WHEN AN EMPLOYER MAY FILE A PETITION

162. Role of Employer

G.R. No. 92391 July 3, 1992

PHILIPPINE FRUITS AND VEGETABLE INDUSTRIES, INC., petitioner,

vs.
HON. RUBEN D. TORRES, in his capacity as Secretary of the Department of Labor and Employment and
TRADE UNION OF THE PHILIPPINES AND ALLIED SERVICES (TUPAS), respondents.

PARAS, J.:

This petition for review on certiorari with prayer for the issuance of a temporary restraining order and/or
preliminary injunction assails the following:

(1) The Resolution dated December 12, 1989 of public respondent Secretary of Labor 1 affirming on appeal the
Order dated March 7, 1989 issued by Med-Arbiter Danilo T. Basa, and certifying private respondent Trade Union
of the Philippines and Allied Services (or TUPAS) as the sole and exclusive bargaining agent of all regular rank-
and-file and seasonal workers at Philippine Fruits and Vegetable Industries, Inc. (or PFVII), petitioner herein;
and

(2) The Order dated February 8, 1990 issued by public respondent Secretary of Labor 2 denying petitioner's
Urgent Motion for Reconsideration.

Petitioner PFVII contends the questioned resolution and order are null and void as they are contrary to law and
have been issued with grave abuse of discretion, and having no other plain, speedy and adequate remedy in the
ordinary course of law, it filed with this Court the petition now at hand.

The facts of the case are well-stated in the Comment filed by the Solicitor General, and are thus reproduced
hereunder, as follows:

On October 13, 1988, Med-Arbiter Basa issued an Order granting the petition for Certification
election filed by the Trade Union of the Philippines and Allied Services (TUPAS). Said order
directed the holding of a certification election among the regular and seasonal workers of the
Philippine Fruits and Vegetables, Inc. (p. 42, NLRC, Records).

After a series of pre-election conferences, all issues relative to the conduct of the certification
election were threshed out except that which pertains to the voting qualifications of the hundred
ninety four (194) workers enumerated in the lists of qualified voters submitted by TUPAS.

After a late submission by the parties of their respective position papers, Med-Arbiter Basa
issued an Order dated December 9, 1988 allowing 184 of the 194 questioned workers to vote,
subject to challenge, in the certification election to be held on December 16, 1989. Copies of
said Order were furnished the parties (p. 118, NLRC, Records) and on December 12, 1988 the
notice of certification election was duly posted. One hundred sixty eight (168) of the questioned
workers actually voted on election day.

In the scheduled certification election, petitioner objected to the proceeding, through a

Manifestation (p. 262, NLRC, Records) filed with the Representation Officer before the close of
the election proceedings. Said Manifestation pertinently reads:
 The posting of the list of eligible voters authorized to participate in the
certification election was short of the five (5) days provided by law considering
that it was posted only on December 12, 1988 and the election was held today,
December 16, 1988 is only four days prior to the scheduled certification
election.

By agreement of petitioner and TUPAS, workers whose names were inadvertently omitted in the
list of qualified voters were allowed to vote, subject to challenge (p. 263, NLRC, Records). Thirty
eight of them voted on election day.

Initial tally of the election results excluding the challenged votes showed the following:

Total No. of the Votes 291

Yes votes 40
No votes 38
Spoiled 7
Challenged (Regular) 38

Total No. of Votes Cast 123

On January 6, 1989, Management and TUPAS agreed to have the 36 challenged votes of the
regular rank-and-file employees opened and a canvass thereof showed:

Yes votes 20
No votes 14
Spoiled 4

Total 38

Added to the initial election results of December 16, 1988, the canvass of results showed:

Yes 60
No 52
Spoiled 11

Total 123

Based on the foregoing results, the yes votes failed to obtain the majority of the votes cast in
said certification election, hence, the necessity of opening the 168 challenged votes to
determine the true will of the employees.

On January 20, 1989, petitioner filed a position paper arguing against the opening of said votes
mainly because said voters are not regular employees nor seasonal workers for having
allegedly rendered work for less than 180 days.

Trade Union of the Philippines and Allied Services (TUPAS), on the other hand, argued that the
employment status of said employees has been resolved when Labor Arbiter Ricardo N.
Martinez, in his Decision dated November 26, 1988 rendered in NLRC Case No. Sub-Rab-01-
09-7-0087-88, declared that said employees were illegally dismissed.
 In an Order dated February 2, 1989 (pp. 278-280, NLRC, Records) Med-Arbiter Basa ordered
the opening of said 168 challenged votes upon his observation that said employees were
illegally dismissed in accordance with the foregoing Decision of Labor Arbiter Martinez. As
canvassed, the results showed

Yes votes 165

No votes 0
Spoiled 3

Total 168

On February 23, 1989, petitioner formally filed a Protest (pp.

284-287, NLRC, Records) claiming that the required five day posting of notice was not allegedly
complied with and that the list of qualified voters so posted failed to include fifty five regular
workers agreed upon by the parties as qualified to vote. The Protest further alleged that voters
who were ineligible to vote were allowed to vote.

Med-Arbiter Basa, in his Order dated March 7, 1989, dismissed said Protest which Order was
affirmed on appeal in the Resolution dated December 12, 1989 of then Secretary of Labor,
Franklin Drillon.

Petitioner's Motion for Reconsideration was denied for lack of merit in public respondent's Order
dated February 28, 1990.

(pp. 84-88, Rollo) 3

The instant petition has, for its Assignment of Errors, the following:

(1) The Honorable Secretary of Labor and Employment acted with grave abuse of discretion
amounting to lack of jurisdiction and committed manifest error in upholding the certification of
TUPAS as the sole bargaining agent mainly on an erroneous ruling that the protest against the
canvassing of the votes cast by 168 dismissed workers was filed beyond the reglementary
period.

(2) The Honorable Secretary of Labor committed an abuse of discretion in completely

disregarding the issue as to whether or not non-regular seasonal workers who have long been
separated from employment prior to the filing of the petition for certification election would be
allowed to vote and participate in a certification election. 4

The Court finds no merit in the petition.

For it is to be noted that the formal protest of petitioner PFVII was filed beyond the reglementary period. A close
reading of Sections 3 and 4, Rule VI, Book V of the Implementing Rules of the Labor Code, which read as
follows:

Sec. 3. Representation officer may rule on any-on-the-spot questions. The Representation

officer may rule on any on-the-spot question arising from the conduct of the election. The
interested party may however, file a protest with the representation officer before the close of
the proceedings.

Protests not so raised are deemed waived. Such protest shall be contained in the minutes of
the proceedings. (Emphasis supplied)
 Sec. 4. Protest to be decided in twenty (20) working days. Where the protest is formalized
before the med-arbiter with five (5) days after the close of the election proceedings, the med-
arbiter shall decide the same within twenty (20) working days from the date of formalization. If
not formalized within the prescribed period, the protest shall be deemed dropped. The decision
may be appealed to the Bureau in the same manner and on the same grounds as provided
under Rule V. (Emphasis supplied)

would readily yield, as a matter of procedure, the following requirements in order that a protest filed thereunder
would prosper, to wit:

(1) The protest must be filed with the representation officer and made of record in the minutes of
the proceedings before the close of election proceedings, and

(2) The protest must be formalized before the Med-Arbiter within five (5) days after the close of
the election proceedings.

The records before Us quite clearly disclose the fact that petitioner, after filing a manifestation of protest on
December 16, 1988, election day, only formalized the same on February 20, 1989, or more than two months
after the close of election proceedings (i.e., December 16, 1988). We are not persuaded by petitioner's
arguments that election proceedings include not only casting of votes but necessarily includes canvassing and
appreciation of votes cast and considering that the canvassing and appreciation of all the votes cast were
terminated only on February 16, 1989, it was only then that the election proceedings are deemed closed, and
thus, when the formal protest was filed on February 20, 1989, the five-day period within which to file the formal
protest still subsisted and its protest was therefore formalized within the reglementary period. 5

As explained correctly by the Solicitor General, the phrase "close of election proceedings" as used in Sections 3
and 4 of the pertinent Implementing Rules refers to that period from the closing of the polls to the counting and
tabulation of the votes as it could not have been the intention of the Implementing Rules to include in the term
"close of the election proceedings" the period for the final determination of the challenged votes and the canvass
thereof, as in the case at bar which may take a very long period. 6 Thus, if a protest can be formalized within five
days after a final determination and canvass of the challenged votes have been made, it would result in an
undue delay in the affirmation of the employees' expressed choice of a bargaining representative. 7

Petitioner would likewise bring into issue the fact that the notice of certification election was posted only on
December 12, 1988 or four days before the scheduled elections on December 16, 1988, instead of the five-day
period as required under Section 1 of Rule VI, Book V of the Implementing Rules. But it is not disputed that a
substantial number, or 291 of 322 qualified voters, of the employees concerned were informed, thru the notices
thus posted, of the elections to be held on December 16, 1988, and that such employees had in fact voted
accordingly on election day. Viewed thus in the light of the substantial participation in the elections by voter-
employees, and further in the light of the all-too settled rule that in interpreting the Constitution's protection to
labor and social justice provisions and the labor laws and rules and regulations implementing the constitutional
mandate, the Supreme Court adopts the liberal approach which favors the exercise of labor rights, 8 We find the
lack of one day in the posting of notices insignificant, and hence, not a compelling reason at all in nullifying the
elections.

As regards the second assignment of error, the public respondent Secretary of Labor did not completely
disregard the issue as to the voting rights of the alleged separated employees for precisely, he affirmed on
appeal the findings of the Med-Arbiter when he ruled

The election results indicate that TUPAS obtained majority of the valid votes cast in the election
60 plus 165, or a total of 225 votes out of a possible total of 291.
 WHEREFORE, premises considered, the appeal is hereby denied and the Med-Arbiter's order
dated 7 March 1989 affirmed. Petitioner TUPAS is hereby certified as the sole and exclusive
bargaining agent of all regular rank-and-file and seasonal workers at Philippine Fruits and
Vegetable Industries, Inc. 9 (p. 26, Rollo)

At any rate, it is now well-settled that employees who have been improperly laid off but who have a present,
unabandoned right to or expectation of re-employment, are eligible to vote in certification elections. 10 Thus, and
to repeat, if the dismissal is under question, as in the case now at bar whereby a case of illegal dismissal and/or
unfair labor practice was filed, the employees concerned could still qualify to vote in the elections. 11

And finally, the Court would wish to stress once more the rule which it has consistently pronounced in many
earlier cases that a certification election is the sole concern of the workers and the employer is regarded as
nothing more than a bystander with no right to interfere at all in the election. The only exception here is where
the employer has to file a petition for certification election pursuant to Article 258 of the Labor Code because it is
requested to bargain collectively. Thus, upon the score alone of the "Bystander Rule", the instant petition would
have been dismissed outright.

WHEREFORE, the petition filed by Philippine Fruits and Vegetable Industries, Inc. (PFVII) in hereby
DISMISSED for lack of merit.

SO ORDERED.

G.R. No. 92357 July 21, 1993

PHILIPPINE SCOUT VETERANS SECURITY AND INVESTIGATION AGENCY (PSVSIA), GVM SECURITY
AND INVESTIGATION AGENCY (GVM) and ABAQUIN SECURITY AND DETECTIVE AGENCY, INC.
(ASDA), petitioners,
vs.
THE HON. SECRETARY OF LABOR RUBEN D. TORRES AND PGA BROTHERHOOD ASSOCIATION-
UNION OF FILIPINO WORKERS, respondents.

V.E. Del Rosario & Associates for petitioners.

German N. Pascua, Jr. for private respondent.

NOCON, J.:

The sole issue presented for resolution in this petition for certiorari with prayer for preliminary injunction is
whether or not a single petition for certification election or for recognition as the sole and exclusive bargaining
agent can validly or legally be filed by a labor union in three (3) corporations each of which has a separate and
distinct legal personality instead of filing three (3) separate petitions.

On April 6, 1989, private respondent labor union, PGA Brotherhood Association - Union of Filipino Workers
(UFW), hereinafter referred to as "the Union " filed a petition for Direct Certification/Certification Election among
the rank and file employees of Philippine Scout Veterans Security and Investigation Agency (PSVSIA), GVM
Security and Investigations Agency, Inc. (GVM). and Abaquin Security and Detective Agency, Inc. (ASDA).
These three agencies were collectively referred to by private respondent Union as the "PGA Security Agency,"
which is actually the first letters of the corporate names of the agencies.
On April 11, 1989, summons was issued to the management of PSVSIA, GVM, ASDA (PGA Security Agency) at
82 E. Rodriquez Avenue, Quezon City.

On April 11, 26, 1986, petitioners filed a single comment alleging therein that the said three security agencies
have separate and distinct corporate personalities while PGA Security Agency is not a business or corporate
entity and does not possess any personality whatsoever; the petition was unclear as to whether the rank-and-file
employees mentioned therein refer to those of the three security agencies collectively and if so, the labor union
cannot seek a certification election in three separate bargaining units in one petition; the labor union included in
their organization "security supervisors," in violation of R.A. 6715; and though R.A. 6715 is already in effect,
there were still no implementing rules therefor.

On May 4, 1989, the security agencies filed a Consolidated Motion to Dismiss on the grounds that the 721
supporting signatures do not meet the 20% minimum requirement for certification election as the number of
employees totals 2374 and that there are no implementing rules yet of R.A. 6715.

On May 8, 1989, the Union filed an Omnibus Reply to Comment and Motion to Dismiss alleging that it is clear
that it is seeking a certification election in the three agencies; that the apparent separate personalities of the
three agencies were used merely to circumvent the prohibition in R.A. 5847, as amended by P.D. 11 and P.D.
100, that a security agency must not have more than 1,000 guards in its employ; that the three security
agencies' administration, management and operations are so intertwined that they can be deemed to be a single
entity; and that the security supervisors cannot be deemed part of management since they do not meet the
definition of "supervisory employees" found in Articles 212(m), Labor Code, as amended by Section 4, R.A. No.
6715.

On May 18, 1989, the security agencies filed a Rejoinder claiming that there is no violation of R.A. 5487, as
amended by P.D. 11 and P.D. 100 since the three agencies were incorporated long before the decrees'
issuance; that mere duplication of incorporators does not prove that the three security agencies are actually one
single entity; and that security guard supervisors, most especially detachment commanders, fall within the
definition of the term "supervisors."

On July 6, 1989, Med-Arbiter Rasidali C. Abdullah issued an Order in favor of the labor union finding that
PSVSIA, GVM and ASDA should be deemed as a single entity and bargaining unit for the purpose of union
organizing and the holding of a certification election. The dispositive portion of the Order reads as follows:

WHEREFORE, premises considered, let a certification election be conducted among the rank
and file security guards of PSVSIA, GVM and ASDA within twenty (20) days from receipt hereof
with the usual pre-election conference of the parties. The list of eligible voters shall be based on
the security agencies' payroll three (3) months prior to the filing of this petition with the following
choices:

a) PGA Brotherhood Association-Union of Filipino Workers (UFW); and

b) No union.

SO ORDERED. 1

On July 21, 1989, the security agencies appealed the Med-Arbiter's Order to the Secretary of Labor and
Employment claiming that said Order was issued with grave abuse of discretion when it ruled that the three
security agencies could be considered as a single bargaining entity for purposes of the holding of a certification
election.
On December 15, 1989, the Labor Secretary Franklin M. Drilon denied the appeal for lack of merit while at the
same time affirming the Med-Arbiter's Order of July 6, 1989. He also ordered the immediate conduct of a
certification election. The dispositive portion of which reads as follows:

WHEREFORE, premises considered, the Appeal of respondents Security agencies is hereby

denied for lack of merit and the Order dated 6 July affirmed.

Let therefore, the pertinent records of this case be immediately forwarded to the Regional Office
for he immediate conduct of the certification election.

SO ORDERED. 2

On January 5, 1990, the three security agencies filed a Motion for Reconsideration arguing that they were
denied their rights to due process and that jurisdiction was not acquired over them by the labor authorities.

On January 26, 1990, the succeeding Labor Secretary, Ruben D. Torres, likewise denied the Motion for
Reconsideration for lack of merit and reiterated the directive that a certification election be conducted without
further delay.

On March 14, 1990, the instant petition was filed by the three security agencies, raising the following grounds:

SERIOUS ERRORS IN THE FINDINGS OF FACTS.

II

3
GRAVE ABUSE OF DISCRETION ON THE PART OF THE SECRETARY OF LABOR.

Petitioners insist that there are three (3) corporations in this petition, each of which has a separate and distinct
corporate personality of its own with separate registrations with the Securities and Exchange Commission (SEC)
and different Articles of Incorporation and By-Laws; with separate sets of corporate officers and directors; and no
common business address except for GVM and ASDA which are located at 1957 Espaa corner Craig Streets,
Sampaloc, Manila.

Petitioners claim that the facts and circumstances of the case of La Campana Coffee Factory, Inc. v. Kaisahan
Ng Mga Manggagawa sa La Campana 4 which public respondent claims to be on all fours with the instant case,
are very distinct from the facts and circumstance obtaining in the case at bar. As to form of business
organization, in the La Campana case, only one of two (2) businesses was a corporation i.e., the La Campana
Coffee Factory, Inc. and the other, the La Campana Gaugau Packing, is a "non-entity," being merely a business
name. In the case at bar, all three (3) agencies are incorporated. Moreover, the issue involved in the instant case
is one of representation while in the La Campana case, the issue involved is the validity of a demand for wage
increases and other labor standards benefits.

Petitioners likewise contend that it was error to hold that the three companies should be treated as one in a
single bargaining unit in one petition for certification elections resulting in a violation of the right to due process
of each corporation as no notice of hearing and other legal processes were served on each of said corporations.
Consequently, no jurisdiction was acquired on them by the Department of Labor and Employment.

Petitioners' arguments deserve scant consideration. The facts and circumstances extant in the record indicate
that the Med-Arbiter and Secretaries Drilon and Torres were not mistaken in holding that the three security
companies are in reality a single business entity operating as a single company called the "PGA Security Group"
or "PGA Security Services Group." Factual findings of labor officials are conclusive and binding on the Court
when supported by substantial evidence. 5

The public repondent noted the following circumstances in the La Campana case similar to the case at bar, as
indicative of the fact that the La Campana Coffee Factory and La Campana Gaugau Packing were in reality only
one business with two trade names: (1) the two factories occupied the same address, wherein they had their
principal place of business; (2) their signboards, advertisements, packages of starch, delivery truck and delivery
forms all use one appellation, "La Campana Starch and Coffee Factory"; (3) the workers in either company
received their pay from a single cashier, and (4) the workers in one company could easily transfer to the other
company, and vice-versa. This Court held therein that the veil of corporate fiction of the coffee factory may be
pierced to thwart the attempt to consider it part from the other business owned by the same family. Thus, the fact
that one of the businesses is not incorporated was not the decisive factor that led the Court to consider the two
factories as one. Moreover, we do not find any materiality in the fact that the La Campana case was instituted to
demand wage increases and other labor standards benefits while this case was filed by the labor union to seek
recognition as the sole bargaining agent in the establishment. If businesses operating under one management
are treated as one for bargaining purposes, there is not much difference in treating such businesses also as one
for the preliminary purpose of labor organizing.

Indeed, the three agencies in the case at bar failed to rebut the fact that they are managed through the Utilities
Management Corporation with all of their employees drawing their salaries and wages from said entity; that the
agencies have common and interlocking incorporators and officers; and that the PSVSIA, GVM and ASDA
employees have a single Mutual Benefit System and followed a single system of compulsory retirement.

No explanation was also given by petitioners why the security guards of one agency could easily transfer from
one agency to another and then back again by simply filling-up a common pro forma slip called "Request for
Transfer". Records also shows that the PSVSIA, GVM and ASDA always hold joint yearly ceremonies such as
the "PGA Annual Awards Ceremony". In emergencies, all PSVSIA Detachment Commanders were instructed in
a memorandum dated November 10, 1988 to get in touch with the officers not only of PSVSIA but also of GVM
and ASDA. All of these goes to show that the security agencies concerned do not exist and operate separately
and distinctly from each other with different corporate directions and goals. On the contrary, all the cross-linking
of the three agencies' command, control and communication systems indicate their unitary corporate personality.
Accordingly, the veil of corporate fiction of the three agencies should be lifted for the purpose of allowing the
employees of the three agencies to form a single labor union. As a single bargaining unit, the employees therein
need not file three separate petitions for certification election. All of these could be covered in a single petition.

Petitioners' claim of alleged defect in the petition for certification election which although addressed to the three
security agencies merely alleged that there are only 1,000 employees when the total number of employees in
said security agencies is about 2,374 (PSVSIA - 1252; GVM - 807; and ASDA - 315) thereby failing to comply
with the legal requirement that at least twenty percent (20%) of the employees in the bargaining unit must
support the petition, betrays lack of knowledge of the amendments introduced by R.A 6715 which became
effective on March 21, 1989, prior to the filing of the petition for certification election on April 6, 1989. Under the
amendments, there is no need for the labor union to prove that at least 20% of the security guards in the three
agencies supported the petition. When a duly organized union files a petition for certification election, the Med-
Arbiter has the duty to automatically conduct an election. He has no discretion on the matter. This is clearly the
mandate of Article 257 of the Labor Code, as amended by Section 24 of R.A. 6715, which now reads:

Art. 257. Petitions in unorganized establishments. In any establishment where there is no

certified bargaining agent, a certification election shall automatically be conducted by the Med-
Arbiter upon the filing of a petition by a legitimate labor organization.

The designation of the three agencies collectively as "PGA Security Agency" and the service of summons to the
management thereof at 82 E. Rodriguez Avenue, Quezon City did not render the petition defective. Labor
Secretary Franklin Drilon correctly noted the fact that the affidavits executed separately and under oath by the
three managers of the three security agencies indicated their office address to be at PSVSIA Center II, E.
Rodriguez Sr. Blvd., Quezon City. Besides, even if there was improper service of summons by the Med-Arbiter,
the three (3) security agencies voluntarily submitted themselves to the jurisdiction of the labor authorities. The
summons were clearly sent to and received by their lawyer who filed motions and pleadings on behalf of the
three security agencies and who always appeared as their legal counsel. It puzzles this Court why petitioners,
who claim to be separate entities, continue to be represented by one counsel even in this instant petition.

Finally, except where the employer has to file a petition for certification election pursuant to Article 258 of the
Labor Code because of a request to bargain collectively, it has nothing to do with a certification election which is
the sole concern of the workers. Its role in a certification election has aptly been described in Trade Unions of
the Philippines and Allied Services (TUPAS) v. Trajano, 6 as that of a mere by-stander. It has no legal standing in
a certification election as it cannot oppose the petition or appeal the Med-Arbiter's orders related thereto. An
employer that involves itself in a certification election lends suspicion to the fact that it wants to create a
company union.

This Court's disapprobation of management interference in certification elections is even more forceful
in Consolidated Farms, Inc. v. Noriel, 7 where we held:

On a matter that should be the exclusive concern of labor, the choice of a collective bargaining
representative, the employer is definitely an intruder. His participation, to say the least, deserves
no encouragement. This Court should be the last agency to lend support to such an attempt at
interference with a purely internal affair of labor.

Indeed, the three security agencies should not even be adverse parties in the certification election itself. We
note with disapproval the title given to the petition for certification election of the Union by the Med-Arbiter and
the Secretary of Labor naming the three security agencies as respondents. Such is clearly an error. While
employers may rightfully be notified or informed of petitions of such nature, they should not, however, be
considered parties thereto with concomitant right to oppose it. Sound policy dictates that they should maintain a
strictly hands-off policy.

WHEREFORE, finding no reversible error in the questioned decision of the Secretary of Labor, the instant
petition for certiorari is hereby DISMISSED for utter lack of merit.

SO ORDERED.

G.R. No. 128067 June 5, 1998

SAMAHAN NG MGA MANGGAGAWA SA FILSYSTEMS (SAMAFIL-NAFLU-KMU), petitioner,

vs.
HON. SECRETARY OF LABOR AND EMPLOYMENT and FILSYSTEMS, INC., respondents.

PUNO, J.:

Assailed under Rule 65 of the Rules of Court are the Resolution and Order 1 of the public respondent,
dated June 28, 1996 and November 18, 1996, respectively, dismissing petitioner's petition for
certification election.

It appears that petitioner Samahan ng mga Manggagawa sa Filsystems (SAMAFIL-NAFLU-KMU) is a

registered labor union with Certificate of Registration No. NCR-UR-10-1575-95 issued by the
Department of Labor and Employment (DOLE) on October 25, 1995. On November 6, 1995, petitioner
union filed a Petition for Certification Election among the rank-and-file employees of private respondent
FILSYSTEMS, Inc. before the DOLE National Capital Region (NCR). 2 Attached as annexes to the
petition are the Certificate of Registration issued by the DOLE, copies of union membership signed by
thirty three (33) rank-and-file employees of respondent company, the Charter Certificate showing its
affiliation with the National Federation of Labor Unions (NAFLU-KMU), the list of union officers, the
certification of the union secretary of the minutes of the general membership meeting, the Books of
Accounts and its Constitution and By-Laws. 3

Private respondent opposed the petition. It questioned the status of petitioner as a legitimate labor
organization on the ground of lack of proof that its contract of affiliation with the NAFLU-KMU has been
submitted to the Bureau of Labor Relations (BLR) within thirty (30) days from its execution. 4

In reply, petitioner averred that as a duly registered labor union, it has "all the rights and privileges . . . to
act as representative of its members for the purpose of collective bargaining with employers." 5

On January 12, 1996, Med-Arbiter Paterno D. Adap dismissed the petition for certification election. He
ruled that petitioner, as an affiliate of NAFLU-KMU, has no legal personality on account of its failure to
comply with paragraphs (a), (b) and (e) of Section 3, Rule II of the Implementing Rules of Book V of the
Labor Code, 6 viz:

xxx xxx xxx

In matters of affiliation of an independently registered union, the rules provide that the latter
shall be considered an affiliate of a labor federation after submission of the contract or
agreement of affiliation to the Bureau of Labor Relations (BLR) within thirty (30) days after its
execution.

Likewise, it mandates the federation or national union concerned to issue a charter certificate
indicating the creation or establishment of a local or chapter, copy of which shall be submitted to
the Bureau of Labor Relations within thirty (30) days from issuance of such certificate.

A close examination of the records of the case does not reveal that the federation and the
independent union have executed a contract or agreement of affiliation, nor had it shown that it
has submitted its charter certificate to the Bureau of Labor Relations, within thirty (30) days from
issuance of such charter certificate as amended by the rules.

Petitioner argued that it has complied with all the requirements for certification election pursuant
to the mandate of Sec. 2, Rule V of Book V of the Implementing Rules of the Labor Code; that
the rule cited by respondent is not included in the Rule citing the requirements for certification
election.

We disagree with petitioner's contention. The rule cited by the petitioner, Sec. 2, Rule V, Book V,
sub-paragraphs A, B, C, D, E, F and G, refers to an independently registered labor organization
which has filed a petition for certification election.

In the case at bar, an independently registered union has affiliated with a federation, hence,
strict compliance with the requirements embodied in Sec. 3, paragraphs A, B and E of Rule II,
Book V of the Rules and Regulations implementing the Labor Code should be complied with.

Record discloses that petitioner has not shown to have executed a contract or agreement of
affiliation nor has it established that is has submitted its charter certificate to the Bureau of Labor
Relations (BLR) within thirty (30) days from its execution.
 Thus, petitioner in this case having failed to comply with the mandatory requirement, there was
no valid affiliation. Consequently, petitioner has no legal personality because the union failed to
attain the status of legitimacy for failure to comply with the requirements of law.

Petitioner appealed to the Office of the Secretary of Labor and Employment. It reiterated its contention
that as an independently registered union, it has the right to file a petition for certification election
regardless of its failure to prove its affiliation with NAFLU-KMU. 7

On February 26, 1996, private respondent opposed the appeal. It argued that petitioner should have
filed its petition for certification election as an independently registered union and not as a union
affiliated with NAFLU-
KMU. 8

Meanwhile or on February 7, 1996, another union, the Filsystems Workers Union (FWU), filed a Petition
for Certification Election in the same bargaining unit. On March 22, 1996, the Med-Arbitration NCR
Branch granted the petition. The certification election held on April 19, 1996, was won by FWU which
garnered twenty six (26) votes out of the forty six (46) eligible voters. The FWU was certified on April 29,
1996, as the exclusive bargaining agent of all rank-and-file employees of private respondent. Eventually,
FWU and the private respondent negotiated a CBA. 9

On June 11, 1996, the private respondent filed a Motion to Dismiss Appeal of petitioner as it has
become moot and academic. It also invoked Section 3, Rule V of the Implementing Rules of Book V of
the Labor Code stating that "once a union has been certified, no certification election may be held within
one (1) year from the date of issuance of a final certification election [result]." 10

In opposing the Motion to Dismiss Appeal, petitioner contended that its appeal is not moot as the
certification election held on April 19, 1996, was void for violating Section 10, Rule V of the
Implementing Rules of Book V of the Labor Code, 11 viz:

Sec. 10. Decision of the Secretary final and inappealable. The Secretary shall have fifteen
(15) calendar days within which to decide the appeal from receipt of the records of the case.
The filing of the appeal from the decision of the Med-Arbiter stays the holding of any certification
election. The decision of the Secretary shall be final and inappealable.

Petitioner further argued that the CBA executed between the FWU and the private respondent could not
affect its pending representation case following Section 4, Rule V of the Implementing Rules of Book V
of the Labor Code 12 which states:

Sec. 4. Effects of early agreements. The representation case shall not, however, be
adversely affected by a collective bargaining agreement registered before or during the last 60
days of the subsisting agreement or during the pendency of the representation case.

On June 28, 1996, respondent Secretary dismissed the appeal interposed by petitioner on the ground
that it has been rendered moot by the certification of FWU as the sole and exclusive bargaining agent of
the rank-and-file workers of respondent company. Petitioner's Motion for Reconsideration was denied in
an Order dated November 18, 1996. 13

Before this Court, petitioner contends:

I
 Public respondent acted with grave abuse of discretion amounting to acting without or in excess
of jurisdiction in holding that the pending appeal in the representation case was rendered moot
and academic by a subsequently enacted collective bargaining agreement in the company.

II

Public respondent committed a serious legal error and gravely abused its discretion in failing to
hold that the legal personality of petitioner as a union having been established by its Certificate
of Registration, the same could not be subjected to collateral attack.

The petition is meritorious.

We shall first resolve whether the public respondent committed grave abuse of discretion when he
effectively affirmed the Resolution dated January 12, 1996 of the Med-Arbiter dismissing petitioner's
petition for certification election for failure to prove its affiliation with NAFLU-KMU.

The reasoning of the public respondent and the Med-Arbiter is flawed, proceeding as it does from a
wrong premise. Firstly, it must be underscored that petitioner is an independently registered labor union
as evidenced by a Certificate of Registration issued by the DOLE. As a legitimate labor organization,
petitioner's right to file a petition for certification election on its own is beyond question. 14 Secondly, the
failure of petitioner to prove its affiliation with NAFLU-KMU cannot affect its right to file said petition for
certification election as an independent union. At the most, petitioner's failure will result in an ineffective
affiliation with NAFLU-KMU. Still, however, it can pursue its petition for certification election as an
independent union. In our rulings, we have stressed that despite affiliation, the local union remains the
basic unit free to serve the common interest of all its members and pursue its own interests
independently of the federation. 15

In fine, the Med-Arbiter erred in dismissing petitioner's petition for certification election on account of its
non-submission of the charter certificate and the contract of affiliation with the NAFLU-KMU with the
BLR. The public respondent gravely abused his discretion in sustaining the Med-Arbiter's Resolution.

II

We shall now resolve the issue of whether the appeal filed by the petitioner was rendered moot and
academic by the subsequent certification election ordered by the Med-Arbiter, won by FWU and which
culminated in a CBA with private respondent.

Public respondent's ruling is anchored on his finding that there exists no pending representation case
since the petition for certification election filed by the petitioner was dismissed by the Med-Arbiter.
According to the public respondent, the legal effect of the dismissal of the petition was to leave the
playing field open without any legal barrier or prohibition to any petitioner; thus, other legitimate labor
organizations may file an entirely new petition for certification election.

We reject public respondent's ruling. The order of the Med-Arbiter dismissing petitioner's petition for
certification election was seasonably appealed. The appeal stopped the holding of any certification
election. Section 10, Rule V of the Implementing Rules of Book V of the Labor Code is crystal clear and
hardly needs any interpretation.

Accordingly, there was an unresolved representation case at the time the CBA was entered between
FWU and private respondent. Following Section 4, Rule V of the Implementing Rules of Book V of the
 Labor Code, such CBA cannot and will not prejudice petitioner's pending representation case or render
the same moot. 16This rule was applied in the case of Associated Labor Unions (ALU-TUCP)
v. Trajano 17 where we held that "[t]here should be no obstacle to the right of the proper time, that is,
within sixty (60) days prior to the expiration of the life of a certified collective bargaining agreement . . .,
not even by a collective agreement submitted during the pendency of the representation case."
Likewise, in Associated Labor Unions (ALU) v. Ferrer-Calleja, 18 we held that a prematurely renewed
CBA is not a bar to the holding of a certification election.

Finally, we bewail private respondent's tenacious opposition to petitioner's certification election petition.
Such a stance is not conducive to industrial peace. Time and again, we have emphasized that when a
petition for certification election is filed by a legitimate labor organization, it is good policy for the
employer not to have any participation or partisan interest in the choice of the bargaining representative.
While employers may rightfully be notified or informed of petitions of such nature, they should not,
however, be considered parties thereto with an inalienable right to oppose it. An employer that involves
itself in a certification election lends suspicion to the fact that it wants to create a company union. Thus,
in Consolidated Farms, Inc. II v. Noriel, 19we declared that "[o]n a matter that should be the exclusive
concern of labor, the choice of a collective bargaining representative, the employer is definitely an
intruder. His participation, to say the least, deserves no encouragement. This Court should be the last
agency to lend support to such an attempt at interference with a purely internal affair of labor. . . . [While]
it is true that there may be circumstances where the interest of the employer calls for its being heard on
the matter, . . . sound policy dictates that as much as possible, management is to maintain a strictly
hands-off policy. For it is does not, it may lend itself to the legitimate suspicion that it is partial to one of
the contending unions. That is repugnant to the concept of collective bargaining. That is against the
letter and spirit of welfare legislation intended to protect labor and promote social justice. The judiciary
then should be the last to look with tolerance at such efforts of an employer to take part in the process
leading to the free and untrammeled choice of the exclusive bargaining representative of the workers."

IN VIEW WHEREOF, the instant petition is GRANTED. The assailed Resolution and Order of the public
respondent are set aside. The Bureau of Labor Relations is ORDERED to hold a certification election in
respondent company with petitioner as a contending union. No costs.

SO ORDERED.

[G.R. No. 116066. January 24, 2000]

NUEVA ECIJA I ELECTRIC COOPERATIVE, INC., (NEECO I) EMPLOYEES ASSOCIATION, PRESIDENT

RODOLFO JIMENEZ, and members, REYNALDO FAJARDO, ERNESTO MARIN, EVER GUEVARRA,
PETRONILO BAGUISA, VICTORINO CARILLO, petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION, NUEVA ECIJA I ELECTRIC COOPERATIVE, INC., (NEECO I) and PATRICIO DELA
PEA, respondents. Juri-ssc

DECISION

QUISUMBING, J.:

Petitioners assail the decision[1] of the National Labor Relations Commission in NLRC RAB-III-03-2673-92, which
modified the ruling of the Labor Arbiter, by deleting the award of moral and exemplary damages, as well as
attorneys fees and costs of litigation.

The facts, as found a quo, are as follows:

Petitioners Reynaldo Fajardo, Ernesto Marin, Ever Guevarra, Petronilo Baguisa, Victorino Carillo, and Erdie
Javate were permanent employees of respondent Nueva Ecija I Electric Cooperative (NEECO I). They were
members of petitioner NEECO I Employees Association, a labor organization established for the mutual aid and
protection of its members. Petitioner Rodolfo Jimenez was the president of the association.

Respondent NEECO I is an electric cooperative under the general supervision and control of the National
Electrification Administration (NEA). The management of NEECO I is vested on the Board of Directors.
Respondent Patricio dela Pea was NEECOs general manager on detail from NEA.

On February 7, 1987, the Board of Directors adopted Policy No. 3-33, which set the guidelines for NEECO Is
retirement benefits. On October 28, 1987, all regular employees were ordered by NEECO I to accomplish Form
87, which were applications for either retirement, resignation, or separation from service.

On October 5, 1991 and February 28, 1992, the applications of Petronilo Baguisa and Ever Guevarra,
respectively, were approved. They were paid the appropriate separation pay.

These successive events, followed by the promotion of certain union officers to supervisory rank, caused
apprehension in the labor association. They were considered as harassment threatening the union members,
and circumventing the employees security of tenure. On February 29, 1992, to strengthen and neutralize
managements arbitrary moves, the union held a "snap election" of officers. [2] Reynaldo Fajardo was elected
Treasurer, while Evaristo Guevarra, Victorino Carillo and Ernesto Marin were elected Public Relations Officers
for Jaen, Gapan A and Gapan B, respectively.

On March 3, 1992, petitioner labor association passed a resolution withdrawing the applications for retirement of
all its members, thus:

"Upon popular request of all members and officers of the association their manifestation of
willingness to retire on optional basis is hereby WITHDRAWN by the ASSOCIATION for and in
behalf of all its members, EXCEPT those who are willing to avail their retirement benefits with all
their hearts and mind. To avoid what had happened to EVARISTO GUEVARRA. The union
officers and its members, claimed their right to be protected under the security of tenure
clause under the Labor Code of the Philippines. No employee shall be retired without his/her
consent or approval of the union.

On motion and duly seconded. Approved unanimously. Let copies of the resolution be furnished
NEECO I PS/AGM Patricio S. dela Pea, for his information and appropriate action." [3] M-isjuris

On March 4, March 17, and April 7, 1992, petitioners Ernesto Marin, Reynaldo Fajardo and Victorino Carillo
were compulsorily retired by management. They received their separation pay under protest on March 16,
March 18, and April 15, 1992, respectively.

On August 21, 1991, Erdie Javate was terminated from employment allegedly due to misappropriation of funds
and dishonesty. He was not paid separation or retirement benefits.

On March 29, 1992, petitioners and Erdie Javate instituted a complaint for illegal dismissal and damages with
the NLRC Regional Arbitration Branch in San Fernando. They alleged they were purposely singled out for
retirement from a listing of employees who were made to submit retirement forms, even if they were not on top
of the list because they were union officers, past officers or active members of the association. Further,
petitioners claimed that their acceptance of the money offered by NEECO I did not constitute estoppel nor
waiver, since their acceptances were with vehement objections and without prejudice to all their rights resulting
from an illegal dismissal.
Additionally, Javate averred he was framed up and dismissed without due process.

On December 21, 1992, the labor arbiter decided the case as follows:

"WHEREFORE, in view of all the foregoing considerations, judgment is hereby rendered, as

follows:

1. Declaring respondents NEECO I and PS/AGM Engr. Patricio dela Pea guilty of illegal
dismissal and unfair labor practice act, as charged;

2. Ordering respondents to reinstate individual complainants Reynaldo Fajardo, Ernesto Marin,

Ever Guevarra, Petronilo Baguisa, Victorino Carillo, and Erdie Javate of their former positions
under the same terms and conditions of work obtaining at the time of dismissal, without loss of
seniority rights and other privileges, either physically or in the payroll, at the option of the
respondents, with payment of full backwages, including all benefits and privileges that they
should have received if they were not illegally dismissed, computed as follows:

1. Reynaldo Fajardo-

a.) Backwages as of Dec. 31, 1992 P 36,306.55

b.) Bonus 1,000.00

c.) Medical Allowance 1,000.00

d.) Clothing Allowance 750.00

e.) Hospitalization allowance since 1988 2,000.00

Total P 41,056.55

2. Ernesto Marin -

a.) Backwages as of Dec. 31, 1992 P 37,783.60

b.) Bonus 1,000.00

c.) Medical Allowance 1,000.00

d.) Clothing Allowance 750.00

e.) Hospitalization allowance since 1988 2,000.00

Total P 42,533.60

3. Ever Guevarra -

a.) Backwages as of Dec. 31, 1992 P 37,783.60

b.) Bonus 1,000.00

 c.) Medical Allowance 1,000.00

d.) Clothing Allowance 750.00

e.) Hospitalization allowance since 1988 2,000.00

Total P 42,533.60

4. Petronilo Baguisa -

a.) Backwages as of Dec. 31, 1992 P 56,675.40

b.) Bonus 1,000.00

c.) Medical Allowance 1,000.00

d.) Clothing Allowance 750.00

e.) Hospitalization allowance since 1988 2,000.00

Total P 61,425.40

5. Victorino Carillo -

a.) Backwages as of Dec. 31, 1992 P 32,162.78

b.) Bonus 1,000.00

c.) Medical Allowance 1,000.00

d.) Clothing Allowance 750.00

e.) Hospitalization allowance since 1988 2,000.00

Total P 36, 912.78

6. Erdie Javate -

a.) Backwages as of Dec. 31, 1992 P 15,680.00

b.) Bonus 1,000.00

c.) Medical Allowance 1,000.00

d.) Clothing Allowance 750.00

e.) Hospitalization allowance since 1999 2,000.00

Total P 20,430.00

GRAND TOTAL P244,891.93

 3. Ordering respondents to pay complainants moral damages in the amount of P30,000.00 each
or in the total amount of P180,000.00 and exemplary damages in the amount of P120,000.00;

4. Ordering respondents to pay complainants their attorneys fees equivalent to ten (10%)
percent of their monetary claims in the sum of P54,489.20; Acctmis

5. Ordering respondents to pay complainants their cost of litigation in the amount of P30,000.00

SO ORDERED."[4]

Thereafter, herein private respondents elevated the case to respondent NLRC. They filed their appeal on
December 28, 1992, and posted a surety bond on January 5, 1993, in the amount of two hundred forty-four
thousand, eight hundred ninety one pesos and ninety three centavos (P244,891.93). But herein petitioners filed
an omnibus motion to dismiss on the ground of late appeal, claiming that insufficient bond was filed by NEECO I
only on January 5, 1993. The bond excluded the award of moral and exemplary damages, attorneys fees and
costs of litigation.

Respondent NLRC denied the motion and instead gave due course to the appeal. On July 16, 1993, the NLRC
modified the decision, as follows:

"WHEREFORE, premises considered, the appealed Decision is modified by deleting the awards
of moral and exemplary damages, attorneys fees and cost of litigation. The amounts of
retirement benefits received by the individual complainants are to be applied to the backwages
that may be due to the herein complainants. All other dispositions stand.

SO ORDERED."[5]

Meanwhile, on March 16, 1993, petitioners were reinstated by NEECO I pending appeal.

On April 22, 1993, Erdie Javate withdrew his complaint and opted to receive his retirement benefits amounting to
forty-two thousand, one hundred fourteen pesos and nine centavos (P42,114.09).

Herein petitioners filed a motion for reconsideration, which the NLRC denied on August 31, 1993. Likewise,
herein private respondents filed a motion for reconsideration but the same was also denied on September 28,
1993.

Petitioners are now before us, via this special civil action under Rule 65 of the Revised Rules of Court, raising
three issues:

"I. WHETHER OR NOT THE APPEAL TAKEN BY THE RESPONDENT NEECO I FROM THE
DECISION OF NLRC-RAB-III DOLE TO NLRC THIRD DIVISION, MANILA, WAS NOT
PERFECTED WITHIN THE TEN (10) CALENDAR DAYS REGLEMENTARY PERIOD; HENCE
THE APPEAL SHOULD NOT BE GIVEN DUE COURSE; Misact

II. WHETHER OR NOT PUBLIC RESPONDENT NLRC ACTED WITHOUT OR IN EXCESS OF

JURISDICTION WHEN IT RESOLVED TO DELETE EN TOTO MORAL DAMAGES,
EXEMPLARY DAMAGES, ATTORNEYS FEES AND COSTS OF LITIGATION. FACTUAL BASIS
OF WHICH WERE ASCERTAINED BY THE HONORABLE LABOR ARBITER BELOW;

III. WHETHER OR NOT THE ORDER TO APPLY AND DEDUCT RECEIVABLE BACKWAGES
FROM RECEIVED BENEFITS MAY BE REASONABLE BUT UNREALISTIC AND ARBITRARY."
Petitioners contend that although respondent NEECO I filed its appeal on December 28, 1992, such appeal was
not completed for failure to file the necessary supersedeas bond, during the period prescribed by law, or until
January 4, 1993. Hence, no appeal was perfected.

Indisputable is the legal doctrine that the appeal of a decision involving a monetary award in labor cases may be
perfected "only upon the posting of a cash or surety bond." [6]

The Labor Code, as amended by Republic Act No. 6715, clearly provides:

"Art. 223. Appeal - Decisions, awards or orders of the Labor Arbiter are final and executory
unless appealed to the Commission by any or both parties within ten (10) calendar days from
receipt of such decisions, awards, or orders. . .

xxx

In case of a judgment involving a monetary award, an appeal by the employer may be perfected
only upon the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the monetary award in the judgment
appealed from.

xxx

Also, the perfection of an appeal within the reglementary period and in the manner prescribed by law is
jurisdictional, and noncompliance with such legal requirement is fatal and effectively renders the judgment final
and executory.[7] Sdjad

However, in a number of cases,[8] this Court relaxed the rule to resolve controversies on the merits, [9] specifically,
when there are special meritorious circumstances and issues. [10] We relaxed the requirement of posting a
supersedeas bond for the perfection of an appeal, when there was substantial compliance with the rule, so that
on balance, we made technical considerations to give way to equity and justice. [11]

In the case before us, the decision of the labor arbiter was issued on December 21, 1992. Private respondents
filed their appeal on December 28, 1992, barely seven days from receipt thereof. The bonding company issued
the bond dated January 4, 1993, the last day for filing an appeal. However, it was forwarded to respondent
NLRC only on the following day, January 5, 1993. Considering these circumstances and the holiday season, we
find it equitable to ease the rules and consider that there was substantial compliance with the requirements of
the law.

As to the amount of bond, we note that there had been changes in the Rules promulgated by the NLRC.
Previously the computation of the cash or surety bond to be posted by an employer who wishes to appeal
contained in the original rules was "exclusive of moral and exemplary damages and attorneys fees." [12] It was
later deleted sometime in 1991 and 1992, then restored on November 20, 1993. [13]

It may be noted that while respondent NLRC in its Resolution No. 11-01-91 dated November 7, 1991 deleted the
phrase "exclusive of moral and exemplary damages as well as attorneys fees" in the determination of the
amount of the bond, it provided a safeguard against the imposition of excessive bonds providing "(T)he
Commission may, in meritorious cases and upon Motion of the Appellant, reduce the amount of the
bond."[14] Sppedsc

In the case of Cosico, Jr. vs. NLRC, 272 SCRA 583, we ruled:
 "In the case at bar, the backwages and thirteenth month pay awarded to petitioner amounted
only to P270,000.00, but the moral and exemplary damages, plus 10% attorneys fees,
totalled P2,497,000.00. In other words, the moral and exemplary damages and attorneys fees
are almost ten (10) times greater than the basic monetary judgment. Private respondents
posted a supersedeas bond of P270,000.00, obviously, on the honest belief that the amount
was sufficient. At the very least, therefore, there was substantial compliance with the
requirement of appeal bond. For to rule otherwise would negate the interest of justice and
deviate from the mandate of the Labor Code that the rules of procedure should be liberally
construed, . . .

xxx

Since private respondents filed a bond which they honestly believed sufficient for purposes of
their appeal, respondent NLRC should have called their attention that the bond was inadequate,
which it did not."[15]

The unreasonable and excessive amount of bond would be oppressive and unjust and would have the effect of
depriving a party of his right to appeal. Besides, private respondents stress that the petitioners were paid their
retirement benefits[16]and that the cooperative has sufficient assets from which the other claims for damages and
attorneys fees may be obtained.

We come next to the issue of the propriety of the award of moral and exemplary damages.

To warrant an award of moral damages, it must be shown that the dismissal of the employee was attended to by
bad faith, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs
or public policy.[17]The Labor Arbiter ruled that there was unfair labor practice:

"As a backdrop, complainants alleged, and this is supported by documentary evidence, that on
7 February 1987, the then NEECO I Board of Directors adopted their own Policy No. 3-33 under
Resolution No. 47, series of 1987 requiring all employees to avail of the retirement benefits. All
regular employees, including the complainants were ordered to file their application for
retirement/resignation and/or separation from the service under NEECO I Form 87. All NEECO I
employees have no choice but to manifest their willingness to retire. Ca-lrsc

However, the complainants pointed out that the approval of the employees application for
retirement was not done in succession according to the list, but according to the choice of the
respondents, and for which, complainants were singled out from the list because they were
union officers, past officers and active members of the complainant Association." [18]

xxx

"Clearly, therefore, complainants have established the fact that they were illegally dismissed by
the respondents and their illegal dismissal was even tainted with unfair labor practice act. ..." [19]

Unfair labor practices violate the constitutional rights of workers and employees to self-organization, are inimical
to the legitimate interests of both labor and management, including their right to bargain collectively and
otherwise deal with each other in an atmosphere of freedom and mutual respect; and disrupt industrial peace
and hinder the promotion of healthy and stable labor-management relations. [20] As the conscience of the
government, it is the Courts sworn duty to ensure that none trifles with labor rights. [21]

For this reason, we find it proper in this case to impose moral and exemplary damages on private respondent.
However, the damages awarded by the labor arbiter, to our mind, are excessive. In determining the amount of
damages recoverable, the business, social and financial position of the offended parties and the business and
financial position of the offender are taken into account. [22] It is our view that herein private respondents had not
fully acted in good faith. However, we are cognizant that a cooperative promotes the welfare of its own
members. The economic benefits filter to the cooperative members. Either equally or proportionally, they are
distributed among members in correlation with the resources of the association utilized. Cooperatives help
promote economic democracy and support community development. Under these circumstances, we deem it
proper to reduce moral damages to only P10,000.00 payable by private respondent NEECO I to each individual
petitioner. We also deem it sufficient for private respondent NEECO I to pay each individual petitioner P5,000.00
to answer for exemplary damages, based on the provisions of Articles 2229 and 2232 of the Civil Code. [23] Scc-
alr

Having been illegally dismissed, individual petitioners are entitled to reinstatement from the time they were
illegally dismissed, until they were reinstated on March 16, 1993. For that period they are likewise entitled to
backwages minus the amount petitioners were forced to receive as "retirement" pay.[24] It must be noted that the
backwages computed by the labor arbiter covered only until December 22, 1992 but did not include backwages
from January 1, 1993 to March 15, 1993,[25] which should now be computed and included for payment. In the
event that the amount of "retirement" pay received by an individual petitioner exceeds the amount of his
backwages, then the excess should be deemed as advances of salary which should be refundable until fully
repaid by him.

WHEREFORE, the petition is PARTIALLY GRANTED. The assailed decision of the NLRC is AFFIRMED with
MODIFICATION. Private respondent Nueva Ecija 1 Electric Cooperative is hereby ORDERED through its
executive officers:

1. to pay individual petitioners their full backwages from the time they were illegally dismissed until the date of
their reinstatement on March 13, 1992, minus the amount they received as "retirement" pay. In the event that the
computed backwages of a concerned petitioner is less than the amount of so-called "retirement" pay already
received, the difference should be treated as advances refundable from his salary until fully repaid;

2. to pay moral and exemplary damages in the amount of ten thousand (P10,000.00) pesos and five thousand
(P5,000.00) pesos, respectively, to each of the petitioners who were illegally terminated and/or compulsorily
retired;

3. to pay ten (10%) of the total amount due to petitioners as attorneys fees; and

4. to pay the cost of suits.

Respondent NLRC is ORDERED to RECOMPUTE the total monetary benefits awarded and due to the
employees concerned in accordance with the decision and to submit its compliance thereon within thirty (30)
days from notice of this decision, with copies furnished to the parties.

SO ORDERED.

G.R. No. L-19187 February 28, 1963

STERLING PRODUCTS INTERNATIONAL, INC. and V. SAN PEDRO, petitioners,

vs.
LORETA C. SOL and COURT OF INDUSTRIAL RELATIONS, respondents.

LABRADOR, J.:
This is a petition to review on certiorari the resolution of the Court of Industrial Relations, dated June 23, 1961 in
Case No. 2292-ULP, ordering the herein petitioners to reinstate complainant-respondent Loreta C. Sol, with back
wages from the date of her dismissal until her reinstatement.

Loreta C. Sol charged the herein petitioners Sterling Products International and its Radio Director V. San Pedro
with having committed an unfair labor practice act. In her complaint she alleged among others that she has been
a regular Radio Monitor of respondents-petitioners; that on January 8, 1960, she filed a complaint against the
said firm for underpayment, money equivalent of her vacation leave from 1952 to 1959, and Christmas bonus for
1959, equivalent to one month salary. The complaint resulted in her dismissal, without just cause, on December
16, 1960.

In their answer petitioners herein denied the charges and by way of affirmative defenses, alleged that
complainant is an independent contractor whose services were retained by petitioners to submit reports of radio
monitoring work performed outside of their (petitioners') office; that petitioners no longer required complainant's
services and therefore, it gave her notice of termination, as it did in fact terminate her services, as an
independent contractor; that petitioners terminated the services of complainant-respondent for good and
justifiable reasons and in accordance with business requirements; that the complaint states no cause of action
and that petitioners did not and are not engaged in unfair labor practice acts against the complainant within the
meaning of Sec. 4(a), subsection 5 of the Industrial Peace Act.

Judge Tabigne of the Court of Industrial Relations in a decision dated October 8, 1960 held that the complainant
is not an employee of the respondent firm but only an independent contractor and that respondent firm was
justified in dismissing the complainant due to economic reasons.

Complainant filed a motion to reconsider the decision, raising the question as to whether she is an employee or
an independent contractor. The lower court reversed the decision of Judge Tabigne, ruling that complainant was
an employee and not an independent contractor, and ordered her reinstatement with back wages. The lower
court further ruled that respondent firm was guilty of unfair labor practice. In arriving at this ruling it considered
the following circumstances: (1) Complainant was given an identification card stating that "Bearer Loreta C. Sol
is a bona fide employee of this Company;" (2) when she applied for purchase of a lot from the PHHC, she was
given a certificate to show that she was indeed an employee of the respondent company for the last five years or
six years; and (3) as such employee, she enjoyed the privilege of borrowing money from the Employees Loan
Association of the firm.

The court further found that the company's control over respondent's work is shown by the fact that she can not
listen to broadcasts other than those that were contained in the schedule given to her by the company.
Supervision and control of her work could be done by checking or verifying the contents of her reports on said
broadcasts, said the court.

Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and approved by this
Honorable Court, without prejudice to the parties adducing other evidence to prove their case not covered by
this stipulation of facts. 1wph1.t

Further discussing the question the court states:

In the case at bar, the company not only hired and fired Mrs. Sol, without third party intervention, but
also reserved to itself, possessed and exercised its right to control 'the end' to be achieved and 'the
means' to be used in reaching such end, namely, the schedule and other instructions by which the
monitor shall be guided, and the reports with specifications by which the company observes and verifies
the performance of her work.
In consequence the court held that the respondent was an employee. It also found that the petitioners herein are
guilty of unfair labor practice, so it ordered petitioners to reinstate respondent Loreta C. Sol, with back wages
from the date of her dismissal until her reinstatement. Two judges dissented to this decision.

In the petition now brought to Us by certiorari it is urged that respondent Sol was an independent contractor
because in the performance of her work, the elements of control and direction are lacking, hence, no relationship
of employer and employee must have existed, citing in support of this contention Section 3, 35 Am. Jur. 445-446;
and that since respondent was employed to work according to her own methods and without being subject to
control except as to its final result, she may not be considered as an employee. (Ibid.) We cannot accept this
argument. Respondent Sol was directed to listen to certain broadcasts, directing her, in the instructions given
her, when to listen and what to listen, petitioners herein naming the stations to be listened to, the hours of
broadcasts, and the days when listening was to be done. Respondent Sol had to follow these directions. The
mere fact that while performing the duties assigned to her she was not under the supervision of the petitioners
does not render her a contractor, because what she has to do, the hours that she has to work and the report that
she has to submit all these are according to instructions given by the employer. It is not correct to say,
therefore, that she was an independent contractor, for an independent contractor is one who does not receive
instructions as to what to do, how to do, without specific instructions.

Finally, the very act of respondent Sol in demanding vacation leave, Christmas bonus and additional wages
shows that she considered herself an employee. A contractor is not entitled to a vacation leave or to a bonus nor
to a minimum wage. This act of hers in demanding these privileges are inconsistent with the claim that she was
an independent contractor.

The next point at issue is whether or not the petitioners herein are guilty of unfair labor practice. Petitioners claim
that under the decision rendered by Us in the case of Royal Interocean Lines, et al. vs. Court of Industrial
Relations, et al., G.R. No. L-11745, Oct. 31, 1960, as respondent Sol was merely an employee and was not
connected with any labor union, the company cannot be considered as having committed acts constituting unfair
labor practice as defined in the Industrial Peace Act, Rep. Act 875. We find this contention to be well-founded.
The term unfair labor practice has been defined as any of those acts listed in See. 4 of the Act. The respondent
Sol has never been found to commit any of the acts mentioned in paragraph (a) of Sec. 4. Respondent Sol was
not connected with any labor organization, nor has she ever attempted to join a labor organization, or to assist,
or contribute to a labor organization. The company cannot, therefore, be considered as having committed an
unfair labor practice.

The court below found that there is an employment contract (Exhibit "3") between petitioners and respondent Sol
in which it was expressly agreed that Sol could be dismissed upon fifteen days' advance notice, if petitioners
herein desire. Respondent Sol was dismissed on January 13, 1959 and therefore the dismissal should be
governed by the provisions of Republic Act 1787, which took effect on June 21, 1957. Section 1 of the Act
provides:

SECTION 1. In cases of employment, without a definite period, in a commercial, industrial, or

agricultural establishment or enterprise, the employer or the employee may terminate at any time the
employment with just cause; or without just cause in the case of an employee by serving written notice
on the employer at least one month in advance, or in the case of an employer, by serving such notice to
the employee at least one month in advance or one-half month for every year of service of the
employee, whichever is longer, a fraction of at least six months being considered as one whole year.

The employer upon whom no such notice was served in case of termination of employment without just
cause may hold the employee liable for damages.

xxx xxx xxx

 The following are just causes for terminating an employment without a definite period:

1. By the employer

a. The closing or cessation of operation of the establishment or enterprise, unless the closing is
for the purpose of defeating the intention of this law.

The contract between the petitioners and the respondent Sol providing that the respondent Sol can be dismissed
upon fifteen days' notice is therefore null and void. Inasmuch as respondent Sol was employed since the year
1952 and was in the employment of the petitioners from that time up to 1959, or a period of seven years, she is
entitled to three and one-half months pay in accordance with the above quoted section 1 of the Act.

WHEREFORE, that portion of the decision finding the petitioners herein guilty of unfair labor practice and
sentencing petitioners to reinstate respondent Sol in her former work is hereby set aside, and the petitioners are
sentenced to pay, as separation pay, three and one-half months' pay to respondent Sol. In all other respects the
decision is affirmed. No costs.