, the financial
documents6 submitted by respondent as well as its previous bargaining
history and financial outlook and improvements as stated in its own
website.7
The appellate courts ruling that giving credence to the "Pahayag" and the
minutes of the meeting which were not verified and notarized would violate
the rule on parol evidence is erroneous. The parol evidence rule, like other
rules on evidence, should not be strictly applied in labor cases. Interphil
Laboratories Employees Union-FFW v. Interphil Laboratories, Inc. 8 teaches:
[R]eliance on the parol evidence rule is misplaced. In labor cases pending
before the Commission or the Labor Arbiter, the rules of evidence prevailing
in courts of law or equity are not controlling. Rules of procedure and
evidence are not applied in a very rigid and technical sense in labor cases.
Hence, the Labor Arbiter is not precluded from accepting and evaluating
evidence other than, and even contrary to, what is stated in the CBA.
(emphasis and underscoring supplied)
On the contention that the MOA should have been given credence because
it was validly entered into by the parties, the Court notes that even those
who signed it expressed reservations thereto. A CBA (assuming in this case

that the MOA can be treated as one) is a contract imbued with public
interest. It must thus be given a liberal, practical and realistic, rather than a
narrow and technical construction, with due consideration to the context in
which it is negotiated and the purpose for which it is intended. 9
As for the contention that the alleged disaffiliation of the Union from the
FFW during the pendency of the case resulted in the FFW losing its
personality to represent the Union, the same does not affect the Courts
upholding of the authority of the Secretary of Labor to impose arbitral
awards higher than what was supposedly agreed upon in the MOA. Contrary
to respondents assertion, the "unavoidable issue of disaffiliation" bears no
significant legal repercussions to warrant the reversal of the Courts
Decision.
En passant, whether there was a valid disaffiliation is a factual issue.
Besides, the alleged disaffiliation of the Union from the FFW was by virtue of
a Resolution signed on February 23, 2010 and submitted to the DOLE
Laguna Field Office on March 5, 2010 two months after the present
petition was filed on December 22, 2009, hence, it did not affect FFW and
its Legal Centers standing to file the petition nor this Courts jurisdiction to
resolve the same.
At all events, the issue of disaffiliation is an intra-union dispute which must
be resolved in a different forum in an action at the instance of either or both
the FFW and the Union or a rival labor organization, not the employer.
An intra-union dispute refers to any conflict between and among union
members, including grievances arising from any violation of the rights and
conditions of membership, violation of or disagreement over any provision
of the unions constitution and by-laws, or disputes arising from chartering
or disaffiliation of the union. Sections 1 and 2, Rule XI of Department Order
No. 40-03, Series of 2003 of the DOLE enumerate the following
circumstances as inter/intra-union disputes, viz:
RULE XI
INTER/INTRA-UNION DISPUTES AND
OTHER RELATED LABOR RELATIONS DISPUTES
Section 1. Coverage. - Inter/intra-union disputes shall include:

(a) cancellation of registration of a labor organization filed by its

members or by another labor organization;
(b) conduct of election of union and workers association
officers/nullification of election of union and workers association
officers;
(c) audit/accounts examination of union or workers association funds;
(d) deregistration of collective bargaining agreements;
(e) validity/invalidity of union affiliation or disaffiliation;
(f) validity/invalidity of acceptance/non-acceptance for union
membership;
(g) validity/invalidity of impeachment/expulsion of union and workers
association officers and members;
(h) validity/invalidity of voluntary recognition;
(i) opposition to application for union and CBA registration;
(j) violations of or disagreements over any provision in a union or
workers association constitution and by-laws;
(k) disagreements over chartering or registration of labor organizations
and collective bargaining agreements;
(l) violations of the rights and conditions of union or workers
association membership;
(m) violations of the rights of legitimate labor organizations, except
interpretation of collective bargaining agreements;
(n) such other disputes or conflicts involving the rights to selforganization, union membership and collective bargaining
(1) between and among legitimate labor organizations;
(2) between and among members of a union or workers
association.

Section 2. Coverage. Other related labor relations disputes shall include

any conflict between a labor union and the employer or any individual,
entity or group that is not a labor organization or workers association. This
includes: (1) cancellation of registration of unions and workers associations;
and (2) a petition for interpleader.10(emphasis supplied)
Indeed, as respondent-movant itself argues, a local union may disaffiliate at
any time from its mother federation, absent any showing that the same is
prohibited under its constitution or rule. Such, however, does not result in it
losing its legal personality altogether. Verily, Anglo-KMU v. Samahan Ng Mga
Manggagawang Nagkakaisa Sa Manila Bay Spinning Mills At J.P.
Coats11 enlightens:
A local labor union is a separate and distinct unit primarily designed to
secure and maintain an equality of bargaining power between the employer
and their employee-members. A local union does not owe its existence to
the federation with which it is affiliated. It is a separate and distinct
voluntary association owing its creation to the will of its members. The mere
act of affiliation does not divest the local union of its own personality,
neither does it give the mother federation the license to act independently
of the local union. It only gives rise to a contract of agency where the former
acts in representation of the latter. (emphasis and underscoring
supplied)1avvphi1
Whether then, as respondent claims, FFW "went against the will and wishes
of its principal" (the member-employees) by pursuing the case despite the
signing of the MOA, is not for the Court, nor for respondent to determine,
but for the Union and FFW to resolve on their own pursuant to their
principal-agent relationship.
WHEREFORE, the motion for reconsideration of this Courts Decision of
November 15, 2010 is DENIED.

G.R. No. 159460

November 15, 2010

SOLIDBANK CORPORATION (now known as FIRST METRO

INVESTMENT CORPORATION), Petitioner,
vs.
ERNESTO U. GAMIER, ELENA R. CONDEVILLAMAR, JANICE L.
ARRIOLA and OPHELIA C. DE GUZMAN,Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 159461
SOLIDBANK CORPORATION and/or its successor-in-interest, FIRST
METRO INVESTMENT CORPORATION, DEOGRACIAS N. VISTAN AND
EDGARDO MENDOZA, JR., Petitioners,
vs.
SOLIDBANK UNION AND ITS DISMISSED OFFICERS AND MEMBERS,
namely: EVANGELINE J. GABRIEL, TERESITA C. LUALHATI, ISAGANI P.
MAKISIG, REY S. PASCUA, EVELYN A. SIA, MA. VICTORIA M.
VIDALLON, AUREY A. ALJIBE, REY ANTHONY M. AMPARADO, JOSE A.
ANTENOR, AUGUSTO D. ARANDIA, JR., JANICE L. ARRIOLA, RUTH
SHEILA MA. BAGADIONG, STEVE D. BERING, ALAN ROY I. BUYCO,
MANALO T. CABRERA, RACHE M. CASTILLO, VICTOR O. CHUA,
VIRGILIO Y. CO, JR., LEOPOLDO S. DABAY, ARMAND V. DAYANGHIRANG, HUBERT V. DIMAGIBA, MA. LOURDES CECILIA B.
EMPARADOR, FELIX D. ESTACIO, JR., JULIETA T. ESTRADA, MARICEL
G. EVALLA, JOSE G. GUISADIO, JOSE RAINARIO C. LAOANG,

ALEXANDER A. MARTINEZ, JUAN ALEX C. NAMBONG, JOSEPHINE M.

ONG, ARMANDO B. OROZCO, ARLENE R. RODRIGUEZ, NICOMEDES P.
RUIZO, JR., DON A. SANTANA, ERNESTO R. SANTOS, JR., EDNA M.
SARONG, GREGORIO S. SECRETARIO, ELLEN M. SORIANO, ROSIE C.
UY, ARVIN D. VALENCIA, FERMIN JOSSEPH B. VENTURA, JR.,
EMMANUEL C. YAPTANCO, ERNESTO C. ZUNIGA, ARIEL S. ABENDAN,
EMMA R. ABENDAN, PAULA AGNES A. ANGELES, JACQUILINE B.
BAQUIRAN, JENNIFER S. BARCENAS, ALVIN E. BARICANOSA, GEORGE
MAXIMO P. BARQUEZ, MA. ELENA G. BELLO, RODERICK M. BELLO,
MICHAEL MATTHEW B. BILLENA, LEOPE L. CABENIAN, NEPTALI A.
CADDARAO, FERDINAND MEL S. CAPULING, MARGARETTE B.
CORDOVA, MA. EDNA V. DATOR, RANIEL C. DAYAO, RAGCY L. DE
GUZMAN, LUIS E. DELOS SANTOS, CARMINA M. DEGALA, EPHRAIM
RALPH A. DELFIN, KAREN M. DEOCERA, CAROLINA C. DIZON,
MARCHEL S. ESQUEJJO, JOCELYN I. ESTROBO, MINERVA S.
FALLARME, HERNANE C. FERMOCIL, RACHEL B. FETIZANAN, SAMUEL
A. FLORENTINO, MENCHIE R. FRANCISCO, ERNESTO U. GAMIER,
MACARIO RODOLFO N. GARCIA, JOEL S. GARMINO, LESTER MARK Z.
GATCHALIAN, MA. JINKY P. GELERA, MA. TERESA G. GONZALES,
GONZALO G. GUINIT, EMILY H. GUINO-O, FERDINAND S. HABIJAN,
JUN G. HERNANDEZ, LOURDES D. IBEAS, MA. ANGELA L. JALANDONI,
JULIE T. JORNACION, MANUEL C. LIM, MA. LOURDES A. LIM,
EMERSON V. LUNA, NOLASCO B. MACATANGAY, NORMAN C.
MANACO, CHERRY LOU B. MANGROBANG, MARASIGAN G. EDMUNDO,
ALLEN M. MARTINEZ, EMELITA C. MONTANO, ARLENE P. NOBLE,
SHIRLEY A. ONG, LOTIZ E. ORTIZ LUIS, PABLITO M. PALO, MARY
JAINE D. PATINO, GEOFFREY T. PRADO, OMEGA MELANIE M.
QUINTANO, ANES A. RAMIREZ, RICARDO D. RAMIREZ, DANIEL O.
RAQUEL, RAMON B. REYES, SALVACION N. ROGADO, ELMOR R.
ROMANA, JR., LOURDES U. SALVADOR, ELMER S. SAYLON, BENHARD
E. SIMBULAN, MA. TERESA S. SOLIS, MA. LOURDES ROCEL E.
SOLIVEN, EMILY C. SUY AT, EDGAR ALLAN P. TACSUAN, RAYMOND N.
TANAY, JOCELYN Y. TAN, CANDIDO G. TISON, MA. THERESA O. TISON,
EVELYN T. UYLANGCO, CION E. YAP, MA. OPHELIA C. DE GUZMAN,
MA. HIDELISA P. IRA, RAYMUND MARTIN A. ANGELES, MERVIN S.
BAUTISTA, ELENA R. CONDEVILLAMAR, CHERRY T. CO, LEOPOLDO V.
DE LA ROSA, DOROTEO S. FROILAN, EMMANUEL B. GLORIA, JULIETEL
JUBAC AND ROSEMARIE L. TANG, Respondents.

DECISION
VILLARAMA, JR., J.:
The consolidated petitions before us seek to reverse and set aside the
Decision1 dated March 10, 2003 of the Court of Appeals (CA) in CA-G.R. SP
Nos. 67730 and 70820 which denied the petitions for certiorari filed by
Solidbank Corporation (Solidbank) and ordered the reinstatement of the
above-named individual respondents to their former positions.
The Antecedents
Sometime in October 1999, petitioner Solidbank and respondent Solidbank
Employees Union (Union) were set to renegotiate the economic provisions
of their 1997-2001 Collective Bargaining Agreement (CBA) to cover the
remaining two years thereof. Negotiations commenced on November 17,
1999 but seeing that an agreement was unlikely, the Union declared a
deadlock on December 22, 1999 and filed a Notice of Strike on December
29, 1999.2 During the collective bargaining negotiations, some Union
members staged a series of mass actions. In view of the impending actual
strike, then Secretary of Labor and Employment Bienvenido E. Laguesma
assumed jurisdiction over the labor dispute, pursuant to Article 263 (g) of
the Labor Code, as amended. The assumption order dated January 18, 2000
directed the parties "to cease and desist from committing any and all acts
that might exacerbate the situation." 3
In his Order4 dated March 24, 2000, Secretary Laguesma resolved all
economic and non-economic issues submitted by the parties, as follows:
WHEREFORE, premises considered, judgment is hereby issued:
a. Directing Solidbank Corporation and Solidbank Union to conclude
their Collective Bargaining Agreement for the years 2000 and 2001,
incorporating the dispositions above set forth;
b. Dismissing the unfair labor practice charge against Solidbank
Corporation;
c. Directing Solidbank to deduct or check-off from the employees lump
sum payment an amount equivalent to seven percent (7%) of their

economic benefits for the first (1st) year, inclusive of signing bonuses,
and to remit or turn over the said sum to the Unions authorized
representative, subject to the requirements of check-off;
d. Directing Solidbank to recall the show-cause memos issued to
employees who participated in the mass actions if such memos were in
fact issued.
SO ORDERED.5
Dissatisfied with the Secretarys ruling, the Union officers and members
decided to protest the same by holding a rally infront of the Office of the
Secretary of Labor and Employment in Intramuros, Manila, simultaneous
with the filing of their motion for reconsideration of the March 24, 2000
Order. Thus, on April 3, 2000, an overwhelming majority of employees,
including the individual respondents, joined the "mass leave" and "protest
action" at the Department of Labor and Employment (DOLE) office while the
banks provincial branches in Cebu, Iloilo, Bacolod and Naga followed suit
and "boycotted regular work."6 The union members also picketed the banks
Head Office in Binondo on April 6, 2000, and Paseo de Roxas branch on April
7, 2000.
As a result of the employees concerted actions, Solidbanks business
operations were paralyzed. On the same day, then President of Solidbank,
Deogracias N. Vistan, issued a memorandum7 addressed to all employees
calling their absence from work and demonstration infront of the DOLE
office as an illegal act, and reminding them that they have put their jobs at
risk as they will be asked to show cause why they should not be terminated
for participating in the union-instigated concerted action. The employees
work abandonment/boycott lasted for three days, from April 3 to 5, 2000.
On the third day of the concerted work boycott (April 5, 2000), Vistan issued
another memorandum,8 this time declaring that the bank is prepared to take
back employees who will report for work starting April 6, 2000 "provided
these employees were/are not part of those who led or instigated or coerced
their co-employees into participating in this illegal act." Out of the 712
employees who took part in the three-day work boycott, a total of 513
returned to work and were accepted by the bank. The remaining 199
employees insisted on defying Vistans directive, which included herein

respondents Ernesto U. Gamier, Elena R. Condevillamar, Janice L. Arriola and

Ophelia C. De Guzman. For their failure to return to work, the said 199
employees were each issued a show-cause memo directing them to submit
a written explanation within twenty-four (24) hours why they should not be
dismissed for the "illegal strike x x x in defiance of x x x the Assumption
Order of the Secretary of Labor x x x resulting [to] grave and irreparable
damage to the Bank", and placing them under preventive suspension. 9
The herein 129 individual respondents were among the 199 employees who
were terminated for their participation in the three-day work boycott and
protest action. On various dates in June 2000, twenty-one (21) of the
individual respondents executed Release, Waiver and Quitclaim in favor of
Solidbank.10
On May 8, 2000, Secretary Laguesma denied the motions for
reconsideration filed by Solidbank and the Union. 11
The Union filed on May 11, 2000 a Motion for Clarification of certain portions
of the Order dated March 24, 2000, and on May 19, 2000 it filed a Motion to
Resolve the Supervening Issue of Termination of 129 Striking Employees. On
May 26, 2000, Secretary Laguesma granted the first motion by clarifying
that the contract-signing bonus awarded in the new CBA should likewise be
based on the adjusted pay. However, the Unions second motion was
denied,12 as follows:
This Office cannot give due course to the Unions second motion. The labor
dispute arising from the termination of the Bank employees is an issue that
ought to be entertained in a separate case. The assumption order of January
18, 2000 covered only the bargaining deadlock between the parties and the
alleged violation of the CBA provision on regularization. We have already
resolved both the deadlock and the CBA violation issues. The only motion
pending before us is the motion for clarification, which we have earlier
disposed of in this Order. Thus, the only option left is for the Union to file a
separate case on the matter.13
In the meantime, the Monetary Board on July 28, 2000 approved the request
of Metropolitan Bank and Trust Company (Metrobank) to acquire the existing
non-real estate assets of Solidbank in consideration of assumption by
Metrobank of the liabilities of Solidbank, and to integrate the banking

operations of Solidbank with Metrobank. Subsequently, Solidbank was

merged with First Metro Investment Corporation, and Solidbank, the
surviving corporation, was renamed the First Metro Investment Corporation
(FMIC).14 By August 31, 2000, Solidbank ceased banking operations after
surrendering its expanded banking license to the Bangko Sentral ng
Pilipinas. Petitioners duly filed a Termination Report with the DOLE and
granted separation benefits to the banks employees. 15
Respondents Gamier, Condevillamar, Arriola and De Guzman filed separate
complaints for illegal dismissal, moral and exemplary damages and
attorneys fees on April 28, May 15 and May 29, 2000, respectively (NLRC
NCR Case Nos. [S]30-04-01891-00, 30-05-03002-00 and 30-05-02253-00).
The cases were consolidated before Labor Arbiter Potenciano S. Caizares,
Jr. Respondent Union joined by the 129 dismissed employees filed a
separate suit against petitioners for illegal dismissal, unfair labor practice
and damages (NLRC NCR Case No. 30-07-02920-00 assigned to Labor
Arbiter Luis D. Flores).
Labor Arbiters Rulings
In his Decision dated November 14, 2000, Labor Arbiter Potenciano S.
Caizares, Jr. dismissed the complaints of Gamier, Condevillamar, Arriola
and De Guzman. It was held that their participation in the illegal strike
violated the Secretary of Labors return to work order upon the latters
assumption of the labor dispute and after directing the parties to execute
their new CBA.16
On March 16, 2001, Labor Arbiter Luis D. Flores rendered a decision 17 in
favor of respondents Union and employees, the dispositive portion of which
reads:
WHEREFORE, premises considered, judgment is hereby rendered declaring
complainants dismissal as illegal and unjustified and ordering the
respondents Solidbank Corporation and/or its successor-in-interest First
Metro Investment Corporation and/or Metropolitan Bank and Trust Company
and/or Deogracias Vistan and/or Edgardo Mendoza to reinstate
complainants to their former positions. Concomitantly, said respondents are
hereby ordered to jointly and severally pay the complainants their full
backwages and other employees benefits from the time of their dismissal

up to the date of their actual reinstatement; payment of ten (10%) percent

attorneys fees; payment of ONE HUNDRED FIFTY THOUSAND PESOS
(P150,000.00) each as moral damages and ONE HUNDRED THOUSAND
PESOS (P100,000.00) each as exemplary damages which are computed, at
the date of this decision in the amount of THIRTY THREE MILLION SEVEN
HUNDRED NINETY FOUR THOUSAND TWO HUNDRED TWENTY TWO PESOS
and 80/100 (P33,794,222.80), by the Computation and Examination Unit of
this branch and becomes an integral part of this Decision.
SO ORDERED.

18

Respondents Gamier, Condevillamar, Arriola and De Guzman appealed the

decision of Labor Arbiter Caizares, Jr. to the National Labor Relations
Commission (NLRC NCR CA No 027342-01). Petitioners likewise appealed
from the decision of Labor Arbiter Flores (NLRC NCR CA No. 028510-01).
Rulings of the NLRC
On July 23, 2001, the NLRCs Second Division rendered a
Decision19 reversing the decision of Labor Arbiter Flores, as follows:
WHEREFORE, premises considered, the decision of the Labor Arbiter is
hereby VACATED and SET ASIDE and a new one entered dismissing the
complaint for illegal dismissal and unfair labor practice for lack of merit. As
equitable relief, respondents are hereby ordered to pay complainants
separation benefits as provided under the CBA at least one (1) month pay
for every year of service whichever is higher.
SO ORDERED.20
The Second Division ruled that the mass action held by the bank employees
on April 3, 2000 infront of the Office of the Secretary of Labor was not a
legitimate exercise of the employees freedom of speech and assembly.
Such was a strike as defined under Article 212 (o) of the Labor Code, as
amended, which does not distinguish as to whom the action of the
employees is directed against, nor the place/location where the concerted
action of the employees took place. Complainants Gamier, Condevillamar,
Arriola and De Guzman did not report for work and picketed the DOLE
premises on April 3, 2000; they continuously refused to report back to work
until April 7, 2000 when they were issued a Notice of Termination. It was

stressed that the mass action of the bank employees was an incident of a
labor dispute, and hence the concerted work abandonment was a prohibited
activity contemplated under Article 264 (a) of the Labor Code, as amended,
upon assumption of jurisdiction by the Secretary of Labor. Citing this Courts
ruling in the case of Telefunken Semiconductors Employees Union-FFW v.
Court of Appeals,21the Second Division found there was just and valid cause
for the dismissal of complainants. 22
On the charge of forum shopping with respect to twenty-one (21) individual
complainants who have voluntarily settled their claims against Solidbank,
the said cases not having been dismissed by the Labor Arbiter despite
proper motion,23 the Second Division found that complainants admitted in
their Answer that the said employees preferred to pursue their own
independent action against the bank and their names were stricken out
from the original complaint; hence, the Labor Arbiter erred in granting relief
to said employees. Nevertheless, it held that the complaint will not be
dismissed on this ground as the issue of forum shopping should have been
raised in the proceedings before the Labor Arbiter. 24
Respondents filed a motion for reconsideration while the petitioners filed a
partial motion for reconsideration. Both motions were denied under
Resolution25 dated September 28, 2001.
As to respondents appeal, the NLRCs Third Division by Decision 26 dated
January 31, 2002, reversed the decision of Labor Arbiter Caizares, Jr., as
follows:
WHEREFORE, the decision appealed from is hereby SET ASIDE and a new
one entered finding the respondent Solidbank Corporation liable for the
illegal dismissal of complainants Ernesto U. Gamier, Elena P. Condevillamar,
Janice L. Arriola and Maria Ophelia C. de Guzman, and ordering the
respondent bank to reinstate the complainants to their former positions
without loss of seniority rights and to pay full backwages reckoned from the
time of their illegal dismissal up to the time of their actual/payroll
reinstatement. Should reinstatement not be feasible, respondent bank is
further ordered to pay complainants their separation pay in accordance with
the provisions of the subsisting Collective Bargaining Agreement.
All other claims are DISMISSED for lack of merit.

SO ORDERED.27
The Third Division held that the protest action staged by the banks
employees before the DOLE did not amount to a strike but rather an
exercise of their right to express frustration and dissatisfaction over the
decision rendered by the Secretary of Labor. Hence, it cannot be concluded
that the activity is per se illegal or violative of the assumption order
considering that at the time, both parties had pending motions for
reconsideration of the Secretarys decision. Moreover, it was found that
Gamier, Condevillamar, Arriola and De Guzman were not fully investigated
on the charge that they had instigated or actively participated in an illegal
activity; neither was it shown that the explanations submitted by them were
considered by the management. Since said employees had presented
evidence of plausible and acceptable reasons for their absence at the
workplace at the time of the protest action, their termination based on such
alleged participation in the protest action was unjustified. 28
Respondents filed a "partial motion" while the petitioners filed a motion for
reconsideration of the Decision dated January 31, 2002. Both motions were
denied under Resolution29 dated March 8, 2002.
On November 20, 2001, petitioners filed a petition for certiorari before the
CA assailing the July 23, 2001 Decision and Resolution dated September 28,
2001 of the NLRCs Second Division insofar as it ordered the payment of
separation benefits to the 129 terminated employees of Solidbank who
participated in the mass action/strike (CA-G.R. SP No. 67730). 30
On May 23, 2002, petitioners filed a separate petition in the CA (CA-G.R. SP
No. 70820) seeking the reversal of the January 31, 2002 Decision and
Resolution dated March 8, 2002 of the NLRCs Third Division and praying for
the following reliefs: (1) immediate issuance of a TRO and writ of
preliminary injunction to restrain/enjoin the NLRC from issuing a writ of
execution in NLRC CA No. 027342-01; (2) the petition be consolidated with
CA-G.R. SP No. 67730 before the Thirteenth Division and CA-G.R. SP No.
68054 before the Third Division, or if consolidation is no longer possible,
that the petition be resolved independently of the aforesaid cases; and (3)
granting the petition by annulling and setting aside the January 31, 2002
Decision of the NLRC, and reinstating the November 14, 2000 Decision of
Labor Arbiter Caizares, Jr.31

On August 9, 2002, petitioners filed a Manifestation before the Fifteenth

Division (CA-G.R. SP No. 67730) attaching thereto a copy of the
Decision32 (dated July 26, 2002) rendered by the CAs Special Third Division
in CA-G.R. SP No. 68998, a petition for certiorari separately filed by
Metrobank which also sought to annul and set aside the July 23, 2001
Decision of the NLRCs Second Division insofar as it ordered the payment of
separation benefits to the dismissed employees of Solidbank. In the said
decision, the CAs Fourteenth Division gave due course to the petition of
Metrobank and affirmed the July 23, 2001 decision of the NLRC but reversed
and set aside the portion of the decision ordering the payment of separation
benefits.33
On September 11, 2002, respondents filed an Omnibus Motion and CounterManifestation arguing that petitioners Manifestation constitutes a judicial
admission that Metrobank engaged in forum shopping; it was thus prayed
that CA-G.R. SP No. 68998 be consolidated with CA-G.R. SP No. 67730, the
latter having a lower case number. Further, respondents attached a copy of
the Decision34 dated August 29, 2002 rendered by the CAs Second Division
in CA-G.R. SP No. 68054, the petition separately filed by the Union and the
129 terminated employees of Solidbank from the July 23, 2001 Decision of
the NLRCs Second Division. The CAs Second Division granted the petition
in CA-G.R. SP No. 68054 and reinstated the March 16, 2001 Decision of
Labor Arbiter Flores.
CA-G.R. SP Nos. 67730 and 70820 were consolidated before the Twelfth
Division.
Court of Appeals Ruling
On March 10, 2003, the CA rendered its Decision35 the dispositive portion of
which reads:
WHEREFORE, the twin petitions are hereby DENIED. The dismissal of private
respondents are hereby declared to be illegal. Consequently, petitioner is
ordered to reinstate private respondents to their former position, consonant
with the Decision of this Court in CA-G.R. SP No. 68054.
SO ORDERED.36

First, on the issue of forum shopping, the CA found that while there were
indeed two cases filed respecting the same matter of illegality of the
dismissal of certain employees of Solidbank, it appears that the individual
complainants have no hand in initiating the case before the Labor Arbiter for
which the Union filed the complaint in behalf of its members. Hence, the
individual complainants cannot be said to have deliberately or consciously
sought two different fora for the same issues and causes of action.
Petitioners, moreover, failed to call the attention of the Labor Arbiter as to
the fact of filing of similar complaints by four employees.
As to the nature of the mass action resorted to by the employees of
Solidbank, the CA ruled that it was a legitimate exercise of their right to free
expression, and not a strike proscribed when the Secretary of Labor
assumed jurisdiction over the impass between Solidbank and the Union in
the collective bargaining negotiations. The CA thus reasoned:
while conceding that the aggregated acts of the private respondents may
have resulted in a stoppage of work, such was the necessary result of the
exercise of a Constitutional right. It is beyond cavil that the mass action was
done, not to exert any undue pressure on the petitioner with regard to
wages or other economic demands, but to express dissatisfaction over the
decision of the Labor Secretary subsequent to his assumption of jurisdiction.
Surely, this is one course of action that is not enjoined even when a labor
dispute is placed under the assumption of the said Labor Secretary. To allow
an act of the Labor Secretary one man in the Executive Department to
whittle down a freedom guaranteed by the Bill of Rights would be to place
upon that freedom a limitation never intended by the several framers of our
Constitution. In effect, it would make a right enshrined in the Fundamental
Law that was ratified by the Sovereign People, subordinate to a prerogative
granted by the Labor Code, a statutory enactment made by mere
representatives of the People. This anomaly We cannot allow.
xxxx
Was private respondents act of massing in front of the DOLE Building
calculated by them to cause work stoppage, or were they merely airing their
grievance over the ruling of the Labor Secretary in exercise of their civil
liberties? Who can divine the motives of their hearts? But when two different

interpretations are possible, the courts must lean towards that which gives
meaning and vitality to the Bill of Rights. x x x 37 (Emphasis supplied.)
On April 2, 2003, petitioners filed a motion for reconsideration but this was
denied by the CA in its Resolution38dated August 7, 2003.
The Petitions
G.R. No. 159460
Petitioners argued that the CA erred in holding that the mass action of April
3, 2000 infront of the Office of the Secretary of Labor was not a strike
considering that it had all the elements of a strike and the respondents
judicially admitted that it was a strike. The CA deemed the mass action as
an exercise of the respondents freedom of expression but such
constitutional right is not absolute and subject to certain well-defined
exceptions. Moreover, a mass action of this nature is considered a strike and
not an exercise of ones freedom of expression, considering further that the
Secretarys Order dated January 18, 2000 is a valid exercise of police power.
Petitioners assail the CA in not considering the damage and prejudice
caused to the bank and its clients by respondents illegal acts. Respondents
mass actions crippled banking operations. Over-the-counter transactions
were greatly undermined. Checks for clearing were significantly delayed.
On-line transactions were greatly hampered, causing inestimable damage to
the nationwide network of automated teller machines. Respondent Unions
actions clearly belie its allegation that its mass action was merely intended
to protest and express their dissatisfaction with the Secretarys Order dated
March 24, 2000.
In view of the illegal strike conducted in violation of the Secretarys
assumption order, petitioners maintain that the dismissal of respondents
was not illegal, as consistently ruled by this Court in many cases. Even
granting arguendo that their termination was illegal, the CA erred in
ordering the reinstatement of respondents and holding that Solidbank, FMIC
and Metrobank are solidarily liable to the respondents. Lastly, the CA erred
in not finding that respondents were guilty of forum shopping as
respondents claim that they did not know the Union had filed a complaint
was unbelievable under the circumstances. 39

G.R. No. 159461

Petitioners contend that the CA erred in ruling that the dismissal of
respondents Gamier, Condevillamar, Arriola and De Guzman was illegal,
considering that this was not an issue raised in the petition for certiorari
before the appellate court. What was raised by petitioners was only the
propriety of the award of separation pay by the NLRC which in fact declared
their dismissal to be valid and legal.
Petitioners maintain that respondents are not entitled to separation pay
even if the dismissal was valid because they committed serious misconduct
and/or illegal act in defying the Secretarys assumption order. Moreover, the
CA also erred in disregarding the Release, Waiver and Quitclaim executed by
twenty-one (21) individual respondents who entered into a compromise
agreement with Solidbank.40
Issues
The fundamental issues to be resolved in this controversy are: (1) whether
the protest rally and concerted work abandonment/boycott staged by the
respondents violated the Order dated January 18, 2000 of the Secretary of
Labor; (2) whether the respondents were validly terminated; and (3)
whether the respondents are entitled to separation pay or financial
assistance.
Our Ruling
Article 212 of the Labor Code, as amended, defines strike as any temporary
stoppage of work by the concerted action of employees as a result of an
industrial or labor dispute. A labor dispute includes any controversy or
matter concerning terms and conditions of employment or the association
or representation of persons in negotiating, fixing, maintaining, changing or
arranging the terms and conditions of employment, regardless of whether or
not the disputants stand in the proximate relation of employers and
employees.41 The term "strike" shall comprise not only concerted work
stoppages, but also slowdowns, mass leaves, sitdowns, attempts to
damage, destroy or sabotage plant equipment and facilities and similar
activities.42 Thus, the fact that the conventional term "strike" was not used
by the striking employees to describe their common course of action is

inconsequential, since the substance of the situation, and not its

appearance, will be deemed to be controlling. 43
After a thorough review of the records, we hold that the CA patently erred in
concluding that the concerted mass actions staged by respondents cannot
be considered a strike but a legitimate exercise of the respondents right to
express their dissatisfaction with the Secretarys resolution of the economic
issues in the deadlocked CBA negotiations with petitioners. It must be
stressed that the concerted action of the respondents was not limited to the
protest rally infront of the DOLE Office on April 3, 2000. Respondent Union
had also picketed the Head Office and Paseo de Roxas Branch. About 712
employees, including those in the provincial branches, boycotted and
absented themselves from work in a concerted fashion for three continuous
days that virtually paralyzed the employers banking operations.
Considering that these mass actions stemmed from a bargaining deadlock
and an order of assumption of jurisdiction had already been issued by the
Secretary of Labor to avert an impending strike, there is no doubt that the
concerted work abandonment/boycott was the result of a labor dispute.
In Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor
Relations Commission,44petitioners union and members held similar protest
rallies infront of the offices of BLR and DOLE Secretary and at the company
plants. We declared that said mass actions constituted illegal strikes:
Petitioner Union contends that the protests or rallies conducted on February
21 and 23, 2001 are not within the ambit of strikes as defined in the Labor
Code, since they were legitimate exercises of their right to peaceably
assemble and petition the government for redress of grievances. Mainly
relying on the doctrine laid down in the case of Philippine Blooming Mills
Employees Organization v. Philippine Blooming Mills Co., Inc., it argues that
the protest was not directed at Toyota but towards the Government (DOLE
and BLR). It explains that the protest is not a strike as contemplated in the
Labor Code. The Union points out that in Philippine Blooming Mills
Employees Organization, the mass action staged in Malacaang to petition
the Chief Executive against the abusive behavior of some police officers was
a proper exercise of the employees right to speak out and to peaceably
gather and ask government for redress of their grievances.
The Unions position fails to convince us.

While the facts in Philippine Blooming Mills Employees Organization are

similar in some respects to that of the present case, the Union fails to
realize one major difference: there was no labor dispute in Philippine
Blooming Mills Employees Organization. In the present case, there was an
on-going labor dispute arising from Toyotas refusal to recognize and
negotiate with the Union, which was the subject of the notice of strike filed
by the Union on January 16, 2001. Thus, the Unions reliance on Philippine
Blooming Mills Employees Organization is misplaced, as it cannot be
considered a precedent to the case at bar.
xxxx
Applying pertinent legal provisions and jurisprudence, we rule that the
protest actions undertaken by the Union officials and members on February
21 to 23, 2001 are not valid and proper exercises of their right to assemble
and ask government for redress of their complaints, but are illegal strikes in
breach of the Labor Code. The Unions position is weakened by the lack of
permit from the City of Manila to hold "rallies." Shrouded as demonstrations,
they were in reality temporary stoppages of work perpetrated through the
concerted action of the employees who deliberately failed to report for work
on the convenient excuse that they will hold a rally at the BLR and DOLE
offices in Intramuros, Manila, on February 21 to 23, 2001. x x x (Emphasis
supplied.)
Moreover, it is explicit from the directive of the Secretary in his January 18,
2000 Order that the Union and its members shall refrain from committing
"any and all acts that might exacerbate the situation," 45 which certainly
includes concerted actions. For all intents and purposes, therefore, the
respondents staged a strike ultimately aimed at realizing their economic
demands. Whether such pressure was directed against the petitioners or the
Secretary of Labor, or both, is of no moment. All the elements of strike are
evident in the Union-instigated mass actions.
The right to strike, while constitutionally recognized, is not without legal
constrictions.46 Article 264 (a) of the Labor Code, as amended, provides:
Art. 264. Prohibited activities. (a) x x x
No strike or lockout shall be declared after assumption of jurisdiction by the
President or the Secretary or after certification or submission of the dispute

to compulsory or voluntary arbitration or during the pendency of cases

involving the same grounds for the strike or lockout.
x x x x (Emphasis supplied.)
The Court has consistently ruled that once the Secretary of Labor assumes
jurisdiction over a labor dispute, such jurisdiction should not be interfered
with by the application of the coercive processes of a strike or lockout. 47 A
strike that is undertaken despite the issuance by the Secretary of Labor of
an assumption order and/or certification is a prohibited activity and thus
illegal.48
Article 264 (a) of the Labor Code, as amended, also considers it a prohibited
activity to declare a strike "during the pendency of cases involving the same
grounds for the same strike."49 There is no dispute that when respondents
conducted their mass actions on April 3 to 6, 2000, the proceedings before
the Secretary of Labor were still pending as both parties filed motions for
reconsideration of the March 24, 2000 Order. Clearly, respondents
knowingly violated the aforesaid provision by holding a strike in the guise of
mass demonstration simultaneous with concerted work
abandonment/boycott.
Notwithstanding the illegality of the strike, we cannot sanction petitioners
act of indiscriminately terminating the services of individual respondents
who admitted joining the mass actions and who have refused to comply with
the offer of the management to report back to work on April 6, 2000. The
liabilities of individual respondents must be determined under Article 264
(a) of the Labor Code, as amended:
Art. 264. Prohibited activities. x x x
xxxx
Any worker whose employment has been terminated as a consequence of
an unlawful lockout shall be entitled to reinstatement with full back wages.
Any union officer who knowingly participates in an illegal strike and any
worker or union officer who knowingly participates in the commission of
illegal acts during a strike may be declared to have lost his employment
status: Provided, That mere participation of a worker in a lawful strike shall

not constitute sufficient ground for termination of his employment, even if a

replacement had been hired by the employer during such lawful strike.
xxxx
The foregoing shows that the law makes a distinction between union officers
and members. For knowingly participating in an illegal strike or participating
in the commission of illegal acts during a strike, the law provides that a
union officer may be terminated from employment. The law grants the
employer the option of declaring a union officer who participated in an
illegal strike as having lost his employment. It possesses the right and
prerogative to terminate the union officers from service. 50
However, a worker merely participating in an illegal strike may not be
terminated from employment. It is only when he commits illegal acts during
a strike that he may be declared to have lost employment status. 51 We have
held that the responsibility of union officers, as main players in an illegal
strike, is greater than that of the members and, therefore, limiting the
penalty of dismissal only for the former for participation in an illegal strike is
in order.52Hence, with respect to respondents who are union officers, the
validity of their termination by petitioners cannot be questioned. Being fully
aware that the proceedings before the Secretary of Labor were still pending
as in fact they filed a motion for reconsideration of the March 24, 2000
Order, they cannot invoke good faith as a defense. 53
For the rest of the individual respondents who are union members, the rule
is that an ordinary striking worker cannot be terminated for mere
participation in an illegal strike. There must be proof that he or she
committed illegal acts during a strike. In all cases, the striker must be
identified. But proof beyond reasonable doubt is not required. Substantial
evidence available under the attendant circumstances, which may justify
the imposition of the penalty of dismissal, may suffice. Liability for
prohibited acts is to be determined on an individual basis. 54
Petitioners have not adduced evidence on such illegal acts committed by
each of the individual respondents who are union members. Instead,
petitioners simply point to their admitted participation in the mass actions
which they knew to be illegal, being in violation of the Secretarys

assumption order. However, the acts which were held to be prohibited

activities are the following:
where the strikers shouted slanderous and scurrilous words against the
owners of the vessels; where the strikers used unnecessary and obscene
language or epithets to prevent other laborers to go to work, and circulated
libelous statements against the employer which show actual malice; where
the protestors used abusive and threatening language towards the patrons
of a place of business or against co-employees, going beyond the mere
attempt to persuade customers to withdraw their patronage; where the
strikers formed a human cordon and blocked all the ways and approaches to
the launches and vessels of the vicinity of the workplace and perpetrated
acts of violence and coercion to prevent work from being performed; and
where the strikers shook their fists and threatened non-striking employees
with bodily harm if they persisted to proceed to the workplace. x x x 55
The dismissal of herein respondent-union members are therefore unjustified
in the absence of a clear showing that they committed specific illegal acts
during the mass actions and concerted work boycott.1avvphi1
Are these dismissed employees entitled to backwages and separation pay?
The award of backwages is a legal consequence of a finding of illegal
dismissal. Assuming that respondent-union members have indeed reported
back to work at the end of the concerted mass actions, but were soon
terminated by petitioners who found their explanation unsatisfactory, they
are not entitled to backwages in view of the illegality of the said strike.
Thus, we held in G & S Transport Corporation v. Infante 56-It can now therefore be concluded that the acts of respondents do not merit
their dismissal from employment because it has not been substantially
proven that they committed any illegal act while participating in the illegal
strike. x x x
xxxx
With respect to backwages, the principle of a "fair days wage for a fair
days labor" remains as the basic factor in determining the award thereof. If
there is no work performed by the employee there can be no wage or pay
unless, of course, the laborer was able, willing and ready to work but was

illegally locked out, suspended or dismissed or otherwise illegally prevented

from working. While it was found that respondents expressed their intention
to report back to work, the latter exception cannot apply in this case. In
Philippine Marine Officers Guild v. Compaia Maritima, as affirmed in
Philippine Diamond Hotel and Resort v. Manila Diamond Hotel Employees
Union, the Court stressed that for this exception to apply, it is required that
the strike be legal, a situation that does not obtain in the case at bar.
(Emphasis supplied.)
Under the circumstances, respondents reinstatement without backwages
suffices for the appropriate relief. But since reinstatement is no longer
possible, given the lapse of considerable time from the occurrence of the
strike, not to mention the fact that Solidbank had long ceased its banking
operations, the award of separation pay of one (1) month salary for each
year of service, in lieu of reinstatement, is in order. 57 For the twenty-one (21)
individual respondents who executed quitclaims in favor of the petitioners,
whatever amount they have already received from the employer shall be
deducted from their respective separation pay.
Petitioners contended that in view of the blatant violation of the Secretarys
assumption order by the striking employees, the award of separation pay is
unjust and unwarranted. That respondent-members themselves knowingly
participated in the illegal mass actions constitutes serious misconduct which
is a just cause under Article 282 for terminating an employee.
We are not persuaded.
As we stated earlier, the Labor Code protects an ordinary, rank-and-file
union member who participated in such a strike from losing his job, provided
that he did not commit an illegal act during the strike. 58 Article 264 (e) of
theLabor Code, as amended, provides for such acts which are generally
prohibited during concerted actions such as picketing:
No person engaged in picketing shall commit any act of violence, coercion
or intimidation or obstruct the free ingress to or egress from the employers
premises for lawful purposes, or obstruct public thoroughfares. (Emphasis
supplied.)
Petitioners have not adduced substantial proof that respondent-union
members perpetrated any act of violence, intimidation, coercion or

obstruction of company premises and public thoroughfares. It did not submit

in evidence photographs, police reports, affidavits and other available
evidence.
As to the issue of solidary liability, we hold that Metrobank cannot be held
solidarily liable with Solidbank for the claims of the latters dismissed
employees. There is no showing that Metrobank is the successor-in-interest
of Solidbank. Based on petitioners documentary evidence, Solidbank was
merged with FMIC, with Solidbank as the surviving corporation, and was
later renamed as FMIC. While indeed Solidbanks banking operations had
been integrated with Metrobank, there is no showing that FMIC has ceased
business operations. FMIC as successor-in-interest of Solidbank remains
solely liable for the sums herein adjudged against Solidbank.
Neither should individual petitioners Vistan and Mendoza be held solidarily
liable for the claims adjudged against petitioner Solidbank. Article 212
(e)59 does not state that corporate officers are personally liable for the
unpaid salaries or separation pay of employees of the corporation. The
liability of corporate officers for corporate debts remains governed by
Section 3160 of the Corporation Code.
It is basic that a corporation is invested by law with a personality separate
and distinct from those of the persons composing it as well as from that of
any other legal entity to which it may be related. Mere ownership by a
single stockholder or by another corporation of all or nearly all of the capital
stock of a corporation is not of itself sufficient ground for disregarding the
separate corporate personality.61 In labor cases, in particular, the Court has
held corporate directors and officers solidarily liable with the corporation for
the termination of employment of corporate employees done with malice or
in bad faith.62 Bad faith is never presumed.63 Bad faith does not simply
connote bad judgment or negligence -- it imports a dishonest purpose or
some moral obliquity and conscious doing of wrong. It means a breach of a
known duty through some motive or interest or ill-will that partakes of the
nature of fraud.64
Respondents have not satisfactorily proven that Vistan and Mendoza acted
with malice, ill-will or bad faith. Hence, said individual petitioners are not
liable for the separation pay of herein respondents-union members.

WHEREFORE, the petitions are PARTLY GRANTED. The Decision dated March
10, 2003 of the Court of Appeals in CA-G.R. SP Nos. 67730 and 70820 is
hereby SET ASIDE. Petitioner Solidbank Corporation (now FMIC) is hereby
ORDERED to pay each of the above-named individual respondents, except
union officers who are hereby declared validly dismissed, separation pay
equivalent to one (1) month salary for every year of service. Whatever sums
already received from petitioners under any release, waiver or quitclaim
shall be deducted from the total separation pay due to each of them.
The NLRC is hereby directed to determine who among the individual
respondents are union members entitled to the separation pay herein
awarded, and those union officers who were validly dismissed and hence
excluded from the said award.

G.R. No. 171664

March 6, 2013

BANKARD, INC., Petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION- FIRST DIVISION, PAULO
BUENCONSEJO,BANKARD EMPLOYEES UNION-AWATU, Respondents.
DECISION
MENDOZA, J.:

This Petition for Review on Certiorari under Rule 45 of the Rules of Court
seeks to review, reverse and set aside the October 20, 2005 Decision 1 and
the February 21, 2006 Resolution2 of the Court of Appeals {CA), in CA-G.R.
SP No. 68303, which affirmed the May 31, 2001 Resolution 3 and the
September 24, 2001 Order4 of the National Labor Relations Commission
(NLRC) in Certified Cases No. 000-185-00 and 000-191-00.
The Facts
On June 26, 2000, respondent Bankard Employees Union-AWATU (Union)
filed before the National Conciliation and Mediation Board (NCMB) its first
Notice of Strike (NOS), docketed as NS-06-225-00, 5 alleging commission of
unfair labor practices by petitioner Bankard, Inc. (Bankard), to wit: 1) job
contractualization; 2) outsourcing/contracting-out jobs; 3) manpower
rationalizing program; and 4) discrimination.
On July 3, 2000, the initial conference was held where the Union clarified the
issues cited in the NOS. On July 5, 2000, the Union held its strike vote
balloting where the members voted in favor of a strike. On July 10, 2000,
Bankard asked the Office of the Secretary of Labor to assume jurisdiction
over the labor dispute or to certify the same to the NLRC for compulsory
arbitration. On July 12, 2000, Secretary Bienvenido Laguesma (Labor
Secretary) of the Department of Labor and Employment (DOLE) issued the
order certifying the labor dispute to the NLRC. 6
On July 25, 2000, the Union declared a CBA bargaining deadlock. The
following day, the Union filed its second NOS, docketed as NS-07-26500,7 alleging bargaining in bad faith on the part of Bankard. Bankard then
again asked the Office of the Secretary of Labor to assume jurisdiction,
which was granted. Thus, the Order, dated August 9, 2000, certifying the
labor dispute to the NLRC, was issued. 8
The Union, despite the two certification orders issued by the Labor
Secretary enjoining them from conducting a strike or lockout and from
committing any act that would exacerbate the situation, went on strike on
August 11, 2000.9
During the conciliatory conferences, the parties failed to amicably settle
their dispute. Consequently, they were asked to submit their respective
position papers. Both agreed to the following issues:

1. Whether job contractualization or outsourcing or contracting-out is

an unfair labor practice on the part of the management.
2. Whether there was bad faith on the part of the management when it
bargained with the Union.10
As regards the first issue, it was Bankards position that job
contractualization or outsourcing or contracting-out of jobs was a legitimate
exercise of management prerogative and did not constitute unfair labor
practice. It had to implement new policies and programs, one of which was
the Manpower Rationalization Program (MRP) in December 1999, to further
enhance its efficiency and be more competitive in the credit card industry.
The MRP was an invitation to the employees to tender their voluntary
resignation, with entitlement to separation pay equivalent to at least two (2)
months salary for every year of service. Those eligible under the companys
retirement plan would still receive additional pay. Thereafter, majority of the
Phone Center and the Service Fulfilment Division availed of the MRP. Thus,
Bankard contracted an independent agency to handle its call center needs. 11
As to the second issue, Bankard denied that there was bad faith on its part
in bargaining with the Union. It came up with counter-offers to the Unions
proposals, but the latters demands were far beyond what management
could give. Nonetheless, Bankard continued to negotiate in good faith until
the Memorandum of Agreement (MOA) re-negotiating the provisions of the
1997-2002, Collective Bargaining Agreement (CBA) was entered into
between Bankard and the Union. The CBA was overwhelmingly ratified by
the Union members. For said reason, Bankard contended that the issue of
bad faith in bargaining had become moot and academic. 12
On the other hand, the Union alleged that contractualization started in
Bankard in 1995 in the Records Communications Management Division,
particularly in the mailing unit, which was composed of two (2) employees
and fourteen (14) messengers. They were hired as contractual workers to
perform the functions of the regular employees who had earlier resigned
and availed of the MRP.13 According to the Union, there were other
departments in Bankard utilizing messengers to perform work load
considered for regular employees, like the Marketing Department, Voice
Authorizational Department, Computer Services Department, and Records
Retention Department. The Union contended that the number of regular

employees had been reduced substantially through the management

scheme of freeze-hiring policy on positions vacated by regular employees
on the basis of cost-cutting measures and the introduction of a more drastic
formula of streamlining its regular employees through the MRP. 14
With regard to the second issue, the Union averred that Bankards proposals
were way below their demands, showing that the management had no
intention of reaching an agreement. It was a scheme calculated to force the
Union to declare a bargaining deadlock.15
On May 31, 2001, the NLRC issued its Resolution 16 declaring that the
management committed acts considered as unfair labor practice (ULP)
under Article 248(c) of the Labor Code. It ruled that:
The act of management of reducing its number of employees thru
application of the Manpower Rationalization Program and subsequently
contracting the same to other contractual employees defeats the purpose or
reason for streamlining the employees. The ultimate effect is to reduce the
number of union members and increasing the number of contractual
employees who could never be members of the union for lack of
qualification. Consequently, the union was effectively restrained in their
movements as a union on their rights to self-organization. Management had
successfully limited and prevented the growth of the Union and the acts are
clear violation of the provisions of the Labor Code and could be considered
as Unfair Labor Practice in the light of the provisions of Article 248
paragraph (c) of the Labor Code.17
The NLRC, however, agreed with Bankard that the issue of bargaining in bad
faith was rendered moot and academic by virtue of the finalization and
signing of the CBA between the management and the Union. 18
Unsatisfied, both parties filed their respective motions for partial
reconsideration.1wphi1 Bankard assailed the NLRC's finding of acts of ULP
on its part. The Union, on the other hand, assailed the NLRC ruling on the
issue of bad faith bargaining.
On September 24, 2001, the NLRC issued the Order19 denying both parties'
motions for lack of merit.

On December 28, 2001, Bankard filed a petition for certiorari under Rule 65
with the CA arguing that the NLRC gravely abused its discretion amounting
to lack or excess of jurisdiction when:
1. It issued the Resolution, dated May 31, 2001, particularly in finding
that Bankard committed acts of unfair labor practice; and,
2. It issued the Order dated September 24, 2001 denying Bankard's
partial motion for reconsideration. 20
The Union filed two (2) comments, dated January 22, 2002, through its NCR
Director, Cornelio Santiago, and another, dated February 6, 2002, through
its President, Paulo Buenconsejo, both praying for the dismissal of the
petition and insisting that Bankard's resort to contractualization or
outsourcing of contracts constituted ULP. It further alleged that Bankard
committed ULP when it conducted CBA negotiations in bad faith with the
Union.
Ruling of the Court of Appeals
The CA dismissed the petition, finding that the NLRC ruling was supported
by substantial evidence.
The CA agreed with Bankard that job contracting, outsourcing and/or
contracting out of jobs did not per se constitute ULP, especially when made
in good faith and for valid purposes. Despite Bankard's claim of good faith in
resorting to job contractualization for purposes of cost-efficient operations
and its non-interference with the employees' right to self-organization, the
CA agreed with the NLRC that Bankard's acts impaired the employees right
to self-organization and should be struck down as illegal and invalid
pursuant to Article 248(c)21 of the Labor Code. The CA thus, ruled in this
wise:
We cannot agree more with public respondent. Incontrovertible is the fact
that petitioner's acts, particularly its promotion of the program enticing
employees to tender their voluntary resignation in exchange for financial
packages, resulted to a union dramatically reduced in numbers. Coupled
with the management's policy of "freeze-hiring" of regular employees and
contracting out jobs to contractual workers, petitioner was able to limit and

prevent the growth of the Union, an act that clearly constituted unfair labor
practice.22
In its assailed decision, the CA affirmed the May 31, 2001 Resolution and
the September 24, 2001 Order of the NLRC.
Aggrieved, Bankard filed a motion for reconsideration. The CA subsequently
denied it for being a mere repetition of the grounds previously raised.
Hence, the present petition bringing up this lone issue:
THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONER BANKARD,
INC. COMMITTED ACTS OF UNFAIR LABOR PRACTICE WHEN IT DISMISSED
THE PETITION FOR CERTIORARI AND DENIED THE MOTION FOR
RECONSIDERATION FILED BY PETITIONER.23
Ruling of the Court
The Court finds merit in the petition.
Well-settled is the rule that "factual findings of labor officials, who are
deemed to have acquired expertise in matters within their jurisdiction, are
generally accorded not only respect but even finality by the courts when
supported by substantial evidence."24 Furthermore, the factual findings of
the NLRC, when affirmed by the CA, are generally conclusive on this
Court.25 When the petitioner, however, persuasively alleges that there is
insufficient or insubstantial evidence on record to support the factual
findings of the tribunal or court a quo, then the Court, exceptionally, may
review factual issues raised in a petition under Rule 45 in the exercise of its
discretionary appellate jurisdiction.26
This case involves determination of whether or not Bankard committed acts
considered as ULP. The underlying concept of ULP is found in Article 247 of
the Labor Code, to wit:
Article 247. Concept of unfair labor practice and procedure for prosecution
thereof. -- Unfair labor practices violate the constitutional right of workers
and employees to self-organization, are inimical to the legitimate interests
of both labor and management, including their right to bargain collectively
and otherwise deal with each other in an atmosphere of freedom and

mutual respect, disrupt industrial peace and hinder the promotion of healthy
and stable labor-management relations. x x x
The Court has ruled that the prohibited acts considered as ULP relate to the
workers right to self-organization and to the observance of a CBA. It refers
to "acts that violate the workers right to organize." 27 Without that element,
the acts, even if unfair, are not ULP. 28 Thus, an employer may only be held
liable for unfair labor practice if it can be shown that his acts affect in
whatever manner the right of his employees to self-organize. 29
In this case, the Union claims that Bankard, in implementing its MRP which
eventually reduced the number of employees, clearly violated Article 248(c)
of the Labor Code which states that:
Art. 248. Unfair labor practices of employers. It shall be unlawful for an
employer to commit any of the following unfair labor practice:
xxxx
(c) To contract out services or functions being performed by union members
when such will interfere with, restrain or coerce employees in the exercise of
their rights to self-organization;
xxxx
Because of said reduction, Bankard subsequently contracted out the jobs
held by former employees to other contractual employees. The Union
specifically alleges that there were other departments in Bankard, Inc. which
utilized messengers to perform work load considered for regular employees
like the Marketing Department, Voice Authorizational Department, Computer
Services Department, and Records Retention Department. 30 As a result, the
number of union members was reduced, and the number of contractual
employees, who were never eligible for union membership for lack of
qualification, increased.
The general principle is that the one who makes an allegation has the
burden of proving it.1avvphi1 While there are exceptions to this general
rule, in ULP cases, the alleging party has the burden of proving the
ULP;31 and in order to show that the employer committed ULP under the
Labor Code, substantial evidence is required to support the claim. 32 Such

principle finds justification in the fact that ULP is punishable with both civil
and/or criminal sanctions.33
Aside from the bare allegations of the Union, nothing in the records strongly
proves that Bankard intended its program, the MRP, as a tool to drastically
and deliberately reduce union membership. Contrary to the findings and
conclusions of both the NLRC and the CA, there was no proof that the
program was meant to encourage the employees to disassociate
themselves from the Union or to restrain them from joining any union or
organization. There was no showing that it was intentionally implemented to
stunt the growth of the Union or that Bankard discriminated, or in any way
singled out the union members who had availed of the retirement package
under the MRP. True, the program might have affected the number of union
membership because of the employees voluntary resignation and
availment of the package, but it does not necessarily follow that Bankard
indeed purposely sought such result. It must be recalled that the MRP was
implemented as a valid cost-cutting measure, well within the ambit of the
so-called management prerogatives. Bankard contracted an independent
agency to meet business exigencies. In the absence of any showing that
Bankard was motivated by ill will, bad faith or malice, or that it was aimed
at interfering with its employees right to self-organize, it cannot be said to
have committed an act of unfair labor practice. 34
"Substantial evidence is more than a mere scintilla of evidence. It means
such relevant evidence as a reasonable mind might accept as adequate to
support a conclusion, even if other minds equally reasonable might
conceivably opine otherwise."35 Unfortunately, the Union, which had the
burden of adducing substantial evidence to support its allegations of ULP,
failed to discharge such burden.36
The employers right to conduct the affairs of its business, according to its
own discretion and judgment, is well-recognized. 37 Management has a wide
latitude to conduct its own affairs in accordance with the necessities of its
business.38 As the Court once said:
The Court has always respected a company's exercise of its prerogative to
devise means to improve its operations. Thus, we have held that
management is free to regulate, according to its own discretion and
judgment, all aspects of employment, including hiring, work assignments,

supervision and transfer of employees, working methods, time, place and

manner of work.
This is so because the law on unfair labor practices is not intended to
deprive employers of their fundamental right to prescribe and enforce such
rules as they honestly believe to be necessary to the proper, productive and
profitable operation of their business. 39
Contracting out of services is an exercise of business judgment or
management prerogative. Absent any proof that management acted in a
malicious or arbitrary manner, the Court will not interfere with the exercise
of judgment by an employer.40Furthermore, bear in mind that ULP is
punishable with both civil and/or criminal sanctions. 41 As such, the party so
alleging must necessarily prove it by substantial evidence. The Union, as
earlier noted, failed to do this. Bankard merely validly exercised its
management prerogative. Not shown to have acted maliciously or
arbitrarily, no act of ULP can be imputed against it.
WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals
in CA-G.R. SP No. 68303, dated October 20, 2005, and its Resolution, dated
February 21, 2006, are REVERSED and SET ASIDE. Petitioner Bankard, Inc. is
hereby declared as not having committed any act constituting Unfair Labor
Practice under Article 248 of the Labor Code.
G.R. No. 175492

February 27, 2013

CARLOS L. OCTAVIO, Petitioner,

vs.
PIDLIPPINE LONG DISTANCE TELEPHONE COMPANY, Respondent.
DECISION
DEL CASTILLO, J.:
Every Collective Bargaining Agreement (CBA) shall provide a grievance
machinery to which all disputes arising from its implementation or
interpretation will be subjected to compulsory negotiations. This essential
feature of a CBA provides the parties with a simple, inexpensive and
expedient system of finding reasonable and acceptable solutions to disputes
and helps in the attainment of a sound and stable industrial peace.

Before us is a Petition for Review on Certiorari1 assailing the August 31,

2006 Decision2 of the Court of Appeals (CA) in CA-G.R. SP No. 93578, which
dismissed petitioner Carlos L. Octavio's (Octavio) Petition
for Certiorari3assailing the September 30, 2005 Resolution4 of the National
Labor Relations Commission (NLRC). Said NLRC Resolution affirmed the
August 30, 2004 Decision5 of the Labor Arbiter which dismissed Octavio's
Complaint for payment of salary increases against respondent Philippine
Long Distance Company (PLDT). Likewise assailed in this Petition is the
November 15, 2006 Resolution6 which denied Octavios Motion for
Reconsideration.7
Factual Antecedents
On May 28, 1999, PLDT and Gabay ng Unyon sa Telekominaksyon ng mga
Superbisor (GUTS) entered into a CBA covering the period January 1, 1999
to December 31, 2001 (CBA of 1999-2001). Article VI, Section I thereof
provides:
Section 1. The COMPANY agrees to grant the following across-theboard
salary increase during the three years covered by this Agreement to all
employees covered by the bargaining unit as of the given dates:
Effective January 1, 1999 10% of basic wage or P2,000.00 whichever is
higher;
Effective January 1, 2000 11% of basic wage or P2,250.00 whichever is
higher;
Effective January 1, 2001 12% of basic wage or P2,500.00 whichever is
higher.8
On October 1, 2000, PLDT hired Octavio as Sales System Analyst I on a
probationary status. He became a member of GUTS. When Octavio was
regularized on January 1, 2001, he was receiving a monthly basic salary
ofP10,000.00. On February 1, 2002, he was promoted to the position of
Sales System Analyst 2 and his salary was increased to P13,730.00.
On May 31, 2002, PLDT and GUTS entered into another CBA covering the
period January 1, 2002 to December 31, 2004 (CBA of 2002-2004) which
provided for the following salary increases: 8% of basic wage or P2,000.00
whichever is higher for the first year (2002); 10% of basic wage
or P2,700.00 whichever is higher for the second year (2003); and, 10% of
basic wage or P2,400.00 whichever is higher for the third year (2004). 9

Claiming that he was not given the salary increases of P2,500.00 effective
January 1, 2001 and P2,000.00 effective January 1, 2002, Octavio wrote the
President of GUTS, Adolfo Fajardo (Fajardo).10 Acting thereon and on similar
grievances from other GUTS members, Fajardo wrote the PLDT Human
Resource Head to inform management of the GUTS members claim for
entitlement to the across-the-board salary increases. 11
Accordingly, the Grievance Committee convened on October 7, 2002
consisting of representatives from PLDT and GUTS. The Grievance
Committee, however, failed to reach an agreement. In effect, it denied
Octavios demand for salary increases. The Resolution (Committee
Resolution), reads as follows:
October 7, 2002
UNION ISSUE :
1. Mr. Carlos L. Octavio, Sales System Analyst I, CCIM-Database,
was promoted to S2 from S1 last February 01, 2002. He claimed
that the whole P2,000 (1st yr. GUTS-CBA increase) was not given
to him.
2. He was hired as a probationary employee on October 01, 2000
and was regularized on January 01, 2001. He claimed that
Management failed to grant him the GUTS-CBA increase last
January 2001.
MANAGEMENT POSITION :
Issue # 1:
A) Promotional Policy: adjustment of basic monthly salary to the
minimum salary of the new position.
B) Mr. Octavios salary at the time of his promotion and before the
conclusion of the GUTS CBA was P10,000.00.
C) Upon the effectivity of his promotion on February 1, 2002, his
basic monthly salary was adjusted to P13,730.00, the minimum
salary of the new position.
D) In June 2002, the GUTS-CBA was concluded and Mr. Octavios
basic salary was recomputed to include the P2,000.00 1st year
increase retroactive January 2002. The resulting basic salary
was P12,000.00.

E) Applying the above-mentioned policy, Mr. Octavios basic

salary was adjusted to the minimum salary of the new position,
which is P13,730.00.
Issue # 2:
All regularized supervisory employees as of January 1 are not entitled to the
GUTS CBA increase. However, as agreed with GUTS in the grievance case of
18 personnel of International & Luzon Core Network Management Center,
probationary employees who were hired outside of PLDT and regularized as
supervisors/management personnel on January 1, 2002 shall be entitled to
GUTS CBA. This decision shall be applied prospectively and all previous
similar cases are not covered.
RESOLUTION :
After protracted deliberation of these issues, the committee failed to reach
an agreement. Hence, Management position deemed adopted.
MANAGEMENT

UNION

_______(signed)_______
WILFREDO A. GUADIA

_______(signed)_______
ADOLFO L.FAJARDO

_______(signed)_______
ROSALINDA S. RUIZ

_______(signed)_______
CONFESOR A.
ESPIRITU

_______(signed)_______
ALEJANDRO C.
FABIAN

_______(signed)_______
CHARLITO A.
AREVALO12

Aggrieved, Octavio filed before the Arbitration Branch of the NLRC a

Complaint for payment of said salary increases.
Ruling of the Labor Arbiter
Octavio claimed entitlement to salary increases per the CBAs of 1999-2001
and 2002-2004. He insisted that when he was regularized as a supervisory
employee on January 1, 2001, he became entitled to receive the across-theboard increase of P2,500.00 as provided for under the CBA of 1999-2001
which took effect on January 1, 1999. Then pursuant to the CBA of 20022004, he should have received an additional increase of P2,000.00 apart
from the merit increase of P3,730.00 which was given him due to his

promotion on February 1, 2002. However, PLDT unilaterally decided to deem

as included in the said P3,730.00 the P2,000.00 across-the-board increase
for 2002 as stipulated in the CBA of 2002-2004. This, according to Octavio,
amounts to diminution of benefits. Moreover, Octavio averred that the CBA
cannot be the subject of further negotiation as it has the force of law
between the parties. Finally, Octavio claimed that PLDT committed an act of
unfair labor practice because, while it granted the claim for salary increase
of 18 supervisory employees who were regularized on January 1, 2002 and
onwards, it discriminated against him by refusing to grant him the same
salary increase. He thus prayed for an additional award of damages and
attorneys fees.
PLDT countered that the issues advanced by Octavio had already been
resolved by the Union-Management Grievance Committee when it denied
his claims through the Committee Resolution. Moreover, the grant of acrossthe board salary increase for those who were regularized starting January 1,
2002 and the exclusion thereto of those who were regularized on January 1,
2001, do not constitute an act of unfair labor practice as would result in any
discrimination or encourage or discourage membership in a labor
organization. In fact, when the Union-Management Grievance Committee
came up with the Committee Resolution, they considered the same as the
most practicable and reasonable solution for both management and union.
At any rate, the said Committee Resolution had already become final and
conclusive between the parties for failure of Octavio to elevate the same to
the proper forum. In addition, PLDT claimed that the NLRC has no
jurisdiction to hear and decide Octavios claims.
In a Decision dated August 30, 2004, the Labor Arbiter dismissed the
Complaint of Octavio and upheld the Committee Resolution.
Ruling of the National Labor Relations Commission
Upon Octavios appeal, the NLRC, in its September 30, 2005 Resolution,
affirmed the Labor Arbiters Decision. It upheld the Labor Arbiters finding
that Octavios salary had already been adjusted in accordance with the
provisions of the CBA. The NLRC further ruled that it has no jurisdiction to
decide the issues presented by Octavio, as the same involved the
interpretation and implementation of the CBA. According to it, Octavio
should have brought his claim before the proper body as provided in the
2002-2004 CBAs provision on grievance machinery and procedure.
Octavios Motion for Reconsideration was likewise dismissed by the NLRC in
its November 21, 2005 Resolution.13
Ruling of the Court of Appeals

Octavio thus filed a Petition for Certiorari14 which the CA found to be without
merit. In its August 31, 2006 Decision,15 the CA declared the Committee
Resolution to be binding on Octavio, he being a member of GUTS, and
because he failed to question its validity and enforceability.
In his Motion for Reconsideration,16 Octavio disclaimed his alleged failure to
question the Committee Resolution by emphasizing that he filed a
Complaint before the NLRC against PLDT. However, the CA denied Octavios
Motion for Reconsideration in its November 15, 2006 Resolution. 17
Issues
Hence, Octavio filed this Petition raising the following issues for our
consideration:
a. Whether x x x the employer and bargaining representative may
amend the provisions of the collective bargaining agreement without
the consent and approval of the employees;
b. If so, whether the said agreement is binding [on] the employees;
c. Whether x x x merit increases may be awarded simultaneously with
increases given in the Collective Bargaining Agreement;
d. Whether x x x damages may be awarded to the employee for
violation by the employer of its commitment under its existing
collective bargaining agreement.18
Octavio submits that the CA erred in upholding the Committee Resolution
which denied his claim for salary increases but granted the same request of
18 other similarly situated employees. He likewise asserts that both PLDT
and GUTS had the duty to strictly implement the CBA salary increases;
hence, the Committee Resolution, which effectively resulted in the
modification of the CBAs provision on salary increases, is void.
Octavio also insists that PLDT is bound to grant him the salary increase
of P2,000.00 for the year 2002 on top of the merit increase given to him by
reason of his promotion. It is his stance that merit increases are distinct and
separate from across-the-board salary increases provided for under the CBA.
Our Ruling
The Petition has no merit.

Under Article 26019 of the Labor Code, grievances arising from the
interpretation or implementation of the parties CBA should be resolved in
accordance with the grievance procedure embodied therein. It also provides
that all unsettled grievances shall be automatically referred for voluntary
arbitration as prescribed in the CBA.
In its Memorandum,20 PLDT set forth the grievance machinery and
procedure provided under Article X of the CBA of 2002-2004, viz:
Section 1. GRIEVANCE MACHINERY - there shall be a Union-Management
Grievance Committee composed of three (3) Union representatives
designated by the UNION Board of Directors and three (3) Management
representatives designated by the company President. The committee shall
act upon any grievance properly processed in accordance with the
prescribed procedure. The Union representatives to the Committee shall not
lose pay for attending meetings where Management representatives are in
attendance.
Section 2. GRIEVANCE PROCEDURE - The parties agree that all disputes
between labor and management may be settled through friendly
negotiations; that the parties have the same interest in the continuity of
work until all points in dispute shall have been discussed and settled; that
an open conflict in any form involves losses to the parties; and that
therefore, every effort shall be exerted to avoid such an open conflict. In
furtherance of these principles, the parties agree to observe the following
grievance procedures.
Step 1. Any employee (or group of employees) who believes that he has a
justifiable grievance shall present the matter initially to his division head, or
if the division is involved in the grievance, to the company official next
higher to the division head (the local manager in the provincial exchanges)
not later that fifteen (15) days after the occurrence of the incident giving
rise to the grievance. The initial presentation shall be made to the division
head either by the aggrieved party himself or by the Union Steward or by
any Executive Officer of the Union who is not a member of the grievance
panel.1wphi1 The initial presentation may be made orally or in writing.
Step 2. Any party who is not satisfied with the resolution of the grievance at
Step 1 may appeal in writing to the Union-Management Grievance
Committee within seven (7) days from the date of receipt of the department
heads decision.
Step 3. If the grievance is not settled either because of deadlock or
the failure of the committee to decide the matter, the grievance
shall be transferred to a Board of Arbitrators for the final

decision.The Board shall be composed of three (3) arbitrators, one to be

nominated by the Union, another to be nominated by the Management, and
the third to be selected by the management and union nominees. The
decision of the board shall be final and binding both the company and the
Union in accordance with law. Expenses of arbitration shall be divided
equally between the Company and the Union.21 (Emphasis supplied)
Indisputably, the present controversy involves the determination of an
employees salary increases as provided in the CBAs. When Octavios claim
for salary increases was referred to the Union-Management Grievance
Committee, the clear intention of the parties was to resolve their differences
on the proper interpretation and implementation of the pertinent provisions
of the CBAs. And in accordance with the procedure prescribed therein, the
said committee made up of representatives of both the union and the
management convened. Unfortunately, it failed to reach an agreement.
Octavios recourse pursuant to the CBA was to elevate his grievance to the
Board of Arbitrators for final decision. Instead, nine months later, Octavio
filed a Complaint before the NLRC.
It is settled that "when parties have validly agreed on a procedure for
resolving grievances and to submit a dispute to voluntary arbitration then
that procedure should be strictly observed."22 Moreover, we have held time
and again that "before a party is allowed to seek the intervention of the
court, it is a precondition that he should have availed of all the means of
administrative processes afforded him. Hence, if a remedy within the
administrative machinery can still be resorted to by giving the
administrative officer concerned every opportunity to decide on a matter
that comes within his jurisdiction, then such remedy should be exhausted
first before the courts judicial power can be sought. The premature
invocation of the courts judicial intervention is fatal to ones cause of
action."23 "The underlying principle of the rule on exhaustion of
administrative remedies rests on the presumption that when the
administrative body, or grievance machinery, is afforded a chance to pass
upon the matter, it will decide the same correctly." 24
By failing to question the Committee Resolution through the proper
procedure prescribed in the CBA, that is, by raising the same before a Board
of Arbitrators, Octavio is deemed to have waived his right to question the
same. Clearly, he departed from the grievance procedure mandated in the
CBA and denied the Board of Arbitrators the opportunity to pass upon a
matter over which it has jurisdiction. Hence, and as correctly held by the CA,
Octavios failure to assail the validity and enforceability of the Committee
Resolution makes the same binding upon him. On this score alone, Octavios

recourse to the labor tribunals below, as well as to the CA, and, finally, to
this Court, must therefore fail.
At any rate, Octavio cannot claim that the Committee Resolution is not
valid, binding and conclusive as to him for being a modification of the CBA
in violation of Article 25325 of the Labor Code. It bears to stress that the said
resolution is a product of the grievance procedure outlined in the CBA itself.
It was arrived at after the management and the union through their
respective representatives conducted negotiations in accordance with the
CBA. On the other hand, Octavio never assailed the competence of the
grievance committee to take cognizance of his case. Neither did he question
the authority or credibility of the union representatives; hence, the latter are
deemed to have properly bargained on his behalf since "unions are the
agent of its members for the purpose of securing just and fair wages and
good working conditions."26 In fine, it cannot be gainsaid that the Committee
Resolution is a modification of the CBA. Rather, it only provides for the
proper implementation of the CBA provision respecting salary increases.
Finally, Octavios argument that the denial of his claim for salary increases
constitutes a violation of Article 10027of the Labor Code is devoid of merit.
Even assuming that there has been a diminution of benefits on his part,
Article 100 does not prohibit a union from offering and agreeing to reduce
wages and benefits of the employees as the right to free collective
bargaining includes the right to suspend it. 28 PLDT averred that one of the
reasons why Octavios salary was recomputed as to include in his salary
of P13,730.00 the P2,000.00 increase for 2002 is to avoid salary distortion.
At this point, it is well to emphasize that bargaining should not be equated
to an "adversarial litigation where rights and obligations are delineated and
remedies applied."29 Instead, it covers a process of finding a reasonable and
acceptable solution to stabilize labor-management relations to promote
stable industrial peace.30 Clearly, the Committee Resolution was arrived at
after considering the intention of both PLDT and GUTS to foster industrial
peace.
All told, we find no error on the part of the Labor Arbiter, the NLRC and the
CA in unanimously upholding the validity and enforceability of the Grievance
Committee Resolution dated October 7, 2002.
WHEREFORE, the petition is DENIED. The August 31, 2006 Decision and
November 15, 2006 Resolution of the Court of Appeals in CA-G.R. SP No.
93578 are AFFIRMED.

G.R. No. 198783

April 15, 2013

ROYAL PLANT WORKERS UNION, Petitioner,

vs.
COCA-COLA BOTTLERS PHILIPPINES, INC.-CEBU PLANT, Respondent.
DECISION
MENDOZA, J.:
Assailed in this petition is the May 24, 2011 Decision 1 and the September 2,
2011 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 05200,
entitled Coca-Cola Bottlers Philippines, Inc.-Cebu Plant v. Royal Plant
Workers Union, which nullified and set aside the June 11, 2010 Decision 3 of
the Voluntary Arbitration Panel (Arbitration Committee) in a case involving
the removal of chairs in the bottling plant of Coca-Cola Bottlers Philippines,
Inc. (CCBPI).
The Factual and Procedural
Antecedents
The factual and procedural antecedents have been accurately recited in the
May 24, 2011 CA decision as follows:
Petitioner Coca-Cola Bottlers Philippines, Inc. (CCBPI) is a domestic
corporation engaged in the manufacture, sale and distribution of softdrink
products. It has several bottling plants all over the country, one of which is
located in Cebu City. Under the employ of each bottling plant are bottling
operators. In the case of the plant in Cebu City, there are 20 bottling
operators who work for its Bottling Line 1 while there are 12-14 bottling

operators who man its Bottling Line 2. All of them are male and they are
members of herein respondent Royal Plant Workers Union (ROPWU).
The bottling operators work in two shifts. The first shift is from 8 a.m. to 5
p.m. and the second shift is from 5 p.m. up to the time production
operations is finished. Thus, the second shift varies and may end beyond
eight (8) hours. However, the bottling operators are compensated with
overtime pay if the shift extends beyond eight (8) hours. For Bottling Line 1,
10 bottling operators work for each shift while 6 to 7 bottling operators work
for each shift for Bottling Line 2.
Each shift has rotations of work time and break time. Prior to September
2008, the rotation is this: after two and a half (2 ) hours of work, the
bottling operators are given a 30-minute break and this goes on until the
shift ends. In September 2008 and up to the present, the rotation has
changed and bottling operators are now given a 30-minute break after one
and one half (1 ) hours of work.
In 1974, the bottling operators of then Bottling Line 2 were provided with
chairs upon their request. In 1988, the bottling operators of then Bottling
Line 1 followed suit and asked to be provided also with chairs. Their request
was likewise granted. Sometime in September 2008, the chairs provided for
the operators were removed pursuant to a national directive of petitioner.
This directive is in line with the "I Operate, I Maintain, I Clean" program of
petitioner for bottling operators, wherein every bottling operator is given
the responsibility to keep the machinery and equipment assigned to him
clean and safe. The program reinforces the task of bottling operators to
constantly move about in the performance of their duties and
responsibilities.
With this task of moving constantly to check on the machinery and
equipment assigned to him, a bottling operator does not need a chair
anymore, hence, petitioners directive to remove them. Furthermore, CCBPI
rationalized that the removal of the chairs is implemented so that the
bottling operators will avoid sleeping, thus, prevent injuries to their persons.
As bottling operators are working with machines which consist of moving
parts, it is imperative that they should not fall asleep as to do so would
expose them to hazards and injuries. In addition, sleeping will hamper the

efficient flow of operations as the bottling operators would be unable to

perform their duties competently.
The bottling operators took issue with the removal of the chairs. Through
the representation of herein respondent, they initiated the grievance
machinery of the Collective Bargaining Agreement (CBA) in November 2008.
Even after exhausting the remedies contained in the grievance machinery,
the parties were still at a deadlock with petitioner still insisting on the
removal of the chairs and respondent still against such measure. As such,
respondent sent a Notice to Arbitrate, dated 16 July 2009, to petitioner
stating its position to submit the issue on the removal of the chairs for
arbitration. Nevertheless, before submitting to arbitration the issue, both
parties availed of the conciliation/mediation proceedings before the National
Conciliation and Mediation Board (NCMB) Regional Branch No. VII. They
failed to arrive at an amicable settlement.
Thus, the process of arbitration continued and the parties appointed the
chairperson and members of the Arbitration Committee as outlined in the
CBA. Petitioner and respondent respectively appointed as members to the
Arbitration Committee Mr. Raul A. Kapuno, Jr. and Mr. Luis Ruiz while they
both chose Atty. Alice Morada as chairperson thereof. They then executed a
Submission Agreement which was accepted by the Arbitration Committee
on 01 October 2009. As contained in the Submission Agreement, the sole
issue for arbitration is whether the removal of chairs of the operators
assigned at the production/manufacturing line while performing their duties
and responsibilities is valid or not.
Both parties submitted their position papers and other subsequent
pleadings in amplification of their respective stands. Petitioner argued that
the removal of the chairs is valid as it is a legitimate exercise of
management prerogative, it does not violate the Labor Code and it does not
violate the CBA it contracted with respondent. On the other hand,
respondent espoused the contrary view. It contended that the bottling
operators have been performing their assigned duties satisfactorily with the
presence of the chairs; the removal of the chairs constitutes a violation of
the Occupational Health and Safety Standards, the policy of the State to
assure the right of workers to just and humane conditions of work as stated
in Article 3 of the Labor Code and the Global Workplace Rights Policy.

Ruling of the Arbtration Committee

On June 11, 2010, the Arbitration Committee rendered a decision in favor of
the Royal Plant Workers Union (the Union) and against CCBPI, the dispositive
portion of which reads, as follows:
Wherefore, the undersigned rules in favor of ROPWU declaring that the
removal of the operators chairs is not valid. CCBPI is hereby ordered to
restore the same for the use of the operators as before their removal in
2008.4
The Arbitration Committee ruled, among others, that the use of chairs by
the operators had been a company practice for 34 years in Bottling Line 2,
from 1974 to 2008, and 20 years in Bottling Line 1, from 1988 to 2008; that
the use of the chairs by the operators constituted a company practice
favorable to the Union; that it ripened into a benefit after it had been
enjoyed by it; that any benefit being enjoyed by the employees could not be
reduced, diminished, discontinued, or eliminated by the employer in
accordance with Article 100 of the Labor Code, which prohibited the
diminution or elimination by the employer of the employees benefit; and
that jurisprudence had not laid down any rule requiring a specific minimum
number of years before a benefit would constitute a voluntary company
practice which could not be unilaterally withdrawn by the employer.
The Arbitration Committee further stated that, although the removal of the
chairs was done in good faith, CCBPI failed to present evidence regarding
instances of sleeping while on duty. There were no specific details as to the
number of incidents of sleeping on duty, who were involved, when these
incidents happened, and what actions were taken. There was no evidence
either of any accident or injury in the many years that the bottling operators
used chairs. To the Arbitration Committee, it was puzzling why it took 34
and 20 years for CCBPI to be so solicitous of the bottling operators safety
that it removed their chairs so that they would not fall asleep and injure
themselves.
Finally, the Arbitration Committee was of the view that, contrary to CCBPIs
position, line efficiency was the result of many factors and it could not be
attributed solely to one such as the removal of the chairs.

Not contented with the Arbitration Committees decision, CCBPI filed a

petition for review under Rule 43 before the CA.
Ruling of the CA
On May 24, 2011, the CA rendered a contrasting decision which nullified and
set aside the decision of the Arbitration Committee. The dispositive portion
of the CA decision reads:
WHEREFORE, premises considered, the petition is hereby GRANTED and the
Decision, dated 11 June 2010, of the Arbitration Committee in AC389-VII-0910-2009D is NULLIFIED and SET ASIDE. A new one is entered in its stead
SUSTAINING the removal of the chairs of the bottling operators from the
manufacturing/production line.5
The CA held, among others, that the removal of the chairs from the
manufacturing/production lines by CCBPI is within the province of
management prerogatives; that it was part of its inherent right to control
and manage its enterprise effectively; and that since it was the employers
discretion to constantly develop measures or means to optimize the
efficiency of its employees and to keep its machineries and equipment in
the best of conditions, it was only appropriate that it should be given wide
latitude in exercising it.
The CA stated that CCBPI complied with the conditions of a valid exercise of
a management prerogative when it decided to remove the chairs used by
the bottling operators in the manufacturing/production lines. The removal of
the chairs was solely motivated by the best intentions for both the Union
and CCBPI, in line with the "I Operate, I Maintain, I Clean" program for
bottling operators, wherein every bottling operator was given the
responsibility to keep the machinery and equipment assigned to him clean
and safe. The program would reinforce the task of bottling operators to
constantly move about in the performance of their duties and
responsibilities. Without the chairs, the bottling operators could efficiently
supervise these machineries operations and maintenance. It would also be
beneficial for them because the working time before the break in each
rotation for each shift was substantially reduced from two and a half hours
(2 ) to one and a half hours (1 ) before the 30-minute break. This
scheme was clearly advantageous to the bottling operators as the number

of resting periods was increased. CCBPI had the best intentions in removing
the chairs because some bottling operators had the propensity to fall asleep
while on the job and sleeping on the job ran the risk of injury exposure and
removing them reduced the risk.
The CA added that the decision of CCBPI to remove the chairs was not done
for the purpose of defeating or circumventing the rights of its employees
under the special laws, the Collective Bargaining Agreement (CBA) or the
general principles of justice and fair play. It opined that the principles of
justice and fair play were not violated because, when the chairs were
removed, there was a commensurate reduction of the working time for each
rotation in each shift. The provision of chairs for the bottling operators was
never part of the CBAs contracted between the Union and CCBPI. The chairs
were not provided as a benefit because such matter was dependent upon
the exigencies of the work of the bottling operators. As such, CCBPI could
withdraw this provision if it was not necessary in the exigencies of the work,
if it was not contributing to the efficiency of the bottling operators or if it
would expose them to some hazards. Lastly, the CA explained that the
provision of chairs to the bottling operators cannot be covered by Article
100 of the Labor Code on elimination or diminution of benefits because the
employees benefits referred to therein mainly involved monetary
considerations or privileges converted to their monetary equivalent.
Disgruntled with the adverse CA decision, the Union has come to this Court
praying for its reversal on the following GROUNDS
I
THAT WITH DUE RESPECT, THE COURT OF APPEALS COMMITTED REVERSIBLE
ERROR IN HOLDING THAT A PETITION FOR REVIEW UNDER RULE 43 OF THE
RULES OF COURT IS THE PROPER REMEDY OF CHALLENGING BEFORE SAID
COURT THE DECISION OF THE VOLUNTARY ARBITRATOR OR PANEL OF
VOLUNTARY ARBITRATORS UNDER THE LABOR CODE.
II
THAT WITH DUE RESPECT, THE COURT OF APPEALS GRAVELY ABUSED ITS
DISCRETION IN NULLIFYING AND SETTING ASIDE THE DECISION OF THE
PANEL OF VOLUNTARY ARBITRATORS WHICH DECLARED AS NOT VALID THE

REMOVAL OF THE CHAIRS OF THE OPERATORS IN THE MANUFACTURING

AND/OR PRODUCTION LINE.
In advocacy of its positions, the Union argues that the proper remedy in
challenging the decision of the Arbitration Committee before the CA is a
petition for certiorari under Rule 65. The petition for review under Rule 43
resorted to by CCBPI should have been dismissed for being an improper
remedy. The Union points out that the parties agreed to submit the
unresolved grievance involving the removal of chairs to voluntary
arbitration pursuant to the provisions of Article V of the existing CBA. Hence,
the assailed decision of the Arbitration Committee is a judgment or final
order issued under the Labor Code of the Philippines. Section 2, Rule 43 of
the 1997 Rules of Civil Procedure, expressly states that the said rule does
not cover cases under the Labor Code of the Philippines. The judgments or
final orders of the Voluntary Arbitrator or Panel of Voluntary Arbitrators are
governed by the provisions of Articles 260, 261, 262, 262-A, and 262-B of
the Labor Code of the Philippines.
On the substantive aspect, the Union argues that there is no connection
between CCBPIs "I Operate, I Maintain, I Clean" program and the removal of
the chairs because the implementation of the program was in 2006 and the
removal of the chairs was done in 2008. The 30-minute break is part of an
operators working hours and does not make any difference. The frequency
of the break period is not advantageous to the operators because it cannot
compensate for the time they are made to stand throughout their working
time. The bottling operators get tired and exhausted after their tour of duty
even with chairs around. How much more if the chairs are removed?
The Union further claims that management prerogatives are not absolute
but subject to certain limitations found in law, a collective bargaining
agreement, or general principles of fair play and justice. The operators have
been performing their assigned duties and responsibilities satisfactorily for
thirty (30) years using chairs. There is no record of poor performance
because the operators are sitting all the time. There is no single incident
when the attention of an operator was called for failure to carry out his
assigned tasks. CCBPI has not submitted any evidence to prove that the
performance of the operators was poor before the removal of the chairs and
that it has improved after the chairs were removed. The presence of chairs
for more than 30 years made the operators awake and alert as they could

relax from time to time. There are sanctions for those caught sleeping while
on duty. Before the removal of the chairs, the efficiency of the operators was
much better and there was no recorded accident. After the removal of the
chairs, the efficiency of the operators diminished considerably, resulting in
the drastic decline of line efficiency.
Finally, the Union asserts that the removal of the chairs constitutes violation
of the Occupational Health and Safety Standards, which provide that every
company shall keep and maintain its workplace free from hazards that are
likely to cause physical harm to the workers or damage to property. The
removal of the chairs constitutes a violation of the State policy to assure the
right of workers to a just and humane condition of work pursuant to Article 3
of the Labor Code and of CCBPIs Global Workplace Rights Policy. Hence, the
unilateral withdrawal, elimination or removal of the chairs, which have been
in existence for more than 30 years, constitutes a violation of existing
practice.
The respondents position
CCBPI reiterates the ruling of the CA that a petition for review under Rule 43
of the Rules of Court was the proper remedy to question the decision of the
Arbitration Committee. It likewise echoes the ruling of the CA that the
removal of the chairs was a legitimate exercise of management prerogative;
that it was done not to harm the bottling operators but for the purpose of
optimizing their efficiency and CCBPIs machineries and equipment; and
that the exercise of its management prerogative was done in good faith and
not for the purpose of circumventing the rights of the employees under the
special laws, the CBA or the general principles of justice and fair play.
The Courts Ruling
The decision in this case rests on the resolution of two basic questions. First,
is an appeal to the CA via a petition for review under Rule 43 of the 1997
Rules of Civil Procedure a proper remedy to question the decision of the
Arbitration Committee? Second, was the removal of the bottling operators
chairs from CCBPIs production/manufacturing lines a valid exercise of a
management prerogative?
The Court sustains the ruling of the CA on both issues.

Regarding the first issue, the Union insists that the CA erred in ruling that
the recourse taken by CCBPI in appealing the decision of the Arbitration
Committee was proper. It argues that the proper remedy in challenging the
decision of the Voluntary Arbitrator before the CA is by filing a petition for
certiorari under Rule 65 of the Rules of Court, not a petition for review under
Rule 43.
CCBPI counters that the CA was correct in ruling that the recourse it took in
appealing the decision of the Arbitration Committee to the CA via a petition
for review under Rule 43 of the Rules of Court was proper and in conformity
with the rules and prevailing jurisprudence.
A Petition for Review
under Rule 43 is the
proper remedy
CCBPI is correct. This procedural issue being debated upon is not novel. The
Court has already ruled in a number of cases that a decision or award of a
voluntary arbitrator is appealable to the CA via a petition for review under
Rule 43. The recent case of Samahan Ng Mga Manggagawa Sa Hyatt
(SAMASAH-NUWHRAIN) v. Hon. Voluntary Arbitrator Buenaventura C.
Magsalin and Hotel Enterprises of the Philippines 6 reiterated the well-settled
doctrine on this issue, to wit:
In the case of Samahan ng mga Manggagawa sa Hyatt-NUWHRAIN-APL v.
Bacungan,7 we repeated the well-settled rule that a decision or award of a
voluntary arbitrator is appealable to the CA via petition for review under
Rule 43. We held that:
"The question on the proper recourse to assail a decision of a voluntary
arbitrator has already been settled in Luzon Development Bank v.
Association of Luzon Development Bank Employees, where the Court held
that the decision or award of the voluntary arbitrator or panel of arbitrators
should likewise be appealable to the Court of Appeals, in line with the
procedure outlined in Revised Administrative Circular No. 1-95 (now
embodied in Rule 43 of the 1997 Rules of Civil Procedure), just like those of
the quasi-judicial agencies, boards and commissions enumerated therein,

and consistent with the original purpose to provide a uniform procedure for
the appellate review of adjudications of all quasi-judicial entities.
Subsequently, in Alcantara, Jr. v. Court of Appeals, and Nippon Paint
Employees Union-Olalia v. Court of Appeals, the Court reiterated the
aforequoted ruling. In Alcantara, the Court held that notwithstanding
Section 2 of Rule 43, the ruling in Luzon Development Bank still stands. The
Court explained, thus:
The provisions may be new to the Rules of Court but it is far from being a
new law. Section 2, Rules 42 of the 1997 Rules of Civil Procedure, as
presently worded, is nothing more but a reiteration of the exception to the
exclusive appellate jurisdiction of the Court of Appeals, as provided for in
Section 9, Batas Pambansa Blg. 129, as amended by Republic Act No. 7902:
(3) Exclusive appellate jurisdiction over all final judgments, decisions,
resolutions, orders or awards of Regional Trial Courts and quasi-judicial
agencies, instrumentalities, boards or commissions, including the Securities
and Exchange Commission, the Employees Compensation Commission and
the Civil Service Commission, except those falling within the appellate
jurisdiction of the Supreme Court in accordance with the Constitution, the
Labor Code of the Philippines under Presidential Decree No. 442, as
amended, the provisions of this Act and of subparagraph (1) of the third
paragraph and subparagraph (4) of the fourth paragraph of Section 17 of
the Judiciary Act of 1948.
The Court took into account this exception in Luzon Development Bank but,
nevertheless, held that the decisions of voluntary arbitrators issued
pursuant to the Labor Code do not come within its ambit x x x."
Furthermore, Sections 1, 3 and 4, Rule 43 of the 1997 Rules of Civil
Procedure, as amended, provide:
"SECTION 1. Scope. - This Rule shall apply to appeals from judgments or
final orders of the Court of Tax Appeals and from awards, judgments, final
orders or resolutions of or authorized by any quasi-judicial agency in the
exercise of its quasi-judicial functions. Among these agencies are the x x x,
and voluntary arbitrators authorized by law.
xxxx

SEC. 3. Where to appeal. - An appeal under this Rule may be taken to the
Court of Appeals within the period and in the manner therein provided,
whether the appeal involves questions of fact, of law, or mixed questions of
fact and law.
SEC. 4. Period of appeal. - The appeal shall be taken within fifteen (15) days
from notice of the award, judgment, final order or resolution, or from the
date of its last publication, if publication is required by law for its effectivity,
or of the denial of petitioners motion for new trial or reconsideration duly
filed in accordance with the governing law of the court or agency a quo. x x
x. (Emphasis supplied.)
Hence, upon receipt on May 26, 2003 of the Voluntary Arbitrators
Resolution denying petitioners motion for reconsideration, petitioner should
have filed with the CA, within the fifteen (15)-day reglementary period, a
petition for review, not a petition for certiorari.
On the second issue, the Union basically claims that the CCBPIs decision to
unilaterally remove the operators chairs from the production/manufacturing
lines of its bottling plants is not valid because it violates some fundamental
labor policies. According to the Union, such removal constitutes a violation
of the 1) Occupational Health and Safety Standards which provide that
every worker is entitled to be provided by the employer with appropriate
seats, among others; 2) policy of the State to assure the right of workers to
a just and humane condition of work as provided for in Article 3 of the Labor
Code;8 3) Global Workplace Rights Policy of CCBPI which provides for a safe
and healthy workplace by maintaining a productive workplace and by
minimizing the risk of accident, injury and exposure to health risks; and 4)
diminution of benefits provided in Article 100 of the Labor Code. 9
Opposing the Unions argument, CCBPI mainly contends that the removal of
the subject chairs is a valid exercise of management prerogative. The
management decision to remove the subject chairs was made in good faith
and did not intend to defeat or circumvent the rights of the Union under the
special laws, the CBA and the general principles of justice and fair play.
Again, the Court agrees with CCBPI on the matter.
A Valid Exercise of

Management Prerogative
The Court has held that management is free to regulate, according to its
own discretion and judgment, all aspects of employment, including hiring,
work assignments, working methods, time, place, and manner of work,
processes to be followed, supervision of workers, working regulations,
transfer of employees, work supervision, lay-off of workers, and discipline,
dismissal and recall of workers. The exercise of management prerogative,
however, is not absolute as it must be exercised in good faith and with due
regard to the rights of labor.10
In the present controversy, it cannot be denied that CCBPI removed the
operators chairs pursuant to a national directive and in line with its "I
Operate, I Maintain, I Clean" program, launched to enable the Union to
perform their duties and responsibilities more efficiently. The chairs were not
removed indiscriminately. They were carefully studied with due regard to
the welfare of the members of the Union. The removal of the chairs was
compensated by: a) a reduction of the operating hours of the bottling
operators from a two-and-one-half (2 )-hour rotation period to a one-anda-half (1 ) hour rotation period; and b) an increase of the break period
from 15 to 30 minutes between rotations.
Apparently, the decision to remove the chairs was done with good intentions
as CCBPI wanted to avoid instances of operators sleeping on the job while in
the performance of their duties and responsibilities and because of the fact
that the chairs were not necessary considering that the operators constantly
move about while working. In short, the removal of the chairs was designed
to increase work efficiency. Hence, CCBPIs exercise of its management
prerogative was made in good faith without doing any harm to the workers
rights.
The fact that there is no proof of any operator sleeping on the job is of no
moment. There is no guarantee that such incident would never happen as
sitting on a chair is relaxing. Besides, the operators constantly move about
while doing their job. The ultimate purpose is to promote work efficiency.
No Violation of Labor Laws
The rights of the Union under any labor law were not violated. There is no
law that requires employers to provide chairs for bottling operators. The CA

correctly ruled that the Labor Code, specifically Article 132 11 thereof, only
requires employers to provide seats for women. No similar requirement is
mandated for men or male workers. It must be stressed that all concerned
bottling operators in this case are men.
There was no violation either of the Health, Safety and Social Welfare
Benefit provisions under Book IV of the Labor Code of the Philippines. As
shown in the foregoing, the removal of the chairs was compensated by the
reduction of the working hours and increase in the rest period. The directive
did not expose the bottling operators to safety and health hazards.
The Union should not complain too much about standing and moving about
for one and one-half (1 ) hours because studies show that sitting in
workplaces for a long time is hazardous to ones health. The report of
VicHealth, Australia,12 disclosed that "prolonged workplace sitting is an
emerging public health and occupational health issue with serious
implications for the health of our working population. Importantly, prolonged
sitting is a risk factor for poor health and early death, even among those
who meet, or exceed, national13 activity guidelines." In another report,14 it
was written:
Workers needing to spend long periods in a seated position on the job such
as taxi drivers, call centre and office workers, are at risk for injury and a
variety of adverse health effects.
The most common injuries occur in the muscles, bones, tendons and
ligaments, affecting the neck and lower back regions. Prolonged sitting:
reduces body movement making muscles more likely to pull, cramp or
strain when stretched suddenly, causes fatigue in the back and neck
muscles by slowing the blood supply and puts high tension on the spine,
especially in the low back or neck, and
causes a steady compression on the spinal discs that hinders their
nutrition and can contribute to their premature degeneration.
Sedentary employees may also face a gradual deterioration in health if they
do not exercise or do not lead an otherwise physically active life. The most
common health problems that these employees experience are disorders in
blood circulation and injuries affecting their ability to move. Deep Vein

Thrombosis (DVT), where a clot forms in a large vein after prolonged sitting
(eg after a long flight) has also been shown to be a risk.
Workers who spend most of their working time seated may also experience
other, less specific adverse health effects. Common effects include
decreased fitness, reduced heart and lung efficiency, and digestive
problems. Recent research has identified too much sitting as an important
part of the physical activity and health equation, and suggests we should
focus on the harm caused by daily inactivity such as prolonged sitting.
Associate professor David Dunstan leads a team at the Baker IDI in
Melbourne which is specifically researching sitting and physical activity. He
has found that people who spend long periods of time seated (more than
four hours per day) were at risk of:
higher blood levels of sugar and fats,
larger waistlines, and
higher risk of metabolic syndrome
regardless of how much moderate to vigorous exercise they had.
In addition, people who interrupted their sitting time more often just by
standing or with light activities such as housework, shopping, and moving
about the office had healthier blood sugar and fat levels, and smaller
waistlines than those whose sitting time was not broken up.
Of course, in this case, if the chairs would be returned, no risks would be
involved because of the shorter period of working time. The study was cited
just to show that there is a health risk in prolonged sitting.
No Violation of the CBA
The CBA15 between the Union and CCBPI contains no provision whatsoever
requiring the management to provide chairs for the operators in the
production/manufacturing line while performing their duties and
responsibilities. On the contrary, Section 2 of Article 1 of the CBA expressly
provides as follows:
Article I

SCOPE
SECTION 2. Scope of the Agreement. All the terms and conditions of
employment of employees and workers within the appropriate bargaining
unit (as defined in Section 1 hereof) are embodied in this Agreement and
the same shall govern the relationship between the COMPANY and such
employees and/or workers. On the other hand, all such benefits and/or
privileges as are not expressly provided for in this Agreement but which are
now being accorded, may in the future be accorded, or might have
previously been accorded, to the employees and/or workers, shall be
deemed as purely voluntary acts on the part of the COMPANY in each case,
and the continuance and repetition thereof now or in the future, no matter
how long or how often, shall not be construed as establishing an obligation
on the part of the COMPANY. It is however understood that any benefits that
are agreed upon by and between the COMPANY and the UNION in the LaborManagement Committee Meetings regarding the terms and conditions of
employment outside the CBA that have general application to employees
who are similarly situated in a Department or in the Plant shall be
implemented. [emphasis and underscoring supplied]
As can be gleaned from the aforecited provision, the CBA expressly provides
that benefits and/or privileges, not expressly given therein but which are
presently being granted by the company and enjoyed by the employees,
shall be considered as purely voluntary acts by the management and that
the continuance of such benefits and/or privileges, no matter how long or
how often, shall not be understood as establishing an obligation on the
companys part. Since the matter of the chairs is not expressly stated in the
CBA, it is understood that it was a purely voluntary act on the part of CCBPI
and the long practice did not convert it into an obligation or a vested right in
favor of the Union.
No Violation of the general principles of justice and fair play
The Court completely agrees with the CA ruling that the removal of the
chairs did not violate the general principles of justice and fair play because
the bottling operators working time was considerably reduced from two and
a half (2 ) hours to just one and a half (1 ) hours and the break period,
when they could sit down, was increased to 30 minutes between rotations.
The bottling operators new work schedule is certainly advantageous to

them because it greatly increases their rest period and significantly

decreases their working time. A break time of thirty (30) minutes after
working for only one and a half (1 ) hours is a just and fair work schedule.
No Violation of Article 100
of the Labor Code
The operators chairs cannot be considered as one of the employee benefits
covered in Article 10016 of the Labor Code. In the Courts view, the term
"benefits" mentioned in the non-diminution rule refers to monetary benefits
or privileges given to the employee with monetary equivalents.
Such benefits or privileges form part of the employees wage, salary or
compensation making them enforceable obligations.
This Court has already decided several cases regarding the non-diminution
rule where the benefits or privileges involved in those cases mainly concern
monetary considerations or privileges with monetary equivalents. Some of
these cases are: Eastern Telecommunication Phils. Inc. v. Eastern Telecoms
Employees Union,17 where the case involves the payment of 14th, 15th and
16th month bonuses; Central Azucarera De Tarlac v. Central Azucarera De
Tarlac Labor Union-NLU,18 regarding the 13th month pay, legal/special
holiday pay, night premium pay and vacation and sick leaves; TSPIC Corp. v.
TSPIC Employees Union,19 regarding salary wage increases; and American
Wire and Cable Daily Employees Union vs. American Wire and Cable
Company, Inc.,20 involving service awards with cash incentives, premium
pay, Christmas party with incidental benefits and promotional increase.
In this regard, the Court agrees with the CA when it resolved the matter and
wrote:
Let it be stressed that the aforequoted article speaks of non-diminution of
supplements and other employee benefits. Supplements arc privileges
given to an employee which constitute as extra remuneration besides his or
her basic ordinary earnings and wages. From this definition, We can only
deduce that the other employee benefits spoken of by Article 100 pertain
only to those which are susceptible of monetary considerations. Indeed, this
could only be the most plausible conclusion because the cases tackling

Article 100 involve mainly with monetary considerations or privileges

converted to their monetary equivalents.
xxxx
Without a doubt, equating the provision of chairs to the bottling operators
Ds something within the ambit of "benefits'' in the context of Article 100 of
the Labor Code is unduly stretching the coverage of the law. The
interpretations of Article 100 of the Labor Code do not show even with the
slightest hint that such provision of chairs for the bottling operators may be
sheltered under its mantle.21
Jurisprudence recognizes the exercise of management prerogatives. Labor
Jaws also discourage interference with an employer's judgment in the
conduct of its business. For this reason, the Court often declines to interfere
in legitimate business decisions of employers. The law must protect not only
the welfare of the employees, but also the right of the employers. 22
WHEREFORE, the petition is DENIED.
G.R. No. 193789

September 19, 2012

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

ROSEMARIE P. PIMENTEL, and ROWENA B. BARDAJE, Petitioners,
vs.
BIOMEDICA HEALTH CARE, INC. and CARINA "KAREN" J.
MOTOL, Respondents.
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 seeks to annul the June
25, 20101
Decision and September 20, 20102 Resolution of the Court of Appeals (CA)
in CA-G.R. SP No. 108205, finding that petitioners were validly dismissed.
The CA Decision overturned the Decision dated November 21, 2008 3 of the

National Labor Relations Commission (NLRC) and reinstated the Decision

dated March 31, 20084 of Labor Arbiter Ligerio V. Ancheta.
WHEREFORE, in view of the foregoing, judgment is hereby rendered
modifying the assailed Decision of the Labor Arbiter dated March 31, 2008;
(a) DECLARING the Complainants to have been illegally dismissed for
lack of just cause;
(b) ORDERING Respondents jointly and solidarily to pay Complainants
separation pay in lieu of reinstatement computed on the basis of one
(1) month pay for every year of service from date of employment up to
November 29, 2006 (the date of complainants illegal dismissal);
(c) ORDERING Respondents jointly and solidarily to pay Complainants
backwages from November 29, 2006 up to the finality of this Decision;
(d) ORDERING the Respondents jointly and solidarily to pay
Complainants the following:
1. Unpaid salary for the period 08-15 November 2006;
2. Pro-rated 13th month pay for 2006;
3. Service Incentive Leave for 2006 (except for complainant
Bardaje );
4. Unpaid commissions based on their sales for the years 2005
and 2006; and
5. Nominal damages in the amount of PhP 30,000 each.
(e) ORDERING the Respondents jointly and solidarily to pay
Complainants attorney's fees in the amount of I 0% of the total award
of monetary claims.
All other claims and counterclaims are dismissed for lack of factual and legal
basis.
The NLRC is ordered to recompute the monetary awards due to petitioners
based on the aforelisted dispositions deducting from the awards to Naranjo

and Pimentel their cash advances of PhP 4,750.00 and PhP 4,500.00,
respectively.