Labor Arbitration (From Procedure To Conciliation

National Union of Restaurant Workers
Thursday, July 01, 2004

12:01 AM
SUMMARY: NURW filed a complaint for ULP against Tres Hermanas Restaurant, specifically against Mrs. Felisa
Herrera, for 3 grounds: (1)refusal to bargain with them, (2) that NURW be a company union first before the ER
entered CBA with them; (3) that ER terminated one MARTIN BRIONES for union activities. Court found that the said
allegations are baseless. On first allegation, it was found that upon the demand to negotiate by the union, the ERs
called a meeting with them in a restaurant in QC and negotiated the demands of the Union, making some markings
on the proposals (  if agreeable;  if not agreeable;  if open for discussions). This fact shows that the ER was
agreeable to negotiations. The fact that it did not give a reply to its demands is merely procedural and could not be
deemed an ULP with the efforts to negotiate shown by the ER. As to the 2nd allegation, it appears that another
union - International Labor and Marine Union of the Philippines – claimed to represent majority of the workers in
the company so the ER wanted to make sure that the union had capacity to be the authorized bargaining unit. As
to the third contention, it was found that other active members of the union were not terminated so the
termination of Briones could not have been based on union activities.
lawphil
Today is
Thursda
y, July
01, 2004
Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-20044 April 30, 1964
NATIONAL UNION OF RESTAURANT WORKERS (PTUC), petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, ET AL., respondents.
Alejandro C. Villavieja for petitioner.
Padilla Law Office for respondents.
BAUTISTA ANGELO, J.:
On June 9, 1960, a complaint for unfair labor practice was lodged against the
owners of Tres Hermanas Restaurant, particularly Mrs. Felisa Herrera, on the
ground, among others, that respondents refused to bargain collectively with the
complaining union; respondents made a counter-proposal in the sense that they
would bargain with said union and would accept its demands if the same would
become a company union, and one Martin Briones, an employee, was separated
from the service because he was found to be the organizer and adviser of the
complaining union.
After respondents had filed their answer, wherein they denied the charges of unfair
labor practice filed against them, Judge Emiliano C. Tabigne, who was assigned to
act on the complaint, received the evidence, and on July 28, 1961, rendered
Labor Arbitration Page 1

act on the complaint, received the evidence, and on July 28, 1961, rendered
decision exonerating respondents. He found that the charges were not proven and
dismissed the complaint.
The case was taken to the court en banc, where in a split decision the court
affirmed the decision of Judge Tabigne. The case is now before us on a petition for
review.
The important findings of the court a quo which are now disputed by the union are:
(1) respondents did not refuse to bargain collectively with the union as in fact they
met its members with the only particularity that they were not able to accept all the
demands of the union; (2) respondents did not interfere, coerce or restrain their
employees in the exercise of their right to join the complaining union; and (3) the
dismissal of Martin Briones was due to the concern of Mrs. Herrera for her life on
account of the hatred that Briones had entertained against her, she being always
with him in the car he used to drive during their business routine. It is claimed that
Judge Tabigne committed a grave abuse of discretion in making the above findings.
Anent the first issue, the court a quo found that in the letter sent by the union to
respondents containing its demands marked in the case as Exhibit 1, there appears
certain marks, opposite each demand, such as a check for those demands to which
Mrs. Felisa Herrera was agreeable, a cross signifying the disapproval of Mrs.
Herrera, and a circle regarding those demands which were left open for discussion
on some future occasion that the parties may deem convenient. Such markings
were made during the discussion of the demands in the meeting called by
respondents on May 3, 1960 at their restaurant in Quezon City. The court a
quo concluded that the fact that respondent Herrera had agreed to some of the
demands shows that she did not refuse to bargain collectively with the complaining
union.
We can hardly dispute this finding, for it finds support in the evidence. The
inference that respondents did not refuse to bargain collectively with the
complaining union because they accepted some of the demands while they refused
the others even leaving open other demands for future discussion is correct,
especially so when those demands were discussed at a meeting called by
respondents themselves precisely in view of the letter sent by the union on April 29,
1960. It is true that under Section 14 of Republic Act 875 whenever a party serves a
written notice upon the employer making some demands the latter shall reply
thereto not later than 10 days from receipt thereof, but this rendition is merely
procedural and as such its non-compliance cannot be deemed to be an act of unfair
labor practice. The fact is that respondents did not ignore the letter sent by the
union so much so that they called a meeting to discuss its demands, as already
stated elsewhere.
It is contended that respondents refused to bargain with the complaining union as
such even if they called a meeting of its officers and employees thereby concluding
that they did not desire to enter into a bargaining agreement with said union. This
conclusion has no rational relation with the main premise of the union for it is belied
by the fact that respondents did actually agree and bargain with the representatives
of the union. While it is true that respondents denied the capacity of the complaining
union to bargain collectively with the respondents this is because they were of the
impression that before a union could have that capacity it must first be certified by
the Court of Industrial Relations as the duly authorized bargaining unit, in fact this is
what they stated in their answer to the petition for certification filed by said union
before the Court of Industrial Relations (See Case No. 763-MC). In said case,
another union known as the International Labor and Marine Union of the Philippines
claimed to represent the majority of the employees of respondent restaurant, and
this is what it alleged in a letter sent to the manager of respondents dated May 25,
1962.
Anent the second issue, the claim of the complaining union has also no basis. This
is premised on a document marked Exhibit C which contains certain alleged
counter-proposals tendered to complainant union the nature of which would
apparently indicate that respondents made use of coercion which interferes with the
right of the employees to self-organization. On this document certain notations were
made by one Ernesto Tan which are indeed derogatory and which were allegedly
made by him upon instructions of respondent Felisa Herrera. Thus, the pertinent
notation on which the union relies is one which states that respondent Herrera
would be willing to recognize the union "if union would be willing to recognize the

would be willing to recognize the union "if union would be willing to recognize the
union", which would indeed show that Mrs. Herrera interfered with the employees'
right to self-organization. But respondents denied that they ever authorized Ernesto
Tan to make such notation or to represent them in the negotiations, for he was
merely a bookkeeper whose duties were confined to the keeping and examination
of their books of accounts and sales invoices. It appears that he was not even
invited to the meeting but merely volunteered to be present and made those
notations on his own account and initiative. The court a quo gave credence to this
stand of respondents, as can be seen in the following finding: "There is no evidence
to show that Ernesto Tan was authorized to represent management in the meeting
held on May 3, 1960, and that Ernesto Tan, being a mere bookkeeper of
respondents, he is not a part of management although he is the nephew of Mrs.
Herrera." We are not prepared to disturb this finding of the court a quo.
Finally, it is alleged in connection with the third issue that respondent Herrera
dismissed Martin Briones without sufficient cause other than his being the organizer
and adviser of the complaining union. It however appears from the very testimony
of Martin Briones that he is not the only one who organized the complaining union
but together with Galicano Apiz, Pablo Cabreros and Juan Morales, with the
particularity that, as Briones himself had intimated, Apiz, Cabreros and Morales
were more active than himself in organizing the union so much so that they were
appointed officers of that union. And yet, Apiz, Cabreros and Morales were never
touched and continued to be employed in respondents' restaurant. For this reason,
the court a quo discredited the claim that Briones was dismissed because of union
activities but rather because of the threats he made on Mrs. Herrera, as
communicated to her by her sister Aureata. The following is the finding made by the
court a quo on this point: "If it is the union activities of complainant's members that
Mrs. Herrera did not like, Apiz, Cabreros and Morales should have been dismissed
by her also, because said persons were more active than Briones in the
organization of the union. Verily, it was not the union activities of Martin Briones that
prompted Mrs. Herrera to dismiss him, but her fear for the safety of her life on
account of the smouldering members of hatred that the former had against the
latter, the said persons being always together in her car driven by Briones, during
business routine." This finding finds support in the evidence.
On the strength of the foregoing considerations, we find no justification for
disturbing the findings of the court a quo which led to the dismissal of the complaint
under consideration. 1äwp
hï1.ñ
ët
WHEREFORE, the decision appealed from is affirmed. No costs.

Bengzon, C.J., Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon,
Regala and Makalintal, JJ., concur.
Padilla, J., took no part.
The Lawphil Project - Arellano Law Foundation
Pasted from <http://www.lawphil.net/judjuris/juri1964/apr1964/gr_l-20044_1964.html>

Kiok Loy
12:06 AM
FACTS
- Pambansang Kilusan ng Paggaw a (Kilusan), a legitimate labor federation, w on cert election and w as certified by the BLR as the sole and
exclusive bargaining agent of the rank-and-file employees of Sw eden Ice Cream Plant (Company).
- Kilusan then gave the Company tw o copies of its proposed CBA. It requested the Company for its counter proposals. There w as n o response
from Company. Kilusan again requested the Company for collective bargaining negotiations and for the Company to furnish them w ith its
counter proposals. Both requests were ignored and remained unacted upon by the Company.
-Kilusan on Feb 14, 1979, filed a "Notice of Strike", w ith the BLR on ground of unresolved economic issues in collective barga ining.
-Conciliation proceedings follow ed but all attempts tow ards an amicable settlement failed. BLR certified the case to the NLRC for compulsory
arbitration. The case w as reset/postponed several times (mostly Company‟s “request”).
-Then in the scheduled hearing on June 4, 1979, the Company's representative, Mr. Ching, w ho w as supposed to be examined, failed to
appear. The Company‟s counsel requested for another postponement. The labor arbiter denied. He ruled that the Company has w aived its
right to present further evidence and, therefore, considered the case submitted for resolution.
- NLRC held: Sw eden Ice Cream guilty of unjustified refusal to bargain. The draft proposal for a CBA w as found to be reasonable under the
premises, and declared to be the collective agreement w /c should govern the relationship betw een the parties.
-Petitioner: …its right to procedural due process has been violated w hen it w as precluded from presenting further evidence in support of i ts
stand and w hen its request for further postponement w as denied.
…that the NLRC‟s finding of unfair labor practice for refusal to bargain is not supported by law and the evidence considering that it w as only on
May 24. 1979 w hen the Union furnished them w ith a copy of the proposed CBA and it w as only then that they came to know of the Union's
demands; … that CBA approved and adopted by the NLRC is unreasonable and lacks legal basis.
ISSUE/S
1) WON company‟s right to due process has been violated
2) WON company is guilty of ULP
3) WON CBA is reasonable
HELD
1) NO
-Considering the various postponements granted in its behalf, the claimed denial of due process appeared totally bereft of any legal and factual
support. As herein earlier stated, petitioner had not even honored respondent union w ith any reply to the latter's successive letters, all geared
tow ards bringing the Company to the bargaining table.. Certainly, the moves and overall behavior of company w ere in total der ogation of the
policy enshrined in the Labor Code w hich is aimed tow ards expediting settlement of economic disputes. Hence, the Court is not prepared to
affix its imprimatur to such an illegal scheme and dubious maneuvers.
2) YES
- Article 249, par. (g) LC makes it an unfair labor practice for an employer to refuse "to meet and convene promptly and expeditiously in good
faith for the purpose of negotiating an agreement w ith respect to w ages, hours of work, and all other terms and conditions of employment
including proposals for adjusting any grievance or question arising under such an agreement and executing a contract incorpor ating such
agreement, if requested by either party."
-Collective bargaining w hich is defined as negotiations tow ards a collective agreement, is designed to stabilize the relation betw een labor and
management and to create a climate of sound and stable industrial peace. It is a mutual responsibility of the employer and the Union and is
characterized as a legal obligation.
- While it is a mutual obligation of the parties to bargain, the employer, how ever, is not under any legal duty to initiate contract negotiation.
-The mechanics of collective bargaining is set in motion only w hen the ff. jurisdictional preconditions are present, namely, ( 1) possession of the
status of majority representation of the employees' representative in accordance w ith any of the means of selection or design ation provided for
by the LC; (2) proof of majority representation; and (3) a demand to bargain under Art 251, par. (a) of the Labor Code . . . all of w hich
preconditions are undisputedly present in the instant case.
-From the over-all conduct of petitioner company, Kilusan has a valid cause to complain against Company's attitude, the totality of w hich is
indicative of the latter's disregard of, and failure to live up to, w hat is enjoined by the Labor Code ---- to bargain in good faith.
-Company is GUILTY of unfair labor practice. (1) respondent Union w as a duly certified bargaining agent; (2) it made a definit e request to
bargain, accompanied w ith a copy of the proposed CBA, to the Company not only once but tw ice w hich were left unanswered and u nacted
upon; and (3) the Company made no counter proposal w hatsoever all of w hich conclusively indicate lack of a sincere desire to negotiate. Even
during the period of compulsory arbitration before the NLRC, Company's stalled the negotiation by a series of postponements, non-appearance
at the hearing conducted
-Herald Delivery Carriers Union (PAFLU) vs. Herald Publications: "unfair labor practice is committed w hen it is show n that the respondent
employer, after having been served w ith a w ritten bargaining proposal by the petitioning Union, did not even bother to submit an answ er or
reply to the said proposal. This doctrine w as reiterated in Bradman vs. CIR: "w hile the law does not compel the parties to reach an agreement,
it does contemplate that both parties w ill approach the negotiation w ith an open mind and make a reasonable effort to reach a common ground
of agreement".
3) YES
- The instant case being a certified one, it must be resolved by the NLRC pursuant to the mandate of P.D. 873, as amended, w hic h authorizes
the said body to determine the reasonableness of the terms and conditions of employment embodied in any CBA. To that extent, utmost
deference to its findings of reasonableness of any Collective Bargaining Agreement as the governing agreement by the employee s and
management must be accorded due respect by this Court.

management must be accorded due respect by this Court.
Disposition Petition dismissed.

Colegio de San Juan de letran
12:06 AM
Summary: College refused to bargain, arguing that a new group of union filed a petition for certification
election.

July 7_Labor Arbitration Class Notes
12:04 AM
Inaugural speech of Noynoy

Anti-wangwang campaign
United Employees Union of Gelmart v. Noriel

-in Collective bargaining (CB), we witness a situation where labor, management agree on a set of rules
that would govern their relationship in respect of wages, terms and conditions of employments, hours
of work…
-delineation of rights and responsibilities of both parties
-management prerogatives vs. employees' right to security of tenure: cannot be avoided
-two attempt to spell out in the CBA, the law between the two parties, these items
NATIONAL UNION OF RESTAURANT WORKERS V. CIR (Tres Hermanas Restaurant Case)

F: Union accused Tres Hermanas of ULP for refusal to bargain collectively. Union wanted to negotiate
CBA, sent its proposal. Tres Hermanas called for a meeting, and during the meeting, the owner of the
restaurant marked the proposals to what she was amenable to, what she was not amenable to, and
what are subject to further negotiations. No counter proposal submitted. Eventually, the ER refused to
bargain with them, absent a certification from the CIR that they were the duly authorized bargaining
representative of the Ees.
H: NO ULP
-failure to submit a counter proposal, there being already a meeting set by the ER
Under normal circumstances, when a set of proposals are submitted, the ER is supposed to send a
counter proposal:
-the following proposals
…we accept
…we reject
…willing to discuss further
-in this case, it was not strictly complied with. But SC absolved employer of ULP because of substantial
compliance
Vs. Kiok loy

-absolute application of the Labor Code provision on the 10 day period
-here, no effort at all from the ER. Plus delaying
-so the Court applied the CBA proposed by the Labor Union
Vs. Divine Word University

-same: no counter proposal
-same: court applied the CBA proposed by the labor to the ER
*Ers in Sweden Ice cream and Divine Word University closed down!!!
*sir commented on chances of granting continuance: if you are from a big law firm, the court would
least likely allow the continuance on the ground that there are many counsels in the law firm!
*on 10-day period: hard to come up with a counterproposal w/n 10-day period. So can ask for additional
time. Should acknowledge receipt first of receipt plus request that additional time may be given to give
counterproposal. Most definitely not refusal to bargain in GF.
-can also reply w/n 10 day period, saying what the ER considers approved and then segregate the issues
into political and economic issues. When it's time to start negotiations, normally the parties deal with
political issues first on the justification that they are less controversial and agreement can be reached on
those points easier than in economic issues like wages and other benefits like sick leave, vacation leave,

etc.
General Milling Corporation vs. CA

-Union sent proposals for renegotiation of CBA 1 day before its expiration. Company questioned its
status to represent the status of the union: it received letters from individual members saying that they
had resigned from the union
-Company did not send any counterproposal
H: CBA proposed of the union was applied
Suarez vs. National Steel

-National steel retrenched employees, gave them separation benefits. CBA was being negotiated and
was adopted right before the employees were retrenched. Employees availed of separation benefits,
executed quitclaims.
-after 2.5 years, these employees claimed that they were entitled to the retirement benefits in the CBA
-ER refused to grant them the retirement benefits, arguing that they already got separation benefits,
thus barred from receiving the retirement benefits
H: CBA was amended, with affidavits from the Union members who were part of the negotiating panel
attesting that the intention of the parties were to give exclusively separation benefits but increased it.
Thus, since they already received separation benefits, then cannot claim retirement benefits anymore
• In Suarez, note that the SC kept on referring to the case of UE and Otiz Elevator Case. These cases can be
used as arguments ifo of the position that, yes, it is possible for the employees to receive BOTH
retirement and separation benefits:
○ UE: Faculty and administrative personnel were dismissed. SC found there was illegal dismissal. In
Labor Court, there was a claim for both retirement and separation benefits. SC also granted these.
It is strongly recommended that the employer already state in the retirement plan WON both
benefits can be recovered, or WON receipt of one benefit would cancel out receipt of the other.
○ Otis Elevator: Ees who have been illegally dismissed by the company were entitled also to
retirement benefits and separation benefits
-as a result of these rules, ERs changed their retirement plans to provide merely 1 benefit. Not both.
Almario v. PAL
-Almario, then 39 years old, was qualified to fly a Boeing 737. He qualified to fly an Air Bus 300, but
which required additional training, the cost of which was P800k at the expense of PAL.
-He qualified, but resigned from PAL 8 months after.
-PAL argued that he should reimburse the company, based on the PROHIBITIVE TRAINING COSTS
PRINCIPLE in the CBA. Almario alleged no such provision is found in the CBA
RTC: for Almario. No provision in the CBA
CA: there is a provision in the CBA
SC: There is a provision in the CBA, and the CBA is the law between the parties.
-court explained the rationale why PAL provided that at a certain age, pilots are no longer entitled for
promotion because of the costs of training them - which cannot be recovered by PAL because they
would retire soon.
-court also said there would be unjust enrichment on the part of Almario if he resigned.
-There ER-EE relationship BUT PAL went to the RTC. WHY? No relief from Labor Code, but from a
contract
-Almario vigorously denied having signed any agreement providing that he should serve 3 years for the
training which PAL paid for. He was right, but SC still held that he was liable.
Book V: labor relations

Payment of Agency Fee: Holy Cross of Davao
-employees in general (not members of the union) pay agency fee for representing them before the
Employer and management - no freeloader. Pay for whatever benefits received due to the efforts of the
union
-union fees are paid by the union members

-union fees are paid by the union members
-back to Holy Cross case, issue was WON non-union members were obligated to pay agency fees to the
union. Answer in the affirmative. But SC, in deciding a labor case, relied on a civil law provision - that of
UNJUST ENRICHMENT. So same with Almario Case
*as a consequence of this Almario case, management wisened up by pointing out in black and white that
when the company trains you, you have to serve them for a certain number of years, or else reimburse
the company for the training costs - like that in call centers
*issue on restrictive covenants:

When you leave the company, you sever your ties with the employer/company. Since your skills are in
demand, other corporations would fight against each other to get you. But with restrictive covenants,
you cannot work for a competitor w/n a certain year, or else you would be liable.

Manila Fashions, Inc. vs. NLRC
2:01 AM

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 117878 November 13, 1996

MANILA FASHIONS, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, NONITO ZAMORA and NAGKAKAISANG
MANGGAGAWA NG MANILA FASHIONS, INC., respondents.
BELLOSILLO, J.:
On 15 March 1993 respondent Nagkakaisang Manggagawa ng Manila Fashions, Inc., through its
president, respondent Nonito Zamora, filed a complaint before the Labor Arbiter on behalf of its one
hundred and fifty (150) members who were regular employees of petitioner Manila Fashions, Inc.
The complaint charged petitioner with non-compliance, with Wage Order No NCR-02 and 02-A
mandating a P12- increase in wages effective 8 January 1991. As a result, complainants' basic pay,
13th month pay, service incentive leave pay, legal holiday pay, night shift differential and overtime
pay were all underpaid.
Petitioner countered that the failure to comply with the pertinent Wage Order was brought about by
the tremendous losses suffered by it which were aggravated when the workers staged a strike on
account of the non-adjustment of their basic pay. To forestall continuous suspension/closure of
business operations, which petitioner did for three (3) months, the strikers sent a notice that they
were willing to condone the implementation of the increase. The condonation was distinctly stated in
Sec. 3, Art. VIII, of the Collective Bargaining Agreement (CBA) dated 4 February 1992, which was
voluntarily entered into by the parties and represents a reasonable settlement —
Sec. 3. The Union realizes the company's closeness to insolvency and, as such, sympathizes with
the company's financial condition. Therefore, the Union has agreed, as it hereby agrees, to condone
the implementation of Wage Order No. NCR-02 and 02-A.
The complainants admitted the existence of the aforementioned provision in the CBA; however they
denied the validity thereof inasmuch as it was not reached after due consultation with the members.
The Labor Arbiter sustained the claim that the subject provision of the CBA was void but based its
conclusion on a different ground —
. . . While it is true that both union officers/members and (petitioner) signed the agreement, however, the
same is not enforceable since said agreement is null and void, it being contrary to law. It is only the
Tripartite Wage Productivity Board of (the) Department of Labor and Employment (DOLE) that could
approve exemption (of) an establishment from coverage of (a) Wage Order . . . 1
Thus on 30 June 1993 petitioner was adjudged liable to each of the complainants for underpayment
of salary, 13th month pay, vacation leave pay and legal holiday pay in the total amount of
P900,012.00. All other claims were dismissed for lack of merit. 2
Both parties were unsatisfied with the decision, prompting them to seek relief from respondent
National Labor Relations Commission (NLRC). The basis of petitioner's appeal was that the ruling
was not in accordance with the facts and the law. On the part of the private respondents, they
assailed the computation of the award erroneous.
Respondent NLRC was not persuaded by petitioner. On the other hand, the appeal of private
respondents was no longer considered as it was filed beyond the reglementary period. Thus on 31
May 1994 the disputed decision was affirmed. 3
Was the condonation of the implementation of Wage Order No. NCR-02 and 02-A contained in Sec.
3, Art. VIII, of the CBA valid?
Petitioner maintains that the condonation is valid. In support thereof, it invokes cases decided by this
Court applying the rule that if the agreement was voluntarily entered into and represents a
reasonable settlement it is binding on the parties and may not be disowned simply because of a
change of mind. 4 Granting the CBA provision is indeed void, petitioner offers the alternative
argument that the computation of the award was erroneous and arbitrary.
We sustain the decision of the Labor Arbiter as affirmed by respondent NLRC that the condonation
appearing in Sec. 3, Art. VIII, of the CBA did not exempt petitioner from compliance with Wage Order
No. NCR-02 and 02-A..

No. NCR-02 and 02-A..
A Collective Bargaining Agreement refers to the negotiated contract between a legitimate labor
organization and the employer concerning wages, hours of work and all other terms and conditions
of employment in a bargaining unit, including mandatory provisions for grievances and arbitration
machineries. 5 As in all other contracts, the parties in a CBA may establish such stipulations,
clauses, terms and conditions as they may deem convenient provided they are not contrary to law,
morals, good customs, public order or public policy. 6 Section 3, Art. VIII, of the CBA is a void
provision because by agreeing to condone the implementation of the Wage Order the parties
thereby contravened its mandate on wage increase of P12.00 effective 8 January 1991. Also, as
stated by the Labor Arbiter, it is only the Tripartite Wage Productivity Board of the DOLE that could
approve exemption of an establishment from coverage of a Wage Order.
If petitioner is a financially distressed company then it should have applied for a wage exemption so
that it could meet its labor costs without endangering its viability or its very existence upon which
both management and labor depend for a living. 7 The Office of the Solicitor General emphasizes the
point that parties to a CBA may not by themselves, set a wage lower than the minimum wage. To do
so would render nugatory the purpose of a wage exemption, not to mention the possibility that
employees may be unwittingly put in a position to accept a lower wage. 8
The cases that petitioner relies on are simply inapplicable because, unlike the present case which
involves a stipulation in the CBA in contravention of law, they are concerned with compromise
settlements as a means to end labor disputes recognized by Art. 227 of the Labor Code and
considered not against public policy by doctrinal rules established by this Court. 9
As regards the alternative argument of petitioner that the computation of the award was erroneous
and arbitrary, it must be rejected outright as it was apparently never brought to the attention of
respondent NLRC. Consequently, it cannot be raised for the first time before this Court since that
would be offensive to the basic rule of fair play, justice and due process. 10 Moreover, the original
end exclusive jurisdiction of this Court to review a decision of respondent NLRC in a petition
for certiorari under Rule 65 does not normally include an inquiry into the correctness of its evaluation
of the evidence but confined merely to issues of jurisdiction or grave abuse of discretion. 11
WHEREFORE, the petition is DISMISSED. The order of respondent National Labor Relations
Commission which affirmed the decision of the Labor Arbiter awarding the total amount of
P900,012.00 to the complainants is likewise AFFIRMED.
SO ORDERED.
Padilla, Vitug, Kapunan and Hermosisima, Jr., JJ., concur.
Footnotes
1 Rollo, p. 29.
2 Decision penned by Labor Arbiter Fatima Jambaro-Franco; Rollo, pp. 30-33.
3 Decision penned by Presiding Commissioner Edna Bonto-Perez, concurred in by Commissioner
Rogelio I. Rayala; Rollo, p. 26.
4 Cruz v. NLRC, G.R. No. 98273, 28 October 1991, 203 SCRA 286; Olaybar v. NLRC, G.R. No.
108713, 28 October 1994, 237 SCRA 819; Siangco v. NLRC, G.R. No. 110261, 4 August 1994, 235
SCRA 96; and, Jag & Haggar Jeans and Sportswear Corporation v. NLRC, G.R. No. 105710, 23
February 1995, 241 SCRA 635.
5 Sec. jj, Rule I, Bk. V, Omnibus Rules Implementing the Labor Code.
6 Art. 1306, Civil Code.
7 Radio Communications of the Philippines, Inc. v. National Wages Council, G.R. No. 93044, 26
March 1992, 207 SCRA 581.
8 Rollo, p. 90.
9 See note 4.
10 Huang v. CA, G.R. No. 108525, 13 September 1994, 236 SCRA 420.
11 Sta. Fe Construction Co. v. NLRC, G.R. No. 101280, 2 March 1994, 230 SCRA 593.
Pasted from <http://www.lawphil.net/judjuris/juri1996/nov1996/gr_117878_1996.html>

Republic Savings Bank vs. CIR
2:01 AM
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lawphil
Today is
Thursday
, July 01,
2004

SUPREME COURT
Manila
EN BANC
G.R. No. L-20303 September 27, 1967
REPUBLIC SAVINGS BANK (now REPUBLIC BANK), petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, ROSENDO T. RESUELLO, BENJAMIN
JARA, FLORENCIO ALLASAS, DOMINGO B. JOLA, DIOSDADO S. MENDIOLA,
TEODORO DE LA CRUZ, NARCISO MACARAEG and MAURO A.
ROVILLOS, respondents.
Lichauco, Picaso & Agcaoili and R. Santayana for petitioner.
G. E. Fajardo for respondents.
CASTRO, J.:
The vital issue in this case is whether the dismissal of the eight (8)
respondent employees by the petitionerRepublic Bank (hereinafter referred to as
the Bank) constituted an unfair labor practice within the meaning and intendment of
the Industrial Peace Act (Republic Act 875).
The Court of Industrial Relations (CIR) found it did and its decision is now on
appeal before us. The Bank maintains that the discharge was for cause.
The Bank had in its employ the respondents Rosendo T. Resuello, Benjamin
Jara, Florencio Allasas, Domingo B. Jola, Diosdado S. Mendiola, Teodoro de la
Cruz, Narciso Macaraeg and Mauro A. Rovillos. On July 12, 1958 it discharged
Jola and, a few days after (July 18, 1958), the rest of respondents, for having
written and published "a patently libelous letter . . . tending to cause the dishonor,
discredit or contempt not only of officers and employees of this bank, but also of
your employer, the bank itself."
The letter referred to was a letter-charge which the respondents had written
to the bank president, demanding his resignation on the grounds of immorality,
nepotism in the appointment and favoritism as well as discrimination in the
promotion of bank employees. The letter, dated July 9, 1958, is hereunder
reproduced in full:
Mr. Ramon Racelis
President, Republic Savings Bank
Man ila
"Dear Mr. President:

"Dear Mr. President:
We, the undersigned, on behalf of all our members and employees of
the RepublicSavings Bank, who have in our hearts only the most honest
and sincere motive to conserve and protect the interest of the institution and
its 200,000 depositors, do hereby, demand the much needed resignation of
His Excellency, Mr. Ramon Racelis as President and Member of the Board of
Directors of the Bank.
Mr. President, you have already, in so many occasions, placed
the Bank on the verge of danger, that now we deem it right and justifiable for
you to leave this Bank and let other more capable presidents continue the
work you have not well accomplished.
In the above instance, we are presenting charges which in our humble
contention properly justifies incapacity on your part to continue and assume
the position as top executive of the huge institution:
(1) That you Mr. President, have tolerated and practiced immorality in
this Bank. We have been expecting you to do something about this
malpractice which is very disgraceful and affects the morale of the hundreds
of your employees. But so far, Mr. President, you have just let this thing
passed through. As a matter of fact, you have even promoted these women
like Misses Pacita Mato and Edita Castro. These women are of questionable
characters, Mr. President, and should have had no place in the Bank as
managers or even as mere employees. We know Mr. President, because it is
an open secret in the Bank, that you have illicit relations with one of them —
Miss Edita Castro. As top officer and as father of the employees of the Bank,
you have shown this bad example to your employees. Mr. President, we are
really ashamed of you.
(2) That you have allowed the practice of nepotism in this Bank. You have
employed relatives of yours like Honorio Ravida; Bienvenido Ravida; Antonio
Racelis; Jesus Antonio; and Argentina Racelis. Not only that Mr. President.
You have also given those nieces and nephews of yours good positions at
the expense of the more capable employees. Mr. President, if we have to
mention all of them, one page will not be enough.
(3) With regards to promotion, you have given more preferences to your close
relatives. When the Bank advocated the sending of pensionados to States,
you have only limited your choice among your nieces, nephews, and querida,
namely, Miss Argentina Racelis, Mr. Jesus Antonio, Miss Edita Castro, and
her brother-in-law, Mr. Pedro Garcia, Jr. In doing this, Mr. President, you
have only lowered the reputation and standing of
theRepublic Savings Bank. There is really no sense in sending high school
and B.S.E. graduates to States to study advanced banking. Because of this
silly decision, it took one pensionado six months and cost the Bank a total of
P10,000.00 just to study Christmassavings. That subject is very simple; one
need not go to States to study savings; that you know full well, Mr. President.
The reason why you sent Miss Castro to States was because you were also
there. Are we not right?
(4) That you Mr. President, tolerated and still tolerating grave dishonesty in
this Bank as evidenced by the following irregularities and anomalies;
(a) In one of our branches, around P200,000.00 was mulcted and embezzled
by a certain Maximo Donado by doctoring the ledgers and records of that
particular office. To the present, the amount is still increasing and some more
are being dug up from the records everyday ever since its discovery in
February 1957. In this case you dismissed Mr. M. Donado, immediately. But
this was all that you did. If you have to go back to the history of the case, you
will find out that your beloved nieces and nephews are also involved having
been managers of that particular office. Another nephew, the Vice President-
Operations, then Vice President, Personnel, was also involved for valid
reasons that he did not even shift this particular employee to other branches
or departments since the beginning when it has been the policy of
the Bank to reshuffle its personnel. If you want to know why your good
nephew did not transfer this employee, we will tell you. "Your good nephew
has eaten too many baskets of delicious alimango." Mr. President, if there is
someone to be blamed in this particular case, it is your good nephews and
nieces for their gross negligence.

nieces for their gross negligence.
(b) Aside from the one mentioned above, we have also Mr. Rodolfo
Francisco, who in April 1955, maliciously withdraw (sic) P970.00 in two
withdrawal slips from the account of one depositor in one of our provincial
offices, inserting his name as co-depositor in the savings account ledger.
(c) In January 1958, Mr. Jose de los Santos expended and approved
representation expense in the amount of P300.00 in one of our provincial
offices.
(d) Mr. Federico M. Dabu, the ex-cashier and now Personnel Manager,
incurred a shortage in the amount of P1,240.00 in the course of the audit on
August 3, 1954.
(e) Mr. Jose S. Guevara, Vice-President on Personnel have (sic) been
accepting bribe moneys. One of these amounts to P4,000.00 which was
delivered by a messenger sometime during the last quarter of 1957.
Mr. President, the anomalies are only a partial list of the irregularities
which so far you have not acted upon. This type of people should have been
fired out from the Bank; yet on the contrary, you promoted them to higher
and responsible positions, thus, resulting in the demoralization of the more
capable employees.
Mr. President, we hope that you have still a little sense of decency and
propriety left. So, for goodsake and for the welfare of the Bank, DO RESIGN
NOW as President and as Member of the Board of Directors of
the Republic Savings Bank.
Very respectfully yours,
(Sgd.) Rosendo T. Resuello
President, RSB Supervisors' Union (FFW),
(Sgd.) Benjamin Jara
Vice-President RSB Supervisors' Union (FFW)
(Sgd.) Florencio Allasas
Treasurer, RSB Supervisors' Union (FFW)
(Sdg) Domingo B. Jola
Chairman, Executive Committee, RSB Employees' Union (FFW)
(Sgd.) Diosdado S. Mendiola
Vice-President, RSB Employees Union (FFW)
(Sgd.) Teodoro de la Cruz
Member, Executive Committee, RSB Employees' Union (FFW)
(Sgd.) Angelino Quiambao
President, RSB Security Guard Union (FFW)
(Sgd.) Narciso Macaraeg
Vice-President, RSB Security Guard Union (FFW)
(Sgd.) Alfredo Bautista
Treasurer, RSB Security Guard Union (FFW)
(Sgd.) Pacifico A. Argao
PRO, RSB Employees' Union (FFW)
(Sgd.) Toribio B. Garcia
Secretary, RSB Security Guard Union (FFW)
(Sgd.) Mauro A. Rovillos
Member, Executive Committee, RSB Supervisors' Union (FFW)
Copies of this letter were admittedly given to the chairman of the board of directors
of the Bank, and the Governor of the Central Bank.
At the instance of the respondents, prosecutor A. Tirona filed a complaint in the
CIR on September 15, 1958, alleging that the Bank's conduct violated section 4(a) (5) of
the Industrial Peace Act which makes it an unfair labor practice for an employer "to
dismiss, discharge or otherwise prejudice or discriminate against an employee for having
filed charges or for having given or being about to give testimony under this Act."
The Bank moved for the dismissal of the complaint, contending that respondents
were discharged not for union activities but for having written and published a libelous
letter against the bank president. The court denied the motion on the basis of its
decision in another case1 in which it ruled that section 4(a) (5) applies to cases in which
an employee is dismissed or discriminated against for having filed "any charges against
his employer." Whereupon the case was heard.
In 1960, however, this Court overruled the decision of the CIR in the Royal
Interocean case and held that "the charge, the filing of which is the cause of the

Interocean case and held that "the charge, the filing of which is the cause of the
dismissal of the employee, must be related to his right to self-organization in order to give
rise to unfair labor practice on the part of the employer," because "under subsection 5 of
section 4(a), the employee's (1) having filed charges or (2) having given testimony or (3)
being about to give testimony, are modified by 'under this Act' appearing after the last
item."2 The Bank therefore renewed its motion to dismiss, but the court held the motion
in abeyance and proceeded with the hearing.
On July 4, 1962 the court rendered a decision finding the Bank guilty of unfair
labor practice and ordering it to reinstate the respondents, with full back wages and
without loss of seniority and other privileges. This decision was affirmed by the courten
banc on August 9, 1962.
Relying upon Royal Interocean Lines v. CIR,3 and Lakas ng Pagkakaisa sa Peter
Paul v. CIR,4 the Bank argues that thecourt should have dismissed the complaint
because the discharge of the respondents had nothing to do with their union activities as
the latter in fact admitted at the hearing that the writing of the letter-charge was not a
"union action" but merely their "individual" act.
It will avail the Bank none to gloat over this admission of the respondents.
Assuming that the latter acted in their individual capacities when they wrote the letter-
charge they were nonetheless protected for they were engaged in concerted activity, in
the exercise of their right of self-organization that includes concerted activity for mutual
aid and protection,5interference with which constitutes an unfair labor practice under
section 4(a)(1). This is the view of some members of thisCourt. For, as has been aptly
stated, the joining in protests or demands, even by a small group of employees, if in
furtherance of their interests as such, is a concerted activity protected by
the Industrial Peace Act. It is not necessary that union activity be involved or that
collective bargaining be contemplated.6
Indeed, when the respondents complained against nepotism, favoritism and other
management practices, they were acting within an area marked out by the Act as a
proper sphere of collective bargaining. Even the reference to immorality was not
irrelevant as it was made to support the respondents' other charge that
the bank president had failed to provide wholesome working conditions, let alone a good
moral example, for the employees by practicing discrimination and favoritism in the
appointment and promotion of certain employees on the basis of illicit relations or blood
relationship with them.
In many respects, the case at bar is similar to National Labor Relations Board v.
Phoenix Mutual Life Insurance Co.7The issue in that case was whether an insurance
company was guilty of an unfair labor practice in interfering with this right of concerted
activity by discharging two agents employed in a branch office. The cashier of that office
had resigned. The ten agents employed there held a meeting and agreed to join in a
letter to the home office objecting to the transfer to their branch office of a cashier from
another branch office to fill the position. They discussed also the question whether to
recommend the promotion of the assistant cashier of their office as the proper
alternative. They then chose one of their number to compose a draft of the letter and
submit it to them for further discussion, approval and signature. The agent selected to
write the letter and another were discharged for their activities in this respect as being, so
their notices stated, completely unpleasant and far beyond the periphery of their
responsibility. In holding the company liable for unfair labor practice, the Circuit Court of
Appeals said:
A proper construction is that the employees shall have the right to engage in
concerted activities for their mutual aid or protection even though no union activity be
involved, for collective bargaining be contemplated. Here Davis and Johnson and other
salesmen were properly concerned with the identity and capability of the new cashier.
Conceding they had no authority to appoint a new cashier or even recommend anyone
for the appointment, they had a legitimate interest in acting concertedly in making known
their views to management without being discharged for that interest. The moderate
conduct of Davis and Johnson and the others bore a reasonable relation to conditions of
their employment. It was therefore an unfair labor practice for respondent to interfere with
the exercise of the right of Davis and Johnson and the other salesmen to engage in
concerted activities for their mutual aid or protection.
Other members of this Court agreed with the CIR that the Bank's conduct violated
section 4(a) (5) which makes it an unfair labor practice for an employer to dismiss an
employee for having filed charges under the Act.
Some other members of this Court believe, without necessarily expressing

Some other members of this Court believe, without necessarily expressing
approval of the way the respondents expressed their grievances, that what
the Bank should have done was to refer the letter-charge to the grievance committee.
This was its duty, failing which it committed an unfair labor practice under section 4(a)
(6). For collective bargaining does not end with the execution of an agreement. It is a
continuous process. The duty to bargain imposes on the parties during the term of their
agreement the mutual obligation "to meet and confer promptly and expeditiously and in
good faith . . . for the purpose of adjusting any grievances or question arising under such
agreement"8 and a violation of this obligation is, by section 4 (a) (6) and (b) (3) an unfair
labor practice.9 As Professors Cox and Dunlop point out:
Collective bargaining . . . normally takes the form of negotiations when major
conditions of employment to be written into an agreement are under consideration and of
grievance committee meetings and arbitration when questions arising in the
administration of an agreement are at stake.10
Instead of stifling criticism, the Bank should have allowed the respondents to air
their grievances. Good faith bargaining required of the Bank an open mind and a sincere
desire to negotiate over grievances.11 The grievance committee, created in the collective
bargaining agreements, would have been an appropriate forum for such negotiation.
Indeed, the grievance procedure is a part of the continuous process of collective
bargaining.12 It is intended to promote, as it were, a friendly dialogue between labor and
management as a means of maintaining industrial peace.
The Bank defends its action by invoking its right to discipline for what it calls the
respondents' libel in giving undue publicity to their letter-charge. To be sure, the right of
self-organization of employees is not unlimited,13 as the right of an employer to discharge
for cause14 is undenied. The Industrial Peace Act does not touch the normal exercise of
the right of an employer to select his employees or to discharge them. It is directed solely
against the abuse of that right by interfering with the countervailing right of self-
organization.15 But the difficulty arises in determining whether in fact the discharges are
made because of such a separable cause or because of some other activities engaged in
by employees for the purpose of collective bargaining.16
It is for the CIR, in the first instance, to make the determination, "to weigh the
employer's expressed motive in determining the effect on the employees of
management's otherwise equivocal act."17 For the Act does not undertake the impossible
task of specifying in precise and unmistakable language each incident which constitutes
an unfair labor practice. Rather, it leaves to the court the work of applying the Act's
general prohibitory language in the light of infinite combinations of events which may be
charged as violative of its terms.18 As the Circuit Court of Appeals puts it:
Determining the legality of a dismissal necessarily involves an appraisal of the
employer's motives. In these cases motivations are seldom expressly avowed and
avowals are not always candid. There thus must be a measure of reliance on the
administrative agency knowledgeable in labor-management relations and on the Trial
Examiner who receives the evidence firsthand and is therefore in a unique position to
determine the credibility of the witnesses. Where Examiner and Board are in agreement
there is an increased presumption in favor of their resolution of the issue. 19
What we have just essayed underscores at once the difference between Royal
Interocean and Lakas ng Pagkakaisa on the one hand and this case on the other.
In Royal Interocean, the employee's letter to the home office, for writing which she was
dismissed, complained of the local manager's "inconsiderate and untactful attitude" 20 — a
grievance which, the courtfound, "had nothing to do with or did not arise from her union
activities." Nor did the court find evidence of discriminatory discharge in Lakas ng
Pagkakaisa as the letter, which the employee wrote to the mother company in violation of
the local company's rule, denounced "wastage of company funds." In contrast, the
express finding of the court in this case was that the dismissal of the respondents was
made on account of the letter they had written, in which they demanded the resignation
of thebank president for a number of reasons touching labor-management relations —
reasons which not even the Bank's judgment that the respondents had committed libel
could excuse it for making summary discharges21 in disregard of its duty to bargain
collectively.
In final sum and substance, this Court is in unanimity that the Bank's conduct,
identified as an interference with the employees' right of self-organization, or as a
retaliatory action, and/or as a refusal to bargain collectively, constituted an unfair labor
practice within the meaning and intendment of section 4(a) of the Industrial Peace Act.
ACCORDINGLY, the decision of July 4, 1962 and the resolution of August 9, 1962

practice within the meaning and intendment of section 4(a) of the Industrial Peace Act.
ACCORDINGLY, the decision of July 4, 1962 and the resolution of August 9, 1962
of the Court of Industrial Relationsare affirmed, at petitioner's cost.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez and Angeles, JJ.,
concur.
Bengzon, J.P., J., took no part.
Separate Opinions
FERNANDO, J., concurring:
The opinion of the Court in this highly significant unfair labor practice case, one of
first impression, easily commends itself for approval. The relevant facts are set forth in all
fullness and with due care. The position of the Court united as it is on an unfair labor
practice having been committed, but not quite fully agreed as to which particular
subsection of the legal provision was violated, is delineated with precision. With the
explicit acknowledgement there made that some members of theCourt are of the belief
that what was done by the Republic Bank here amounted to "interference" and with the
writer being of the persuasion that it could be categorized in line with the statute as
"interference, restraint or coercion," a few words as to why this view is entertained may
not be inappropriate.
No one can doubt that we are in the process of evolving an indigenous labor
jurisprudence. Notwithstanding the clearly American background of the Industrial Peace
Act, based as it is mainly on the Wagner Act,1 labor relations in the Philippines with their
peculiar problems and the ingenuity of Filipino lawyers have resulted in a growing body
of decisions notable for their suitability to local condition and their distinctly local flavor.
This is as it should be.
The present case affords one such instance. The wealth of adjudication by both
judicial and administrative agencies in the United States notwithstanding the diligent and
earnest search for a ruling based on a similar fact-situation yielded no case precisely in
point. What does it signify? At the very least, it may indicate that while the problem posed
could have arisen there, this particular response of labor was quite unique. On the
assumption which I have here hypothetically made that there was indeed a valid cause
for grievance, a more diplomatic approach could have been attempted. Or at the very
least the procedure indicated for the adjustment of a grievance could have been
followed. That was not done. What respondents did was to issue an ultimatum.
Collective bargaining whether in its formative stage preparatory to a labor contract
or in the adjustment of a labor problem in accordance with the procedure set forth in an
existing agreement presupposes the give-and-take of discussion. No party adopts, at
least in its initial stages, a hard-line position, from which there can be no retreat. That
was not the situation here. Respondents as labor leaders appeared adamantine in their
attitude to terminate the services of the then president of the Republic Savings Bank.
Nor did they mince words in describing his alleged misdeeds. They were quite certain
that he had offended most grievously. They wanted him out. There was no room for
discussion.
That for me is not bargaining as traditionally and commonly understood. It is for
that reason that I find it difficult to agree fully with the view that their dismissal could be
construed as a refusal to bargain collectively. Moreover, they did not as adverted to in
the opinion of the Court, follow the procedure set forth for adjusting grievances. Nor
considering the explicit language of the Industrial Peace Act may such dismissal fall
within the prohibition against dismissing employees for having filed charges or about to
give testimony "under the Act." As a matter of fact, if the letter were indeed libelous, their
dismissal would not have been unjustified. There was an admission as noted in the
opinion "that the writing of the letter charged was not a 'union' action but merely their
'individual' act."
Nonetheless, concurrence with the decision arrived at by the Court is called for in
view of their mass dismissal. Under the circumstances, the supervisors union,
the Republic Savings Bank employees union, the Republic Savings Banksecurity
guards union, and the Republic Savings Bank supervisors union were left leaderless.
For collective bargaining to be meaningful, there must be two parties, one representing
management and the other representing the union. Nor could management select who
would represent the latter or with whom to deal, otherwise in effect there would be only
one party. Obviously there would then be no bargaining. 1awphîl .n
èt
It is my view therefore that the dismissal amounted to "interference, restraint or

coercion" as prohibited in the IndustrialPeace Act. To repeat, this Section 4(a), with the
exception of subsection (2), was taken from the Wagner Act. There is as stated by
Bufford in his treatise for the Wagner Act "an overlap" as this particular subsection deals

Bufford in his treatise for the Wagner Act "an overlap" as this particular subsection deals
"with additional labor practice besides containing incidental provisions concerning related
matters."2 As noted further by such commentator: "As expressed by the Senate
Committee: 'The four succeeding unfair labor practices are designed not to impose
limitations or restrictions upon the general guarantees of the first, but rather to spell out
with particularity some of the practices that have been most prevalent and most
troublesome.'"
Teller is in agreement. This subsection according to him "involves the widest
varieties of activities." The other unfair labor practices condemned fall within its terms.
Thus: "That the Board has taken this position is evidenced both by the Board decisions
and by express statement to such effect contained in its first annual report, the language
of which in this connection is as follows: 'At the outset it should be explained that the
Board has held that a violation by an employer of any of the other four subdivisions of
Section 8 of the act is, by the same token, a violation of Section 8(1). Such a conclusion
is too obvious to require explanation. In fact, almost all of the cases in which the Board
has found a violation of Section 8(1) are cases in which the principal offense charged fell
within some other subdivision of Section 8. The explanation for this is, apparently, that
even though an employer may be engaging in anti-union activities in violation of Section
8(1), unions do not seek protection of the act until such activities take such drastic form
as bring them within the provisions of some other subdivisions, as, for example, the
discriminatory discharge of union members (which comes within subdivision [3]), the
domination of or interference with the formation or administration of a labor organization
(which comes within subdivision [2]). or a refusal to bargain collectively (which comes
within subdivision [5]."3
In the Philippines as in the United States then, the first subsection on "interference,
restraint or coercion" covering as it does such a broad range of undesirable practices on
the part of employers could easily be seized upon, where a borderline case, inimical to
the right of self-organization or to collective bargaining, presents itself as justifying a
finding of an unfair labor practice.
1awphî l. n
èt
Footnotes
1
Mariano v. Royal Interocean Lines, Case 527-ULP.
2Royal Interocean Lines v. CIR, L-11745, Oct. 31, 1960.
3Note 2, supra.
4
L-10130, Sept. 30, 1957.
5Section 3 of the industrial Peace Act provides: "Employees' Right to Self-
Organization. — Employees shall have the right to self-organization and to form, join or
assist labor organizations of their own choosing for the purpose of collective bargaining
through representatives of their own choosing and to engage in concerted activities for
the purpose of collective bargaining and other mutual aid or protection. Individuals
employed as supervisors shall not be eligible for membership in a labor organization of
employees under their supervision but may form separate organizations of their own."
6
Annot., 6 A.L.R. 2d 416 (1949).
7167 F. 2d 983 (7th Cir 1948).
8Industrial Peace Act, sec. 13.
9
NLRB v. Highland Shoe, Inc., 119 F. 2d 218 (1st Cir. 1941); NLRB v. Bachelder, 120 F.
2d 574 (7th Cir. 1941).
10The Duty to Bargain Collectively During the Term of an Existing Agreement, 63 Harv. L.
Rev. 1097, 1105 (1950).

11
Cf. id. at 1110.
12
United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574
(1960); accord, United Steelworkers of America v. Enterprise Wheel & Car Corp., 363
U.S. 593 (1960).
13
Republic Aviation Corp. v. NLRB, 324 U.S. 793 (1945).
14
E.g., Philippine Educ. Co. v. Union of Phil. Educ. Employees, L-13773, April 29, 1960.
15Phelps Dodge Corp. v. NLRB, 313 U.S. 177 (1941).
16NLRB v. Local 1229, IBEW, 346 U.S. 464 (1953).
17
NLRB v. Stowe Spinning Co., 336 U.S. 226 (1949).
18Republic Aviation Corp. v. NLRB, supra note 13.
19NLRB v. M & B Headwear Co., 349 F. 2d 170 (4th Cir. 1965).
20
See second Royal Interocean case, L-12429, Feb. 27, 1961.
21
"Considering the actualities of the collective bargaining and grievance procedures, we
think the employer must realize that far-fetched and overstated claims, easily

think the employer must realize that far-fetched and overstated claims, easily
dissuadable, are often made initially by one side in a labor dispute (especially when it is
inexperienced in labor relations). Such claims may well evaporate on discussion and
negotiation, and never become an integral part of the union's real purposes. We think
that the employer cannot seize upon this kind of claim — made by ignorant workers in
their initial demands — in order to justify retaliatory measures against them. He must
make some effort to find out if the employees mean in fact to pursue these claims, to
stick to demands which are not protected by sec. 7. Summary discharge seems
especially premature here." NLRB v. Electronics Equip. Co., 194 F. 2d 650 (2nd Cir.
1952).
Cf. Abaya v. Villegas, L-25641, Dec. 17, 1966.
FERNANDO, J., concurring:
1The National Labor Relations Act (1935) 49 Stat. 457.
2Bufford on the Wagner Act (1941), 169.
32 Teller, Labor disputes and Collective Bargaining (1940), 762.
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q=cache:pbgf0CTQIjUJ:www.lawphil.net/judjuris/juri1967/sep1967/gr_l-20303_1967.html+Republic+Savings+Bank+vs.
+Court+of+Industrial+Relations+1967&cd=3&hl=en&ct=clnk&ie=UTF-8>

Nestle Phils, Inc. vs. NLRC
2:02 AM

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 91231 February 4, 1991

NESTLÉ PHILIPPINES, INC., petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION and UNION OF FILIPRO
EMPLOYEES, respondents.
Siguion Reyna, Montecillo & Ongsiako for petitioner.
Banzuela, Flores, Miralles, Raneses, Sy, Taquio & Associates for private respondent.
GRIÑO-AQUINO, J.:p
Nestlé Philippines, Inc., by this petition for certiorari, seeks to annul, on the ground of grave abuse of
discretion, the decision dated August 8, 1989 of the National Labor Relations Commission (NLRC),
Second Division, in Cert. Case No. 0522 entitled, "In Re: Labor Dispute of Nestlé Philippines, Inc."
insofar as it modified the petitioner's existing non-contributory Retirement Plan.
Four (4) collective bargaining agreements separately covering the petitioner's employees in its:
1. Alabang/Cabuyao factories;
2. Makati Administration Office. (Both Alabang/Cabuyao factories and Makati office were
represented by the respondent, Union of Filipro Employees [UFE]);
3. Cagayan de Oro Factory represented by WATU; and
4. Cebu/Davao Sales Offices represented by the Trade Union of the Philippines and Allied Services
(TUPAS),
all expired on June 30, 1987.
Thereafter, UFE was certified as the sole and exclusive bargaining agent for all regular rank-and-file
employees at the petitioner's Cagayan de Oro factory, as well as its Cebu/Davao Sales Office.
In August, 1987, while the parties, were negotiating, the employees at Cabuyao resorted to a
"slowdown" and walk-outs prompting the petitioner to shut down the factory. Marathon collective
bargaining negotiations between the parties ensued.
On September 2, 1987, the UFE declared a bargaining deadlock. On September 8, 1987, the
Secretary of Labor assumed jurisdiction and issued a return to work order. In spite of that order, the
union struck, without notice, at the Alabang/Cabuyao factory, the Makati office and Cagayan de Oro
factory on September 11, 1987 up to December 8, 1987. The company retaliated by dismissing the
union officers and members of the negotiating panel who participated in the illegal strike. The NLRC
affirmed the dismissals on November 2, 1988.
On January 26, 1988, UFE filed a notice of strike on the same ground of CBA deadlock and unfair
labor practices. However, on March 30, 1988, the company was able to conclude a CBA with the
union at the Cebu/Davao Sales Office, and on August 5, 1988, with the Cagayan de Oro factory
workers. The union assailed the validity of those agreements and filed a case of unfair labor practice
against the company on November 16, 1988.
After conciliation efforts of the National Conciliation and Mediation Board (NCMB) yielded negative
results, the dispute was certified to the NLRC by the Secretary of Labor on October 28, 1988.
After the parties had filed their pleadings, the NLRC issued a resolution on June 5, 1989, whose
pertinent disposition regarding the union's demand for liberalization of the company's retirement plan
for its workers, provides as follows:
xxx xxx xxx
7. Retirement Plan
The company shall continue implementing its retirement plan modified as follows:
a) for fifteen years of service or less — an amount equal to 100% of the employee's monthly salary
for every year of service;
b) more than 15 but less than 20 years — 125% of the employee's monthly salary for every year of
service;
c) 20 years or more — 150% of the employee's monthly salary for every year of service. (pp.
58-59,Rollo.)
Both parties separately moved for reconsideration of the decision.

Both parties separately moved for reconsideration of the decision.
On August 8, 1989, the NLRC issued a resolution denying the motions for reconsideration. With
regard to the Retirement Plan, the NLRC held:
Anent management's objection to the modification of its Retirement Plan, We find no cogent reason
to alter our previous decision on this matter.
While it is not disputed that the plan is non-contributory on the part of the workers, tills does not
automatically remove it from the ambit of collective bargaining negotiations. On the contrary, the
plan is specifically mentioned in the previous bargaining agreements (Exhibits "R-1" and "R-4"),
thereby integrating or incorporating the provisions thereof to the agreement. By reason of its
incorporation, the plan assumes a consensual character which cannot be terminated or modified at
will by either party. Consequently, it becomes part and parcel of CBA negotiations.
However, We need to clarify Our resolution on this issue. When we increased the emoluments in the
plan, the conditions for the availment of the benefits set forth therein remain the same. (p. 32, Rollo.)
On December 14, 1989, the petitioner filed this petition for certiorari, alleging that since its retirement
plan is non-contributory, it (Nestlé) has the sole and exclusive prerogative to define the terms of the
plan "because the workers have no vested and demandable rights thereunder, the grant thereof
being not a contractual obligation but merely gratuitous. At most the company can only be directed
to maintain the same but not to change its terms. It should be left to the discretion of the company on
how to improve or mollify the same" (p. 10, Rollo).
The Court agrees with the NLRC's finding that the Retirement Plan was "a collective bargaining
issue right from the start" (p. 109, Rollo) for the improvement of the existing Retirement Plan was
one of the original CBA proposals submitted by the UFE on May 8, 1987 to Arthur Gilmour, president
of Nestlé Philippines. The union's original proposal was to modify the existing plan by including a
provision for early retirement. The company did not question the validity of that proposal as a
collective bargaining issue but merely offered to maintain the existing non-contributory retirement
plan which it believed to be still adequate for the needs of its employees, and competitive with those
existing in the industry. The union thereafter modified its proposal, but the company was adamant.
Consequently, the impassé on the retirement plan become one of the issues certified to the NLRC
for compulsory arbitration.
The company's contention that its retirement plan is non-negotiable, is not well-taken. The NLRC
correctly observed that the inclusion of the retirement plan in the collective bargaining agreement as
part of the package of economic benefits extended by the company to its employees to provide them
a measure of financial security after they shall have ceased to be employed in the company, reward
their loyalty, boost their morale and efficiency and promote industrial peace, gives "a consensual
character" to the plan so that it may not be terminated or modified at will by either party (p.
32, Rollo).
The fact that the retirement plan is non-contributory, i.e., that the employees contribute nothing to
the operation of the plan, does not make it a non-issue in the CBA negotiations. As a matter of fact,
almost all of the benefits that the petitioner has granted to its employees under the CBA — salary
increases, rice allowances, mid-year bonuses, 13th and 14th month pay, seniority pay, medical and
hospitalization plans, health and dental services, vacation, sick & other leaves with pay — are non-
contributory benefits. Since the retirement plan has been an integral part of the CBA since 1972, the
Union's demand to increase the benefits due the employees under said plan, is a valid CBA issue.
The deadlock between the company and the union on this issue was resolvable by the Secretary of
Labor, or the NLRC, after the Secretary had assumed jurisdiction over the labor dispute (Art. 263,
subparagraph [i] of the Labor Code).
The petitioner's contention, that employees have no vested or demandable right to a non-
contributory retirement plan, has no merit for employees do have a vested and demandable right
over existing benefits voluntarily granted to them by their employer. The latter may not unilaterally
withdraw, eliminate or diminish such benefits (Art. 100, Labor Code; Tiangco, et al. vs. Hon.
Leogardo, et al., 122 SCRA 267).
This Court ruled similarly in Republic Cement Corporation vs. Honorable Panel of Arbitrators, G.R.
No. 89766, Feb. 19, 1990:
. . . Petitioner's claim that retirement benefits, being noncontributory in nature, are not proper
subjects for voluntary arbitration is devoid of merit. The expired CBA previously entered into by the
parties included provisions for the implementation of a "Retirement and Separation Plan." it is only to
be expected that the parties would seek a renewal or an improvement of said item in the new CBA.
In fact, the parties themselves expressly included retirement benefits among the economic issues to
be resolved by voluntary arbitration. Petitioner is estopped from now contesting the validity of the
increased award granted by the arbitrators. (p. 145, Rollo.)
The NLRC's resolution of the bargaining deadlock between Nestlé and its employees is neither
arbitrary, capricious, nor whimsical. The benefits and concessions given to the employees were
based on the NLRC's evaluation of the union's demands, the evidence adduced by the parties, the

based on the NLRC's evaluation of the union's demands, the evidence adduced by the parties, the
financial capacity of the Company to grant the demands, its longterm viability, the economic
conditions prevailing in the country as they affect the purchasing power of the employees as well as
its concommitant effect on the other factors of production, and the recent trends in the industry to
which the Company belongs (p. 57, Rollo). Its decision is not vitiated by abuse of discretion.
WHEREFORE, the petition for certiorari is dismissed, with costs against the petitioner.
SO ORDERED.
Narvasa, Gancayco and Medialdea, JJ., concur.
Cruz, J., took no part.
Pasted from <http://www.lawphil.net/judjuris/juri1991/feb1991/gr_91231_1991.html>

Luzon Development Bank vs. ALDBE
2:04 AM

SUPREME COURT
Manila
EN BANC
G.R. No. 120319 October 6, 1995

LUZON DEVELOPMENT BANK, petitioner,
vs.
ASSOCIATION OF LUZON DEVELOPMENT BANK EMPLOYEES and ATTY. ESTER S. GARCIA
in her capacity as VOLUNTARY ARBITRATOR, respondents.
ROMERO, J.:
From a submission agreement of the Luzon Development Bank (LDB) and the Association of Luzon
Development Bank Employees (ALDBE) arose an arbitration case to resolve the following issue:
Whether or not the company has violated the Collective Bargaining Agreement provision and the
Memorandum of Agreement dated April 1994, on promotion.
At a conference, the parties agreed on the submission of their respective Position Papers on
December 1-15, 1994. Atty. Ester S. Garcia, in her capacity as Voluntary Arbitrator, received
ALDBE's Position Paper on January 18, 1995. LDB, on the other hand, failed to submit its Position
Paper despite a letter from the Voluntary Arbitrator reminding them to do so. As of May 23, 1995 no
Position Paper had been filed by LDB.
On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitrator rendered a decision
disposing as follows:
WHEREFORE, finding is hereby made that the Bank has not adhered to the Collective Bargaining
Agreement provision nor the Memorandum of Agreement on promotion.
Hence, this petition for certiorari and prohibition seeking to set aside the decision of the Voluntary
Arbitrator and to prohibit her from enforcing the same.
In labor law context, arbitration is the reference of a labor dispute to an impartial third person for
determination on the basis of evidence and arguments presented by such parties who have bound
themselves to accept the decision of the arbitrator as final and binding.
Arbitration may be classified, on the basis of the obligation on which it is based, as either
compulsory or voluntary.
Compulsory arbitration is a system whereby the parties to a dispute are compelled by the
government to forego their right to strike and are compelled to accept the resolution of their dispute
through arbitration by a third party. 1The essence of arbitration remains since a resolution of a
dispute is arrived at by resort to a disinterested third party whose decision is final and binding on the
parties, but in compulsory arbitration, such a third party is normally appointed by the government.
Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant
to a voluntary arbitration clause in their collective agreement, to an impartial third person for a final
and binding resolution. 2Ideally, arbitration awards are supposed to be complied with by both parties
without delay, such that once an award has been rendered by an arbitrator, nothing is left to be done
by both parties but to comply with the same. After all, they are presumed to have freely chosen
arbitration as the mode of settlement for that particular dispute. Pursuant thereto, they have chosen
a mutually acceptable arbitrator who shall hear and decide their case. Above all, they have mutually
agreed to de bound by said arbitrator's decision.
In the Philippine context, the parties to a Collective Bargaining Agreement (CBA) are required to
include therein provisions for a machinery for the resolution of grievances arising from the
interpretation or implementation of the CBA or company personnel policies. 3 For this purpose,
parties to a CBA shall name and designate therein a voluntary arbitrator or a panel of arbitrators, or
include a procedure for their selection, preferably from those accredited by the National Conciliation
and Mediation Board (NCMB). Article 261 of the Labor Code accordingly provides for exclusive
original jurisdiction of such voluntary arbitrator or panel of arbitrators over (1) the interpretation or
implementation of the CBA and (2) the interpretation or enforcement of company personnel policies.
Article 262 authorizes them, but only upon agreement of the parties, to exercise jurisdiction over
other labor disputes.
On the other hand, a labor arbiter under Article 217 of the Labor Code has jurisdiction over the
following enumerated cases:

following enumerated cases:
. . . (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the
case by the parties for decision without extension, even in the absence of stenographic notes, the
following cases involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages,
rates of pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-
employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions involving the
legality of strikes and lockouts;
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all
other claims, arising from employer-employee relations, including those of persons in domestic or
household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of
whether accompanied with a claim for reinstatement.
xxx xxx xxx
It will thus be noted that the jurisdiction conferred by law on a voluntary arbitrator or a panel of such
arbitrators is quite limited compared to the original jurisdiction of the labor arbiter and the appellate
jurisdiction of the National Labor Relations Commission (NLRC) for that matter. 4 The state of our
present law relating to voluntary arbitration provides that "(t)he award or decision of the Voluntary
Arbitrator . . . shall be final and executory after ten (10) calendar days from receipt of the copy of the
award or decision by the parties," 5 while the "(d)ecision, 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." 6 Hence, while there is an express
mode of appeal from the decision of a labor arbiter, Republic Act No. 6715 is silent with respect to
an appeal from the decision of a voluntary arbitrator.
Yet, past practice shows that a decision or award of a voluntary arbitrator is, more often than not,
elevated to the Supreme Court itself on a petition for certiorari, 7 in effect equating the voluntary
arbitrator with the NLRC or the Court of Appeals. In the view of the Court, this is illogical and
imposes an unnecessary burden upon it.
In Volkschel Labor Union, et al. v. NLRC, et al., 8 on the settled premise that the judgments of courts
and awards of quasi-judicial agencies must become final at some definite time, this Court ruled that
the awards of voluntary arbitrators determine the rights of parties; hence, their decisions have the
same legal effect as judgments of a court. In Oceanic Bic Division (FFW), et al. v. Romero, et
al., 9 this Court ruled that "a voluntary arbitrator by the nature of her functions acts in a quasi-judicial
capacity." Under these rulings, it follows that the voluntary arbitrator, whether acting solely or in a
panel, enjoys in law the status of a quasi-judicial agency but independent of, and apart from, the
NLRC since his decisions are not appealable to the latter. 10
Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court of
Appeals shall exercise:
xxx xxx xxx
(B) 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.
xxx xxx xxx
Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not strictly
be considered as a quasi-judicial agency, board or commission, still both he and the panel are
comprehended within the concept of a "quasi-judicial instrumentality." It may even be stated that it
was to meet the very situation presented by the quasi-judicial functions of the voluntary arbitrators
here, as well as the subsequent arbitrator/arbitral tribunal operating under the Construction Industry
Arbitration Commission, 11 that the broader term "instrumentalities" was purposely included in the
above-quoted provision.
An "instrumentality" is anything used as a means or agency. 12 Thus, the terms governmental
"agency" or "instrumentality" are synonymous in the sense that either of them is a means by which a
government acts, or by which a certain government act or function is performed. 13 The word
"instrumentality," with respect to a state, contemplates an authority to which the state delegates
governmental power for the performance of a state function. 14 An individual person, like an

governmental power for the performance of a state function. 14 An individual person, like an
administrator or executor, is a judicial instrumentality in the settling of an estate, 15 in the same
manner that a sub-agent appointed by a bankruptcy court is an instrumentality of the court, 16 and a
trustee in bankruptcy of a defunct corporation is an instrumentality of the state. 17
The voluntary arbitrator no less performs a state function pursuant to a governmental power
delegated to him under the provisions therefor in the Labor Code and he falls, therefore, within the
contemplation of the term "instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact that his
functions and powers are provided for in the Labor Code does not place him within the exceptions to
said Sec. 9 since he is a quasi-judicial instrumentality as contemplated therein. It will be noted that,
although the Employees Compensation Commission is also provided for in the Labor Code, Circular
No. 1-91, which is the forerunner of the present Revised Administrative Circular No. 1-95, laid down
the procedure for the appealability of its decisions to the Court of Appeals under the foregoing
rationalization, and this was later adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129.
A fortiori, 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, just like those of the quasi-judicial agencies, boards and commissions enumerated
therein.
This would be in furtherance of, and consistent with, the original purpose of Circular No. 1-91 to
provide a uniform procedure for the appellate review of adjudications of all quasi-judicial
entities 18 not expressly excepted from the coverage of Sec. 9 of B.P. 129 by either the Constitution
or another statute. Nor will it run counter to the legislative intendment that decisions of the NLRC be
reviewable directly by the Supreme Court since, precisely, the cases within the adjudicative
competence of the voluntary arbitrator are excluded from the jurisdiction of the NLRC or the labor
arbiter.
In the same vein, it is worth mentioning that under Section 22 of Republic Act No. 876, also known
as the Arbitration Law, arbitration is deemed a special proceeding of which the court specified in the
contract or submission, or if none be specified, the Regional Trial Court for the province or city in
which one of the parties resides or is doing business, or in which the arbitration is held, shall have
jurisdiction. A party to the controversy may, at any time within one (1) month after an award is made,
apply to the court having jurisdiction for an order confirming the award and the court must grant such
order unless the award is vacated, modified or corrected. 19
In effect, this equates the award or decision of the voluntary arbitrator with that of the regional trial
court. Consequently, in a petition for certiorari from that award or decision, the Court of Appeals
must be deemed to have concurrent jurisdiction with the Supreme Court. As a matter of policy, this
Court shall henceforth remand to the Court of Appeals petitions of this nature for proper disposition.
ACCORDINGLY, the Court resolved to REFER this case to the Court of Appeals.
SO ORDERED.
Padilla, Regalado, Davide, Jr., Bellosillo, Puno, Vitug, Kapunan, Mendoza, Francisco and
Hermosisima, Jr., JJ., concur.
Feliciano, J., concurs in the result.
Narvasa, C.J. and Melo, J. are on leave.
Footnotes
1 Seide, A Dictionary of Arbitration (1970).
2 Ibid.
3 Art. 260, Labor Code.
5 Art. 262-A, par. 4, Labor Code.
7 Oceanic Bic Division (FFW), et al. v. Romero, et al., 130 SCRA 392 (1984); Sime Darby Pilipinas,
Inc. v. Magsalin, et al., 180 SCRA 177 (1989).
8 98 SCRA 314 (1980).
9 Supra.
10 Art. 262-A, in relation to Art. 217 (b) and (c), Labor Code, as amended by Sec. 9, R.A. 6715.
11 Executive Order No. 1008.
12 Laurens Federal Sav. and Loan Ass'n v. South Carolina Tax Commission, 112 S.E. 2d 716, 719,
236 S.C. 2.
13 Govt. of P.I. v. Springer, et al., 50 Phil. 259, 334 (1927).
14 Ciulla v. State, 77 N.Y.S. 2d 545, 550, 191 Misc. 528.
15 In re Turncock's Estate, 300 N.W. 155, 156, 238 Wis. 438.
16 In re Brown Co., D.C. Me., 36 F. Supp. 275, 277.
17 Gagne v. Brush, D.C.N.H., 30 F. Supp. 714, 716.
18 First Lepanto Ceramics, Inc. v. CA, et al., 231 SCRA 30 (1994).
19 Section 23, R.A. No. 876.

19 Section 23, R.A. No. 876.
Pasted from <http://www.lawphil.net/judjuris/juri1995/oct1995/gr_120319_1995.html>

National Union of Restaurant Workers, supra
2:04 AM

Kiok Loy, supra
2:05 AM

Colegio De San Juan de letran v. Assn of Employees and Faculty of
Letran
2:05 AM

Samahan sa Permex v. SoLE
12:46 AM

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 107792 March 2, 1998

SAMAHANG MANGGAGAWA SA PERMEX (SMP-PIILU-TUCP), petitioners,
vs.
THE SECRETARY OF LABOR, NATIONAL FEDERATION OF LABOR, PERMEX PRODUCER
AND EXPORTER CORPORATION, respondents.
MENDOZA, J.:
This is a petition for review on certiorari of the decision, dated October 8, 1992 and order dated
November 12, 1992, of Undersecretary of Labor and Employment Bienvenido Laguesma, ordering a
certification election to be conducted among the employees of respondent company.
The facts of the case are as follows. On January 15, 1991, a certification election was conducted
among employees of respondent Permex Producer and Exporter Corporation (hereafter referred to
as Permex Producer). The results of the elections were as follows:
National Federation of Labor (NFL) 235

No Union 466
Spoiled Ballots 18
Marked Ballots 9
Challenged Ballots 7
However, some employees of Permex Producer formed a labor organization known as the
Samahang Manggagawa sa Permex (SMP) which they registered with the Department of Labor and
Employment on March 11, 1991. The union later affiliated with the Philippine Integrated Industries
Labor Union (PIILU).
On August 16, 1991, Samahang Manggagawa sa Permex-Philippine Integrated Industries Labor
Union (SMP-PIILU), wrote the respondent company requesting recognition as the sole and exclusive
bargaining representative of employees at the Permex Producer. On October 19, 1991 Permex
Producer recognized SMP-PIILU and, on December 1, entered into a collective bargaining
agreement with it. The CBA was ratified between December 9 and 10, 1991 by the majority of the
rank and file employees of Permex Producer. On December 13, 1991, it was certified by the DOLE.
On February 25, 1992, respondent NFL filed a petition for certification election, but it was dismissed
by Med-Arbiter Edgar B. Gongalos in an order dated August 20, 1992. Respondent NFL then
appealed the order to the Secretary of Labor and Employment. On October 8, 1992, the Secretary of
Labor, through Undersecretary Bienvenido Laguesma, set aside the order of the Med-Arbiter and
ordered a certification election to be conducted among the rank and file employees at the Permex
Producer, with the following choices:
1. National Federation of Labor
2. Samahang Manggagawa sa Permex
3. No union
Petitioner moved for a reconsideration but its motion was denied in an order dated November 12,
1992. Hence, this petition.
Two arguments are put forth in support of the petition. First, it is contended that petitioner has been
recognized by the majority of the employees at Permex Producer as their sole collective bargaining
agent. Petitioner argues that when a group of employees constituting themselves into an
organization and claiming to represent a majority of the work force requests the employer to bargain
collectively, the employer may do one of two things. First, if the employer is satisfied with the
employees' claim the employer may voluntarily recognize the union by merely bargaining collectively
with it. The formal written confirmation is ordinarily stated in the collective bargaining agreement.
Second, if on the other hand, the employer refuses to recognize the union voluntarily, it may petition
the Bureau of Labor Relations to conduct a certification election. If the employer does not submit a

the Bureau of Labor Relations to conduct a certification election. If the employer does not submit a
petition for certification election, the union claiming to represent the employees may submit the
petition so that it may be directly certified as the employees' representative or a certification election
may be held.
The case of Ilaw at Buklod ng Manggagawa v. Ferrer-Calleja, 1 cited by the Solicitor General in his
comment filed in behalf of the NLRC, is particularly apropos. There, the union also requested
voluntary recognition by the company. Instead of granting the request, the company petitioned for a
certification election. The union moved to dismiss on the ground that it did not ask the company to
bargain collectively with it. As its motion was denied, the union brought the matter to this Court. In
sustaining the company's stand, this Court ruled:
. . . Ordinarily, in an unorganized establishment like the Calasiao Beer Region, it is the union that
files a petition for a certification election if there is no certified bargaining agent for the workers in the
establishment. If a union asks the employer to voluntarily recognize it as the bargaining agent of the
employees, as the petitioner did, it in effect asks the employer to certify it as the bargaining
representative of the employees — A CERTIFICATION WHICH THE EMPLOYER HAS NO
AUTHORITY TO GIVE, for it is the employees' prerogative (not the employer's) to determine
whether they want a union to represent them, and, if so, which one it should be. (emphasis supplied)
In accordance with this ruling, Permex Producer should not have given its voluntary recognition to
SMP-PIILU-TUCP when the latter asked for recognition as exclusive collective bargaining agent of
the employees of the company. The company did not have the power to declare the union the
exclusive representative of the workers for the purpose of collective bargaining,
Indeed, petitioner's contention runs counter to the trend towards the holding of certification election.
By virtue of Executive Order No. 111, which became effective on March 4, 1987, the direct
certification previously allowed under the Labor Code had been discontinued as a method of
selecting the exclusive bargaining agents of the workers. 2 Certification election is the most effective
and the most democratic way of determining which labor organization can truly represent the
working force in the appropriate bargaining unit of a company. 3
Petitioner argues that of the 763 qualified employees of Permex Producer, 479 supported its
application for registration with the DOLE and that when petitioner signed the CBA with the
company, the CBA was ratified by 542 employees. Petitioner contends that such support by the
majority of the employees justifies its finding that the CBA made by it is valid and binding.
But it is not enough that a union has the support of the majority of the employees. It is equally
important that everyone in the bargaining unit be given the opportunity to express himself. 4
This is especially so because, in this case, the recognition given to the union came barely ten (10)
months after the employees had voted "no union" in the certification election conducted in the
company. As pointed out by respondent Secretary of Labor in his decision, there can be no
determination of a bargaining representative within a year of the proclamation of the results of the
certification election. 5 Here the results, which showed that 61% of the employees voted for "no
union," were certified only on February 25, 1991 but on December 1, 1991 Permex Producer already
recognized the union and entered into a CBA with it.
There is something dubious about the fact that just ten (10) months after the employees had voted
that they did not want any union to represent them, they would be expressing support for petitioner.
The doubt is compounded by the fact that in sworn affidavits some employees claimed that they had
either been coerced or misled into signing a document which turned out to be in support of petitioner
as its collective bargaining agent. Although there were retractions, we agree with the Solicitor
General that retractions of statements by employees adverse to a company (or its favored union) are
oftentimes tainted with coercion and intimidation. For how could one explain the seeming flip-
flopping of position taken by the employees? The figures claimed by petitioner to have been given to
it in support cannot readily be accepted as true.
Second. Petitioner invokes the contract-bar rule. They contend that under Arts. 253, 253-A and 256
of the Labor Code and Book V, Rule 5, §3 of its Implementing Rules and Regulations, a petition for
certification election or motion for intervention may be entertained only within 60 days prior to the
date of expiration of an existing collective bargaining agreement. The purpose of the rule is to
ensure stability in the relationships of the workers and the management by preventing frequent
modifications of any collective bargaining agreement earlier entered into by them in good faith and
for the stipulated original period. Excepted from the contract-bar rule are certain types of contracts
which do not foster industrial stability, such as contracts where the identity of the representative is in
doubt. Any stability derived from such contracts must be subordinated to the employees' freedom of
choice because it does not establish the kind of industrial peace contemplated by the law. 6 Such
situation obtains in this case. The petitioner entered into a CBA with Permex Producer when its
status as exclusive bargaining agent of the employees had not been established yet.
WHEREFORE, the challenged decision and order of the respondent Secretary of Labor are
AFFIRMED.

AFFIRMED.
SO ORDERED.
Regalado, Melo, Puno and Martinez, JJ., concur.
Footnotes
1 182 SCRA 561 (1990).
2 Central Negros Electric Cooperative v. Secretary of Labor and Employment, 201 SCRA 591
(1991).
3 National Mines and Allied Workers Union v. Secretary of Labor, 227 SCRA 821 (1993); Associated
Trade Unions v. Trajano, 162 SCRA 319 (1988).
4 Central Negros Electric Cooperative, Inc. v. Secretary of DOLE, 201 SCRA at 592.
5 IMPLEMENTING RULES, Bk V, Rule V, §3.
6 Firestone Tire and Rubber Company Employees Union v. Estrella, 81 SCRA 49 (1978).
Pasted from <http://www.lawphil.net/judjuris/juri1998/mar1998/gr_107792_1998.html>

ALU v. Ferrer-Calleja
12:46 AM

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-77282 May 5, 1989
ASSOCIATED LABOR UNIONS (ALU) petitioner,
vs.
HON. PURA FERRER-CALLEJA, as Director of the Bureau of Labor Relations, Ministry of
Labor and Employment; PHILIPPINE SOCIAL SECURITY LABOR UNION (PSSLU); SOUTHERN
PHILIPPINES FEDERATION OF LABOR (SPFL) and GAW TRADING, INC., respondents.
Romeo S. Occena, Leonard U. Sawal, Edgemelo C. Rosales and Ernesto Carreon for petitioner.
Henrick F. Gingoyon for respondent SPFL.
Wilfredo L. Orcullo for respondent Southern Philippines Federation of Labor.
Miguel A. Enrique, Jr. for respondent GAW Trading, Inc.
REGALADO, J.:
Petitioner Associated Labor Unions (ALU, for brevity) instituted this special civil action
for certiorari and prohibition to overturn the decision of the respondent direcstor 1 dated December
10, 1986, which ordered the holding of a certification election among the rank-and-file workers of the
private respondent GAW Trading, Inc. The averments in the petition therefor, which succinctly but
sufficiently detail the relevant factual antecedents of this proceedings, justify their being quoted in
full, thus:
1. The associated Labor Unions (ALU) thru its regional Vice-Presidents Teofanio C. Nuñez, in a
letter dated May 7, 1986 (ANNEX C) informed GAW Trading, Inc. that majority of the latter's
employees have authorized ALU to be their sole and exclusive bargaining representative, and
requested GAW Trading Inc., in the same Letter for a conference for the execution of an initial
Collective Bargaining Agreement (CBA);
2. GAW Trading Inc. received the Letter of ALU aforesaid on the same day of May 7, 1986 as
acknowledged thereunder and responded (sic) ALU in a letter dated May 12, 1986 (Annex D)
indicating its recognition of ALU as the sole and exclusive bargaining agent for the majority of its
employees and for which it set the time for conference and/or negotiation at 4:00 P.M. on May 12,
1986 at the Pillsbury Office, Aboitiz Building Juan Luna Street, Cebu City;
3. On the following day of May13, 1986, ALU in behalf of the majority of the employees of GAW
Trading Inc. signed and excuted the Collective Bargaining (ANNEX F) ...
4. On May 15, 1986, ALU in behalf of the majority of the employees of GAW Trading Inc. and GAW
Trading Inc. signed and executed the Collective Bargaining Agreements (ANNEX F) . . . .
5. In the meantime, at about 1:00 P.M. of May 9, 1986, the Southern Philippines Federation of Labor
(SPFL) together with Nagkahiusang Mamumuo sa GAW (NAMGAW) undertook a ... Strike ... after it
failed to get the management of GAW Trading Inc. to sit for a conference respecting its demands
presented at 11: A.M. on the same day in an effort to pressure GAW Trading Inc. to make a
turnabout of its standign recognition of ALU as the sole and exclusive bargaining representative of
its employees, as to which strike GAW Trading Inc. filed a petition for Restraining Order/Preliminary
Injunction, dfated June 1, 1986 (Annex H) and which strike Labor Arbiter Bonifacio B. Tumamak held
as illegal in a decision dated August 5, 1986 (ANNEX I);
6. On May 19, 1986, GAW Lumad Labor Union (GALLU-PSSLU) Federation ... filed a Certification
Election petition (ANNEX J), but as found by Med-Arbiter Candido M. Cumba in its (sic) Order dated
Ju ne 11, 1986 (ANNEX K), without having complied (sic) the subscription requirement for which it
was merely considered an intervenor until compliance thereof in the other petition for direct
recogbnition as bargaining agent filed on MAy 28, 1986 by southern Philippines Federation of Labor
(SPFL) as found in the same order (ANNEX K);
7. Int he meantime, the Collective Bargaining Agreement executed by ALU and GAW Trading Inc.
(ANNEX F) was duly filed May 27, 1986 with the Ministry of Labor and Employment in Region VII,
Cebu city;
8. Nevertheless, Med-Arbiter Candido M. Cumba in his order of June 11, 1986 (Annex K) ruled for
the holding of a ceritfication election in all branches of GAW Trading Inc. in Cebu City, as to which
ALU filed a Motion for Reconsideration dated June 19, 1986 (ANNEX L) which was treated as an
appeal on that questioned Order for which reason the entire record of subject certification case was

appeal on that questioned Order for which reason the entire record of subject certification case was
forwarded for the Director, Bureau of LAbor Relations, Ministry of Labor and Employment, Manila
(ANNEX M);
9. Bureau of Labor Relations Director Cresencio B. Trajano, rendered a Decision on August 13,
1986 (Annex B) granting ALU's appeal (Motion for Reconsideration) and set aside the questioned
Med-Arbiter Order of June 11, 1986 (Annex K), on the ground that the CBA has been effective and
valid and the contract bar rule applicable;
10. But the same Decision of Director Crecensio B. Trajano was sought for reconsideratrion both by
Southern Philippines Federation of Labor (SPFL) on August 26, 1986 (ANNEX N), supplemented by the
'SUBMISSION OD ADDITIONA L EVIDENCE' dated September 29, 1986 (ANNEX O), and the Philppine
Social Security Labor Union (PSSLU) on October 2, 1986 (ANNEX P), which were opposed by both GAW
Trading, Inc. on September 2, 1986 (ANNEX Q) and ALU on September 12, 1986 (ANNEX R); 2
The aforesaid decision of then Director Trajano was thereafter reversed by respondent director in
her aforecited decision which is now assailed in this action. A motion for reconsideration of
ALU 3 appears to have been disregarded, hence, its present resort grounded on grave abuse of
discretion by public respondent.
Public respondent ordered the holding of a certification election ruling that the "contract bar rule"
relied upon by her predecessor does not apply in the present controversy. According to the decision
of said respondent, the collective bargaining agreement involved herein is defective because it "was
not duly submitted in accordance with Section I, Rule IX, Book V of the Implementing Rules of Batas
Pambansa Blg. 130." It was further observed that "(t)here is no proof tending to show that the CBA
has been posted in at least two conspicuous places in the 1 establishment at least five days before
its ratification and that it has been ratified by the majority of the employees in the bargaining unit."
We find no reversible error in the challenged decision of respondent director. A careful consideration
of the facts culled from the records of this case, especially the allegations of petitioner itself as
hereinabove quoted, yields the conclusion that the collective bargaining agreement in question is
indeed defective hence unproductive of the legal effects attributed to it by the former director in his
decision which was subsequently and properly reversed.
We have previously held that the mechanics of collective bargaining are set in motion only when the
following jurisdictional preconditions are present, namely, (1) possession of the status of majority
representation by the employees' representative in accordance with any of the means of selection
and/or designation provided for by the Labor Code; (2) proof of majority representation; and (3) a
demand to bargain under Article 251, paragraph (a), of the New Labor Code. 4 In the present case,
the standing of petitioner as an exclusive bargaining representative is dubious, to say the least. It
may be recalled that respondent company, in a letter dated May 12, 1986 and addressed to
petitioner, merely indicated that it was "not against the desire of (its) workers" and required petitioner
to present proof that it was supported by the majority thereof in a meeting to be held on the same
date. 5 The only express recognition of petitioner as said employees' bargaining representative that
We see in the records is in the collective bargaining agreement entered into two days
thereafter. 6 Evidently, there was precipitate haste on the part of respondent company in recognizing
petitioner union, which recognition appears to have been based on the self-serving claim of the latter
that it had the support of the majority of the employees in the bargaining unit. Furthermore, at the
time of the supposed recognition, the employer was obviously aware that there were other unions
existing in the unit. As earlier stated, respondent company's letter is dated May 12, 1986 while the
two other unions, Southern Philippine Federation of Labor (hereafter, SPFL and Philippine Social
Security Labor Union (PSSLU, for short), went on strike earlier on May 9, 1986. The unusual
promptitude in the recognition of petitioner union by respondent company as the exclusive
bargaining representative of the workers in GAW Trading, Inc. under the fluid and amorphous
circumstances then obtaining, was decidedly unwarranted and improvident.
It bears mention that even in cases where it was the then Minister of Labor himself who directly
certified the union as the bargaining representative, this Court voided such certification where there
was a failure to properly determine with legal certainty whether the union enjoyed a majority
representation. In such a case, the holding of a certification election at a proper time would not
necessarily be a mere formality as there was a compelling reason not to directly and unilaterally
certify a union. 7
An additional infirmity of the collective bargaining agreement involved was the failure to post the
same in at least two (2) conspicuous places in the establishment at least five days before its
ratification. 8 Petitioners rationalization was that "(b)ecause of the real existence of the illegal strike
staged by SPFL in all the stores of GAW Trading, Inc. it had become impossible to comply with the
posting requirement in so far as the realization of tits purpose is concerned as there were no
impartial members of the unit who could be appraised of the CBA's contents. " 9 This justification is
puerile and unacceptable.
In the first place, the posting of copies of the collective bargaining agreement is the responsibility of

In the first place, the posting of copies of the collective bargaining agreement is the responsibility of
the employer which can easily comply with the requirement through a mere mechanical act. The fact
that there were "no impartial members of the unit" is immaterial. The purpose of the requirement is
precisely to inform the employees in the bargaining unit of the contents of said agreement so that
they could intelligently decide whether to accept the same or not. The assembly of the members of
ALU wherein the agreement in question was allegedly explained does not cure the defect. The
contract is intended for all employees and not only for the members of the purpoted representative
alone. It may even be said the the need to inform the non-members of the terms thereof is more
exigent and compelling since, in all likehood, their contact with the persons who are supposed to
represent them is limited. Moreover, to repeat, there was an apparent and suspicious hurry in the
formulation and finalization of said collective bargaining accord. In the sforementioned letter where
respondent company required petitioner union to present proof of its support by the employees, the
company already suggested that petitioner ALU at the same time submit the proposals that it
intended to embody in the projected agreement. This was on May 12, 1986, and prompltly on thre
following day the negoltiation panel; furnish respondent company final copies of the desired
agreement whcih, with equal dispatch, was signed on May 15, 1986.
Another potent reason for annulling the disputed collective bargaining is the finding of respondent
director that one hundred eighty-one( 181) of the two hundred eighty-one (281) workers who
"ratified" the same now " strongly and vehemently deny and/or repudiate the alleged negotiations
and ratification of the CBA. " 10 Although petitioner claims that only sev en (7) of the repudiating
group of workers belong to the total number who allegedly ratified the agreement, nevertheless such
substantiated contention weighed against the factujal that the controverted contract will not promote
industrial stability . The Court has long since declared that:
... Basic to the contract bar rule is the proposition that the delay of the right to select represen tatives can
be justified only where stability is deemed paramount. Excepted from the contract which do not foster
industrial stability, such as contracts where the identity of the representative is in doubt. Any stability
derived from such contracts must be subordinated to the employees' freedom of choice because it does
nto establish the type of industrial peace contemplated by the law. 11
At this juncture, petitioner should be reminded that the technical rules of rpocedure do not strictly
apply in the adjudication of labor disputes. 12 Consequently, its objection that the evidence with
respect to the aforesaid repudiiation of the supposed collective bargaining agreement cannot be
considered for the first time on appeal on the Bureau of Labor Relations should be disregarded,
especially considering the weighty significance thereof.
Both petitioner and private respondent GAW Trading, Inc. allege that the employees of the latter are
now enjoying the benefits of the collective bargaining agreement that both parties had forged.
However, We cannot find sufficient evidence of record to support this contention. The only evidence
cited by petitioner is supposed payment of union fees by said employees, a premise too tenuous to
sustain the desired conclusion. Even the actual number of workers in the respondent company is not
clear from the records. Said private respondent claims that it is two hundred eighty-one (281) 13 but
petitioner suggests that it is more than that number. The said parties should be aware that this Court
is not an adjudicator of facts. Worse, to borrow a trite but apt phrase, they would heap the Ossa of
confusion upon the Pelion of uncertainty and still expect a definitive ruling on the matter thus
confounded.
Additionally, the inapplicability of the contract bar rule is further underscored by the fact that when
the disputed agreement was filed before the Labor Regional Office on May 27, 1986, a petition for
certification election had already been filed on May 19, 1986. Although the petition was not
supported by the signatures of thirty percent (30%) of the workers in the bargaining unit, the same
was enough to initiate said certification election.
WHEREFORE, the order of the public respondent for the conduct of a certification election among
the rank-and-file workers of respondent GAW Trading Inc. is AFFIRMED. The temporary restraining
order issued in this case pursuant to the Resolution of March 25, 1987 is hereby lifted.
SO ORDERED.
Melencio-Herrera, Paras, Padilla and Sarmiento, JJ., concur.
Footnotes
1 Rollo, 25-27; Annex A. Petition.
2 Ibid., 8-11.
3 Ibid., 11; Annex S. Petition.
4 Kick Loy vs. National Labor Relations Commission, 141 SCRA 179,185 (1986).
5 Rollo, 9, 34; Annex D, Petition.
6 Ibid., 37.
7 Colgate Palmolive Philippines, Inc. vs. Hon. Blas F. Ople, et al., G.R. No. 73691, June 30, 1988.
8 Sec. l (a), Rule IX, Book V, Implementing Rules of B.P. 130.

7 Colgate Palmolive Philippines, Inc. vs. Hon. Blas F. Ople, et al., G.R. No. 73691, June 30, 1988.
8 Sec. l (a), Rule IX, Book V, Implementing Rules of B.P. 130.
9 Rollo, 16.
10 Ibid., 27.
11 Firestone Tire & Rubber Company Employees Union, etc. vs. Estrella, etc., et al. 81 SCRA 49, 54
(1978).
12 Art. 221, Labor Code, as amended.
13 Rollo, 175-176.
Pasted from <http://www.lawphil.net/judjuris/juri1989/may1989/gr_l77282_1989.html>

Citizen's labor union v. CIR
12:46 AM

SUPREME COURT
Manila
EN BANC
G.R. No. L-24320 November 12, 1966
CITIZENS LABOR UNION-CCLU, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, MALAYANG MANGGAGAWA SA ESSO, DEPARTMENT
OF LABOR and ESSO STANDARD EASTERN, INC., respondents.
G.R. No. L-24421 November 12, 1966
CITIZENS LABOR UNION-CCLU, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS, MALAYANG MANGGAGAWA SA ESSO, ESSO
STANDARD EASTERN, INC., respondents.
Leon O. Ty and Gesmundo for petitioner.
Lanting and Morabe and Padilla Law Office for respondent.
CASTRO, J.:
G.R. L-24320, entitled "Citizens Labor Union vs. Court of Industrial Relations, Malayang
Manggagawa sa Esso, Department of Labor and Esso Standard Eastern, Inc.," is a petition
for certiorari and mandamus with preliminary injunction. The petitioner therein prayed, among other
things, that a writ of preliminary injunction issue to compel the Court ofzenIndustrial Relations (to be
hereinafter referred to as the CIR) to act on the motion filed by the said petitioner Citizens Labor
Union (to be hereinafter referred to as the CLU) to suspend certification election, and to enjoin the
Department of Labor from holding the secret ballot election scheduled for March 22, 1965; or, in the
alternative, should the CIR fail to act on the motion in question and such inaction be interpreted as a
denial thereof, that the petition be given due course under Rule 43, Revised Rules of Court,
judgment be rendered reversing the order of March 6, 1965, infra, and that the petition for
certification election filed by the Malayang Manggagawa Sa Esso (to be hereinafter referred to as
the MME) be dismissed. The dispositive portion of the order of March 6, 1965 reads:
WHEREFORE, pursuant to the provisions of Section 12, Republic Act No. 875, and the Rules on
Certification Election of this Court, the Department of Labor is hereby requested to conduct the
necessary certification election among the regular rank and file employees and/or laborers of the
Esso Standard Eastern, Inc. at Pandacan Terminal, Manila, whose names appear in Exhibit X-Court,
in order to determine whether they desire to be represented for collective bargaining purposes with
the employer firm by either the Citizens Labor Union (CLU) or the Malayang Manggagawa Sa Esso
(PFPW) or neither; and upon conclusion of the said election, to submit a report of the result thereof,
for further disposition.
G.R. L-24431, entitled "Citizens Labor Union vs. Court of Industrial Relations, Malayang
Manggagawa Sa Esso, Esso Standard Eastern, Inc.," is a petition for certiorari to review the order of
March 6, 1965, quoted above, and the resolution of the CIR en banc of April 2, 1965, the dispositive
portion of which reads:
After a close perusal of the records as well as the arguments of the parties, the Court en banc fails
to find sufficient justification for altering or modifying the aforesaid Order.
BOTH MOTIONS DENIED
The chronology of the events leading to these two cases follows:
The MME on January 7, 1965 filed a petition for certification election with the CIR (Case 1459-MC),
alleging that it is a labor union organized among the employees of Esso Standard Eastern, Inc.
(ESSO) Pandacan Terminal, Manila; that it represents the majority of the non-supervisory
employees of the said terminal unit; that there exists a collective bargaining agreement between the
CLU and the ESSO, of a duration of three (3) years and three (3) month from April 8, 1963 to July 8,
1966; and that its aim in asking for a certification election is merely to determine which union will
administer the contract during the remainder of the term thereof. The CLU and the ESSO filed
motions to dismiss the petition based on several grounds, most important of which is that the
existing collective bargaining contract is a bar to the holding of a certification election.
After due hearing, the CIR, through the Honorable Judge Tabigne, issued an order dated March 6,
1965, denying the motions to dismiss the petition for certification election, holding that the existing
collective bargaining contract is no bar to a certification election, and requesting the Department of

collective bargaining contract is no bar to a certification election, and requesting the Department of
Labor to conduct the necessary election. The CLU and the ESSO filed with the CIR en banc
separate motions for reconsideration, to which the MME filed its opposition. Meanwhile, the
Department of Labor scheduled the secret ballot election for March 22, 1965, from 7:00 a.m. to 7:00
p.m., with notice to the parties concerned. The CLU and the ESSO on March 18, 1965 filed with the
CIR en banc separate motions to suspend the certification election as set, upon the basis of their
respective motions for reconsideration then pending, ESSO on its part alleging that the certification
election if held would render academic its said motion for reconsideration.
On March 19, 1965 the CLU filed with this Court a petition for certiorari and mandamus with
preliminary injunction (L-24320). This was given due course and the parties respondents therein as
required filed their respective answers, but no writ of preliminary injunction was issued to direct the
CIR to suspend the certification election or to enjoin the Department of Labor from proceeding with
its scheduled secret ballot election. The latter proceeded with the election and the result thereof
shows that the MME obtained votes of more than one-half of the rank and file employees and
laborers of the ESSO Pandacan Terminal unit eligible to vote.
The CLU on March 23, 1965 filed with the CIR a motion to annul the certification election on several
grounds, among which are that the election was held illegally and irregularly as it was conducted on
a holiday, and that it was had without participation of the CLU therein. The ESSO on the following
March 29 also filed with the CIR a similar motion to annul the certification election. The MME
thereafter filed its opposition thereto.
The CIR en banc, by resolution of April 2, 1965, denied the motions for reconsideration of the order
of March 6, 1965. From this resolution, the CLU filed a notice of appeal.
The CIR on April 26, 1965 issued an order denying the motions for reconsideration seeking
annulment of the certification election held on March 22, 1965. In the same order, on the basis of the
result of the secret ballot election, the CIR certified the MME as the sole and exclusive bargaining
agent of all the non-supervisory employees of the ESSO at its Pandacan Terminal unit. The CLU
and the ESSO filed separate motions to have this last order reconsidered. These motions are
pending resolution.
The CLU on May 9, 1965 filed with this Court an urgent petition praying for issuance of a writ of
preliminary injunction to restrain the CIR from proceeding with the enforcement of its order of April
26, 1965, on the ground that the issues to be heard in L-24320 which was set for hearing on June
16, 1965 would become moot and academic if the said order was enforced. The CLU on the
following May 12 moved to have hearing advanced to May 19, 1965. This Court on May 14, 1965
issued the injunction prayed for, restraining the CIR from enforcing its order of April 26, 1965, and
also from proceeding or taking any other action in connection with the certification election case.
This Court also advanced the hearing to May 26, 1965.
The CLU on June 10, 1965 filed with this Court a petition for review of the order of March 6, 1965
and of the CIR resolution en banc of April 2, 1965 (L-24431). The MME moved to have the petition
dismissed on the ground that this Court lacks jurisdiction to entertain it as the CLU failed to file with
the CIR its notice of appeal from the order of March 6, 1965 and the CIR resolution en banc of April
2, 1965 within the prescribed reglementary period. We gave due course to the petition for review and
resolved further to consider it together with L-24320 (Res. of July 14, 1965).
Pending this Court's adjudication of the two cases, or more precisely on October 13, 1966, the MME
filed with this Court a "Motion for Preliminary Injunction", alleging that the ESSO and the CLU had
extended the term of the existing collective bargaining contract to December 31, 1966; that pursuant
to its salient provisions, the CLU and the ESSO at any time between October 31 and December 31,
1966 will commence negotiations for a new collective bargaining agreement and sign the same,
unless a preliminary injunction is issued by this Court; that a new agreement will render moot and
academic the order of the CIR certifying the MME as the sole and exclusive bargaining agent of all
the employees of the ESSO at its Pandacan Terminal unit, and may again be alleged as a bar to the
holding of a new certification election. The motion was opposed by the CLU and the ESSO, both
alleging in concert that since March 22, 1965 when the secret ballot election was held, there has
occurred a substantial change in the composition of the rank and file of the employees and laborers
at the ESSO Pandacan Terminal unit, a good number of them having left their employment, retired,
or been compulsorily laid off with the approval of the CIR, resulting in a change of employee
composition in the unit; that the ESSO will negotiate a new collective bargaining contract with the
union that commands the majority of the present labor force, either the CLU or the MME, as the case
may be; and that if this Court issues the restraining order, it will suspend the process of a new
collective bargaining agreement to the prejudice of the workers who would be denied the economic
benefits thereof.
On November 3, 1966, we issued in L-24320 an injunction commanding the CLU and ESSO to
refrain from negotiating and concluding a new collective bargaining agreement until after this Court
shall have decided the case on the merits.

shall have decided the case on the merits.
We will first dispose of the jurisdictional objection interposed by the MME in its brief: that this Court
did not acquire jurisdiction over the petition for review (L-24431) on the ground that the CLU failed to
file its notice of appeal from the order of March 6, 1965 and the CIR resolution en banc of April 2,
1965 within the prescribed reglementary period. We cannot sustain this view. By giving due course
to the petition for review (See Res. of July 14, 1965), we necessarily denied the motion to dismiss
the petition for review, and simultaneously regarded the petition formandamus and certiorari with
preliminary injunction (L-2432O) as a petition for review. The CLU in that petition in fact prayed this
Court that, should the "inaction of the Respondent Court en banc be interpreted as a denial of the
said motion to Suspend Election and the Motion for Reconsideration," the petition be treated as one
for review under Rule 43 of the Revised Rules of Court, that judgment be rendered therein reversing
the order of March 6, 1965, and that the petition of the MME for certification election be dismissed.
Our resolution is in line with the ruling in Cruz vs. Court of Industrial Relations, et al., L-18277,
August 31, 1963. We there held that
Although as heretofore stated, this is an action for mandamus, prohibition and certiorari, primarily to
compel the respondent court to act on petitioner's motion for reconsideration of November 29, 1960,
nevertheless, in view of the inaction of the court, notwithstanding the repeated petitions to pass upon
the motions in question which could be interpreted as an insistence on or adherence to the judges'
respective previous rulings, and therefore, a denial of the motion for reconsideration, and
considering that we have here already before us all the records of the case, it is believed that the
interest of justice would be better subserved if the present petition should be treated as one for
review.
We will now define the diametrically opposite positions taken by the two competiting unions.
In seeking the reversal and setting aside of the order of the CIR of March 6, 1965 and the dismissal
of the petition for certification election filed by the MME, the concerted grounds relied upon by the
CLU and the ESSO are that the MME was not qualified to ask for certification election, not having
observed the legal requisites therefor; that the petition for certification election was made to
circumvent the results of the elections held in the ESSO Pandacan Terminal unit on December 4,
1964 wherein the MME's officers were defeated; that the certification election is being used as a
justification for unethical, illegal and immoral union-raiding and union-grabbing which disturb
industrial peace; that a certification election cannot be held pending the adjudication of the unfair
labor practice actions filed against the CLU and the MME in connection with the strikes staged by
the said unions (Case 3943 and Charge 442 before the CIR); and that the certification election is
barred by the "Contract-Bar Policy".
The MME, upon the other hand, urges the dismissal of these two cases before us and the affirmance
of the orders in question, contending that the CIR committed no abuse of discretion in ordering a
certification election, its judgment in certification proceedings being entitled to almost finality in the
absence of patent abuse; that the CLU can no longer be considered as the representative of the
rank and file of the employees and laborers of ESSO at its Pandacan Terminal unit, because it has
lost its majority status inasmuch as the overwhelming majority of its members have given up their
membership therein; that the MME was conclusively established to have obtained the majority status
as a result of the secret ballot election held on March 22, 1965; that the "Contract-Bar Policy" relied
upon by the CLU and the ESSO for the non-holding of a certification election can not be applied,
because here the existing collective bargaining agreement is not one of reasonable duration as it
has been in existence for more than 10 years, that is from 1953 to 1964, and moreover that the
MME in its petition for certification election expressly bound itself not to change, modify, or contest
the contract during its unexpired term; and that the right of the workers to elect their bargaining
agent to represent them is paramount and should not be curtailed or restricted in any manner unless
absolutely necessary.
We thus confront the problem of determining which of the competing unions should be recognized
as the "appropriate bargaining unit" of the rank and file of the employees and laborers of ESSO at its
Pandacan Terminal unit, pursuant to Section 12-(a) of the Industrial Peace Act.
We must observe at this juncture, however, that the passage of time has removed all meaning and
validity from the positions taken by the two competing unions. Except for the motion for preliminary
injunction filed by the MME recently, that is, on October 13, 1966, all the pleadings extant in the
record are dated and were filed prior to July 8, 1966, the date when the life of the collective
bargaining agreement in question expired. All that the MME seeks is that it be declared the sole and
collective bargaining agent to "administer the contract during its remaining term"(see order of March
6, 1965). Upon the other hand, the opposition of the CLU and the ESSO is grounded mainly on the
existence of the collective bargaining agreement which, they claim, is of a reasonable duration, and
therefore precludes the holding of a certification election by virtue of the "Contract-Bar Policy". The
collective bargaining agreement lapsed on July 8, 1966; the positions of the two labor unions have
therefore become academic.

therefore become academic.
All these notwithstanding, we still confront the very real and fundamental problem of which union
should be recognized as the sole and exclusive bargaining agent of all the ESSO employees at the
Pandacan Terminal unit. The extension of the life of the collective bargaining agreement to
December 31, 1966, while significant, is really of little moment, because after that date, the problem
will still be there, as big as life, unless it is resolved before then.
This Court in numerous cases has reaffirmed its attitude that it is a sound and unassailable labor
practice for labor and management to conclude a new contract before the expiry date of any
collective bargaining agreement in order to avoid a hiatus in management-labor relations. The
Industrial Peace Act was designed primarily to promote industrial peace through encouragement of
collective bargaining. Any undue delay in the selection of a bargaining representative can hardly be
said to contribute to that end.
The CLU claims that it is the sole and exclusive bargaining agent on the strength of its prior
collective bargaining history (Democratic Labor Assn. vs. Cebu Stevedoring, L-10321, Feb. 28,
1958); the MME claims that it is the one that should be recognized on the basis of the will of the
employees (Democratic Labor Assn. vs. Cebu Stevedoring, supra) manifested in the secret ballot
election held on March 22, 1965 in favor of the MME as their sole and exclusive bargaining agent,
which collective will should not be brushed aside lightly. Like the CLU, the MME claims that its
majority status should be presumed to continue up to the present time and for as long as the
question has not been finally resolved (NLRB vs. International Furniture Co., 212 F. 2d 431; The
Celanese Corporation of America, 95 NLRB 664).
Against the presumption of continued majority status, however, is the rule that such majority status
does not continue forever "especially in face of an assertion and offer of proof to the contrary"
(Steward Die Casting Corp. vs. National Labor Relations Board [1940; CCA 8th] 114 F. 2d, 849 [writ
of certiorari denied in (1941)], 312 US 680; 85 L ed 1119, 61 S. Ct. 449), or "in view of altered
circumstances which have likely occurred in the interim" (Reliance Mfg. Co. vs. National Labor
Relations Board [1941; CCA 8th] 125 F 2d, 311), or "by a change in the conditions which
demonstrates that a shift in sentiment actually exists among the employees, and is caused by other
factors than the employer's refusal to bargain collectively" (National Labor Relations Board vs. P.
Lorillard Co. [1941; CCA 6th] 117 F. 2d 921). It would seem then that the burden of coming forward
with proof of majority status is upon the union asserting it.
Against the claim of the MME that it represents the will of the majority of the rank and file employees
at the Pandacan Terminal unit, is the manifestation, advanced with vehemence, of both the CLU and
the ESSO that after the secret ballot election held on March 22, 1965, the employee composition
has substantially changed because a great number of the employees and laborers in the Pandacan
Terminal unit have left their employment, retired, or been compulsorily laid off with the approval of
the CIR. On its part, ESSO further claims that the salient facts obtaining in the two cases before us
have been so altered by the lapse of time and by developments shaped and brought about by the
parties themselves, that "nothing will be gained if an altered factual situation is compelled to await a
decision applicable to an entirely different set of facts." (See ESSO opposition to the motion for
issuance of a writ of preliminary injunction, filed on October 20, 1966).
The above conflicting assertions are not based on any evidence of record, but they are nevertheless
assertions formally and solemnly made and therefore cannot be ignored.
But precisely because the record is barren of evidence upon which this Court may properly reach a
definitive determination as to which of the two unions should be upheld, at this time, as the sole and
exclusive bargaining agent, this Court will not even begin to attempt to resolve the problem in favor
of one or the other labor union.
By express mandate of law, the CIR is empowered to investigate controversies concerning the
matter of representation of labor in its dealings with management, and, depending upon the results
of its investigation, thereafter to certify to the parties the name of the labor organization that, in
proper proceedings, has been selected to act as the appropriate bargaining unit (sec. 12-[b],
Industrial Peace Act).
UPON THE FOREGOING PREMISES, this Court is constrained to remand, as it hereby remands,
this case to the Court of Industrial Relations, with instructions that it exert and exercise, without
delay, the powers conferred upon it by law, and take such actions and issue such orders as the
environmental circumstances will accordingly warrant.
No pronouncement as to costs.
Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Bengzon, J.P., Zaldivar and Sanchez,
JJ., concur.
Barrera, J., is on leave.
Pasted from <http://www.lawphil.net/judjuris/juri1966/nov1966/gr_l-24320_1966.html>

National Congress Union v. CIR
12:47 AM

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 89609 January 27, 1992

NATIONAL CONGRESS OF UNIONS IN THE SUGAR INDUSTRY OF THE PHILIPPINES
(NACUSIP)-TUCP,petitioner,
vs.
HON. PURA FERRER-CALLEJA, in her capacity as Director of the Bureau of Labor Relations;
and the NATIONAL FEDERATION OF SUGAR WORKERS (NFSW)-FGT-KMU, respondents.
Zoilo V. De la Cruz, Jr., Beethoven R. Buenaventura and Pedro E. Jimenez for petitioner.
Manlapao, Drilon, Ymballa and Chavez for private respondent.
MEDIALDEA, J.:
This is a petition for certiorari seeking the nullification of the resolution issued by the respondent
Director of the Bureau of Labor Relations Pura Ferrer-Calleja dated June 26, 1989 setting aside the
order of the Med-Arbiter dated February 8, 1989 denying the motion to dismiss the petition and
directing the conduct of a certification election among the rank and file employees or workers of the
Dacongcogon Sugar and Rice Milling Co. situated at Kabankalan, Negros Occidental.
The antecedent facts giving rise to the controversy at bar are as follows:
Petitioner National Congress of Unions in the Sugar Industry of the Philippines (NACUSIP-TUCP) is
a legitimate national labor organization duly registered with the Department of Labor and
Employment. Respondent Honorable Pura Ferrer-Calleja is impleaded in her official capacity as the
Director of the Bureau of Labor Relations of the Department of Labor and Employment, while private
respondent National Federation of Sugar Workers (NFSW-FGT-KMU) is a labor organization duly
registered with the Department of Labor and Employment.
Dacongcogon Sugar and Rice Milling Co., Inc. (Dacongcogon) based in Kabankalan, Negros
Occidental employs about five hundred (500) workers during milling season and about three
hundred (300) on off-milling season.
On November 14, 1984, private respondent NFSW-FGT-KMU and employer Dacongcogon entered
into a collective bargaining agreement (CBA) for a term of three (3) years, which was to expire on
November 14, 1987.
When the CBA expired, private respondent NFSW-FGT-KMU and Dacongcogon negotiated for its
renewal. The CBA was extended for another three (3) years with reservation to negotiate for its
amendment, particularly on wage increases, hours of work, and other terms and conditions of
employment.
However, a deadlock in negotiation ensued on the matter of wage increases and optional retirement.
In order to obviate friction and tension, the parties agreed on a suspension to provide a cooling-off
period to give them time to evaluate and further study their positions. Hence, a Labor Management
Council was set up and convened, with a representative of the Department of Labor and
Employment, acting as chairman, to resolve the issues.
On December 5, 1988, petitioner NACUSIP-TUCP filed a petition for direct certification or
certification election among the rank and file workers of Dacongcogon.
On January 27, 1989, private respondent NFSW-FGT-KMU moved to dismiss the petition on the
following grounds, to wit:
I
The Petition was filed out of time;
II
There is a deadlocked (sic) of CBA negotiation between forced intervenor and respondent-central.
(Rollo, p. 25)
On February 6, 1989, Dacongcogon filed an answer praying that the petition be dismissed.
By an order dated February 8, 1989, the Med-Arbiter denied the motion to dismiss filed by private
respondent NFSW-FGT-KMU and directed the conduct of certification election among the rank and
file workers of Dacongcogon, the dispositive portion of which provides as follows:
WHEREFORE, premises considered, the Motion to Dismiss the present petition is, as it is hereby
DENIED. Let therefore a certification election among the rank and file employees/workers of the

DENIED. Let therefore a certification election among the rank and file employees/workers of the
Dacongcogon Sugar and Rice Milling Co., situated at Kabankalan, Neg. Occ., be conducted with the
following choices:
(1) National Congress of Unions in the Sugar Industry of the Philippines (NACUSIP-TUCP);
(2) National Federation of Sugar Workers (NFSW);
(3) No Union.
The designated Representation Officer is hereby directed to call the parties for a pre-election
conference to thresh out the mechanics of the election and to conduct and supervise the same
within twenty (20) days from receipt by the parties of this Order. The latest payroll shall be used to
determine the list of qualified voters.
SO ORDERED. (Rollo, p. 34)
On February 9, 1989, private respondent filed a motion for reconsideration and/or appeal alleging
that the Honorable Med-Arbiter misapprehended the facts and the law applicable amounting to gross
incompetence. Hence, private respondent prayed that the order of the Med-Arbiter be set aside and
the motion to dismiss be reconsidered.
On February 27, 1989, petitioner filed its opposition to the motion for reconsideration praying that the
motion for reconsideration and/or appeal be denied for lack of merit.
On June 26, 1989, respondent Director of the Bureau of Labor Relations rendered a resolution
reversing the order of the Med-Arbiter, to wit:
WHEREFORE, premises considered, the Order of the Med-Arbiter dated 8 February 1989 is hereby
set aside and vacated, and a new one issued dismissing the above-entitled petition for being filed
out of time.
SO ORDERED. (Rollo, p. 46)
Hence, this petition raising four (4) issues, to wit:
I. RESPONDENT HON. PURA FERRER-CALLEJA, IN HER CAPACITY AS DIRECTOR OF THE
BUREAU OF LABOR RELATIONS, COMMITTED GRAVE ABUSE OF DISCRETION IN
RENDERING HER RESOLUTION DATED 26 JUNE 1989 REVERSING THE ORDER DATED
FEBRUARY 8, 1989 OF MED-ARBITER FELIZARDO SERAPIO.
II. THAT THE AFORESAID RESOLUTION DATED 26 JUNE 1989 OF RESPONDENT PURA
FERRER-CALLEJA IS CONTRARY TO LAW AND JURISPRUDENCE.
III. THAT THE AFORESAID RESOLUTION DATED 26 JUNE 1989 OF RESPONDENT DIRECTOR
PURA FERRER-CALLEJA DENIES THE RANK AND FILE EMPLOYEES OF THE
DACONGCOGON SUGAR & RICE MILLING COMPANY, AND THE HEREIN PETITIONER
NACUSIP-TUCP, THEIR LEGAL AND CONSTITUTIONAL RIGHTS.
IV. THAT RESPONDENT DIRECTOR PURA FERRER-CALLEJA, IN RENDERING HER SAID
RESOLUTION DATED 26 JUNE 1989 WAS BIASED AGAINST PETITIONER NACUSIP-TUCP.
(Rollo,
p. 2)
The controversy boils down to the sole issue of whether or not a petition for certification election may
be filed after the 60-day freedom period.
Petitioner maintains that respondent Director Calleja committed grave abuse of discretion amounting
to excess of jurisdiction in rendering the resolution dated June 26, 1989 setting aside, vacating and
reversing the order dated February 8, 1989 of Med-Arbiter Serapio, in the following manner:
1) by setting aside and vacating the aforesaid Order dated February 8, 1989 of Med-Arbiter
Felizardo Serapio and in effect dismissing the Petition for Direct or Certification Election of Petitioner
NACUSIP-TUCP (Annex "A" hereof) without strong valid, legal and factual basis;
2) by giving a very strict and limited interpretation of the provisions of Section 6, Rule V, Book V of
the Implementing Rules and Regulations of the Labor Code, as amended, knowing, as she does,
that the Labor Code, being a social legislation, should be liberally interpreted to afford the workers
the opportunity to exercise their legitimate legal and constitutional rights to self-organization and to
free collective bargaining;
3) by issuing her questioned Resolution of June 26, 1989 knowing fully well that upon the effectivity
of Rep. Act No. 6715 on 21 March 1989 she had no longer any appellate powers over decisions of
Med-Arbiters in cases of representation issues or certification elections;
4) by ignoring intentionally the applicable ruling of the Honorable Supreme Court in the case
ofKapisanan ng Mga Manggagawa sa La Suerte-FOITAF vs. Noriel, L-45475, June 20, 1977;
5) by clearly failing to appreciate the significance (sic) of the fact that for more than four (4) years
there has been no certification election involving the rank and file workers of the Company; and,
6) by frustrating the legitimate desire and will of the workers of the Company to determine their sole
and exclusive collective bargaining representative through secret balloting. (Rollo, pp. 9-10)
However, the public respondent through the Solicitor General stresses that the petition for
certification election was filed out of time. The records of the CBA at the Collective Agreements
Division (CAD) of the Bureau of Labor Relations show that the CBA between Dacongcogon and

Division (CAD) of the Bureau of Labor Relations show that the CBA between Dacongcogon and
private respondent NFSW-FGT-KMU had expired on November 14, 1987, hence, the petition for
certification election was filed too late, that is, a period of more than one (1) year after the CBA
expired.
The public respondent maintains that Section 6 of the Rules Implementing Executive Order No. 111
commands that the petition for certification election must be filed within the last sixty (60) days of the
CBA and further reiterates and warns that any petition filed outside the 60-day freedom period "shall
be dismissed outright." Moreover, Section 3, Rule V, Book V of the Rules Implementing the Labor
Code enjoins the filing of a representation question, if before a petition for certification election is
filed, a bargaining deadlock to which the bargaining agent is a party is submitted for conciliation or
arbitration.
Finally, the public respondent emphasizes that respondent Director has jurisdiction to entertain the
motion for reconsideration interposed by respondent union from the order of the Med-Arbiter
directing a certification election. Public respondent contends that Section 25 of Republic Act No.
6715 is not applicable, "(f)irstly, there is as yet no rule or regulation established by the Secretary for
the conduct of elections among the rank and file of employer Dacongcogon; (s)econdly, even the
mechanics of the election which had to be first laid out, as directed in the Order dated February 8,
1989 of the Med-Arbiter, was aborted by the appeal therefrom interposed by respondent union; and
(t)hirdly, petitioner is estopped to question the jurisdiction of respondent Director after it filed its
opposition to respondent union's Motion for Reconsideration (Annex
'F,' Petition) and without, as will be seen, in any way assailing such jurisdiction. . . ." (Rollo, p.66)
We find the petition devoid of merit.
A careful perusal of Rule V, Section 6, Book V of the Rules Implementing the Labor Code, as
amended by the rules implementing Executive Order No. 111 provides that:
Sec. 6. Procedure — . . .
In a petition involving an organized establishment or enterprise where the majority status of the
incumbent collective bargaining union is questioned by a legitimate labor organization, the Med-
Arbiter shall immediately order the conduct of a certification election if the petition is filed during the
last sixty (60) days of the collective bargaining agreement. Any petition filed before or after the sixty-
day freedom period shall be dismissed outright.
The sixty-day freedom period based on the original collective bargaining agreement shall not be
affected by any amendment, extension or renewal of the collective bargaining agreement for
purposes of certification election.
xxx xxx xxx
The clear mandate of the aforequoted section is that the petition for certification election filed by the
petitioner NACUSIP-TUCP should be dismissed outright, having been filed outside the 60-day
freedom period or a period of more than one (1) year after the CBA expired.
It is a rule in this jurisdiction that only a certified collective bargaining agreement — i.e., an
agreement duly certified by the BLR may serve as a bar to certification elections. (Philippine
Association of Free Labor Unions (PAFLU) v. Estrella, G.R. No. 45323, February 20, 1989, 170
SCRA 378, 382) It is noteworthy that the Bureau of Labor Relations duly certified the November 14,
1984 collective bargaining agreement. Hence, the contract-bar rule as embodied in Section 3, Rule
V, Book V of the rules implementing the Labor Code is applicable.
This rule simply provides that a petition for certification election or a motion for intervention can only
be entertained within sixty days prior to the expiry date of an existing collective bargaining
agreement. Otherwise put, the rule prohibits the filing of a petition for certification election during the
existence of a collective bargaining agreement except within the freedom period, as it is called, when
the said agreement is about to expire. The purpose, obviously, is to ensure stability in the
relationships of the workers and the management by preventing frequent modifications of any
collective bargaining agreement earlier entered into by them in good faith and for the stipulated
original period. (Associated Labor Unions (ALU-TUCP) v. Trajano, G.R. No. 77539, April 12, 1989,
172 SCRA 49, 57 citing Associated Trade Unions (ATU v. Trajano, G.R. No. L-75321, 20 June 1988,
162 SCRA 318, 322-323)
Anent the petitioner's contention that since the expiration of the CBA in 1987 private respondent
NFSW-FGT-KMU and Dacongcogon had not concluded a new CBA, We need only to stress what
was held in the case of Lopez Sugar Corporation v. Federation of Free Workers, Philippine Labor
Union Association (G.R. No. 75700-01, 30 August 1990, 189 SCRA 179, 191) quoting Article 253 of
the Labor Code that "(i)t shall be the duty of both parties to keep the status quo and to continue in
full force and effect the terms and conditions of the existing agreement during the 60-day period
and/or until a new agreement is reached by the parties." Despite the lapse of the formal effectivity of
the CBA the law still considers the same as continuing in force and effect until a new CBA shall have
been validly executed. Hence, the contract bar rule still applies.
Besides, it should be emphasized that Dacongcogon, in its answer stated that the CBA was

been validly executed. Hence, the contract bar rule still applies.
Besides, it should be emphasized that Dacongcogon, in its answer stated that the CBA was
extended for another three (3) years and that the deadlock was submitted to the Labor Management
Council.
All premises considered, the Court is convinced that the respondent Director of the Bureau of Labor
Relations did not commit grave abuse of discretion in reversing the order of the Med-Arbiter.
ACCORDINGLY, the petition is DENIED and the resolution of the respondent Director of the Bureau
of Labor Relations is hereby AFFIRMED.
SO ORDERED.
Narvasa, C.J., Cruz and Griño-Aquino, JJ., concur
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Standard Chartered Bank Employees v. Confessor
12:47 AM
STANDARD CHARTERED BANK EMPLOYEES UNION V CONFESOR

432 SCRA 308
CALLEJO; June 16, 2004
FACTS
- Standard Chartered Bank is a foreign banking corporation doing business in the Philippines. The exclusive bargaining agent of the
rank and file employees of the Bank is the Standard Chartered Bank Employees Union
- The Union sought to renegotiate the terms of the CBA and initiated the negotiations.
- Through its President, Eddie L. Divinagracia, it sent a letter containing its proposals covering political and economic provis ions.
- The Bank, took note of the Union‟s proposals. The Bank attached its counter-proposal to the non-economic provisions proposed by
the Union.
- Before the commencement of the negotiation, the Union, through Divinagracia, suggested to the Bank‟s Human Resource
Manager and head of the negotiating panel, Cielito Diokno, that the bank law yers should be excluded from the negotiating team.
The Bank acceded.
- Meanw hile, Diokno suggested to Divinagracia that Jose P. Umali, Jr., the President of the National Union of Bank Employees
(NUBE), the federation to w hich the Union w as affiliated, be excluded from the Union‟s negotiating panel. How ever, Umali w as
retained as a member thereof.
- The parties met and set the ground rules for the negotiation. Diokno suggested that the negotiation be kept a “family affair.”
- Even during the final reading of the, there w ere still non-economic provisions on w hich the Union and the Bank could not agree.
Both parties agreed to place the notation “DEFERRED/DEADLOCKED.”
- The negotiation for economic provisions commenced. Except for the provisions on signing bonus and uniforms, the Union and the
Bank failed to agree on the remaining economic provisions of the CBA. The Union declared a deadlock and filed a Notice of Strike
before the National Conciliation and Mediation Board
- The Bank filed a complaint for Unfair Labor Practice (ULP) and Damages before the NLRC in Manila alleging that the Union
violated its duty to bargain, as it did not bargain in good faith. It contended that the Union demanded “sky high economic demands,”
indicative of blue-sky bargaining.
- Then Secretary of Labor and Employment (SOLE) Nieves R. Confesor, assumed jurisdiction over the labor dispute and issued an
Order dismissing the Bank and the Union‟s charges for unfair labor practice
- The Union filed a motion for reconsideration w ith clarification, while the Bank filed a motion for reconsideration. The SOLE issued a
Resolution denying the motions. The Union filed a second motion for reconsideration, w hich was, likew ise, denied
- The Union filed this petition
- The Union alleges that the Bank violated its duty to bargain; hence, committed ULP under Article 248(g) w hen it engaged in
surface bargaining. It alleged that the Bank just w ent through the motions of bargaining w ithout any intent of reaching an agreement,
as evident in the Bank‟s counter-proposals.
ISSUE
WON the SOLE committed grave abuse of discretion amounting to lack of jurisdiction in dismissing the union‟s charge of unfair labor
practice.
HELD
NO.
- Surface bargaining: “going through the motions of negotiating” w ithout any legal intent to reach an agreement.
- The resolution of surface bargaining allegations never presents an easy issue. The determination of whether a party has engaged
in unlawful surface bargaining is usually a difficult one because it involves, at bottom, a question of the intent of the party in
question, and usually such intent can only be inferred from the totality of the challenged party’s conduct both at and away from the
bargaining table. It involves the question of w hether an employer‟s conduct demonstrates an unw illingness to bargain in good faith
or is merely hard bargaining.
- The minutes of meetings do not show that the Bank had any intention of violating its duty to bargain w ith the Union. Records show
that after the Union sent its proposal to the Bank, the latter replied w ith a list of its counter-proposals. Thereafter, meetings w ere set
for the settlement of their differences. The minutes of the meetings show that both the Bank and the Union exchanged economic
and non-economic proposals and counter-proposals.
- The Union has not been able to show that the Bank had done acts, both at and aw ay from the bargaining table, w hich tend to show
that it did not w ant to reach an agreement w ith the Union or to settle the differences between it and the Union. Admittedly, the
parties w ere not able to agree and reached a deadlock. How ever, it is herein emphasized that the duty to bargain “does not compel
either party to agree to a proposal or require the making of a concession.” Hence, the parties‟ failure to agree did not amount to ULP
under Article 248(g) for violation of the duty to bargain.
- The inference that respondents did not refuse to bargain collectively w ith the complaining union because they accepted some of
the demands w hile they refused the others even leaving open other demands for future discussion is correct, especially so when
those demands w ere discussed at a meeting called by respondents themselves precisely in view of the letter sent by the union
- The Court also does not agree that the Union is guilty of ULP for engaging in blue-sky bargaining or making exaggerated or
unreasonable proposals.
- The Bank failed to show that the economic demands made by the Union w ere exaggerated or unreasonable. The minutes of the
meeting show that the Union based its economic proposals on data of rank and file employees and the prevailing economic benefits
received by bank employees from other foreign banks doing business in the Philippines and other branches of the Bank in the Asian
region.
Disposition Resolutions of the SOLE are AFFIRMED.
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20Arb\COMPILED%20LABOR2-disini\labor%20rd5%20compiled.doc>

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 114974 June 16, 2004
STANDARD CHARTERED BANK EMPLOYEES UNION (NUBE), petitioner,
vs.
The Honorable MA. NIEVES R. CONFESOR, in her capacity as SECRETARY OF LABOR AND
EMPLOYMENT; and the STANDARD CHARTERED BANK, respondents.
DEC I SI O N
CALLEJO, SR., J.:
This is a petition for certiorari under Rule 65 of the Rules of Court filed by the Standard Chartered
Bank Employees Union, seeking the nullification of the October 29, 1993 Order 1 of then Secretary of
Labor and Employment Nieves R. Confesor and her resolutions dated December 16, 1993 and
February 10, 1994.
The Antecedents
Standard Chartered Bank (the Bank, for brevity) is a foreign banking corporation doing business in
the Philippines. The exclusive bargaining agent of the rank and file employees of the Bank is the
Standard Chartered Bank Employees Union (the Union, for brevity).
In August of 1990, the Bank and the Union signed a five-year collective bargaining agreement (CBA)
with a provision to renegotiate the terms thereof on the third year. Prior to the expiration of the three-
year period2 but within the sixty-day freedom period, the Union initiated the negotiations. On
February 18, 1993, the Union, through its President, Eddie L. Divinagracia, sent a letter 3 containing
its proposals4 covering political provisions5 and thirty-four (34) economic provisions.6 Included therein
was a list of the names of the members of the Union’s negotiating panel.7
In a Letter dated February 24, 1993, the Bank, through its Country Manager Peter H. Harris, took
note of the Union’s proposals. The Bank attached its counter-proposal to the non-economic
provisions proposed by the Union.8 The Bank posited that it would be in a better position to present
its counter-proposals on the economic items after the Union had presented its justifications for the
economic proposals.9 The Bank, likewise, listed the members of its negotiating panel. 10 The parties
agreed to set meetings to settle their differences on the proposed CBA.
Before the commencement of the negotiation, the Union, through Divinagracia, suggested to the
Bank’s Human Resource Manager and head of the negotiating panel, Cielito Diokno, that the bank
lawyers should be excluded from the negotiating team. The Bank acceded. 11 Meanwhile, Diokno
suggested to Divinagracia that Jose P. Umali, Jr., the President of the National Union of Bank
Employees (NUBE), the federation to which the Union was affiliated, be excluded from the Union’s
negotiating panel.12 However, Umali was retained as a member thereof.
On March 12, 1993, the parties met and set the ground rules for the negotiation. Diokno suggested
that the negotiation be kept a "family affair." The proposed non-economic provisions of the CBA
were discussed first.13 Even during the final reading of the non-economic provisions on May 4, 1993,
there were still provisions on which the Union and the Bank could not agree. Temporarily, the
notation "DEFERRED" was placed therein. Towards the end of the meeting, the Union manifested
that the same should be changed to "DEADLOCKED" to indicate that such items remained
unresolved. Both parties agreed to place the notation "DEFERRED/DEADLOCKED."14
On May 18, 1993, the negotiation for economic provisions commenced. A presentation of the basis
of the Union’s economic proposals was made. The next meeting, the Bank made a similar
presentation. Towards the end of the Bank’s presentation, Umali requested the Bank to validate the
Union’s "guestimates," especially the figures for the rank and file staff. 15 In the succeeding meetings,
Umali chided the Bank for the insufficiency of its counter-proposal on the provisions on salary
increase, group hospitalization, death assistance and dental benefits. He reminded the Bank, how
the Union got what it wanted in 1987, and stated that if need be, the Union would go through the
same route to get what it wanted.16
Upon the Bank’s insistence, the parties agreed to tackle the economic package item by item. Upon
the Union’s suggestion, the Bank indicated which provisions it would accept, reject, retain and agree
to discuss.17 The Bank suggested that the Union prioritize its economic proposals, considering that
many of such economic provisions remained unresolved. The Union, however, demanded that the
Bank make a revised itemized proposal.
In the succeeding meetings, the Union made the following proposals:
Wage Increase:
1st Year – Reduced from 45% to 40%

1st Year – Reduced from 45% to 40%
2nd Year - Retain at 20%
Total = 60%
Group Hospitalization Insurance:
Maximum disability benefit reduced from P75,000.00 to P60,000.00 per illness annually
Death Assistance:
For the employee – Reduced from P50,000.00 to P45,000.00
For Immediate Family Member – Reduced from P30,000.00 to P25,000.00
Dental and all others – No change from the original demand.18
In the morning of the June 15, 1993 meeting, the Union suggested that if the Bank would not make
the necessary revisions on its counter-proposal, it would be best to seek a third party
assistance.19 After the break, the Bank presented its revised counter-proposal20 as follows:
Wage Increase : 1st Year – from P1,000 to P1,050.00
2nd Year – P800.00 – no change
Group Hospitalization Insurance
From: P35,000.00 per illness
To : P35,000.00 per illness per year
Death Assistance – For employee
From: P20,000.00
To : P25,000.00
Dental Retainer – Original offer remains the same21
The Union, for its part, made the following counter-proposal:
Wage Increase: 1st Year - 40%
2nd Year - 19.5%
Group Hospitalization Insurance
From: P60,000.00 per year
To : P50,000.00 per year
Dental:
Temporary Filling/ – P150.00
Tooth Extraction
Permanent Filling – 200.00
Prophylaxis – 250.00
Root Canal – From P2,000 per tooth
To: 1,800.00 per tooth
Death Assistance:
For Employees: From P45,000.00 to P40,000.00
For Immediate Family Member: From P25,000.00 to P20,000.00.22
The Union’s original proposals, aside from the above-quoted, remained the same.
Another set of counter-offer followed:
Management Union
Wage Increase
1st Year – P1,050.00 40%
2nd Year - 850.00 19.0%23
Diokno stated that, in order for the Bank to make a better offer, the Union should clearly identify what
it wanted to be included in the total economic package. Umali replied that it was impossible to do so
because the Bank’s counter-proposal was unacceptable. He furthered asserted that it would have
been easier to bargain if the atmosphere was the same as before, where both panels trusted each
other. Diokno requested the Union panel to refrain from involving personalities and to instead focus
on the negotiations.24 He suggested that in order to break the impasse, the Union should prioritize
the items it wanted to iron out. Divinagracia stated that the Bank should make the first move and
make a list of items it wanted to be included in the economic package. Except for the provisions on
signing bonus and uniforms, the Union and the Bank failed to agree on the remaining economic
provisions of the CBA. The Union declared a deadlock 25 and filed a Notice of Strike before the
National Conciliation and Mediation Board (NCMB) on June 21, 1993, docketed as NCMB-NCR-
NS-06-380-93.26
On the other hand, the Bank filed a complaint for Unfair Labor Practice (ULP) and Damages before
the Arbitration Branch of the National Labor Relations Commission (NLRC) in Manila, docketed as
NLRC Case No. 00-06-04191-93 against the Union on June 28, 1993. The Bank alleged that the
Union violated its duty to bargain, as it did not bargain in good faith. It contended that the Union
demanded "sky high economic demands," indicative of blue-sky bargaining.27 Further, the Union
violated its no strike- no lockout clause by filing a notice of strike before the NCMB. Considering that

violated its no strike- no lockout clause by filing a notice of strike before the NCMB. Considering that
the filing of notice of strike was an illegal act, the Union officers should be dismissed. Finally, the
Bank alleged that as a consequence of the illegal act, the Bank suffered nominal and actual
damages and was forced to litigate and hire the services of the lawyer. 28
On July 21, 1993, then Secretary of Labor and Employment (SOLE) Nieves R. Confesor, pursuant to
Article 263(g) of the Labor Code, issued an Order assuming jurisdiction over the labor dispute at the
Bank. The complaint for ULP filed by the Bank before the NLRC was consolidated with the complaint
over which the SOLE assumed jurisdiction. After the parties submitted their respective position
papers, the SOLE issued an Order on October 29, 1993, the dispositive portion of which is herein
quoted:
WHEREFORE, the Standard Chartered Bank and the Standard Chartered Bank Employees Union –
NUBE are hereby ordered to execute a collective bargaining agreement incorporating the
dispositions contained herein. The CBA shall be retroactive to 01 April 1993 and shall remain
effective for two years thereafter, or until such time as a new CBA has superseded it. All provisions
in the expired CBA not expressly modified or not passed upon herein are deemed retained while all
new provisions which are being demanded by either party are deemed denied, but without prejudice
to such agreements as the parties may have arrived at in the meantime.
The Bank’s charge for unfair labor practice which it originally filed with the NLRC as NLRC-NCR
Case No. 00-06-04191-93 but which is deemed consolidated herein, is dismissed for lack of merit.
On the other hand, the Union’s charge for unfair labor practice is similarly dismissed.
Let a copy of this order be furnished the Labor Arbiter in whose sala NLRC-NCR Case No.
00-06-04191-93 is pending for his guidance and appropriate action. 29
The SOLE gave the following economic awards:
1. Wage Increase:
a) To be incorporated to present salary rates:
Fourth year : 7% of basic monthly salary
Fifth year : 5% of basic monthly salary based on the 4th year adjusted salary
b) Additional fixed amount:
Fourth year : P600.00 per month
Fifth year : P400.00 per month
2. Group Insurance
a) Hospitalization : P45,000.00
b) Life : P130,000.00
c) Accident : P130,000.00
3. Medicine Allowance
Fourth year : P5,500.00
Fifth year : P6,000.00
4. Dental Benefits
Provision of dental retainer as proposed by the Bank, but without diminishing existing benefits
5. Optical Allowance
Fourth year: P2,000.00
Fifth year : P2,500.00
6. Death Assistance
a) Employee : P30,000.00
b) Immediate Family Member : P5,000.00
7. Emergency Leave – Five (5) days for each contingency
8. Loans
a) Car Loan : P200,000.00
b) Housing Loan : It cannot be denied that the costs attendant to having one’s own home have
tremendously gone up. The need, therefore, to improve on this benefit cannot be overemphasized.
Thus, the management is urged to increase the existing and allowable housing loan that the Bank
extends to its employees to an amount that will give meaning and substance to this CBA benefit.30
The SOLE dismissed the charges of ULP of both the Union and the Bank, explaining that both
parties failed to substantiate their claims. Citing National Labor Union v. Insular-Yebana Tobacco
Corporation,31 the SOLE stated that ULP charges would prosper only if shown to have directly
prejudiced the public interest.
Dissatisfied, the Union filed a motion for reconsideration with clarification, while the Bank filed a
motion for reconsideration. On December 16, 1993, the SOLE issued a Resolution denying the
motions. The Union filed a second motion for reconsideration, which was, likewise, denied on
February 10, 1994.
On March 22, 1994, the Bank and the Union signed the CBA. 32 Immediately thereafter, the wage
increase was effected and the signing bonuses based on the increased wage were distributed to the
employees covered by the CBA.

employees covered by the CBA.
The Present Petition
On April 28, 1994, the Union filed this petition for certiorari under Rule 65 of the Rules of Procedure
alleging as follows:
A. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICT ION IN DISMISSING THE UNION’S CHARGE OF UNFAIR
LABOR PRACTICE IN VIEW OF THE CLEAR EVIDENCE OF RECORD AND ADMISSIONS
PROVING THE UNFAIR LABOR PRACTICES CHARGED.33
B. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICT ION IN FAILING TO RULE ON OTHER UNFAIR LABOR
PRACTICES CHARGED.34
C. RESPONDENT HONORABLE SECRETARY COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICT ION IN DISMISSING THE CHARGES OF UNFAIR LABOR
PRACTICES ON THE GROUND THAT NO PROOF OF INJURY TO THE PUBLIC INTEREST WAS
PRESENTED.35
The Union alleges that the SOLE acted with grave abuse of discretion amounting to lack or excess
of jurisdiction when it found that the Bank did not commit unfair labor practice when it interfered with
the Union’s choice of negotiator. It argued that, Diokno’s suggestion that the negotiation be limited
as a "family affair" was tantamount to suggesting that Federation President Jose Umali, Jr. be
excluded from the Union’s negotiating panel. It further argued that contrary to the ruling of the public
respondent, damage or injury to the public interest need not be present in order for unfair labor
practice to prosper.
The Union, likewise, pointed out that the public respondent failed to rule on the ULP charges arising
from the Bank’s surface bargaining. The Union contended that the Bank merely went through the
motions of collective bargaining without the intent to reach an agreement, and made bad faith
proposals when it announced that the parties should begin from a clean slate. It argued that the
Bank opened the political provisions "up for grabs," which had the effect of diminishing or obliterating
the gains that the Union had made.
The Union also accused the Bank of refusing to disclose material and necessary data, even after a
request was made by the Union to validate its "guestimates."
In its Comment, the Bank prayed that the petition be dismissed as the Union was estopped,
considering that it signed the Collective Bargaining Agreement (CBA) on April 22, 1994. It asserted
that contrary to the Union’s allegations, it was the Union that committed ULP when negotiator Jose
Umali, Jr. hurled invectives at the Bank’s head negotiator, Cielito Diokno, and demanded that she be
excluded from the Bank’s negotiating team. Moreover, the Union engaged in blue-sky
bargaining and isolated the no strike-no lockout clause of the existing CBA.
The Office of the Solicitor General, in representation of the public respondent, prayed that the
petition be dismissed. It asserted that the Union failed to prove its ULP charges and that the public
respondent did not commit any grave abuse of discretion in issuing the assailed order and
resolutions.
The Issues
The issues presented for resolution are the following: (a) whether or not the Union was able to
substantiate its claim of unfair labor practice against the Bank arising from the latter’s alleged
"interference" with its choice of negotiator; surface bargaining; making bad faith non-economic
proposals; and refusal to furnish the Union with copies of the relevant data; (b) whether or not the
public respondent acted with grave abuse of discretion amounting to lack or excess of jurisdiction
when she issued the assailed order and resolutions; and, (c) whether or not the petitioner is
estopped from filing the instant action.
The Court’s Ruling
The petition is bereft of merit.
"Interference" under Article
248 (a) of the Labor Code
The petitioner asserts that the private respondent committed ULP, i.e., interference in the selection
of the Union’s negotiating panel, when Cielito Diokno, the Bank’s Human Resource Manager,
suggested to the Union’s President Eddie L. Divinagracia that Jose P. Umali, Jr., President of the
NUBE, be excluded from the Union’s negotiating panel. In support of its claim, Divinagracia
executed an affidavit, stating that prior to the commencement of the negotiation, Diokno approached
him and suggested the exclusion of Umali from the Union’s negotiating panel, and that during the
first meeting, Diokno stated that the negotiation be kept a "family affair."
Citing the cases of U.S. Postal Service36 and Harley Davidson Motor Co., Inc., AMF,37 the Union
claims that interference in the choice of the Union’s bargaining panel is tantamount to ULP.
In the aforecited cases, the alleged ULP was based on the employer’s violation of Section 8(a)(1)
and (5) of the National Labor Relations Act (NLRA), 38 which pertain to the interference, restraint or

and (5) of the National Labor Relations Act (NLRA), 38 which pertain to the interference, restraint or
coercion of the employer in the employees’ exercise of their rights to self-organization and to bargain
collectively through representatives of their own choosing; and the refusal of the employer to bargain
collectively with the employees’ representatives. In both cases, the National Labor Relations Board
held that upon the employer’s refusal to engage in negotiations with the Union for collective-
bargaining contract when the Union includes a person who is not an employee, or one who is a
member or an official of other labororganizations, such employer is engaged in unfair labor practice
under Section 8(a)(1) and (5) of the NLRA.
The Union further cited the case of Insular Life Assurance Co., Ltd. Employees Association – NATU
vs. Insular Life Assurance Co. Ltd.,39 wherein this Court said that the test of whether an employer
has interfered with and coerced employees in the exercise of their right to self-organization within
the meaning of subsection (a)(1) is whether the employer has engaged in conduct which it may
reasonably be said, tends to interfere with the free exercise of employees’ rights under Section 3 of
the Act.40 Further, it is not necessary that there be direct evidence that any employee was in fact
intimidated or coerced by statements of threats of the employer if there is a reasonable inference
that anti-union conduct of the employer does have an adverse effect on self-organization and
collective bargaining.41
Under the International Labor Organization Convention (ILO) No. 87 FREEDOM OF ASSOCIATION
AND PROTECTION OF THE RIGHT TO ORGANIZE to which the Philippines is a signatory,
"workers and employers, without distinction whatsoever, shall have the right to establish and, subject
only to the rules of the organization concerned, to job organizations of their own choosing without
previous authorization."42
Workers’ and employers’ organizations shall have the right to draw up their constitutions and rules,
to elect their representatives in full freedom to organize their administration and activities and to
formulate their programs. 43 Article 2 of ILO Convention No. 98 pertaining to the Right to Organize
and Collective Bargaining, provides:
Article 2
1. Workers’ and employers’ organizations shall enjoy adequate protection against any acts or
interference by each other or each other’s agents or members in their establishment, functioning or
administration.
2. In particular, acts which are designed to promote the establishment of workers’ organizations
under the domination of employers or employers’ organizations or to support workers’ organizations
by financial or other means, with the object of placing such organizations under the control of
employers or employers’ organizations within the meaning of this Article.
The aforcited ILO Conventions are incorporated in our Labor Code, particularly in Article 243 thereof,
which provides:
ART. 243. COVERAGE AND EMPLOYEES’ RIGHT TO SELF-ORGANIZATION. – All persons
employed in commercial, industrial and agricultural enterprises and in religious, charitable, medical
or educational institutions whether operating for profit or not, shall have the right to self-organization
and to form, join, or assist labor organizations of their own choosing for purposes of collective
bargaining. Ambulant, intermittent and itinerant workers, self-employed people, rural workers and
those without any definite employers may form labor organizations for their mutual aid and
protection.
and Articles 248 and 249 respecting ULP of employers and labor organizations.
The said ILO Conventions were ratified on December 29, 1953. However, even as early as the 1935
Constitution,44 the State had already expressly bestowed protection to labor as part of the general
provisions. The 1973 Constitution,45 on the other hand, declared it as a policy of the state to afford
protection to labor, specifying that the workers’ rights to self-organization, collective bargaining,
security of tenure, and just and humane conditions of work would be assured. For its part, the 1987
Constitution, aside from making it a policy to "protect the rights of workers and promote their
welfare,"46 devotes an entire section, emphasizing its mandate to afford protection to labor, and
highlights "the principle of shared responsibility" between workers and employers to promote
industrial peace.47
Article 248(a) of the Labor Code, considers it an unfair labor practice when an employer interferes,
restrains or coerces employees in the exercise of their right to self-organization or the right to form
association. The right to self-organization necessarily includes the right to collective bargaining.
Parenthetically, if an employer interferes in the selection of its negotiators or coerces the Union to
exclude from its panel of negotiators a representative of the Union, and if it can be inferred that the
employer adopted the said act to yield adverse effects on the free exercise to right to self-
organization or on the right to collective bargaining of the employees, ULP under Article 248(a) in
connection with Article 243 of the Labor Code is committed.
In order to show that the employer committed ULP under the Labor Code, substantial evidence is
required to support the claim. Substantial evidence has been defined as such relevant evidence as a

required to support the claim. Substantial evidence has been defined as such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion. 48 In the case at bar, the Union
bases its claim of interference on the alleged suggestions of Diokno to exclude Umali from the
Union’s negotiating panel.
The circumstances that occurred during the negotiation do not show that the suggestion made by
Diokno to Divinagracia is an anti-union conduct from which it can be inferred that the Bank
consciously adopted such act to yield adverse effects on the free exercise of the right to self-
organization and collective bargaining of the employees, especially considering that such was
undertaken previous to the commencement of the negotiation and simultaneously with
Divinagracia’s suggestion that the bank lawyers be excluded from its negotiating panel.
The records show that after the initiation of the collective bargaining process, with the inclusion of
Umali in the Union’s negotiating panel, the negotiations pushed through. The complaint was made
only on August 16, 1993 after a deadlock was declared by the Union on June 15, 1993.
It is clear that such ULP charge was merely an afterthought. The accusation occurred after the
arguments and differences over the economic provisions became heated and the parties had
become frustrated. It happened after the parties started to involve personalities. As the public
respondent noted, passions may rise, and as a result, suggestions given under less adversarial
situations may be colored with unintended meanings.49 Such is what appears to have happened in
this case.
The Duty to Bargain
Collectively
If at all, the suggestion made by Diokno to Divinagracia should be construed as part of the normal
relations and innocent communications, which are all part of the friendly relations between the Union
and Bank.
The Union alleges that the Bank violated its duty to bargain; hence, committed ULP under Article
248(g) when it engaged in surface bargaining. It alleged that the Bank just went through the motions
of bargaining without any intent of reaching an agreement, as evident in the Bank’s counter-
proposals. It explained that of the 34 economic provisions it made, the Bank only made 6 economic
counterproposals. Further, as borne by the minutes of the meetings, the Bank, after indicating the
economic provisions it had rejected, accepted, retained or were open for discussion, refused to
make a list of items it agreed to include in the economic package.
Surface bargaining is defined as "going through the motions of negotiating" without any legal intent
to reach an agreement.50 The resolution of surface bargaining allegations never presents an easy
issue. The determination of whether a party has engaged in unlawful surface bargaining is usually a
difficult one because it involves, at bottom, a question of the intent of the party in question, and
usually such intent can only be inferred from the totality of the challenged party’s conduct both at
and away from the bargaining table.51 It involves the question of whether an employer’s conduct
demonstrates an unwillingness to bargain in good faith or is merely hard bargaining. 52
The minutes of meetings from March 12, 1993 to June 15, 1993 do not show that the Bank had any
intention of violating its duty to bargain with the Union. Records show that after the Union sent its
proposal to the Bank on February 17, 1993, the latter replied with a list of its counter-proposals on
February 24, 1993. Thereafter, meetings were set for the settlement of their differences. The
minutes of the meetings show that both the Bank and the Union exchanged economic and non-
economic proposals and counter-proposals.
The Union has not been able to show that the Bank had done acts, both at and away from the
bargaining table, which tend to show that it did not want to reach an agreement with the Union or to
settle the differences between it and the Union. Admittedly, the parties were not able to agree and
reached a deadlock. However, it is herein emphasized that the duty to bargain "does not compel
either party to agree to a proposal or require the making of a concession." 53 Hence, the parties’
failure to agree did not amount to ULP under Article 248(g) for violation of the duty to bargain.
We can hardly dispute this finding, for it finds support in the evidence. The inference that
respondents did not refuse to bargain collectively with the complaining union because they accepted
some of the demands while they refused the others even leaving open other demands for future
discussion is correct, especially so when those demands were discussed at a meeting called by
respondents themselves precisely in view of the letter sent by the union on April 29, 1960… 54
In view of the finding of lack of ULP based on Article 248(g), the accusation that the Bank made bad-
faith provisions has no leg to stand on. The records show that the Bank’s counterproposals on the
non-economic provisions or political provisions did not put "up for grabs" the entire work of the Union
and its predecessors. As can be gleaned from the Bank’s counterproposal, there were many
provisions which it proposed to be retained. The revisions on the other provisions were made after
the parties had come to an agreement. Far from buttressing the Union’s claim that the Bank made
bad-faith proposals on the non-economic provisions, all these, on the contrary, disprove such
allegations.

allegations.
We, likewise, find that the Union failed to substantiate its claim that the Bank refused to furnish the
information it needed.
While the refusal to furnish requested information is in itself an unfair labor practice, and also
supports the inference of surface bargaining, 55 in the case at bar, Umali, in a meeting dated May 18,
1993, requested the Bank to validate its guestimates on the data of the rank and file. However,
Umali failed to put his request in writing as provided for in Article 242(c) of the Labor Code:
Article 242. Rights of Legitimate Labor Organization…
(c) To be furnished by the employer, upon written request, with the annual audited financial
statements, including the balance sheet and the profit and loss statement, within thirty (30) calendar
days from the date of receipt of the request, after the union has been duly recognized by the
employer or certified as the sole and exclusive bargaining representatives of the employees in the
bargaining unit, or within sixty (60) calendar days before the expiration of the existing collective
bargaining agreement, or during the collective negotiation;
The Union, did not, as the Labor Code requires, send a written request for the issuance of a copy of
the data about the Bank’s rank and file employees. Moreover, as alleged by the Union, the fact that
the Bank made use of the aforesaid guestimates, amounts to a validation of the data it had used in
its presentation.
No Grave Abuse of Discretion
On the Part of the Public Respondent
The special civil action for certiorari may be availed of when the tribunal, board, or officer exercising
judicial or quasi-judicial functions has acted without or in excess of jurisdiction and there is no appeal
or any plain, speedy, and adequate remedy in the ordinary course of law for the purpose of annulling
the proceeding.56 Grave abuse of discretion implies such capricious and whimsical exercise of
judgment as is equivalent to lack of jurisdiction, or where the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility which must be so patent and gross as to
amount to an invasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at
all in contemplation of law. Mere abuse of discretion is not enough. 57
While it is true that a showing of prejudice to public interest is not a requisite for ULP charges to
prosper, it cannot be said that the public respondent acted in capricious and whimsical exercise of
judgment, equivalent to lack of jurisdiction or excess thereof. Neither was it shown that the public
respondent exercised its power in an arbitrary and despotic manner by reason of passion or
personal hostility.
Estoppel not Applicable
In the Case at Bar
The respondent Bank argues that the petitioner is estopped from raising the issue of ULP when it
signed the new CBA.
Article 1431 of the Civil Code provides:
Through estoppel an admission or representation is rendered conclusive upon the person making it,
and cannot be denied or disproved as against the person relying thereon.
A person, who by his deed or conduct has induced another to act in a particular manner, is barred
from adopting an inconsistent position, attitude or course of conduct that thereby causes loss or
injury to another.58
In the case, however, the approval of the CBA and the release of signing bonus do not necessarily
mean that the Union waived its ULP claim against the Bank during the past negotiations. After all,
the conclusion of the CBA was included in the order of the SOLE, while the signing bonus was
included in the CBA itself. Moreover, the Union twice filed a motion for reconsideration respecting its
ULP charges against the Bank before the SOLE.
The Union Did Not Engage
In Blue-Sky Bargaining
We, likewise, do not agree that the Union is guilty of ULP for engaging in blue-sky bargaining or
making exaggerated or unreasonable proposals. 59 The Bank failed to show that the economic
demands made by the Union were exaggerated or unreasonable. The minutes of the meeting show
that the Union based its economic proposals on data of rank and file employees and the prevailing
economic benefits received by bank employees from other foreign banks doing business in the
Philippines and other branches of the Bank in the Asian region.
In sum, we find that the public respondent did not act with grave abuse of discretion amounting to
lack or excess of jurisdiction when it issued the questioned order and resolutions. While the approval
of the CBA and the release of the signing bonus did not estop the Union from pursuing its claims of
ULP against the Bank, we find the latter did not engage in ULP. We, likewise, hold that the Union is
not guilty of ULP.
IN LIGHT OF THE FOREGOING, the October 29, 1993 Order and December 16, 1993 and
February 10, 1994 Resolutions of then Secretary of Labor Nieves R. Confesor areAFFIRMED. The

February 10, 1994 Resolutions of then Secretary of Labor Nieves R. Confesor areAFFIRMED. The
Petition is hereby DISMISSED.
SO ORDERED.
Puno, Quisumbing, Austria-Martinez, and Tinga, JJ., concur.
Footnotes
1 Rollo, pp. 451-464.
2 The expiration of the CBA is on March 31, 1993.
3
Rollo, pp. 120-121.
4 Id. at 122-141.
5 Sometimes referred to as non-economic provisions.
6 Uniforms, signing bonus, wages, group insurance, medicine allowance, dental benefits, optical
allowance, death assistance, additional ½ month in midyear allowance, additional 2.5% in the teller’s
guarantee fund; profit-sharing provision, improvements in leave benefits, i.e., maternity, vacation,
sick, emergency and union leave; introduction of paternity leave, marriage leave, birthday leave and
loyalty leave; extension of the enjoyment of salary increments from 35 to 40 years of service;
provision for meal and shift allowances; increase in overtime, weekend, holiday and shift allowances;
increase emergency premiums, increase in availments of housing corresponding lowering of interest
rates and eligibility requirements, and deletion of the current rules on availment; improvement of
gratuities to a maximum of 175% and increase of medical benefits (Rollo, p. 142).
7
Eddie L. Divinagracia, Rogelio Fernando, Nancy G. Sagum, Rebecca Gabay, Ray Michael Quimpo,
Reyel G. Vargas, Cipriano Garcia, Alberto Diaz, Ed De Mesa and Jose P. Umali, Jr.
8 The Bank’s counterproposal centered on union recognition and scope (appropriate bargaining
agreement), union security and check-off (maintenance of membership), new employees, collection
of union dues, job security, hiring of next of kin, temporary personnel, redundancies, closure and
relocation, management prerogative, uniforms and grievance procedures. With respect to the
counterproposals on all economic provisions, the Bank said that it is open for discussion. (Rollo, p.
144).
9
Rollo, p. 142.
10 Pinky Diokno (sometimes referred to as Cielito Diokno), Jose S. Ho, Rene Padlan, Rolando
Orbeta, Janet Camarista, Sinforoso Morada and Modesto B. Lim.

11
Rollo, p. 544.
12 Id. at 288.
13 The negotiations for the non-economic provisions were made on March 12, 16, 23, and 30, 1993;
April 6, 13, 20, 23 and 28, 1993 and May 4, 1993.

14
The Union defined "DEADLOCKED" as exhaustion of the three readings; Rollo, p. 269.
15 Minutes of the Meeting of June 1, 1993; Rollo, p. 277.
16 Rollo, p. 278.
17
Minutes of the Meeting of June 8, 1993; Rollo, p. 281.
18
Rollo, p. 284.
19 Ibid.
20 Rollo, pp. 284-285.
21
Id. at 285.
22
Id. at 285.
23 Id.
24 Id.
25
Minutes of the Meeting of June 15, 1993; Rollo, p. 286.
26 Rollo, p. 683.
27 Blue-Sky Bargaining is defined as "unrealistic and unreasonable demands in negotiations by either
or both labor and management, where neither concedes anything and demands the impossible." It
actually is not collective bargaining at all. (Harold S. Roberts, Robert’s Dictionary of Industrial
Relations (Revised Edition, 1971, p. 51);Rollo, p. 671.
28 Rollo, pp. 670-676.
29
Id. at 463-464.
30
Id. at 459-460.
31 2 SCRA 924 (1961).
32 Rollo, pp. 562-611.
33
Id. at 10.
34
Id. at 23.
35 Id. at 24.
36 280 NLRB No. 80 280 NLRB No. 8
37
214 NLRB No. 062.
38 Section 8.a . It shall be unfair labor practice for an employer-(1)To interfere with, restrain or coerce
employees in the exercise of their rights guaranteed under Section 7;

employees in the exercise of their rights guaranteed under Section 7;
…
(5) To refuse to bargain collectively with the representatives of his employees, subject to the
provisions of Section 9. (National Labor Management Act)
Section 7. Employees shall have the right to self-organization, to form, join or assist labor
organizations, to bargain collectively through representatives of their own choosing; and to engage
in other concerted activities for the purpose of collective bargaining or other mutual aid or protection,
and shall also have the right to refrain from any or all of such activities except to the extant that such
right may be affected by an agreement requiring membership in a labor organization as a condition
of employment as authorized in Section 8(a)(3.)
39 37 SCRA 244 (1971).
40
Section 3. Employees’ Right to Self-Organization.- Employees shall have the right to self-
organization and to form, join or assist labor organizations of their own choosing for the purpose of
collective bargaining through representatives of their own choosing and to engage in concerted
activities for the purpose of collective bargaining and other mutual aid or protection. Individuals
employed as supervisors shall not be eligible for membership in a labor organization of employees
under their supervision but may form separate organizations of their own.
…
Section 4. Unfair Labor Practices.-
(a) It shall be unfair labor practice for an employer:
(1) To interfere with, restrain or coerce employees in the exercise of their rights guaranteed in
Section three; (Republic Act No. 875)
41
Referring to Section 3 and 4(a)(1) of the Industrial Peace Act, Republic Act No. 875.
42
Article 2, ILO Convention No. 87.
43 Article 3, ILO Convention No. 87.
44 Section 6, Article XIV of the 1935 Constitution provides:
Sec. 6. The State shall afford protection to labor, especially to working women and minors, and shall
regulate the relations between landowner and tenant, and between labor and capital in industry and
in agriculture. The State may provide for compulsory arbitration.
45 Section 9, Article II of the 1973 Constitution provides:
Sec. 9. The State shall afford protection to labor, promote full employment and equality in
employment, ensure equal work opportunities regardless of sex, race, or creed, and regulate the
relations between workers and employers. The State shall assure the rights of workers to self-
organization, collective bargaining, security of tenure, and just and humane conditions of work. The
State may provide for compulsory arbitration.
46 Section 18, Article II of the 1987 Constitution provides:
Sec. 18. The State affirms labor as a primary social economic force. It shall protect the rights of
workers and promote their welfare.
47
Section 3, Article XIII on Social Justice and Human Rights reads as follows:
LABOR
Sec. 3. The State shall afford full protection to labor, local and overseas, organized and unorganized
and unorganized, and promote full employment and equality of employment opportunities for all.
It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations,
and peaceful concerted activities, including the right to strike in accordance with law. They shall be
entitled to security of tenure, humane conditions of work, and a living wage. They shall also
participate in policy and decision-making processes affecting their rights and benefits as may be
provided by law.
The State shall promote the principle of shared responsibility between workers and employers and
the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce
their mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers, recognizing the right of labor
to its just share in the fruits of production and the right of enterprises to reasonable return on
investments, and to expansion and growth.
48
Rubberworld (Phils.), Inc. vs. NLRC, 175 SCRA 450 (1989).
49 Rollo, p. 462.
50 K-Mart Corporation vs. National Labor Relations Board, 626 F.2d 704 (1980).
51
Luck Limousine, 312 NLRB 770, 789 (1993).
52
Queen Mary Restaurants Corp. and Q.M. Foods, Inc. vs. National Labor Relations Board, 560
F.2d 403 (1977).
53 Eastern Maine Medical Center vs. National Labor Relations Board, 658 F.2d 1 (1981).
54
National Union of Restaurant Workers (PTUC) vs. Court of Industrial Relations, 10 SCRA 843
(1964).
55 K-Mart Corporation vs. NLRB, supra.

55
K-Mart Corporation vs. NLRB, supra.
56 Guerrero vs. Commission on Elections, 336 SCRA 458 (2000).
57 Santos vs. Commission on Elections, 399 SCRA 611 (2003).
58
Navarro vs. Second Laguna Development Bank, 398 SCRA 227 (2003).
59
Arthur A. Sloane and Fred Witney, Labor Relations, 7th Edition 1991, p. 195.
Pasted from <http://www.lawphil.net/judjuris/juri2004/jun2004/gr_114974_2004.html>

San Miguel Corp. vs. NLRC
2:07 AM

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 99266 March 2, 1999

SAN MIGUEL CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, SECOND DIVISION,
AND SAN MIGUEL CORPORATIONEMPLOYEES UNION (SMCEU) — PTGWO, respondents.
PURISIMA, J.:
At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of Court, assailing the
Resolution 1 of the National Labor Relations Commission in NLRC NCR CASE NO. 00094-90, which
dismissed the complaint of SanMiguel Corporation (SMC), seeking to dismiss the notice of strike
given by the private respondent union and to compel the latter to comply with the provisions of the
Collective Bargaining Agreement (CBA) 2 on grievancemachinery, arbitration, and the no-strike
clause, with prayer for the issuance of a temporary restraining order.
The antecedent facts are as follows:
In July 1990, San Miguel Cooperation, alleging the need to streamline its operations due to financial
loses, shut down some of its plants and declared 55 positions as redundant listed as follows:
seventeen (17) employees in the Business Logistics Division ("BLD"), seventeen (17) in the Ayala
Operations Center (AOC), and eighteen (18) in the Magnolia-Manila Buying Station ("Magnolia-
MBS"). 3 Consequently, the private respondent union filed severalgrievance cases for the said
retrenched employees, praying for the redeployment of the said employees to the other divisions of
the company.
The grievance proceedings were conducted pursuant to Sections 5 and 8, Article VIII of the parties'
1990 Collective Bargaining Agreement providing for the following procedures, to wit:
Sec.5. Processing of Grievance. — Should a grievance arise, an earnest effort shall be made to
settle the grievance expeditiously in accordance with the following procedures:
Step 1. — The individual employee concerned and the Union Directors, or the Union Steward shall,
first take up the employee's grievance orally with his immediate superior. If no satisfactory
agreement or adjustment of the grievance is reached, the grievance shall, within twenty (20)
working days from the occurrence of the cause or event which gave rise to the grievance, be filed in
writing with the Department Manager or the next level superior who shall render his decision within
ten (10) working days from the receipt of the written grievance. A copy of the decision shall be
furnished the Plant Personnel Officer.
Step 2. — If the decision in Step 1 is rejected, the employee concerned may elevate or appeal this in
writing to the Plant Manager/Director or his duly authorized representative within twenty (20) working
days from the receipt of the Decision of the Department Manager, Otherwise, the decision in Step 1
shall be deemed accepted by the employee.
The Plant Manager/Director assisted by the Plant Personnel Officer shall determine the necessity, of
conducting grievance meetings. If necessary, the Plant Manager/Director and the Plant Personnel
Officer shall meet the employee concerned and the Union Director/Steward on such date(s) as may
be designated by the Plant Manager. In every plant/office, Grievance Meetings shall be scheduled
at least twice a month.
The Plant Manager shall give his written comments and decision within ten (10) working days after
his receipt of such grievance or the date of submission of the grievance for resolution, as the case
may be. A copy of his Decision shall be furnished the Employee Relations Directorate.
Step 3. — If no satisfactory adjustment is arrived at Step 2, the employee may appeal the Decision
to the Conciliation Board as provided under Section 6 hereof, within fifteen (15) working days from
the date of receipt of the decision of the Plant Manager/Director or his designate. Otherwise, the
decision in Step 2 shall be deemed accepted by the employee.
The Conciliation Board shall meet on the grievance in such dates as shall be designated by the
Division/Business Unit Manager or his representative. In every Division/Business
Unit, GrievanceMeetings of the Conciliation Board shall be scheduled at least once a month.
The Conciliation Board shall have fifteen (15) working days from the date of submission of

Unit, GrievanceMeetings of the Conciliation Board shall be scheduled at least once a month.
The Conciliation Board shall have fifteen (15) working days from the date of submission of
thegrievance for resolution within which to decide on the grievance.
Sec. 6. Conciliation Board. — There shall be a conciliation Board per Business Unit or Division.
Every Conciliation Board shall be composed of not more than five (5) representatives each from the
Company and the Union. Management and the Union may be assisted by their respective legal
counsels.
In every Division/Business Unit, the names of the Company and Union representatives to the
Conciliation Board shall be submitted to the Division/Business Unit Manager not later than January
of every year. The Conciliation Board members shall act as such for one (1) year until removed by
the Company or the Union, as the case may be.
xxx xxx xxx
Sec. 8. Submission to Arbitration. — If the employee or Union is not satisfied with the Decision of the
Conciliation Board and desires to submit the grievance to arbitration, the employee or the Union shall
serve notice of such intention to the Company within fifteen (15) working days after receipt of the Board's
decision. If no such written notice is received by the Company within fifteen (15) working days,
the grievance shall be considered settled on the basis of the company's position and shall no longer be
available for arbitration. 4
During the grievance proceedings, however, most of the employees were redeployed, while others
accepted early retirement. As a result only 17 employees remained when the parties proceeded to
the third level (Step 3) of the grievance procedure. In a meeting on October 26, 1990, petitioner
informed private respondent union that if by October 30, 1990, the remaining 17 employees could
not yet be redeployed, their services would be terminated on November 2, 1990. The said meeting
adjourned when Mr. Daniel S. L. Borbon II, a representative of the union, declared that there was
nothing more to discuss in view of the deadlock. 5
On November 7, 1990, the private respondent filed with the National Conciliation and Mediation
Board (NCMB) of the Department of Labor and Employment (DOLE) a notice of strike on the
following grounds: a) bargainingdeadlock; b) union busting; c) gross violation of the
Collective Bargaining Agreement (CBA), such as non-compliance with the grievance procedure;
d) failure to provide private respondent with a list of vacant positions pursuant to the parties side
agreement that was appended to the 1990 CBA; and e) defiance of voluntary arbitration award.
Petitioner on the other hand, moved to dismiss the notice of strike but the NCMB failed to act on the
motion.
On December 21, 1990, petitioner SMC filed a complaint 6 with the respondent NLRC, praying for:
(1) the dismissal the notice of strike; (2) an order compelling the respondent union to submit
to grievance and arbitration the issue listed in the notice of strike; (3) the recovery of the expenses
of litigation.
On April 16, 1991, respondent NLRC came out with a minute resolution dismissing the complaint;
holding, thus:
NLRC NCR IC NO. 000094-90, entitled San Miguel Corporation, Complainant -
versus- San Miguel Employees Union-PTWO (SMCEU), Respondent. — Considering the allegations in
the complaint to restrain Respondent Union from declaring a strike and to enforce mutual compliance with
the provisions of the collective bargaining agreement on grievance machinery, and the no-strike clause,
with prayer for issuance of temporary restraining order, and the evidence adduced therein, the Answer
filed by the respondent and the memorandum filed by the complainant in support of its application for the
issuance of an injunction, the Second Division, after due deliberation, Resolved to dismiss the complaint
for lack of merit. 7
Aggrieved by the said resolution, petitioner found its way to this court via the present petition,
contending that:
I
IT IS THE POSITIVE LEGAL DUTY OR RESPONDENT NLRC TO COMPEL ARBITRATION AND
TO ENJOIN A STRIKE IN VIOLATION OF A NO STRIKE CLAUSE.
II
INJUNCTION IS THE ONLY IMMEDIATE, EFFECTIVE SUBSTITUTE FOR THE DISASTROUS
ECONOMIC WARFARE THAT ARBITRATION IS DESIGNED TO AVOID. 8
On June 3, 1991, to preserve the status quo, the Court issued a Resolution 9 granting petitioners
prayer for the issuance of a Temporary Restraining Order.
The Petition is impressed with merit.
Rule XXII, Section I, of the Rules and Regulations Implementing Book V the Labor Code 10, reads:
Sec.1. Grounds for strike and lockout. — A strike or lockout may be declared in cases
of bargainingdeadlocks and unfair labor practices. Violations of the
collective bargaining agreements, except flagrant and/or malicious refusal to comply with its
economic provisions, shall not be considered unfair labor practice and shall not be strikeable. No
strike or lockout may be declared on grounds involving inter-union and intra-union disputes or on
issues brought to voluntary, or compulsory, arbitration.

issues brought to voluntary, or compulsory, arbitration.
In the case under consideration, the grounds relied upon by the private respondent union are non-
strikeable. The issues which may lend substance to the notice of strike filed by the private
respondent union are: collectivebargaining deadlock and petitioner's alleged violation of the
collective bargaining agreement. These grounds, however, appear more illusory than real.
Collective Bargaining Deadlock is defined as "the situation between the labor and the management
of the company where there is failure in the collective bargaining negotiations resulting in a
stalemate" 11 This situation, is non-existent in the present case since there is a Board assigned on
the third level (Step 3) of the grievancemachinery to resolve the conflicting views of the parties.
Instead of asking the Conciliation Board composed of five representatives each from the company
and the union, to decide the conflict, petitioner declared a deadlock, and thereafter, filed a notice of
strike. For failing to exhaust all the steps in the grievance machinery and arbitration proceedings
provided in the Collective Bargaining Agreement, the notice of strike should have been dismissed
by the NLRC and private respondent union ordered to proceed with the grievance and arbitration
proceedings. In the case of Liberal Labor Union vs. Phil. Can
Co. 12, the court declared as illegal the strike staged by the union for not complying with
the grievanceprocedure provided in the collective bargaining agreement, ruling that:
. . . the main purpose of the parties in adopting a procedure in the settlement of their disputes is to
prevent a strike. This procedure must be followed in its entirety if it is to achieve its objective. . . . strikes
held in violation of the terms contained in the collective bargainingagreement are illegal, specially when
they provide for conclusive arbitration clauses. These agreements must be strictly adhered to and
respected if their ends have to be achieved. . . . 13
As regards the alleged violation of the CBA, we hold that such a violation is chargeable against the
private respondent union. In abandoning the grievance proceedings and stubbornly refusing to avail
of the remedies under the CBA. private respondent violated the mandatory provisions of the
collective bargaining agreement.
Abolition of departments or positions in the company is one of the recognized management
prerogatives. 14Noteworthy is the fact that the private respondent does not question the validity of the
business move of petitioner. In the absence of proof that the act of petitioner was ill-motivated, it is
presumed that petitioner San MiguelCorporation acted in good faith. In fact, petitioner acceded to
the demands of the private respondent union by redeploying most of the employees involved; such
that from an original 17 excess employees in BLD, 15 were successfully redeployed. In AOC, out of
the 17 original excess, 15 were redeployed. In the Magnolia — Manila Buying Station, out of 18
employees, 6 were redeployed and only 12 were terminated. 15
So also, in filing complaint with the NLRC, petitioner prayed that the private respondent union be
compelled to proceed with the grievance and arbitration proceedings. Petitioner having evinced its
willingness to negotiate the fate of the remaining employees affected, there is no ground to sustain
the notice of strike of the private respondent union.
All things studiedly considered. we are of the ineluctable conclusion, and so hold, that
the NLRC gravely abused its discretion in dismissing the complaint of Petitioner SMC for the
dismissal of the notice of strike, issuance of a temporary restraining order, and an order compelling
the respondent union to settle the dispute under thegrievance machinery of their CBA..
WHEREFORE, the instant petition is hereby GRANTED. Petitioner San Miguel Corporation and
private respondent San Miguel Corporation Employees Union — PTGWO are hereby directed to
complete the third level (Step 3) of the Grievance Procedure and proceed with the Arbitration
proceedings if necessary. No pronouncement as to costs.
SO ORDERED.
Romero and Gonzaga-Reyes, JJ., concur.
Vitug, J., abroad on official business.
Panganiban, J., is on leave.
Footnotes
1 Dated April 16, 1991; Rollo, pp. 183-184.
2 Annex: "A" of Petition.
3 Complaint Annex "F", Rollo, p. 53.
4 Annex "A", Petition; Collective Bargaining Agreement, pp.18-19.
5 Annex "B-3", Petition, Rollo, p. 31.
6 Annex "F", Petition, Rollo, pp. 48-65.
7 Annex "J"; Petition; Rollo, p. 183.
8 Rollo, p. 14.
9 Rollo, p. 185.
10 As amended by D.O. No 09 which took effect on June 21, 1997.
11 Tayag & P.F. Jardiniano, Dictionary of Philippine Labor Terms. p. 36.
12 91 Phil. 72.

12 91 Phil. 72.
13 Id. p. 77-78. citing; Shop N. Save vs. Retail Food Clerks Union (1940) Cal. Super. Ct. CCT. Tab.
Case 91-18675; 2 A.L.R. Ann., 2nd Series, pp. 1278-1282.
14 Dangan vs. NLRC et al., 127 SCRA 706, p. 713.
15 Complaint; Annex "A"; Rollo, p. 54.

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Divine Word University vs. SOLE
2:12 AM

Samahan sa Top Form vs. NLRC
2:13 AM

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 113856 September 7, 1998

SAMAHANG MANGGAGAWA SA TOP FORM MANUFACTURING UNITED WORKERS OF THE
PHILIPPINES (SMTFM-UWP), its officers and members, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, HON. JOSE G. DE VERA and TOP FORM
MANUFACTURING PHIL., INC., respondents.
ROMERO, J.:
The issue in this petition for certiorari is whether or not an employer committed an unfair labor
practice by bargaining in bad faith and discriminating against its employees. The charge arose from
the employer's refusal to grant across-the-board increases to its employees in implementing Wage
Orders Nos. 01 and 02 of the Regional Tripartite Wages and Productivity Board of the National
Capital Region (RTWPB-NCR). Such refusal was aggravated by the fact that prior to the issuance of
said wage orders, the employer allegedly promised at the collective bargaining conferences to
implement any government-mandated wage increases on an across-the-board basis.
Petitioner Samahang Manggagawa sa Top Form Manufacturing — United Workers of the Philippines
(SMTFM) was the certified collective bargaining representative of all regular rank and file employees
of private respondent Top Form Manufacturing Philippines, Inc. At the collective bargaining
negotiation held at the Milky Way Restaurant in Makati, Metro Manila on February 27, 1990, the
parties agreed to discuss unresolved economic issues. According to the minutes of the meeting,
Article VII of the collective bargaining agreement was discussed. The following appear in said
Minutes:
Art. VII, Wages
Sect. 1. — Defer —
Sect. 2. Status quo
Sec. 3. Union proposed that any future wage increase given by the government should be
implemented by the company across-the-board or non-conditional.
Management requested the union to retain this provision since their sincerity was already proven when the P25.00 wage increase was
granted across-the-board. The union acknowledges management's sincerity but they are worried that in case there is a new set of
management, they can just show their CBA. The union decided to defer this provision. 1
In their joint affidavit dated January 30, 1992, 2 union members Salve L. Barnes, Eulisa Mendoza,
Lourdes Barbero and Concesa Ibañez affirmed that at the subsequent collective bargaining negotiations,
the union insisted on the incorporation in the collective bargaining agreement (CBA) of the union proposal
on "automatic across-the-board wage increase." They added that:
11. On the strength of the representation of the negotiating panel of the company and the above
undertaking/promise made by its negotiating panel, our union agreed to drop said proposal relying
on the undertakings made by the officials of the company who negotiated with us, namely, Mr.
William Reynolds, Mr. Samuel Wong and Mrs. Remedios Felizardo. Also, in the past years, the
company has granted to us government mandated wage increases on across-the-board basis.
On October 15, 1990, the RTWPB-NCR issued Wage Order No. 01 granting an increase of P17.00
per day in the salary of workers. This was followed by Wage Order No. 02 dated December 20, 1990
providing for a P12.00 daily increase in salary.
As expected, the union requested the implementation of said wage orders. However, they demanded that
the increase be on an across-the-board basis. Private respondent refused to accede to that demand.
Instead, it implemented a scheme of increases purportedly to avoid wage distortion. Thus, private
respondent granted the P17.00 increase under Wage Order No. 01 to workers/employees receiving
salary of P125.00 per day and below. The P12.00 increase mandated by Wage Order No. 02 was granted
to those receiving the salary of P140.00 per day and below. For employees receiving salary higher than
P125.00 or P140.00 per day, private respondent granted an escalated increase ranging from P6.99 to
P14.30 and from P6.00 to P10.00, respectively. 3
On October 24, 1991, the union, through its legal counsel, wrote private respondent a letter demanding
that it should "fulfill its pledge of sincerity to the union by granting an across-the-board wage increases

(sic) to all employees under the wage orders." The union reiterated that it had agreed to "retain the old
provision of CBA" on the strength of private respondent's "promise and assurance" of an across-the-
board salary increase should the government mandate salary increases. 4 Several conferences between
the parties notwithstanding, private respondent adamantly maintained its position on the salary increases
it had granted that were purportedly designed to avoid wage distortion.
Consequently, the union filed a complaint with the NCR NLRC alleging that private respondent's act of
"reneging on its undertaking/promise clearly constitutes act of unfair labor practice through bargaining in
bad faith." It charged private respondent with acts of unfair labor practices or violation of Article 247 of the
Labor Code, as amended, specifically "bargaining in bad faith," and prayed that it be awarded actual,
moral and exemplary damages. 5 In its position paper, the union added that it was charging private
respondent with "violation of Article 100 of the Labor Code." 6
Private respondent, on the other hand, contended that in implementing Wage Orders Nos. 01 and 02, it
had avoided "the existence of a wage distortion" that would arise from such implementation. It
emphasized that only "after a reasonable length of time from the implementation" of the wage orders "that
the union surprisingly raised the question that the company should have implemented said wage orders
on an across-the-board basis." It asserted that there was no agreement to the effect that future wage
increases mandated by the government should be implemented on an across-the-board basis. Otherwise,
that agreement would have been incorporated and expressly stipulated in the CBA. It quoted the
provision of the CBA that reflects the parties' intention to "fully set forth" therein all their agreements that
had been arrived at after negotiations that gave the parties "unlimited right and opportunity to make
demands and proposals with respect to any subject or matter not removed by law from the area of
collective bargaining." The same CBA provided that during its effectivity, the parties "each voluntarily and
unqualifiedly waives the right, and each agrees that the other shall not be obligated, to bargain
collectively, with respect to any subject or matter not specifically referred to or covered by this Agreement,
even though such subject or matter may not have been within the knowledge or contemplation of either or
both of the parties at the time they negotiated or signed this Agreement." 7
On March 11, 1992, Labor Arbiter Jose G. de Vera rendered a decision dismissing the complaint for lack
of merit. 8 He considered two main issues in the case: (a) whether or not respondents are guilty of unfair
labor practice, and (b) whether or not the respondents are liable to implement Wage Orders Nos. 01 and
02 on an across-the-board basis. Finding no basis to rule in the affirmative on both issues, he explained
as follows:
The charge of bargaining in bad faith that the complainant union attributes to the respondents is
bereft of any certitude inasmuch as based on the complainant union's own admission, the latter
vacillated on its own proposal to adopt an across-the-board stand or future wage increases. In fact,
the union acknowledges the management's sincerity when the latter allegedly implemented Republic
Act 6727 on an across-the-board basis. That such union proposal was not adopted in the existing
CBA was due to the fact that it was the union itself which decided for its deferment. It is, therefore,
misleading to claim that the management undertook/promised to implement future wage increases
on an across-the-board basis when as the evidence shows it was the union who asked for the
deferment of its own proposal to that effect.
The alleged discrimination in the implementation of the subject wage orders does not inspire belief at
all where the wage orders themselves do not allow the grant of wage increases on an across-the-
board basis. That there were employees who were granted the full extent of the increase authorized
and some others who received less and still others who did not receive any increase at all, would not
ripen into what the complainants termed as discrimination. That the implementation of the subject
wage orders resulted into an uneven implementation of wage increases is justified under the law to
prevent any wage distortion. What the respondents did under the circumstances in order to deter an
eventual wage distortion without any arbitral proceedings is certainly commendable.
The alleged violation of Article 100 of the Labor Code, as amended, as well as Article XVII, Section 7
of the existing CBA as herein earlier quoted is likewise found by this Branch to have no basis in fact
and in law. No benefits or privileges previously enjoyed by the employees were withdrawn as a
result of the implementation of the subject orders. Likewise, the alleged company practice of
implementing wage increases declared by the government on an across-the-board basis has not
been duly established by the complainants' evidence. The complainants asserted that the company
implemented Republic Act No. 6727 which granted a wage increase of P25.00 effective July 1, 1989
on an across-the-board basis. Granting that the same is true, such isolated single act that
respondents adopted would definitely not ripen into a company practice. It has been said that "a
sparrow or two returning to Capistrano does not a summer make."
Finally, on the second issue of whether or not the employees of the respondents are entitled to an
across-the-board wage increase pursuant to Wage Orders Nos. 01 and 02, in the face of the above
discussion as well as our finding that the respondents correctly applied the law on wage increases,
this Branch rules in the negative.
Likewise, for want of factual basis and under the circumstances where our findings above are
adverse to the complainants, their prayer for moral and exemplary damages and attorney's fees may

adverse to the complainants, their prayer for moral and exemplary damages and attorney's fees may
not be granted.
Not satisfied, petitioner appealed to the NLRC that, in turn, promulgated the assailed Resolution of April
29, 1993 9dismissing the appeal for lack of merit. Still dissatisfied, petitioner sought reconsideration
which, however, was denied by the NLRC in the Resolution dated January 17, 1994. Hence, the instant
petition for certiorari contending that:
-A-
THE PUBLIC RESPONDENTS GROSSLY ERRED IN NOT DECLARING THE PRIVATE
RESPONDENTS GUILTY OF ACTS OF UNFAIR LABOR PRACTICES WHEN, OBVIOUSLY, THE
LATTER HAS BARGAINED IN BAD FAITH WITH THE UNION AND HAS VIOLATED THE CBA
WHICH IT EXECUTED WITH THE HEREIN PETITIONER UNION.
-B-
THE PUBLIC RESPONDENTS SERIOUSLY ERRED IN NOT DECLARING THE PRIVATE
RESPONDENTS GUILTY OF ACTS OF DISCRIMINAT ION IN THE IMPLEMENTAT ION OF NCR
WAGE ORDER NOS. 01 AND 02.
-C-
THE PUBLIC RESPONDENTS SERIOUSLY ERRED IN NOT FINDING THE PRIVATE
RESPONDENTS GUILTY OF HAVING VIOLATED SECTION 4, ARTICLE XVII OF THE EXISTING
CBA.
-D-
THE PUBLIC RESPONDENTS GRAVELY ERRED IN NOT DECLARING THE PRIVATE
RESPONDENTS GUILTY OF HAVING VIOLATED ARTICLE 100 OF THE LABOR CODE OF THE
PHILIPPINES, AS AMENDED.
-E-
ASSUMING, WITHOUT ADMITTING THAT THE PUBLIC RESPONDENTS HAVE CORRECTLY
RULED THAT THE PRIVATE RESPONDENTS ARE GUILTY OF ACTS OF UNFAIR LABOR
PRACTICES, THEY COMMITTED SERIOUS ERROR IN NOT FINDING THAT THERE IS A
SIGNIFICANT DISTORTION IN THE WAGE STRUCTURE OF THE RESPONDENT COMPANY.
-F-
THE PUBLIC RESPONDENTS ERRED IN NOT AWARDING TO THE PETITIONERS HEREIN
ACTUAL, MORAL, AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES.
As the Court sees it, the pivotal issues in this petition can be reduced into two, to wit: (a) whether or
not private respondent committed an unfair labor practice in its refusal to grant across-the-board
wage increases in implementing Wage Orders Nos. 01 and 02, and (b) whether or not there was a
significant wage distortion of the wage structure in private respondent as a result of the manner by
which said wage orders were implemented.
With respect to the first issue, petitioner union anchors its arguments on the alleged commitment of
private respondent to grant an automatic across-the-board wage increase in the event that a
statutory or legislated wage increase is promulgated. It cites as basis therefor, the aforequoted
portion of the Minutes of the collective bargaining negotiation on February 27, 1990 regarding
wages, arguing additionally that said Minutes forms part of the entire agreement between the
parties.
The basic premise of this argument is definitely untenable. To start with, if there was indeed a
promise or undertaking on the part of private respondent to obligate itself to grant an automatic
across-the-board wage increase, petitioner union should have requested or demanded that such
"promise or undertaking" be incorporated in the CBA. After all, petitioner union has the means under
the law to compel private respondent to incorporate this specific economic proposal in the CBA. It
could have invoked Article 252 of the Labor Code defining "duty to bargain," thus, the duty includes
"executing a contract incorporating such agreements if requested by either party." Petitioner union's
assertion that it had insisted on the incorporation of the same proposal may have a factual basis
considering the allegations in the aforementioned joint affidavit of its members. However, Article 252
also states that the duty to bargain "does not compel any party to agree to a proposal or make any
concession." Thus, petitioner union may not validly claim that the proposal embodied in the Minutes
of the negotiation forms part of the CBA that it finally entered into with private respondent.
The CBA is the law between the contracting parties 10 — the collective bargaining representative and the
employer-company. Compliance with a CBA is mandated by the expressed policy to give protection to
labor. 11 In the same vein, CBA provisions should be "construed liberally rather than narrowly and
technically, and the courts must place a practical and realistic construction upon it, giving due
consideration to the context in which it is negotiated and purpose which it is intended to serve." 12 This is
founded on the dictum that a CBA is not an ordinary contract but one impressed with public interest. 13 It
goes without saying, however, that only provisions embodied in the CBA should be so interpreted and
complied with. Where a proposal raised by a contracting party does not find print in the CBA, 14 it is not a
part thereof and the proponent has no claim whatsoever to its implementation.

part thereof and the proponent has no claim whatsoever to its implementation.
Hence, petitioner union's contention that the Minutes of the collective bargaining negotiation meeting
forms part of the entire agreement is pointless. The Minutes reflects the proceedings and discussions
undertaken in the process of bargaining for worker benefits in the same way that the minutes of court
proceedings show what transpired therein. 15 At the negotiations, it is but natural for both management
and labor to adopt positions or make demands and offer proposals and counter-proposals. However,
nothing is considered final until the parties have reached an agreement. In fact, one of management's
usual negotiation strategies is to ". . . agree tentatively as you go along with the understanding that
nothing is binding until the entire agreement is reached." 16 If indeed private respondent promised to
continue with the practice of granting across-the-board salary increases ordered by the government,
such promise could only be demandable in law if incorporated in the CBA.
Moreover, by making such promise, private respondent may not be considered in bad faith or at the
very least, resorting to the scheme of feigning to undertake the negotiation proceedings through
empty promises. As earlier stated, petitioner union had, under the law, the right and the opportunity
to insist on the foreseeable fulfillment of the private respondent's promise by demanding its
incorporation in the CBA. Because the proposal was never embodied in the CBA, the promise has
remained just that, a promise, the implementation of which cannot be validly demanded under the
law.
Petitioner's reliance on this Court's pronouncements 17 in Kiok Loy v. NLRC 18 is, therefore, misplaced. In
that case, the employer refused to bargain with the collective bargaining representative, ignoring all
notices for negotiations and requests for counter proposals that the union had to resort to conciliation
proceedings. In that case, the Court opined that "(a) Company's refusal to make counter-proposal, if
considered in relation to the entire bargaining process, may indicate bad faith and this is specially true
where the Union's request for a counter-proposal is left unanswered." Considering the facts of that case,
the Court concluded that the company was "unwilling to negotiate and reach an agreement with the
Union." 19
In the case at bench, however, petitioner union does not deny that discussion on its proposal that all
government-mandated salary increases should be on an across-the-board basis was "deferred,"
purportedly because it relied upon the "undertaking" of the negotiating panel of private
respondent. 20 Neither does petitioner union deny the fact that "there is no provision of the 1990 CBA
containing a stipulation that the company will grant across-the-board to its employees the mandated wage
increase." They simply assert that private respondent committed "acts of unfair labor practices by virtue of
its contractual commitment made during the collective bargaining process." 21 The mere fact, however,
that the proposal in question was not included in the CBA indicates that no contractual
commitment thereon was ever made by private respondent as no agreement had been arrived at by the
parties. Thus:
Obviously the purpose of collective bargaining is the reaching of an agreement resulting in a contract binding on the parties; but the failure to
reach an agreement after negotiations continued for a reasonable period does not establish a lack of good faith. The statutesinvite and
contemplate a collective bargaining contract, but they do not compel one. The duty to bargain does not include the obligation to reach an
agreement. . . . 32
With the execution of the CBA, bad faith bargaining can no longer be imputed upon any of the parties
thereto. All provisions in the CBA are supposed to have been jointly and voluntarily incorporated therein
by the parties. This is not a case where private respondent exhibited an indifferent attitude towards
collective bargaining because the negotiations were not the unilateral activity of petitioner union. The CBA
is proof enough that private respondent exerted "reasonable effort at good faith bargaining." 23
Indeed, the adamant insistence on a bargaining position to the point where the negotiations reach an
impasse does not establish bad faith. Neither can bad faith be inferred from a party's insistence on the
inclusion of a particular substantive provision unless it concerns trivial matters or is obviously
intolerable. 24
The question as to what are mandatory and what are merely permissive subjects of collective bargaining is of significance on the right of a
party to insist on his position to the point of stalemate. A party may refuse to enter into a collective bargaining contract unless it includes a
desired provision as to a matter which is a mandatory subject of collective bargaining; but a refusal to contract unless the agreement covers
a matter which is not a mandatory subject is in substance a refusal to bargain about matters which are mandatory subjects of collective
bargaining, and it is no answer to the charge of refusal to bargain in good faith that the insistence on the disputed clause was not the sole
cause of the failure to agree or that agreement was not reached with respect to other disputed clauses. 25
On account of the importance of the economic issue proposed by petitioner union, it could have
refused to bargain and to enter into a CBA with private respondent. On the other hand, private
respondent's firm stand against the proposal did not mean that it was bargaining in bad faith. It had
the right "to insist on (its) position to the point of stalemate." On the part of petitioner union, the
importance of its proposal dawned on it only after the wage orders were issued after the CBA had
been entered into. Indeed, from the facts of this case, the charge of bad faith bargaining on the part
of private respondent was nothing but a belated reaction to the implementation of the wage orders
that private respondent made in accordance with law. In other words, petitioner union harbored the
notion that its members and the other employees could have had a better deal in terms of wage
increases had it relentlessly pursued the incorporation in the CBA of its proposal. The inevitable
conclusion is that private respondent did not commit the unfair labor practices of bargaining in bad
faith and discriminating against its employees for implementing the wage orders pursuant to law.

faith and discriminating against its employees for implementing the wage orders pursuant to law.
The Court likewise finds unmeritorious petitioner union's contention that by its failure to grant across-the-
board wage increases, private respondent violated the provisions of Section 5, Article VII of the existing
CBA 26 as well as Article 100 of the Labor Code. The CBA provision states:
Sec. 5. The COMPANY agrees to comply with all the applicable provisions of the Labor Code of the
Philippines, as amended, and all other laws, decrees, orders, instructions, jurisprudence, rules and
regulations affecting labor.
Art. 100 of the Labor Code on prohibition against elimination or diminution of benefits provides that
"(n)othing in this Book shall be construed to eliminate or in any way diminish supplements, or other
employee benefits being enjoyed at the time of promulgation of this Code."
We agree with the Labor Arbiter and the NLRC that no benefits or privileges previously enjoyed by
petitioner union and the other employees were withdrawn as a result of the manner by which private
respondent implemented the wage orders. Granted that private respondent had granted an across-
the-board increase pursuant to Republic Act No. 6727, that single instance may not be considered
an established company practice. Petitioner union's argument in this regard is actually tied up with
its claim that the implementation of Wage Orders Nos. 01 and 02 by private respondent resulted in
wage distortion.
The issue of whether or not a wage distortion exists is a question of
fact 27 that is within the jurisdiction of the quasi-judicial tribunals below. Factual findings of administrative
agencies are accorded respect and even finality in this Court if they are supported by substantial
evidence. 28 Thus, in Metropolitan Bank and Trust Company, Inc. v. NLRC, the Court said:
The issue of whether or not a wage distortion exists as a consequence of the grant of a wage increase to certain employees, we agree, is, by
and large, a question of fact the determination of which is the statutory function of the NLRC. Judicial review of labor cases, we may add,
does not go beyond the evaluation of the sufficiency of the evidence upon which the labor officials' findings rest. As such, the factual findings
of the NLRC are generally accorded not only respect but also finality provided that its decisions are supported by substantial evidence and
devoid of any taint of unfairness or arbitrariness. When, however, the members of the same labor tribunal are not in accord on those aspects
of a case, as in this case, this Court is well cautioned not to be as so conscious in passing upon the sufficiency of the evidence, let alone the
conclusions derived
therefrom. 29
Unlike in above-cited case where the Decision of the NLRC was not unanimous, the NLRC Decision
in this case which was penned by the dissenter in that case, Presiding Commissioner Edna Bonto-
Perez unanimously ruled that no wage distortions marred private respondent's implementation of the
wage orders. The NLRC said:
On the issue of wage distortion, we are satisfied that there was a meaningful implementation of Wage Orders Nos. 01 and 02. This debunks
the claim that there was wage distortion as could be shown by the itemized wages implementation quoted above. It should be noted that this
itemization has not been successfully traversed by the appellants. . . . . 30
The NLRC then quoted the labor arbiter's ruling on wage distortion.
We find no reason to depart from the conclusions of both the labor arbiter and the NLRC. It
is apropos to note, moreover, that petitioner's contention on the issue of wage distortion and the
resulting allegation of discrimination against the private respondent's employees are anchored on its
dubious position that private respondent's promise to grant an across-the-board increase in
government-mandated salary benefits reflected in the Minutes of the negotiation is an enforceable
part of the CBA.
In the resolution of labor cases, this Court has always been guided by the State policy enshrined in the
Constitution that the rights of workers and the promotion of their welfare shall be protected. 31 The Court
is likewise guided by the goal of attaining industrial peace by the proper application of the law. It cannot
favor one party, be it labor or management, in arriving at a just solution to a controversy if the party has
no valid support to its claims. It is not within this Court's power to rule beyond the ambit of the law.
WHEREFORE, the instant petition for certiorari is hereby DISMISSED and the questioned
Resolutions of the NLRC AFFIRMED. No costs.
SO ORDERED.
Narvasa, C.J., Kapunan and Purisima, JJ., concur.
Footnotes
1 Annex D to Petition: Rollo, pp. 71-74.
2 Annex K to Petition; Rollo, pp. 139-143.
3 NLRC Resolution of April 29, 1993, p. 2; Rollo, p. 61.
4 Annex E to Petition; Rollo, pp. 80-81.
5 Annex F to Petition; Rollo, pp. 75-78.
6 Rollo, p. 93.
7 Ibid., p. 95.
8 Ibid., p. 53.
9 Penned by Presiding Commissioner Edna Bonto-Perez and concurred in by Commissioners
Domingo H. Zapanta and Rogelio I. Rayala.
10 Marcopper Mining Corporation v. NLRC, 325 Phil. 618, 632 (1996).
11 Meycauayan College v. Drilon. G.R. No. 81144. May 7, 1990, 185 SCRA 50, 56 citing Art. 3 of
the Labor Code.

the Labor Code.
12 Marcopper Mining Corporation v. NLRC, supra, at p. 634.
13 Art. 1700 of the Civil Code provides: "The relations between capital and labor are not merely
contractual. They are so impressed with public interest that labor contracts must yield to the
common good. Therefore, such contracts are subject to the special laws on labor unions, collective
bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar
subjects."
14 Art. 252 of the Labor Code provides that the duty to bargain collectively "means the performance
of a mutual obligation to meet and convene promptly and expeditiously in good faith for the purpose
of negotiating an agreement with respect to wages, hours of work an all other terms and conditions
of employment including proposals for adjusting any grievances or questions arising under such
agreement and executing a contract incorporating such agreements if requested by either party but
such duty does not compel any party to agree to a proposal or to make any concession. Notably,
however, the first paragraph of Sec. 13 of Rep. Act No. 875. the Industrial peace Act, provides the
execution of a written contract incorporating the collective bargaining agreement as part of the
parties' duty to bargain collectively.
15 While the "minutes" kept by the judge are not the memorial of the judgment, and are not records
required by law to be kept, they constitute legal evidence of what was adjudged, and as such may
serve as the foundation for the correction of errors of the clerk in the performance of his duty. The
minutes are only evidence of what was done (27 WORDS AND PHRASES 425 citing State ex rel.
Sheridan Pub. Co. v. Goodrich, 140 S.W. 629, 630, 159 Mo. App. 422, citing Kreisel v. Snavely, 115
S.W. 1060, 135 Mo. App. 158).
16 William G. Caphs and Robert A. Graney. "The Technique of Labor-Management
Negotiations."University of Illinois Law Forum, Summer 1955, p. 293 cited in C.A. AZUCENA, THE
LABOR CODE WITH COMMENTS AND CASES. Vol. 11. 1993 ed., p. 228.
17 Petitioners' Memorandum. pp. 18-20.
18 G.R. No. 54334, January 22, 1986, 141 SCRA 179.
19 Ibid., at pp. 185 & 186.
20 Petitioners' Memorandum, pp. 14-15.
21 Ibid., p. 17.
22 51 C.J.S. 910.
23 Divine Word University of Tacloban v. Secretary of Labor and Employment, G.R. No. 91915,
September 11, 1992, 213 SCRA 759, 773.
24 Ibid., at p. 910.
25 Ibid., at p. 912-913.
26 Petitioner's Memorandum. p. 35.
27 Manila Mandarin Employees Union v. NLRC, G.R. No. 108556, November 19, 1996, 264 SCRA
320, 336 citing Associate Labor Unions-TUCP v. NLRC. G.R. No. 109328, August 16, 1994, 235
SCRA 395; Metropolitan Bank and Trust Co. Employees Union-ALU-TUCP v. NLRC, G.R. No.
102636, September 10, 1993, 226 SCRA 268; Cardona v. NLRC, G.R. No. 89007, March 11, 1991,
195 SCRA 92.
28 Philippine Savings Bank v. NLRC, 330 Phil, 106 (1996).
29 Supra, at p. 275.
30 Rollo, p. 66.
31 Sec. 18. Art. II, 1987 Constitution.
Pasted from <http://www.lawphil.net/judjuris/juri1998/sep1998/gr_113856_1998.html>

San Miguel Corp vs. NLRC
2:15 AM
FIRST DIVISION
[G.R. No. 119293. June 10, 2003]
SAN MIGUEL CORPORATION, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION, Second Division, ILAW AT BUKLOD NG
MANGGAGAWA (IBM), respondents.
DECISION
AZCUNA, J.:
Before us is a petition for certiorari and prohibition seeking to set aside the
decision of the Second Division of the National Labor Relations Commission
(NLRC) in Injunction Case No. 00468-94 dated November 29, 1994,[1] and its
resolution dated February 1, 1995 [2] denying petitioner‟s motion for reconsideration.
Petitioner San Miguel Corporation (SMC) and respondent Ilaw at Buklod ng
Manggagawa (IBM), exclusive bargaining agent of petitioner‟s daily-paid rank and
file employees, executed a Collective Bargaining Agreement (CBA) under which
they agreed to submit all disputes to grievance and arbitration proceedings. The
CBA also included a mutually enforceable no-strike no-lockout agreement. The
pertinent provisions of the said CBA are quoted hereunder:
ARTICLE IV
GRIEVANCE MACHINERY
Section 1. - The parties hereto agree on the principle that all disputes between labor and management may
be solved through friendly negotiation;. . . 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 the
foregoing principle, the parties hereto have agreed to establish a procedure for the adjustment of
grievances so as to (1) provide an opportunity for discussion of any request or complaint and (2) establish
procedure for the processing and settlement of grievances.
xxx xxx xxx
ARTICLE V
ARBITRATION
Section 1. Any and all disputes, disagreements and controversies of any kind between the COMPANY
and the UNION and/or the workers involving or relating to wages, hours of work, conditions of
employment and/or employer-employee relations arising during the effectivity of this Agreement or any
renewal thereof, shall be settled by arbitration through a Committee in accordance with the procedure
established in this Article. No dispute, disagreement or controversy which may be submitted to the
grievance procedure in Article IV shall be presented for arbitration until all the steps of the grievance
procedure are exhausted.
xxx xxx xxx
ARTICLE VI
STRIKES AND WORK STOPPAGES
Section 1. The UNION agrees that there shall be no strikes, walkouts, stoppage or slowdown of work,
boycotts, secondary boycotts, refusal to handle any merchandise, picketing, sit-down strikes of any kind,
sympathetic or general strikes, or any other interference with any of the operations of the COMPANY
during the term of this Agreement.
Section 2. The COMPANY agrees that there shall be no lockout during the term of this Agreement so
long as the procedure outlined in Article IV hereof is followed by the UNION.[3]
On April 11, 1994, IBM, through its vice-president Alfredo Colomeda, filed with the
National Conciliation and Mediation Board (NCMB) a notice of strike, docketed as
NCMB-NCR-NS-04-180-94, against petitioner for allegedly committing: (1) illegal
dismissal of union members, (2) illegal transfer, (3) violation of CBA, (4)
contracting out of jobs being performed by union members, (5) labor-only

contracting out of jobs being performed by union members, (5) labor-only
contracting, (6) harassment of union officers and members, (7) non-recognition of
duly-elected union officers, and (8) other acts of unfair labor practice.[4]
The next day, IBM filed another notice of strike, this time through its president
Edilberto Galvez, raising similar grounds: (1) illegal transfer, (2) labor-only
contracting, (3) violation of CBA, (4) dismissal of union officers and members, and
(5) other acts of unfair labor practice. This was docketed as NCMB-NCR-
NS-04-182-94.[5]
The Galvez group subsequently requested the NCMB to consolidate its notice of
strike with that of the Colomeda group,[6] to which the latter opposed, alleging
Galvez‟s lack of authority in filing the same.[7]
Petitioner thereafter filed a Motion for Severance of Notices of Strike with Motion to
Dismiss, on the grounds that the notices raised non-strikeable issues and that they
affected four corporations which are separate and distinct from each other.[8]
After several conciliation meetings, NCMB Director Reynaldo Ubaldo found that
the real issues involved are non-strikeable. Hence on May 2, 1994, he issued
separate letter-orders to both union groups, converting their notices of strike into
preventive mediation. The said letter-orders, in part, read:
During the conciliation meetings, it was clearly established that the real issues involved are illegal
dismissal, labor only contracting and internal union disputes, which affect not only the interest of the San
Miguel Corporation but also the interests of the MAGNOLIA-NESTLE CORPORATION, the SAN
MIGUEL FOODS, INC., and the SAN MIGUEL JUICES, INC.
Considering that San Miguel Corporation is the only impleaded employer-respondent, and considering
further that the aforesaid companies are separate and distinct corporate entities, we deemed it wise to
reduce and treat your Notice of Strike as Preventive Mediation case for the four (4) different companies
in order to evolve voluntary settlement of the disputes. . . .[9] (Emphasis supplied)
On May 16, 1994, while separate preventive mediation conferences were ongoing,
the Colomeda group filed with the NCMB a notice of holding a strike vote.
Petitioner opposed by filing a Manifestation and Motion to Declare Notice of Strike
Vote Illegal,[10] invoking the case of PAL v. Drilon,[11] which held that no strike could
be legally declared during the pendency of preventive mediation. NCMB Director
Ubaldo in response issued another letter to the Colomeda Group reiterating the
conversion of the notice of strike into a case of preventive mediation and
emphasizing the findings that the grounds raised center only on an intra-union
conflict, which is not strikeable, thus:
xxx xxx xxx
A perusal of the records of the case clearly shows that the basic point to be resolved entails the question
of as to who between the two (2) groups shall represent the workers for collective bargaining purposes,
which has been the subject of a Petition for Interpleader case pending resolution before the Office of the
Secretary of Labor and Employment. Similarly, the other issues raised which have been discussed by the
parties at the plant level, are ancillary issues to the main question, that is, the union
leadership...[12] (Emphasis supplied)
Meanwhile, on May 23, 1994, the Galvez group filed its second notice of strike
against petitioner, docketed as NCMB-NCR-NS-05-263-94. Additional grounds
were set forth therein, including discrimination, coercion of employees, illegal
lockout and illegal closure.[13] The NCMB however found these grounds to be mere
amplifications of those alleged in the first notice that the group filed. It therefore
ordered the consolidation of the second notice with the preceding one that was
earlier reduced to preventive mediation.[14] On the same date, the group likewise
notified the NCMB of its intention to hold a strike vote on May 27, 1994.
On May 27, 1994, the Colomeda group notified the NCMB of the results of their
strike vote, which favored the holding of a strike.[15] In reply, NCMB issued a letter
again advising them that by virtue of the PAL v. Drilon ruling, their notice of strike is
deemed not to have been filed, consequently invalidating any subsequent strike for
lack of compliance with the notice requirement.[16] Despite this and the pendency of
the preventive mediation proceedings, on June 4, 1994, IBM went on strike. The

the preventive mediation proceedings, on June 4, 1994, IBM went on strike. The
strike paralyzed the operations of petitioner, causing it losses allegedly worth
P29.98 million in daily lost production.[17]
Two days after the declaration of strike, or on June 6, 1994, petitioner filed with
public respondent NLRC an amended Petition for Injunction with Prayer for the
Issuance of Temporary Restraining Order, Free Ingress and Egress Order and
Deputization Order.[18] After due hearing and ocular inspection, the NLRC on June
13, 1994 resolved to issue a temporary restraining order (TRO) directing free
ingress to and egress from petitioner‟s plants, without prejudice to the union‟s right
to peaceful picketing and continuous hearings on the injunction case.[19]
To minimize further damage to itself, petitioner on June 16, 1994, entered into a
Memorandum of Agreement (MOA) with the respondent-union, calling for a lifting
of the picket lines and resumption of work in exchange of “good faith talks”
between the management and the labor management committees. The MOA,
signed in the presence of Department of Labor and Employment (DOLE) officials,
expressly stated that cases filed in relation to their dispute will continue and will not
be affected in any manner whatsoever by the agreement.[20] The picket lines ended
and work was then resumed.
Respondent thereafter moved to reconsider the issuance of the TRO, and sought
to dismiss the injunction case in view of the cessation of its picketing activities as a
result of the signed MOA. It argued that the case had become moot and academic
there being no more prohibited activities to restrain, be they actual or
threatened.[21] Petitioner, however, opposed and submitted copies of flyers being
circulated by IBM, as proof of the union‟s alleged threat to revive the strike.[22] The
NLRC did not rule on the opposition to the TRO and allowed it to lapse.
On November 29, 1994, the NLRC issued the challenged decision, denying the
petition for injunction for lack of factual basis. It found that the circumstances at the
time did not constitute or no longer constituted an actual or threatened commission
of unlawful acts.[23] It likewise denied petitioner‟s motion for reconsideration in its
resolution dated February 1, 1995.[24]
Hence, this petition.
Aggrieved by public respondent‟s denial of a permanent injunction, petitioner
contends that:
A.
THE NLRC GRAVELY ABUSED ITS DISCRETION WHEN IT FAILED TO ENFORCE, BY
INJUNCTION, THE PARTIES‟ RECIPROCAL OBLIGATIONS TO SUBMIT TO ARBITRATION
AND NOT TO STRIKE.
B.
THE NLRC GRAVELY ABUSED ITS DISCRETION IN WITHHOLDING INJUNCTION WHICH IS
THE ONLY IMMEDIATE AND EFFECTIVE SUBSTITUTE FOR THE DISASTROUS ECONOMIC
WARFARE THAT ARBITRATION IS DESIGNED TO AVOID.
C.
THE NLRC GRAVELY ABUSED ITS DISCRETION IN ALLOWING THE TRO TO LAPSE
WITHOUT RESOLVING THE PRAYER FOR INJUNCTION, DENYING INJUNCTION WITHOUT
EXPRESSING THE FACTS AND THE LAW ON WHICH IT IS BASED AND ISSUING ITS DENIAL
FIVE MONTHS AFTER THE LAPSE OF THE TRO.[25]
We find for the petitioner.
Article 254 of the Labor Code provides that no temporary or permanent injunction
or restraining order in any case involving or growing out of labor disputes shall be
issued by any court or other entity except as otherwise provided in Articles 218 and
264 of the Labor Code. Under the first exception, Article 218 (e) of the Labor Code
expressly confers upon the NLRC the power to “enjoin or restrain actual and
threatened commission of any or all prohibited or unlawful acts, or to require the
performance of a particular act in any labor dispute which, if not restrained or
performed forthwith, may cause grave or irreparable damage to any party or render
ineffectual any decision in favor of such party x x x.” The second exception, on the

ineffectual any decision in favor of such party x x x.” The second exception, on the
other hand, is when the labor organization or the employer engages in any of the
“prohibited activities” enumerated in Article 264.
Pursuant to Article 218 (e), the coercive measure of injunction may also be used to
restrain an actual or threatened unlawful strike. In the case of San Miguel
Corporation v. NLRC,[26] where the same issue of NLRC‟s duty to enjoin an unlawful
strike was raised, we ruled that the NLRC committed grave abuse of discretion
when it denied the petition for injunction to restrain the union from declaring a
strike based on non-strikeable grounds. Further, in IBM v. NLRC,[27] we held that it
is the “legal duty and obligation” of the NLRC to enjoin a partial strike staged in
violation of the law. Failure promptly to issue an injunction by the public respondent
was likewise held therein to be an abuse of discretion.
In the case at bar, petitioner sought a permanent injunction to enjoin the
respondent‟s strike. A strike is considered as the most effective weapon in
protecting the rights of the employees to improve the terms and conditions of their
employment. However, to be valid, a strike must be pursued within legal
bounds.[28] One of the procedural requisites that Article 263 of the Labor Code and
its Implementing Rules prescribe is the filing of a valid notice of strike with the
NCMB. Imposed for the purpose of encouraging the voluntary settlement of
disputes,[29] this requirement has been held to be mandatory, the lack of which shall
render a strike illegal.[30]
In the present case, NCMB converted IBM‟s notices into preventive mediation as it
found that the real issues raised are non-strikeable. Such order is in pursuance of
the NCMB‟s duty to exert “all efforts at mediation and conciliation to enable the
parties to settle the dispute amicably,”[31] and in line with the state policy of favoring
voluntary modes of settling labor disputes.[32] In accordance with the Implementing
Rules of the Labor Code, the said conversion has the effect of dismissing the
notices of strike filed by respondent.[33] A case in point is PAL v. Drilon,[34] where we
declared a strike illegal for lack of a valid notice of strike, in view of the NCMB‟s
conversion of the notice therein into a preventive mediation case. We ruled, thus:
The NCMB had declared the notice of strike as “appropriate for preventive mediation.” The effect of that
declaration (which PALEA did not ask to be reconsidered or set aside) was to drop the case from the
docket of notice of strikes, as provided in Rule 41 of the NCMB Rules, as if there was no notice of strike.
During the pendency of preventive mediation proceedings no strike could be legally declared... The strike
which the union mounted, while preventive mediation proceedings were ongoing, was aptly described by
the petitioner as “an ambush.” (Emphasis supplied)
Clearly, therefore, applying the aforecited ruling to the case at bar, when the
NCMB ordered the preventive mediation on May 2, 1994, respondent had
thereupon lost the notices of strike it had filed. Subsequently, however, it still
defiantly proceeded with the strike while mediation was ongoing, and
notwithstanding the letter-advisories of NCMB warning it of its lack of notice of
strike. In the case of NUWHRAIN v. NLRC,[35] where the petitioner-union therein
similarly defied a prohibition by the NCMB, we said:
Petitioners should have complied with the prohibition to strike ordered by the NCMB when the latter
dismissed the notices of strike after finding that the alleged acts of discrimination of the hotel were not
ULP, hence not “strikeable.” The refusal of the petitioners to heed said proscription of the NCMB is
reflective of bad faith.
Such disregard of the mediation proceedings was a blatant violation of the
Implementing Rules, which explicitly oblige the parties to bargain collectively in good
faith and prohibit them from impeding or disrupting the proceedings.[36]
The NCMB having no coercive powers of injunction, petitioner sought recourse
from the public respondent. The NLRC issued a TRO only for free ingress to and
egress from petitioner‟s plants, but did not enjoin the unlawful strike itself. It
ignored the fatal lack of notice of strike, and five months after came out with a
decision summarily rejecting petitioner‟s cited jurisprudence in this wise:
Complainant‟s scholarly and impressive arguments, formidably supported by a long line of jurisprudence

Complainant‟s scholarly and impressive arguments, formidably supported by a long line of jurisprudence
cannot however be appropriately considered in the favorable resolution of the instant case for the
complainant. The cited jurisprudence do not squarely cover and apply in this case, as they are not
similarly situated and the remedy sought for were different.[37]
Unfortunately, the NLRC decision stated no reason to substantiate the above
conclusion.
Public respondent, in its decision, moreover ruled that there was a lack of factual
basis in issuing the injunction. Contrary to the NLRC‟s finding, we find that at the
time the injunction was being sought, there existed a threat to revive the unlawful
strike as evidenced by the flyers then being circulated by the IBM-NCR Council
which led the union. These flyers categorically declared: “Ipaalala n’yo sa
management na hindi iniaatras ang ating Notice of Strike (NOS) at anumang oras
ay pwede nating muling itirik ang picket line.”[38]These flyers were not denied by
respondent, and were dated June 19, 1994, just a day after the union‟s
manifestation with the NLRC that there existed no threat of commission of
prohibited activities.
Moreover, it bears stressing that Article 264(a) of the Labor Code [39] explicitly states
that a declaration of strike without first having filed the required notice is a
prohibited activity, which may be prevented through an injunction in accordance
with Article 254. Clearly, public respondent should have granted the injunctive
relief to prevent the grave damage brought about by the unlawful strike.
Also noteworthy is public respondent‟s disregard of petitioner‟s argument pointing
out the union‟s failure to observe the CBA provisions on grievance and arbitration.
In the case of San Miguel Corp. v. NLRC,[40] we ruled that the union therein violated
the mandatory provisions of the CBA when it filed a notice of strike without availing
of the remedies prescribed therein. Thus we held:
x x x For failing to exhaust all steps in the grievance machinery and arbitration proceedings provided in
the Collective Bargaining Agreement, the notice of strike should have been dismissed by the NLRC and
private respondent union ordered to proceed with the grievance and arbitration proceedings. In the case
of Liberal Labor Union vs. Phil. Can Co., the court declared as illegal the strike staged by the union for
not complying with the grievance procedure provided in the collective bargaining agreement. . . (Citations
omitted)
As in the abovecited case, petitioner herein evinced its willingness to negotiate with the
union by seeking for an order from the NLRC to compel observance of the grievance
and arbitration proceedings. Respondent however resorted to force without exhausting
all available means within its reach. Such infringement of the aforecited CBA provisions
constitutes further justification for the issuance of an injunction against the strike. As we
said long ago: “Strikes held in violation of the terms contained in a collective bargaining
agreement are illegal especially when they provide for conclusive arbitration clauses.
These agreements must be strictly adhered to and respected if their ends have to be
achieved.”[41]
As to petitioner‟s allegation of violation of the no-strike provision in the CBA,
jurisprudence has enunciated that such clauses only bar strikes which are
economic in nature, but not strikes grounded on unfair labor practices.[42] The
notices filed in the case at bar alleged unfair labor practices, the initial
determination of which would entail fact-finding that is best left for the labor
arbiters. Nevertheless, our finding herein of the invalidity of the notices of strike
dispenses with the need to discuss this issue.
We cannot sanction the respondent-union‟s brazen disregard of legal requirements
imposed purposely to carry out the state policy of promoting voluntary modes of
settling disputes. The state‟s commitment to enforce mutual compliance therewith
to foster industrial peace is affirmed by no less than our Constitution.[43] Trade
unionism and strikes are legitimate weapons of labor granted by our statutes. But
misuse of these instruments can be the subject of judicial intervention to forestall
grave injury to a business enterprise.

Pasted from <http://sc.judiciary.gov.ph/jurisprudence/2003/jun2003/119293.htm>

Rivera vs. Espiritu
2:20 AM
SECOND DIVISION
[G.R. No. 135547. January 23, 2002]
GERARDO F. RIVERA, ALFRED A. RAMISO, AMBROCIO PALAD,
DENNIS R. ARANAS, DAVID SORIMA, JR., JORGE P. DELA ROSA,
and ISAGANI ALDEA, petitioners, vs. HON. EDGARDO ESPIRITU in
his capacity as Chairman of the PAL Inter-Agency Task Force created
under Administrative Order No. 16; HON. BIENVENIDO LAGUESMA in
his capacity as Secretary of Labor and Employment; PHILIPPINE
AIRLINES (PAL), LUCIO TAN, HENRY SO UY, ANTONIO V. OCAMPO,
MANOLO E. AQUINO, JAIME J. BAUTISTA, and ALEXANDER O.
BARRIENTOS, respondents.
DECISION
QUISUMBING, J.:
In this special civil action for certiorari and prohibition, petitioners charge public
respondents with grave abuse of discretion amounting to lack or excess of
jurisdiction for acts taken in regard to the enforcement of the agreement dated
September 27, 1998, between Philippine Airlines (PAL) and its union, the PAL
Employees Association (PALEA).
The factual antecedents of this case are as follows:
On June 5, 1998, PAL pilots affiliated with the Airline Pilots Association of the
Philippines (ALPAP) went on a three-week strike, causing serious losses to the
financially beleaguered flag carrier. As a result, PAL‟s financial situation went from
bad to worse. Faced with bankruptcy, PAL adopted a rehabilitation plan and
downsized its labor force by more than one-third.
On July 22, 1998, PALEA went on strike to protest the retrenchment measures
adopted by the airline, which affected 1,899 union members. The strike ended four
days later, when PAL and PALEA agreed to a more systematic reduction in PAL‟s
work force and the payment of separation benefits to all retrenched employees.
On August 28, 1998, then President Joseph E. Estrada issued Administrative
Order No. 16 creating an Inter-Agency Task Force (Task Force) to address the
problems of the ailing flag carrier. The Task Force was composed of the
Departments of Finance, Labor and Employment, Foreign Affairs, Transportation
and Communication, and Tourism, together with the Securities and Exchange
Commission (SEC). Public respondent Edgardo Espiritu, then the Secretary of
Finance, was designated chairman of the Task Force. It was “empowered to
summon all parties concerned for conciliation, mediation (for) the purpose of
arriving at a total and complete solution of the problem.”[1] Conciliation meetings
were then held between PAL management and the three unions representing the
airline‟s employees,[2] with the Task Force as mediator.
On September 4, 1998, PAL management submitted to the Task Force an offer by
private respondent Lucio Tan, Chairman and Chief Executive Officer of PAL, of a
plan to transfer shares of stock to its employees. The pertinent portion of said plan
reads:
1. From the issued shares of stock within the group of Mr. Lucio Tan‟s holdings, the ownership of 60,000
fully paid shares of stock of Philippine Airlines with a par value of PHP5.00/share will be transferred in
favor of each employee of Philippine Airlines in the active payroll as of September 15, 1998. Should any

favor of each employee of Philippine Airlines in the active payroll as of September 15, 1998. Should any
share-owning employee leave PAL, he/she has the option to keep the shares or sells (sic) his/her shares to
his/her union or other employees currently employed by PAL.
2. The aggregate shares of stock transferred to PAL employees will allow them three (3) members to (sic)
the PAL Board of Directors. We, thus, become partners in the boardroom and together, we shall address
and find solutions to the wide range of problems besetting PAL.
3. In order for PAL to attain (a) degree of normalcy while we are tackling its problems, we would request
for a suspension of the Collective Bargaining Agreements (CBAs) for 10 years.[3]
On September 10, 1998, the Board of Directors of PALEA voted to accept Tan‟s
offer and requested the Task Force‟s assistance in implementing the same. Union
members, however, rejected Tan‟s offer. Under intense pressure from PALEA
members, the union‟s directors subsequently resolved to reject Tan‟s offer.
On September 17, 1998, PAL informed the Task Force that it was shutting down its
operations effective September 23, 1998, preparatory to liquidating its assets and
paying off its creditors. The airline claimed that given its labor problems,
rehabilitation was no longer feasible, and hence, the airline had no alternative but
to close shop.
On September 18, 1998, PALEA sought the intervention of the Office of the
President in immediately convening the parties, the PAL management, PALEA,
ALPAP, and FASAP, including the SEC under the direction of the Inter-Agency
Task Force, to prevent the imminent closure of PAL.[4]
On September 19, 1998, PALEA informed the Department of Labor and
Employment (DOLE) that it had no objection to a referendum on the Tan‟s offer.
2,799 out of 6,738 PALEA members cast their votes in the referendum under
DOLE supervision held on September 21-22, 1998. Of the votes cast, 1,055 voted
in favor of Tan‟s offer while 1,371 rejected it.
On September 23, 1998, PAL ceased its operations and sent notices of termination
to its employees.
Two days later, the PALEA board wrote President Estrada anew, seeking his
intervention. PALEA offered a 10-year moratorium on strikes and similar actions
and a waiver of some of the economic benefits in the existing CBA.[5] Tan, however,
rejected this counter-offer.
On September 27, 1998, the PALEA board again wrote the President proposing
the following terms and conditions, subject to ratification by the general
membership:
Pasted from <http://sc.judiciary.gov.ph/jurisprudence/2002/jan2002/135547.htm>

New Pacific Timber vs. NLRC
2:23 AM

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 124224 March 17, 2000

NEW PACIFIC TIMBER & SUPPLY COMPANY, CO., INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, MUSIB M. BUAT, LEON G. GONZAGA, JR., ET
AL., NATIONAL FEDERATION OF LABOR, MARIANO AKILIT and 350 OTHERS, respondents.
KAPUNAN, J.:
May the term of a Collective Bargaining Agreement (CBA) as to its economic provisions be extended
beyond the term expressly stipulated therein, and, in the absence of a new CBA, even beyond the
three-year period provided by law? Are employees hired after the stipulated term of a CBA entitled to
the benefits provided thereunder?
These are the issues at the heart of the instant petition for certiorari with prayer for the issuance of
preliminary injunction and/or temporary restraining order filed by petitioner New Pacific Timber &
Supply Company, Incorporated against the National Labor Relations Commission (NLRC), et. al.,
and the National Federation of Labor, et. al.
The antecedents facts, as found by the NLRC, are as follows:
The National Federation of Labor (NFL, for brevity) was certified as the sole and exclusive
bargaining representative of all the regular rank-and-file employees of New Pacific Timber & Supply
Co., Inc. (hereinafter referred to as petitioner Company). 1 As such, NFL started to negotiate for
better terms and conditions of employment for the employees in the bargaining unit which it
represented. However, the same was allegedly met with stiff resistance by petitioner Company, so
that the former was prompted to file a complaint for unfair labor practice (ULP) against the latter on
the ground of refusal to bargain collectively. 2
On March 31, 1987, then Executive Labor Arbiter Hakim S. Abdulwahid issued an order declaring (a)
herein petitioner Company guilty of ULP; and (b) the CBA proposals submitted by the NFL as the
CBA between the regular rank-and-file employees in the bargaining unit and petitioner Company. 3
Petitioner Company appealed the above order to the NLRC. On November 15, 1989, the NLRC
rendered a decision dismissing the appeal for lack of merit. A motion for reconsideration thereof
was, likewise, denied in a Resolution, dated November 12, 1990. 4
Unsatisfied, petitioner Company filed a petition for certiorari with this Court. But the Court dismissed
said petition in a Resolution, dated January 21, 1991. 5
Thereafter, the records of the case were remanded to the arbitration branch of origin of the
execution of Labor Arbiter Abdulwahid's Order, dated March 31, 1987, granting monetary benefits
consisting of wage increases, housing allowances, bonuses, etc. to the regular rank-and-file
employees. Following a series of conferences to thresh out the details of computation, Labor Arbiter
Reynaldo S. Villena issued an Order, dated October 18, 1993, directing petitioner Company to pay
the 142 employees entitled to the aforesaid benefits the respective amounts due them under the
CBA. Petitioner Company complied; and the corresponding quitclaims were executed. The case was
considered closed following NFL's manifestation that it will no longer appeal the October 18, 1993
Order of Labor Arbiter Villena. 6
However, notwithstanding such manifestation, a "Petition for Relief" was filed in behalf of 186 of the
private respondents "Mariano J. Akilit and 350 others" on May 12, 1994. In their petition, they
claimed that they were wrongfully excluded from enjoying the benefits under the CBA since the
agreement with NFL and petitioner Company limited the CBA's implementation to only the 142 rank-
and-file employees enumerated. They claimed that NFL's misrepresentations had precluded them
from appealing their exclusion. 7
Treating the petition for relief as an appeal, the NLRC entertained the same. On August 4, 1994,
said commission issued a resolution 8 declaring that the 186 excluded employees "form part and
parcel of the then existing rank-and-file bargaining unit" and were, therefore, entitled to the benefits
under the CBA. The NLRC held, thus:
WHEREFORE, the appeal is hereby granted and the Order of the Labor arbiter dated October 18,
1993 is hereby. Set Aside and Vacated. In lieu hereof, a new Order is hereby issued directing

1993 is hereby. Set Aside and Vacated. In lieu hereof, a new Order is hereby issued directing
respondent New Pacific Timber & Supply Co., Inc. to pay all its regular rank-and-file workers their
wage differentials and other benefits arising from the decreed CBA as explained above, within ten
(10) days from receipt of this order.
SO ORDERED. 9
Petitioner Company filed a motion for reconsideration of the aforequoted resolution.

Meanwhile, four separate groups of the private respondents, including the original 186 who had filed
the "Petition for Relief" filed individual money claims, docketed as NLRC Cases Nos. M-001991-94
to M-001994-94, before the Arbitration Branch of the NLRC, Cagayan de Oro City. However, Labor
Arbiter Villena dismissed these cases in Orders, dated March 11, 1994; April 13, 1994; March 9,
1994; and, May 10, 1994. The employees appealed the respective dismissals of their complainants
to the NLRC. The latter consolidated these appeals with the aforementioned motion for
reconsideration filed by petitioner Company.
On February 29, 1996, the NLRC issued a resolution, the dispositive portions of which reads as
follows:
WHEREFORE, the instant petition for reconsideration of respondent is DENIED for lack of merit and
the Resolution of the Commission dated August 4, 1994 Sustained. The separate orders of the
Labor Arbiter dated March 11, 1994, April 13, 1994, March 9, 1994 and May 10, 1994, respectively,
in NLRC Cases Nos. M-001991-94 to M-001994-94 are Set Aside and Vacated for lack of legal
bases.
Conformably, respondent New Pacific Timber and Supply Co., Inc., is hereby directed to pay
individual complainants their CBA benefits in the aggregate amount of P13,559,510.37, the detailed
computation thereof is contained in Annex "A" which forms an integral part of this resolution, plus ten
(10%) percent thereof as Attorney's fees.
SO ORDERED. 10
Hence, the instant petition wherein petitioner Company raises the following issues:
I
THE PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN
ALLOWING THE "PETITION FOR RELIEF" TO PROSPER.
II
THE PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN RULING
THAT PRIVATE RESPONDENTS MARIANO AKILIT AND 350 OTHERS ARE ENTITLED TO
BENEFITS UNDER THE COLLECTIVE BARGAINING AGREEMENT IN SPITE OF THE FACT
THAT THEY WERE NOT EMPLOYED BY THE PETITIONER MUCH LESS WERE THEY
MEMBERS OF THE BARGAINING UNIT DURING THE TERM OF THE CBA.
III
PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION IN MAKING
FACTUAL FINDINGS WITHOUT BASIS.
IV
THE DISPOSITIVE PORTIONS OF THE ASSAILED RESOLUTIONS ARE DEFECTIVE AND/OR
REVEAL THE GRAVE ABUSE OF DISCRETION COMMITTE D BY PUBLIC RESPONDENT. 11
Petitioner company contends that a "Petition of Relief" is not the proper mode of seeking a review of
a decision rendered by the arbitration branch of the NLRC. 12 According to the petitioner, nowhere in
the Labor Code or in the NLRC Rules of Procedure is there such a pleading. Rather, the remedy of a
party aggrieved by an unfavorable of the labor arbiter is to appeal said judgment to the NLRC. 13
Petitioners asseverates that even assuming that the NLRC correctly treated the petition for relief as
an appeal, still, it should not have allowed the same to prosper, because the petition was filed
several months after the ten-day reglementary period for filing an appeal had expired; and therefore,
it failed to comply with the requirements of an appeal under the Labor Code and the NLRC Rules of
Procedure.
Petitioner Company further contends that in filing separate complaints and/or money claims at the
arbitration level in spite of their pending petition for relief and in spite of the final order, dated
October 18, 1993, in NLRC Case No. RAB-IX-0334-82, the private respondents were in fact forum-
shopping, an act which is proscribed as trifling with the courts and abusing their practices.
Anent the second issue, petitioners argues that the private respondents are not entitled to the
benefits under the CBA because employees hired after the term of a CBA are not parties to the
agreement, and therefore, may not claim benefits thereunder, even if they subsequently become
members of the bargaining unit.
As for the term of the CBA, petitioner maintains that Article 253 of the Labor Code refers to the
continuation in full force and effect of the previous CBA's terms and conditions. By necessity, it could
not possibly refers to terms and conditions which, as expressly stipulated, ceased to have force and
effect. 14
According to petitioner, the provision on wage increase in the 1981 to 1984 CBA between petitioner

effect. 14
According to petitioner, the provision on wage increase in the 1981 to 1984 CBA between petitioner
Company and NFL provided for yearly wage increases. Logically, these provisions ended in the
years 1984 — the last year that the economic provisions of the CBA were, to contract and law,
effective. Petitioner claims that there is no contractual basis for the grant of CBA benefits such as
wage increases in 1985 and subsequent years, since the CBA stipulated only the increases for the
years 1981 to 1984.
Moreover, petitioner alleges that it was through no fault of theirs that no new CBA was entered
pending appeal of the decision in NLRC Case No. RAB-IX-0334-82.
Finally, petitioner Company claims that it was never given the opportunity to submit a counter-
computation of the benefits supposedly due the private respondents. Instead, the NLRC allegedly
relied on the self-serving computations of private respondents.
Petitioner's contentions as untenable.
We find no grave abuse of discretion on the part of the NLRC, when it entertained the petition for
relief filed by the private respondents and treated it as an appeal, even if it was filed beyond the
reglementary period for filing an appeal. Ordinarily, once a judgment has become final and
executory, it can no longer be disturbed, altered or modified. However, a careful scrutiny of the facts
and circumstances of the instant case warrants liberality in the application of technical rules and
procedure. It would be a greater injustice to deprive the concerned employees of the monetary
benefits rightly due them because of a circumstance over which they had no control. As stated
above, private respondents, in their petition for relief, claimed that they were wrongfully excluded
from the list of those entitled to the CBA benefits by their union, NFL, without their knowledge; and,
because they were under the impression that they were ably represented, they were not able to
appeal their case on time.
The Supreme Court has allowed appeals from decisions of the labor arbiter to the NLRC, even if
filed beyond the reglementary period, in the interest of justice. 15 Moreover, under Article 218 (c) of
the Labor Code, the NLRC may, in the exercise of its appellate powers, "correct, amend or waive
any error, defect or irregularity whether in the substance or in form." Further, Article 221 of the same
provides that "In any proceeding before the Commission or any of the Labor Arbiters, the rules of
evidence prevailing in courts of law or equity shall not be controlling and it is the spirit and intention
of this Code that the Commission and its members and the Labor Arbiter shall use every and all
reasonable means to ascertain the facts in each case speedily and objectively and without regard to
technicalities of law or procedure, all in the interest of due process. . . . 16
Anent the issue of whether or not the term of an existing CB, particularly as to its economic
provisions, can be extended beyond the period stipulated therein, and even beyond the three-year
period prescribed by law, in the absence of a new agreement, Article 253 of the Labor Code
explicitly provides:
Art. 253. Duty to bargain collectively when there exists a collective bargaining agreement. — When
there is a collective bargaining agreement, the duty to bargain collectively shall also mean that
neither party shall terminate nor modify such agreement during its lifetime. However, either party can
serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its
expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force
and effect the terms and conditions of the existing agreement during the 60-day period and/or until a
new agreement is reached by the parties. (Emphasis supplied.)
It is clear from the above provision of law that until a new Collective Bargaining Agreement has been
executed by and between the parties, they are duty-bound to keep the status quo and to continue in
full force and effect the terms and conditions of the existing agreement. The law does not provide for
any exception nor qualification as to which of the economic provisions of the existing agreement are
to retain force and effect, therefore, it must be understood as encompassing all the terms and
conditions in the said agreement.
In the case at bar, no new agreement was entered into by and between petitioner Company and
NFL pending appeal of the decision in NLRC Case No. RAB-IX-0334-82; nor were any of the
economic provisions and/or terms and conditions pertaining to monetary benefits in the existing
agreement modified or altered. Therefore, the existing CBA in its entirety, continues to have legal
effect.
In a recent case, the Court had occasion to rule that Article 253 and
253-A 17 mandate the parties to keep the status quo and to continue in full force and effect the terms
and conditions of the existing agreement during the 60-day period prior to the expiration of the old
CBA and/or until a new agreement is reached by the parties. Consequently, the automatic renewal
clause provided for by the law, which is deemed incorporated in all CBA's, provides the reason why
the new CBA can only be given a prospective effect. 18
In the case of Lopez Sugar Corporation vs. Federation of Free Workers, et. al, 19 this Court
reiterated the rule although a CBA has expired, it continues to have legal effects as between the
parties until a new CBA has been entered into. It is the duty of both parties to the CBA to keep

parties until a new CBA has been entered into. It is the duty of both parties to the CBA to keep
the status quo, and to continue in full force and effect the terms and conditions of the existing
agreement during the 60-day period and/or until a new agreement is reached by the parties. 20
To rule otherwise, i.e., that the economic provisions of the existing CBA in the instant case ceased to
have force and effect in the year 1984 would be to create a gap during which no agreement would
govern, from the time the old contract expired to the time a new agreement shall have been entered
into. For if, as contended by the petitioner, the economic provisions of the existing CBA were to have
no legal effect, what agreement as to wage increases and other monetary benefits would govern at
all? None, it would seem, if we are to follow the logic of petitioner Company. Consequently, the
employees from the year 1985 onwards would be deprived of a substantial amount of monetary
benefits which they could have enjoyed had the terms and conditions of the CBA remained in force
and effect. Such a situation runs contrary to the very intent and purpose of Article 253 and 253-A of
the Labor Code which is to curb labor unrest and to promote industrial peace, as can be gleaned
from the discussion of the legislators leading to the passage of the said laws, thus:
HON. CHAIRMAN HERRERA: Pag nag-survey tayo sa mga unyon, ganoon ang mangyayari. And I
think our responsibility here is to create a legal framework to promote industrial peace and to
develop responsible and fair labor movement.
HON. CHAIRMAN VELOSO: In other words, the longer the period of the effectivity.
xxx xxx xxx
HON. CHAIRMAN VELOSO: (continuing) . . . . in other words, the longer the period of effectivity of
the CBA, the better for industrial peace.
xxx xxx xxx 21
Having established that the CBA between petitioner Company and NFL remained in full force and
effect even beyond the stipulated term, in the absence of a new agreement; and, therefore, that the
economic provisions such as wage increases continued to have legal effect, we are now faced with
the question of who are entitled to the benefits provided thereunder.
Petitioner Company insists that the rank-and-file employees hired after the term of the CBA inspite of
their subsequent membership in the bargaining unit, are not parties to the agreement, and certainly
may not claim the benefits thereunder.
We do not agree. In a long line of cases, this Court has held that when a collective bargaining
contract is entered into by the union representing the employees and the employer, even the non-
member employees are entitled to the benefits of the contract. To accord its benefits only to
members of the union without any valid reason would constitute undue discrimination against
nonmembers. 22 It is even conceded, that a laborer can claim benefits from the CBA entered into
between the company and the union of which he is a member at the time of the conclusion of the
agreement, after he has resigned from the said union. 23
In the same vein, the benefits under the CBA in the instant case should be extended to those
employees who only became such after the year 1984. To exclude them would constitute undue
discrimination and deprive them of monetary benefits they would otherwise be entitled to under a
new collective bargaining contract to which they would have been parties. Since in this particular
case, no new agreement had been entered into after the CBA's stipulated term, it is only fair and just
that the employees hired thereafter be included in the existing CBA. This is in consonance with our
ruling that the terms and conditions of a collective bargaining agreement continue to have force and
effect even beyond the stipulated term when no new agreement is executed by and between the
parties to avoid or prevent the situation where no collective bargaining agreement at all
would govern between the employer company and its employees.
Anent the other issues raised by petitioner Company, the Court finds that these pertain to questions
of fact that have already been passed upon by the NLRC. It is axiomatic that, the factual findings of
the National Labor Relations Commissions, which have acquired expertise because its jurisdiction is
confined to specific matters, are accorded respect and finality by the Supreme Court, when these
are supported by substantial evidence. "A perusal of the assailed resolution reveals that the same
was reached on the basis of the required quantum of evidence.
WHEREFORE, in view of the foregoing, the instant petition for certiorari is hereby DISMISSED for
lack of merit.
1âwphi 1. nê
t
SO ORDERED.
Davide, Jr., C.J., Puno and Ynares-Santiago, JJ., concur.
Pardo, J., is on official business abroad.
Footnotes
1 Rollo, p. 42.
2 Ibid.
3 Id., at 42.
4 Id., at 43.
5 Id., at 43.

4 Id., at 43.
5 Id., at 43.
6 Id., at 46.
7 Id., at 137.
8 Id., at 40.
9 Id., at 138.
10 Id., at 69-70.
11 Id., at 12.
12 Id., at 12.
13 Id., at 13.
14 Id., at 25.
15 City Fair Corporation vs. NLRC, 243 SCRA 572 (1995).
16 Id., at 576.
17 Art. 253-A. Terms of a collective bargaining agreement. — Any Collective Bargaining Agreement
that the parties may enter into shall insofar as the representation aspect is concerned, be for a term
of five (5) years. . . . All other provisions of the Collective Bargaining Agreement shall be
renegotiated not later than three (3) years after its execution. Any agreement on such other
provisions of the Collective Bargaining Agreement entered into within six (6) months from the date of
expiry of the term of such other provisions as fixed in such Collective Bargaining Agreement, shall
retroact to the day immediately following such date. If any such agreement is entered into beyond six
months, the parties shall agree on bargaining agreement, the parties may exercise their rights under
this Code.
18 Union of Filipino Employees vs. NLRC, 192 SCRA 414 (1990).
19 189 SCRA 179.
20 Pier 8 Arrastre & Stevedoring Services, Inc., vs. Hon. Ma. Nieves Roldan-Confesor, et. al., 241
SCRA 294 (1995).
21 Conference Committee on Labor, December 15, 1988.
22 International Oil Factory Workers Union vs. Hon. Martinez, et. al., 110 Phil. 595 (1960); National
Brewery & Allied Industries Labor Union vs. San Miguel Brewery Inc., et. al., 118 Phil 806 (1963).
23 Kapisanan Ng Mga Manggagawang Pinagyakap vs. Franklin Baker Co., of the Phil. June 3, 1949.

Interphil Union vs. Interphil
2:24 AM
PHILIPPINE JURISPRUDENCE - FULL TEXT

G.R. No. 142824 December 19, 2001
INTERPHIL LABORATORIES EMPLOYEES UNION-FFW, ET AL. vs. INTERPHIL LABORATORIES, INC., ET AL.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 142824 December 19, 2001
INTERPHIL LABORATORIES EMPLOYEES UNION-FFW, ENRICO GONZALES and MA.
THERESA MONTEJO, petitioners,
vs.
INTERPHIL LABORATORIES, INC., AND HONORABLE LEONARDO A. QUISUMBING,
SECRETARY OF LABOR AND EMPLOYMENT, respondents.
KAPUNAN, J.:
Assailed in this petition for review on certiorari are the decision, promulgated on 29 December 1999,
and the resolution, promulgated on 05 April 2000, of the Court of Appeals in CA-G.R. SP No. 50978.
Culled from the questioned decision, the facts of the case are as follows:
Interphil Laboratories Employees Union-FFW is the sole and exclusive bargaining agent of the rank-
and-file employees of Interphil Laboratories, Inc., a company engaged in the business of
manufacturing and packaging pharmaceutical products. They had a Collective Bargaining
Agreement (CBA) effective from 01 August 1990 to 31 July 1993.
Prior to the expiration of the CBA or sometime in February 1993, Allesandro G. Salazar, 1 Vice-
President-Human Resources Department of respondent company, was approached by Nestor
Ocampo, the union president, and Hernando Clemente, a union director. The two union officers
inquired about the stand of the company regarding the duration of the CBA which was set to expire
in a few months. Salazar told the union officers that the matter could be best discussed during the
formal negotiations which would start soon.
In March 1993, Ocampo and Clemente again approached Salazar. They inquired once more about
the CBA status and received the same reply from Salazar. In April 1993, Ocampo requested for a
meeting to discuss the duration and effectivity of the CBA. Salazar acceded and a meeting was held
on 15 April 1993 where the union officers asked whether Salazar would be amenable to make the
new CBA effective for two (2) years, starting 01 August 1993. Salazar, however, declared that it
would still be premature to discuss the matter and that the company could not make a decision at
the moment. The very next day, or on 16 April 1993, all the rank-and-file employees of the company
refused to follow their regular two-shift work schedule of from 6:00 a.m. to 6:00 p.m., and from 6:00
p.m. to 6:00 a.m. At 2:00 p.m. and 2:00 a.m., respectively, the employees stopped working and left
their workplace without sealing the containers and securing the raw materials they were working on.
When Salazar inquired about the reason for their refusal to follow their normal work schedule, the
employees told him to "ask the union officers." To minimize the damage the overtime boycott was
causing the company, Salazar immediately asked for a meeting with the union officers. In the
meeting, Enrico Gonzales, a union director, told Salazar that the employees would only return to
their normal work schedule if the company would agree to their demands as to the effectivity and
duration of the new CBA. Salazar again told the union officers that the matter could be better
discussed during the formal renegotiations of the CBA. Since the union was apparently unsatisfied
with the answer of the company, the overtime boycott continued. In addition, the employees started
to engage in a work slowdown campaign during the time they were working, thus substantially
delaying the production of the company.2
On 14 May 1993, petitioner union submitted with respondent company its CBA proposal, and the
latter filed its counter-proposal.
On 03 September 1993, respondent company filed with the National Labor Relations Commission
(NLRC) a petition to declare illegal petitioner union's "overtime boycott" and "work slowdown" which,
according to respondent company, amounted to illegal strike. The case, docketed NLRC-NCR Case
No. 00-09-05529-93, was assigned to Labor Arbiter Manuel R. Caday.

No. 00-09-05529-93, was assigned to Labor Arbiter Manuel R. Caday.
On 22 October 1993, respondent company filed with the National Conciliation and Mediation Board
(NCMB) an urgent request for preventive mediation aimed to help the parties in their CBA
negotiations.3 The parties, however, failed to arrive at an agreement and on 15 November 1993,
respondent company filed with the Office of the Secretary of Labor and Employment a petition for
assumption of jurisdiction.
On 24 January 1994, petitioner union filed with the NCMB a Notice of Strike citing unfair labor
practice allegedly committed by respondent company. On 12 February 1994, the union staged a
strike.
On 14 February 1994, Secretary of Labor Nieves Confesor issued an assumption order 4 over the
labor dispute. On 02 March 1994, Secretary Confesor issued an order directing respondent
company to "immediately accept all striking workers, including the fifty-three (53) terminated union
officers, shop stewards and union members back to work under the same terms and conditions
prevailing prior to the strike, and to pay all the unpaid accrued year end benefits of its employees in
1993."5 On the other hand, petitioner union was directed to "strictly and immediately comply with the
return-to-work orders issued by (the) Office x x x6 The same order pronounced that "(a)ll pending
cases which are direct offshoots of the instant labor dispute are hereby subsumed herewith."7
In the i, the case before Labor Arbiter Caday continued. On 16 March 1994, petitioner union filed an
"Urgent Manifestation and Motion to Consolidate the Instant Case and to Suspend Proceedings"
seeking the consolidation of the case with the labor dispute pending before the Secretary of Labor.
Despite objection by respondent company, Labor Arbiter Caday held in abeyance the proceedings
before him. However, on 06 June 1994, Acting Labor Secretary Jose S. Brillantes, after finding that
the issues raised would require a formal hearing and the presentation of evidentiary matters,
directed Labor Arbiters Caday and M. Sol del Rosario to proceed with the hearing of the cases
before them and to thereafter submit their report and recommendation to his office.
On 05 September 1995, Labor Arbiter Caday submitted his recommendation to the then Secretary of
Labor Leonardo A. Quisumbing.8 Then Secretary Quisumbing approved and adopted the report in
his Order, dated 13 August 1997, hence:
WHEREFORE, finding the said Report of Labor Arbiter Manuel R. Caday to be supported by
substantial evidence, this Office hereby RESOLVES to APPROVE and ADOPT the same as the
decision in this case, and judgment is hereby rendered:
(1) Declaring the 'overtime boycott' and 'work slowdown' as illegal strike;
(2) Declaring the respondent union officers namely:
Nestor Ocampo President

Carmelo Santos Vice-President
Marites Montejo Treasurer/Board Member
Rico Gonzales Auditor
Rod Abuan Director
Segundino Flores Director
Hernando Clemente Director
who spearheaded and led the overtime boycott and work slowdown, to have lost their employment
status; and
(3) Finding the respondents guilty of unfair labor practice for violating the then existing CBA which
prohibits the union or any employee during the existence of the CBA from staging a strike or
engaging in slowdown or interruption of work and ordering them to cease and desist from further
committing the aforesaid illegal acts.
Petitioner union moved for the reconsideration of the order but its motion was denied. The union
went to the Court of Appeals via a petition for certiorari. In the now questioned decision promulgated
on 29 December 1999, the appellate court dismissed the petition. The union's motion for
reconsideration was likewise denied.
Hence, the present recourse where petitioner alleged:
THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS, LIKE THE HONORABLE
PUBLIC RESPONDENT IN THE PROCEEDINGS BELOW, COMMITTED GRAVE ABUSE OF
DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICT ION WHEN IT
COMPLETELY DISREGARDED "PAROL EVIDENCE RULE" IN THE EVALUATION AND
APPRECIATION OF EVIDENCE PROFERRED BY THE PARTIES.
THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION, WHEN IT DID

OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION, WHEN IT DID
NOT DECLARE PRIVATE RESPONDENT'S ACT OF EXTENDING SUBSTANTIAL SEPARATION
PACKAGE TO ALMOST ALL INVOLVED OFFICERS OF PETITIONER UNION, DURING THE
PENDENCY OF THE CASE, AS TANTAMOUNT TO CONDONATION, IF INDEED, THERE WAS
ANY MISDEED COMMITTED.
THE HONORABLE FIFTH DIVISION OF THE COURT OF APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION, AMOUNTING TO LACK AND/OR EXCESS OF JURISDICTION WHEN IT HELD
THAT THE SECRETARY OF LABOR AND EMPLOYMENT HAS JURISDICT ION OVER A CASE (A
PETITION TO DECLARE STRIKE ILLEGAL) WHICH HAD LONG BEEN FILED AND PENDING
BEFORE THE LABOR ARBITER.9
We sustain the questioned decision.
Pasted from <http://www.lawphil.net/judjuris/juri2001/dec2001/gr_142824_2001.html>

SMC Employees Union vs. Confessor
2:24 AM

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 111262 September 19, 1996

SAN MIGUEL CORPORATION EMPLOYEES UNION-PTGWO, represented by its President
RAYMUNDO HIPOLITO, JR., petitioner,
vs.
HON. MA. NIEVES D. CONFESOR, Secretary of Labor, Dept. of Labor & Employment, SAN
MIGUEL CORPORATION, MAGNOLIA CORPORATION (Formerly, Magnolia Plant) and SAN
MIGUEL FOODS, INC. (Formerly, B-Meg Plant), respondents.
KAPUNAN, J.:
This is a petition for certiorari assailing the Order of the Secretary of Labor rendered on February 15,
1993 involving a labor dispute at San Miguel Corporation.
The facts are as follows:
On June 28, 1990, petitioner-union San Miguel Corporation Employees Union — PTGWO entered
into a Collective Bargaining Agreement (CBA) with private respondent San Miguel Corporation
(SMC) to take effect upon the expiration of the previous CBA or on June 30, 1989.
This CBA provided, among others, that:
ARTICLE XIV
DURATION OF AGREEMENT
Sec. 1. This Agreement which shall be binding upon the parties hereto and their respective
successors-in-interest, shall become effective and shall remain in force and effect until June 30,
1992.
Sec. 2. In accordance with Article 253-A of the Labor Code as amended, the term of this Agreement
insofar as the representation aspect is concerned, shall be for five (5) years from July 1, 1989 to
June 30, 1994. Hence, the freedom period for purposes of such representation shall be sixty (60)
days prior to June 30, 1994.
Sec. 3. Sixty (60) days prior to June 30, 1992 either party may initiate negotiations of all provisions of this
Agreement, except insofar as the representation aspect is concerned. If no agreement is reached in such
negotiations, this Agreement shall nevertheless remain in force up to the time a subsequent agreement is
reached by the parties. 1
In keeping with their vision and long term strategy for business expansion, SMC management
informed its employees in a letter dated August 13, 1991 2 that the company which was composed of
four operating divisions namely: (1) Beer, (2) Packaging, (3) Feeds and Livestocks, (4) Magnolia and
Agri-business would undergo a restructuring. 3
Effective October 1, 1991, Magnolia and Feeds and Livestock Division were spun-off and became
two separate and distinct corporations: Magnolia Corporation (Magnolia) and San Miguel Foods, Inc.
(SMFI). Notwithstanding the spin-offs, the CBA remained in force and effect.
After June 30, 1992, the CBA was renegotiated in accordance with the terms of the CBA and Article
253-A of the Labor Code. Negotiations started sometime in July, 1992 with the two parties
submitting their respective proposals and counterproposals.
During the negotiations, the petitioner-union insisted that the bargaining unit of SMC should still
include the employees of the spun-off corporations: Magnolia and SMFI; and that the renegotiated
terms of the CBA shall be effective only for the remaining period of two years or until June 30, 1994.
SMC, on the other hand, contended that the members/employees who had moved to Magnolia and
SMFI, automatically ceased to be part of the bargaining unit at the SMC. Furthermore, the CBA
should be effective for three years in accordance with Art. 253-A of the Labor Code.
Unable to agree on these issues with respect to the bargaining unit and duration of the CBA,
petitioner-union declared a deadlock on September 29, 1990.
On October 2, 1992, a Notice of Strike was filed against SMC.
In order to avert a strike, SMC requested the National Conciliation and Mediation Board (NCMB) to
conduct preventive mediation. No settlement was arrived at despite several meetings held between
the parties.
On November 3, 1992, a strike vote was conducted which resulted in a "yes vote" in favor of a strike.

the parties.
On November 3, 1992, a strike vote was conducted which resulted in a "yes vote" in favor of a strike.
On November 4, 1992, private respondents SMC, Magnolia and SMFI filed a petition with the
Secretary of Labor praying that the latter assume jurisdiction over the labor dispute in a vital
industry.
As prayed for, the Secretary of Labor assumed jurisdiction over the labor dispute on November 10,
1992. 4Several conciliation meetings were held but still no agreement/settlement was arrived at by
both parties.
After the parties submitted their respective position papers, the Secretary of Labor issued the
assailed Order on February 15, 1993 directing, among others, that the renegotiated terms of the
CBA shall be effective for the period of three (3) years from June 30, 1992; and that such CBA shall
cover only the employees of SMC and not of Magnolia and SMFI.
Dissatisfied, petitioner-union now comes to this Court questioning this Order of the Secretary of
Labor.
Subsequently, on March 30, 1995, 5 petitioner-union filed a Motion for Issuance of a Temporary
Restraining Order or Writ of Preliminary Injunction to enjoin the holding of the certification elections
in the different companies, maintaining that the employees of Magnolia and SMFI fall within the
bargaining unit of SMC.
On March 29, 1995, the Court issued a resolution granting the temporary restraining order prayed
for. 6
Meanwhile, an urgent motion for leave to intervene 7 in the case was filed by the Samahan ng
Malayang Manggagawa-San Miguel Corporation-Federation of Free Workers (SMM-SMC-FFW)
through its authorized representative, Elmer S. Armando, alleging that it is one of the contending
parties adversely affected by the temporary restraining order.
The Intervenor cited the case of Daniel S.L. Borbon v. Hon. Bienvenido B. Laguesma, 8 G.R. No.
101766, March 5, 1993, where the Court recognized the separation of the employees of Magnolia
from the SMC bargaining unit. It then prayed for the lifting of the temporary restraining order.
Likewise, Efren Carreon, Acting President of the SMCEU-PTGWO, filed a petition for the
withdrawal/dismissal of the petition considering that the temporary restraining order jeopardized the
employees' right to conclude a new CBA. At the same time, he challenged the legal personality of
Mr. Raymundo Hipolito, Jr. to represent the Union as its president when the latter was already
officially dismissed from the company on October 4, 1994.
Amidst all these pleadings, the following primordial issues arise:
1) Whether or not the duration of the renegotiated terms of the CBA is to be effective for three years
of for only two years; and
2) Whether or not the bargaining unit of SMC includes also the employees of the Magnolia and
SMFI.
Petitioner-union contends that the duration for the non-representation provisions of the CBA should
be coterminous with the term of the bargaining agency which in effect shall be for the remaining two
years of the current CBA, citing a previous decision of the Secretary of Labor on December 14, 1992
in the matter of the labor dispute at Philippine Refining Company.
However, the Secretary of Labor, in her questioned Order of February 15, 1993 ruled that the
renegotiated terms of the CBA at SMC should run for a period of three (3) years.
We agree with the Secretary of Labor.
Pertinent to the first issue is Art. 253-A of the Labor Code as amended which reads:
Art. 253-A. Terms of a Collective Bargaining Agreement. — Any Collective Bargaining Agreement
that the parties may enter into shall, insofar as the representation aspect is concerned, be for a term
of five (5) years. No petition questioning the majority status of the incumbent bargaining agent shall
be entertained and no certification election shall be conducted by the Department of Labor and
Employment outside of the sixty-day period immediately before the date of expiry of such five year
term of the Collective Bargaining Agreement. All other provisions of the Collective Bargaining
Agreement shall be renegotiated not later than three (3) years after its execution. Any agreement on
such other provisions of the Collective Bargaining Agreement entered into within six (6) months from
the date of expiry of the term of such other provisions as fixed in such Collective Bargaining
Agreement, shall retroact to the day immediately following such date. If any such agreement is
entered into beyond six months, the parties shall agree on the duration of retroactivity thereof. In
case of a deadlock in the renegotiation of the collective bargaining agreement, the parties may
exercise their rights under this Code. (Emphasis supplied.)
Article 253-A is a new provision. This was incorporated by Section 21 of Republic Act No. 6715 (the
Herrera-Veloso Law) which took effect on March 21, 1989. This new provision states that the CBA
has a term of five (5) years instead of three years, before the amendment of the law as far as the
representation aspect is concerned. All other provisions of the CBA shall be negotiated not later than
three (3) years after its execution. The "representation aspect" refers to the identity and majority
status of the union that negotiated the CBA as the exclusive bargaining representative of the

status of the union that negotiated the CBA as the exclusive bargaining representative of the
appropriate bargaining unit concerned. "All other provisions" simply refers to the rest of the CBA,
economic as well as non-economic provisions, except representation. 10
As the Secretary of Labor herself observed in the instant case, the law is clear and definite on the
duration of the CBA insofar as the representation aspect is concerned, but is quite ambiguous with
the terms of the other provisions of the CBA. It is a cardinal principle of statutory construction that
the Court must ascertain the legislative intent for the purpose of giving effect to any statute. The
history of the times and state of the things existing when the act was framed or adopted must be
followed and the conditions of the things at the time of the enactment of the law should be
considered to determine the legislative intent. 11 We look into the discussions leading to the passage
of the law:
THE CHAIRMAN (REP. VELASCO): . . .the CBA, insofar as the economic provisions are
concerned . . .
THE CHAIRMAN (SEN. HERRERA): Maximum of three years?
THE CHAIRMAN (SEN. VELOSO): Maximum of three years.
THE CHAIRMAN (SEN. HERRERA): Present practice?
THE CHAIRMAN (REP. VELOSO): In other words, after three years pwede nang magnegotiate in
the CBA for the remaining two years.
THE CHAIRMAN (REP. HERRERA): You can negotiate for one year, two years or three years but
assuming three years which, I think, that's the likelihood. . .
THE CHAIRMAN (REP. VELOSO): Yes.
THE CHAIRMAN (SEN. HERRERA): Three years, the new union, assuming there will be a change
of agent, at least he has one year to administer and to adjust, to develop rapport with the
management. Yan ang importante.
You know, for us na nagne-negotiate, ang hazard talaga sa negotiation, when we negotiate with
somebody na hindi natin kilala, then, we are governed by our biases na ito ay destroyer ng Labor;
ang mga employer, ito bayaran ko lang ito okay na.
'Yan ang nangyayari, but let us give that allowance for the one year to let them know.
Actually, ang thrust natin ay industrial peace, and there can be no industrial peace if you encourage union
to fight each other. 'Yan ang problema. 12
xxx xxx xxx
HON. ISIDRO: Madali iyan, kasi these two periods that are mentioned in the CBA seem to provide
some doubts later on in the implementation. Sabi kasi rito, insofar as representation issue is
concerned, seven years and lifetime. . .
HON. CHAIRMAN HERRERA: Five years.
HON. ISIDRO: Five years, all the others three years.
HON. CHAIRMAN HERRERA: No. Ang three years duon sa terms and conditions, not later than
three years.
HON. ISIDRO: Not later than three years, so within three years you have to make a new CBA.
HON. CHAIRMAN HERRERA: Yes.
HON. ISIDRO: That is again for purposes of renewing the terms, three years na naman iyan — then,
seven years. . .
HON. CHAIRMAN HERRERA: Not later than three years.
HON. ISIDRO: Assuming that they usually follow the period — three years nang three years, but
under this law with respect to representation — five years, ano? Now, after three years, nagkaroon
ng bagong terms, tapos na iyong term, renewed na iyong terms, ang karapatan noon sa
representation issue mayroon pang two years left.
HON. CHAIRMAN HERRERA: One year na lang because six years nang lahat, three plus three.
HON. ISIDRO: Hindi, two years pa rin ang natitira, eh. Three years pa lang ang natatapos. So,
another CBA was formed and this CBA mayroon na naman siyang bagong five years with respect to
representation issue.
HON. CHAIRMAN HERRERA: Hindi. Hindi na. Ganito iyan. Iyong terms and conditions for three
years.
HON. ISIDRO: Yes.
HON. CHAIRMAN HERRERA: One the third year you can start negotiating to change the terms and
conditions.
HON. ISIDRO: Yes.
HON. CHAIRMAN HERRERA: Assuming you will follow the practice . . .
HON. ISIDRO: Oo.
HON. CHAIRMAN HERRERA: But on the fifth year, ang representation status now can be
questioned, so baka puwedeng magkaroon ng certification election. If the incumbent union loses,
then the new union administers the contract for one year to give him time to know his counterpart —

the employer, before he can negotiate for a new term. Iyan ang advantage.
HON. ISIDRO: Kasi, when the CBA has only a three-year lifetime with respect to the terms and
conditions and then, so you have to renew that in three years — you renew for another three years,
mayroon na naman another five years iyong ano . . .
HON. ANIAG: Hindi, ang natitira duon sa representation two years na lang.
HON. CHAIRMAN HERRERA: Two years na lang sa representation.
HON. ANIAG: So that if they changed the union, iyong last year . . .
HON. CHAIRMAN HERRERA: Iyon lang, that you have to administer the contract. Then, voluntary
arbitration na kayo and then mayroon ka nang probisyon "retroact on the date of the expiry date".
Pagnatalo ang incumbent unyon, mag-aassume ang new union, administer the contract. As far as
the term and condition, for one year, and that will give him time and the employer to know each
other.
HON. JABAR: Boy, let us be realistic. I think if a new union wins a certification election, it would not
want to administer a CBA which has not been negotiated by the union itself.
HON. CHAIRMAN HERRERA: That is not true, Hon. This is true because what is happening now in
the country is that the term ng contract natin, duon din mage-expire ang representation. Iyon ang
nangyari. That is where you have the gulo. Ganoon ang nangyari. So, ang nangyari diyan, pag-
mayroon certification election, expire ang contract, ano ang usual issue — company union. I can you
(sic) give you more what the incumbent union is giving. So ang mangyayari diyan, pag-negotiate mo
hardline na agad.
HON. CHAIRMAN VELOSO : Mon, for four years?
HON. ISIDRO: Ang tingin ko lang dito, iyong distinction between the terms and the representation
aspect — why do we have to distinguish between three and five? What's wrong with having a
uniform expiration period?
HON. CHAIRMAN HERRERA: Five years.
HON. ISIDRO: Puro three years.
HON. CHAIRMAN HERRERA: That is what we are trying to avoid because ang reality diyan, Mart,
pagpasok mo sa kumpanya, mag-ne-negotiate ka ng six months, that's the average, aabot pa
minsan ng one year. Pagktapos ng negotiation mo, signing kayo. There will be an allowed period of
one year. Third year na, uumpisahan naman ang organizations, papasok na ang ibang unyon
because the reality in Trade Union committee, they organize, we organize. So, actually, you have
only industrial peace for one year, effective industrial peace. That is what we are trying to change.
Otherwise, we will continue to discourage the investors and the union will never grow because every
other year it has to use its money for the certification election. Ang grabe pang practice diyan, mag-
a-advance ang federation for three years union dues para panggastos lang sa certification election.
That is what we are trying to avoid.
HON. JABAR: Although there are unions which really get advances.
HON. CHAIRMAN HERRERA: Pag nag-survey tayo sa mga unyon, ganoon ang mangyayari. And I
think our responsibility here is to create a legal framework to promote industrial peace and to
develop responsible and fair labor movement.
HON. CHAIRMAN VELOSO: In other words, the longer the period of the effectivity . . .
xxx xxx xxx
HON CHAIRMAN VELOSO. (continuing) . . . in other words, the longer the period of effectivity of the
CBA, the better for industrial peace.
HON. CHAIRMAN HERRERA: representation status.
HON. CHAIRMAN VELOSO: Only on —
HON. CHAIRMAN HERRERA: — the representations.
HON. CHAIRMAN VELOSO: But on the economic issues.
HON. CHAIRMAN HERRERA: You have to review that. The parties will have to review that.
HON. CHAIRMAN VELOSO: At least on second year.
HON. CHAIRMAN HERRERA: Not later than 3 years, ang karamihan ng mga mag-negotiate when the
companyis (interrupted) 13
From the aforesaid discussions, the legislators were more inclined to have the period of effectivity for
three (3) years insofar as the economic as well as non-economic provisions are concerned, except
representation.
Obviously, the framers of the law wanted to maintain industrial peace and stability by having both
management and labor work harmoniously together without any disturbance. Thus, no outside union
can enter the establishment within five (5) years and challenge the status of the incumbent union as
the exclusive bargaining agent. Likewise, the terms and conditions of employment (economic and
non-economic) can not be questioned by the employers or employees during the period of effectivity
of the CBA. The CBA is a contract between the parties and the parties must respect the terms and
conditions of the agreement. 14 Notably, the framers of the law did not give a fixed term as to the
effectivity of the terms and conditions of employment. It can be gleaned from their discussions that it

effectivity of the terms and conditions of employment. It can be gleaned from their discussions that it
was left to the parties to fix the period.
In the instant case, it is not difficult to determine the period of effectivity for the non-representation
provisions of the CBA. Taking it from the history of their CBAs, SMC intended to have the terms of
the CBA effective for three (3) years reckoned from the expiration of the old or previous CBA which
was on June 30, 1989, as it provides:
Sec. 1. This Agreement which shall be binding upon the parties hereto and their respective
successors-in-interest, shall become effective and shall remain in force and effect until June 30,
1992.
The argument that the PRC case is applicable is indeed misplaced. We quote with favor the Order of
the Secretary of Labor in the light of SMC's peculiar situation as compared with PRC's company
situation.
It is true that in the Philippine Refining Company case (OS-AJ-0031-91) (sic), Labor Dispute at
Philippine Refining Company), we ruled that the term of the renegotiated provisions of the CBA
should coincide with the remaining term of the agency. In doing so, we placed premium on the fact
that PRC has only two (2) unions and no other union had yet executed a renewed term of 3 years.
Nonetheless, in ruling for a shortened term, we were guided by our considered perception that the
said term would improve, rather than ruin, the general welfare of both the workers and the company.
It is equally true that once the economic provisions of the CBA expire, the residual representative
status of the union is effective for only 2 more years. However, if circumstances warrant that the
contract duration which it is soliciting from the company for the benefit of the workers, shall be a little
bit longer than its lifespan, then this Office cannot stand in the way of a more ideal situation. We
must not lose sight of the fact that the primordial purpose of a collective contract is to promote
industrial harmony and stability in the terms and conditions of employment. To our mind, this
objective cannot be achieved without giving due consideration to the peculiarities and unique
characteristics of the employer. In the case at bar, there is no dispute that the mother corporation
(SMC) spun-off two of its divisions and thereby gave birth to two (2) other entities now known as
Magnolia Corporation and San Miguel Foods, Inc. In order to effect a smooth transition, the
companies concerned continued to recognize the existing unions as the bargaining agents of their
respective bargaining units. In the meantime, the other unions in these companies eventually
concluded their CBA negotiations on the remaining term and all of them agreed on a 3-year cycle.
Notably, the following CBAs were forged incorporating a term of 3-years on the renegotiated
provisions, to wit:
1. SMC — daily-paid employees union (IBM)
2. SMFI — monthly-paid employees and daily-paid employees at the Cabuyao Plant.
There is a direct link between the voluntary recognition by the company of the continuing representative
status of the unions after the aforementioned spin-offs and the stand of the company for a 3-year
renegotiated cycle when the economic provisions of the existing CBAs expired, i.e., the maintain stability
and avoid confusion when the umbilical cord of the two divisions were severed from their parent. These
two cannot be considered independently of each other for they were intended to reinforce one another.
Precisely, the company conceded to face the same union notwithstanding the spin-offs in order to
preserve industrial peace during the infancy of the two corporations. If the union would insist on a shorter
renegotiated term, then all the advantages gained by both parties in this regard, would have gone to
naught. With this in mind, this office feels that it will betray its mandate should we order the parties to
execute a 2-year renegotiated term for then chaos and confusion, rather than tranquillity, would be the
order of the day. Worse, there is a strong likelihood that such a ruling might spawn discontent and
possible mass actions against the company coming from the other unions who had already agreed to a 3-
year renegotiated terms. If this happens, the purpose of this Office's intervention into the parties'
controversy would have been defeated. 15
The issue as to the term of the non-representation provisions of the CBA need not belabored
especially when we take note of the Memorandum of the Secretary of Labor dated February 24,
1994 which was mentioned in the Resolution of Undersecretary Bienvenido Laguesma on January
16, 1995 in the certification election case involving the SMC employees. 16 In said memorandum, the
Secretary of Labor had occasion to clarify the term of the renegotiated terms of the CBA vis-a-vis the
term of the bargaining agent, to wit:
As a matter of policy the parties are encourages (sic) to enter into a renegotiated CBA with a term
which would coincide (sic) with the aforesaid five (5) year term of the bargaining representative.
In the event however, that the parties, by mutual agreement, enter into a renegotiated contract with a
term of three (3) years or one which does not coincide with the said 5-year term, and said agreement
is ratified by majority of the members in the bargaining unit, the subject contract is valid and legal
and therefore, binds the contracting parties. The same will however not adversely affect the right of
another union to challenge the majority status of the incumbent bargaining agent within sixty (60)
days before the lapse of the original five (5) year term of the CBA.

days before the lapse of the original five (5) year term of the CBA.
Thus, we do not find any grave abuse of discretion on the part of the Secretary of Labor in ruling that
the effectivity of the renegotiated terms of the CBA shall be for three (3) years.
With respect to the second issue, there is, likewise, no merit in petitioner-union's assertion that the
employees of Magnolia and SMFI should still be considered part of the bargaining unit of SMC.
Magnolia and SMFI were spun-off to operate as distinct companies on October 1, 1991.
Management saw the need for these transformations in keeping with its vision and long term
strategy as it explained in its letter addressed to the employees dated August 13, 1991:
. . . As early as 1986, we announced the decentralization program and spoke of the need for
structures that can react fast to competition, a changing environment, shorter product life cycles and
shifts in consumer preference. We further stated in the 1987 Annual Report to Stockholders that San
Miguel's businesses will be more autonomous and self sufficient so as to better acquire and master
new technologies, cope with a labor force with different expertises and expectations, and master and
satisfy the changing needs of our customers and end-consumers. As subsidiaries, Magnolia and
FLD will gain better industry focus and flexibility, greater awareness of operating results, and
speedier, more responsive decision making.
xxx xxx xxx
We only have to look at the experience of Coca-Cola Bottlers Philippines, Inc., since this company
was organized about ten years ago, to see the benefits that arise from restructuring a division of San
Miguel into a more competitive organization. As a stand-alone enterprise, CCBPI engineered a
dramatic turnaround and has sustained its sales and market share leadership ever since.
We are confident that history will repeat itself, and the transformation of Magnolia and FLD will be
successful as that of CCBPI. 17
Undeniably, the transformation of the companies was a management prerogative and business
judgment which the courts can not look into unless it is contrary to law, public policy or morals.
Neither can we impute any bad faith on the part of SMC so as to justify the application of the
doctrine of piercing the corporate veil. 18 Ever mindful of the employees' interests, management has
assured the concerned employees that they will be absorbed by the new corporations without loss of
tenure and retaining their present pay and benefits according to the existing CBAs. 19 They were
advised that upon the expiration of the CBAs, new agreements will be negotiated between the
management of the new corporations and the bargaining representatives of the employees
concerned. As a result of the spin-offs:
1. Each of the companies are run by, supervised and controlled by different management teams
including separate human resource/personnel managers.
2. Each Company enforces its own administrative and operational rules and policies and are not
dependent on each other in their operations.
3. Each entity maintains separate financial statements and are audited separately from each other. 20
Indubitably, therefore, Magnolia and SMFI became distinct entities with separate juridical
personalities. Thus, they can not belong to a single bargaining unit as held in the case of Diatagon
Labor Federation Local 110 of the ULGWP v. Ople. 21 We elucidate:
The fact that their businesses are related and that the 236 employees of the Georgia Pacific
International Corporation were originally employees of Lianga Bay Logging Co., Inc. is not a
justification for disregarding their separate personalities. Hence, the 236 employees, who are now
attached to Georgia Pacific International Corporation, should not be allowed to vote in the
certification election at the Lianga Bay Logging Co., Inc. They should vote at a separate certification
election to determine the collective bargaining representative of the employees of Georgia Pacific
International Corporation.
Petition-union's attempt to include the employees of Magnolia and SMFI in the SMC bargaining unit
so as to have a bigger mass base of employees has, therefore, no more valid ground.
Moreover, in determining an appropriate bargaining unit, the test of grouping is mutuality or
commonality of interests. The employees sought to be represented by the collective bargaining
agent must have substantial mutual interests in terms of employment and working conditions as
evinced by the type of work they performed. 22 Considering the spin-offs, the companies would
consequently have their respective and distinctive concerns in terms of the nature of work, wages,
hours of work and other conditions of employment. Interests of employees in the different companies
perforce differ. SMC is engaged in the business of the beer manufacturing. Magnolia is involved in
the manufacturing and processing of diary products 23 while SMFI is involved in the production of
feeds and the processing of chicken. 24 The nature of their products and scales of business may
require different skills which must necessarily be commensurated by different compensation
packages. The different companies may have different volumes of work and different working
conditions. For such reason, the employees of the different companies see the need to group
themselves together and organize themselves into distinctive and different groups. It would then be
best to have separate bargaining units for the different companies where the employees can bargain

best to have separate bargaining units for the different companies where the employees can bargain
separately according to their needs and according to their own working conditions.
We reiterate what we have explained in the case of University of the Philippines v. Ferrer-
Calleja 25 that:
[T]here are various factors which must be satisfied and considered in determining the proper
constituency of a bargaining unit. No one particular factor is itself decisive of the determination. The
weight accorded to any particular factor varies in accordance with the particular question or
questions that may arise in a given case. What are these factors? Rothenberg mentions a good
number, but the most pertinent to our case are: (1) will of the employees (Globe Doctrine); (2) affinity
and unit of employees' interest, such as substantial similarity of work and duties, or similarity of
compensation and working conditions; (3) prior collective bargaining history; and (4) employment
status, such as temporary, seasonal and probationary employees. . . .
xxx xxx xxx
An enlightening appraisal of the problem of defining an appropriate bargaining unit is given in the
10th Annual Report of the National Labor Relations Board wherein it is emphasized that the factors
which said board may consider and weigh in fixing appropriate units are: the history, extent and type
of organization of employees; the history of their collective bargaining; the history, extent and type of
organization of employees in other plants of the same employer, or other employers in the same
industry; the skill, wages, work, and working conditions of the employees; the desires of the
employees; the eligibility of the employees for membership in the union or unions involved; and the
relationship between the unit or units proposed and the employer's organization, management, and
operation . . .
. . . In said report, it is likewise emphasized that the basic test in determining the appropriate
bargaining unit is that a unit, to be appropriate, must affect a grouping of employees who have
substantial, mutual interests in wages, hours, working conditions and other subjects of collective
bargaining (citing Smith on Labor Laws, 316-317; Francisco, Labor Laws, 162). . .
Finally, we take note of the fact that the separate interests of the employees of Magnolia and SMFI
from those of SMC has been recognized in the case of Daniel Borbon v. Laguesma. 26 We quote:
Even assuming in gratia argumenti that at the time of the election they were regular employees of
San Miguel, nonetheless, these workers are no longer connected with San Miguel Corporation in
any manner because Magnolia has ceased to be a division of San Miguel Corporation and has been
formed into a separate corporation with a personality of its own (p. 305, Rollo). This development,
which was brought to our attention by private respondents, necessarily renders moot and academic
any further discourse on the propriety of the elections which petitioners impugn via the recourse (p.
319, Rollo).
In view of all the foregoing, we do not find any grave abuse of discretion on the part of the Secretary
of Labor in rendering the assailed Order.
WHEREFORE, the petition is DISMISSED for lack of merit. The Temporary Restraining Order issued
on March 29, 1995 is lifted.
SO ORDERED.
Bellosillo, Vitug and Hermosisima, Jr., JJ., concur.
Padilla, J., took no part.
Footnotes
1 Rollo, p. 56.
2 Id., at 541.
3 Id., at 211.
4 Id., at 9.
5 Id., at 1048.
6 Id., at 1125.
7 Id., at 1166.
8 219 SCRA 605 (1993).
9 OS-AJ-0031-92 NCMB-NCR-NS-08-563-92, December 14, 1992, Annex "B," fRollo, p. 33.
10 C.A. Azucena, Labor Law Handbook, 718 (1995 Edition).
11 De los Santos v. Mallari, 87 Phil. 289 (1950); Gomez Garcia v. Hipolito, 2 Phil. 732 (1903).
12 Joint Congressional Conference Committee on Senate Bill No. 530 and House Bill No. 11524,
December 14, 1988.
14 Henson v. Intermediate Appellate Court, 148 SCRA 11 (1987).
15 Rollo, pp. 28-30.
16 Attached as Annex "G" (Rollo, p. 1108) to the Motion for Temporary Restraining
Order/Preliminary Injunction (Rollo, p. 1048).
17 Rollo, p. 211.
18 See Indophil Textile Mill Workers Union v. Calica, 205 SCRA 697 (1992).

18 See Indophil Textile Mill Workers Union v. Calica, 205 SCRA 697 (1992).
19 Id., at 211, 213.
20 Id., at 23.
21 101 SCRA 534 (1980).
22 San Miguel Corporation v. Laguesma, 231 SCRA 595 (1994).
23 Rollo, p. 186.
24 Id., at 451.
25 211 SCRA 451 (1992).
26 Supra.

Navarro vs. Damasco
2:26 AM

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 101875 July 14, 1995

CASIANO A. NAVARRO III, petitioner,
vs.
HON. ISRAEL D. DAMASCO, in his capacity as VOLUNTARY ARBITRATOR, and BUSCO
SUGAR MILLING CO., INC., respondents.
QUIASON, J.:
This is a petition for certiorari to reverse the Decision dated August 16, 1991 of the Voluntary
Arbitrator, respondent Israel D. Damasco, declaring as valid the separation from employment of
petitioner.
We dismiss the petition.
I
Petitioner was employed as typist of private respondent at its plant in Quezon, Bukidnon.
At about 5:00 P.M. of November 27, 1990, petitioner went to visit Mercy Baylas, a co-employee, at
the ladies' dormitory inside the compound of private respondent. Upon seeing petitioner, Baylas hid
behind the divider at the reception room. Rosemarie Basa and Isabel Beleno, co-boarders of Baylas,
told petitioner that Baylas was not at the dormitory and advised him to stop courting her because she
had no feelings towards him. Afterwards, the two left leaving petitioner alone in the room. When he
peeped behind the divider, he saw Baylas, who stood up without answering his greetings and ran
towards her room. He followed, and after taking hold of her left hand, pulled her towards him. The
force caused her to fall on the floor. He then placed himself on top of her. She resisted and futilely
struggled to free herself from his grasp. Sonia Armada, the dormitory housekeeper, responded to
Baylas' shouts for help. Armada saw petitioner embracing and kissing Baylas. She tried to separate
petitioner from Baylas but to no avail. So she went outside and asked Basa and Beleno to help
Baylas. She also asked the help of Edmundo Subong.
Basa and Beleno tried to pull petitioner away from Baylas, but it was Subong who was able to free
Baylas from petitioner.
According to the medical report issued by Dr. Letecia P. Maraat, Baylas complained of pains on her
shoulder and left foot.
On December 5, 1990, petitioner was informed of the complaint against him and was placed under
preventive suspension. Nolito S. Densing, Jr. was instructed to investigate the incident. In his report
dated December 26, 1990, Densing recommended that the maximum penalty be meted out against
petitioner. On January 5, 1991, petitioner was dismissed from the service for having violated
paragraph 3.B (Conduct and Behavior) of the Code of Employee Discipline, which provides:
1. Inflicting or attempting to inflict bodily injury, in any form, on fellow employee, with a penalty of
dismissal.
2. Immoral conduct within company premises, regardless of whether or not committed during
working time, punishable by reprimand to dismissal, depending on the prejudice caused by such act
to the company.
3. Improper conduct and acts of gross discourtesy or disrespect to fellow employees at any time
within the company premises punishable by reprimand to dismissal, depending on the gravity of the
offense.
4. Knowingly giving false or untruthful statements or concealing material facts in an investigation
conducted by authorized representative of the company, punishable by dismissal ( Rollo, pp. 47-48).
On March 18, 1991, the President of the Mindanao Sugar Workers Union, for and in behalf of
petitioner, and Jaime J. Javier, Personnel Officer of private respondent, agreed to submit the case of
petitioner to voluntary arbitration.
At the initial conference on March 27, 1991, petitioner, represented by his counsel, agreed to limit
the issues to be submitted to the Voluntary Arbitrator to the following:
1. Whether or not the grievance procedure in the CBA for bringing a case before the Voluntary
Arbitrator had been followed;
2. Whether petitioner's dismissal was legal; and

2. Whether petitioner's dismissal was legal; and
3. Who was the complainant insofar as the grievance procedure under the CBA was concerned
(Rollo, p. 147).
The parties also agreed to submit the case for decision based on their position papers.
On August 16, 1991, a decision was rendered by the Voluntary Arbitrator dismissing petitioner from
his employment and holding that private respondent did not violate the provisions of the grievance
procedure under the Collective Bargaining Agreement.
Not satisfied with the decision, petitioner filed the instant petition.
II
According to petitioner's version, Baylas was his girlfriend, whom he visited at the ladies' dormitory in
the afternoon of November 27, 1990. At the dormitory, petitioner saw Rosemarie Basa who told him
that Baylas was not around. To prove that Basa was lying, he peeped behind the divider and saw
Baylas hiding there. When Baylas ran towards her room, petitioner followed her. While running,
Baylas lost her balance and fell down. However, petitioner got hold of her to prevent her from hitting
the floor and to help her to her feet. He denied having kissed and embraced her. He admitted that
Subong arrived and pulled him away from Baylas. He also admitted that he voluntarily surrendered
to the security guards.
III
Petitioner contends that the grievance procedure provided for in the Collective Bargaining
Agreement was not followed; hence, the Voluntary Arbitrator exceeded his authority when he took
cognizance of the labor case.
Section 2, Article X of the Collective Bargaining Agreement specifies the instances when the
grievance machinery may be availed of, thus:
Any protest or misunderstanding concerning any ruling, practice or working conditions in the
Company, or any dispute arising as to the meaning, application or claim of violation of any provision
of this Agreement or any complaint that any employee may have against the COMPANY shall
constitute a grievance ( Rollo, p. 27).
The instant case is not a grievance that must be submitted to the grievance machinery. What are
subject of the grievance procedure for adjustment and resolution are grievances arising from the
interpretation or implementation of the collective bargaining agreement (Labor Code of the
Philippines, as amended by R.A. No. 6715, Art. 260).
The acts of petitioner involved a violation of the Code of Employee Discipline, particularly the
provision penalizing the immoral conduct of employees. Consequently, there was no justification for
petitioner to invoke the grievance machinery provisions of the Collective Bargaining Agreement
(Auxilio, Jr. v. National Labor Relations Commission, 188 SCRA 263 [1990]).
The case of petitioner was submitted to voluntary arbitration by agreement of the president of the
labor union to which petitioner belongs, and his employer, through its personnel officer. Petitioner
himself voluntarily submitted to the jurisdiction of the Voluntary Arbitrator when he, through his
counsel, filed his position paper with the Voluntary Arbitrator and even submitted additional
documentary evidence. In addition thereto, during the initial conference on March 27, 1991, the
parties manifested that they were not questioning the authority of the Voluntary Arbitrator.
It is the policy of the State to promote voluntary arbitration as a mode of settling labor disputes
(Manguiat, Mechanisms of Voluntary Arbitration in Labor Disputes 2-6 [1978]).
Petitioner claims that he was denied due process of law because no hearing was held and he was
not given an opportunity to cross-examine the witnesses.
We held in Stayfast Philippines Corp. v. National Labor Relation Commission, 218 SCRA 596 (1993)
that:
The essence of due process is simply an opportunity to be heard, or as applied to administrative
proceedings, an opportunity to explain one's side or an opportunity to seek a reconsideration of the
action or ruling complained of.
A formal or trial-type hearing is not at all times and in all instances essential. The requirements are
satisfied where the parties are fair and reasonable opportunity to explain their side of the controversy
at hand. What is frowned upon is the absolute lack of notice and hearing. . . .
(at p. 601).
Concerning the allegation that petitioner was not allowed to cross-examine the witnesses, the record
shows that the parties had agreed not to cross-examine their witnesses anymore.
Petitioner alleges that the quarrel between Baylas and him was a purely private affair. We do not
agree with this contention. It will be noted that not only did the incident happen within the company
premises, i.e. the ladies' dormitory which was located inside the plant site, but both of them are
employees of private respondent. Management would then be at the mercy of its employees if it
cannot enforce discipline within company premises solely because the quarrel is purely personal
matter. The harassment of an employee by a co-employee within the company premises even after
office hours is a work-related matter considering that the peace of the company is thereby affected.

office hours is a work-related matter considering that the peace of the company is thereby affected.
The Code of Employee Discipline is very clear that immoral conduct "within the company premises
regardless of whether or not [it is] committed during working time" is punishable.
The pretext of petitioner that he was merely helping Baylas is belied by the eyewitnesses. Petitioner
admitted that it took Subong to pull him away from Baylas. His alleged act of chivalry is nothing more
than a chance to gratify his amorous feelings.
WHEREFORE, the Decision of the respondent Voluntary Arbitrator is AFFIRMED.
SO ORDERED.
Padilla, Davide, Jr. and Kapunan, JJ., concur.
Bellosillo, J., is on leave.
Pasted from <http://www.lawphil.net/judjuris/juri1995/jul1995/gr_101875_1995.html>

Republic Savings Bank vs. CIR
2:26 AM

Davao Integrated Port Stevedoring Services vs. Abarquez
2:27 AM
lawphil
Today is
Thursda
y, July
01, 2004

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 102132. March 19, 1993.

DAVAO INTEGRATED PORT STEVEDORING SERVICES, petitioner, vs. RUBEN
V. ABARQUEZ, in his capacity as an accredited Voluntary Arbitrator and THE
ASSOCIATION OF TRADE UNIONS (ATU-TUCP), respondents.
Libron, Gaspar & Associates for petitioner.
Bansalan B. Metilla for Association of Trade Unions (ATUTUCP).
SYLLABUS
1. LABOR LAWS AND SOCIAL LEGISLATION; LABOR RELATIONS;
COLLECTIVE BARGAINING AGREEMENT; DEFINED; NATURE THEREOF;
CONSTRUCTION TO BE PLACED THEREON. — A collective bargaining
agreement (CBA), as used in Article 252 of the Labor Code, refers to a contract
executed upon request of either the employer or the exclusive bargaining
representative incorporating the agreement reached after negotiations with respect
to wages, hours of work and all other terms and conditions of employment, including
proposals for adjusting any grievances or questions arising under such agreement.
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 a practical
and realistic construction upon it, giving due consideration to the context in which it
is negotiated and purpose which it is intended to serve.
2. ID.; ID.; ID.; ID.; ID.; ID.; CASE AT BAR. — It is thus erroneous for petitioner to
isolate Section 1, Article VIII of the 1989 CBA from the other related section on sick
leave with pay benefits, specifically Section 3 thereof, in its attempt to justify the
discontinuance or withdrawal of the privilege of commutation or conversion to cash
of the unenjoyed portion of the sick leave benefit to regular intermittent workers. The
manner they were deprived of the privilege previously recognized and extended to
them by petitioner-company during the lifetime of the CBA of October 16, 1985 until
three (3) months from its renewal on April 15, 1989, or a period of three (3) years
and nine (9) months, is not only tainted with arbitrariness but likewise discriminatory

in nature. It must be noted that the 1989 CBA has two (2) sections on sick leave
with pay benefits which apply to two (2) distinct classes of workers in petitioner's
company, namely: (1) the regular non-intermittent workers or those workers who
render a daily eight-hour service to the company and are governed by Section 1,
Article VIII of the 1989 CBA; and (2) intermittent field workers who are members of
the regular labor pool and the present regular extra labor pool as of the signing of
the agreement on April 15, 1989 or those workers who have irregular working days
and are governed by Section 3, Article VIII of the 1989 CBA. It is not disputed that
both classes of workers are entitled to sick leave with pay benefits provided they
comply with the conditions set forth under Section 1 in relation to the last paragraph
of Section 3, to wit: (1) the employee-applicant must be regular or must have
rendered at least one year of service with the company; and (2) the application must
be accompanied by a certification from a company-designated physician. the phrase
"herein sick leave privilege," as used in the last sentence of Section 1, refers to the
privilege of having a fixed 15-day sick leave with pay which, as mandated by
Section 1, only the non-intermittent workers are entitled to. This fixed 15 -day sick
leave with pay benefit should be distinguished from the variable number of days of
sick leave, not to exceed 15 days, extended to intermittent workers under Section 3
depending on the number of hours of service rendered to the company, including
overtime pursuant to the schedule provided therein. It is only fair and reasonable for
petitioner-company not to stipulate a fixed 15-day sick leave with pay for its regular
intermittent workers since, as the term "intermittent" implies, there is irregularity in
their work-days. Reasonable and practical interpretation must be placed on
contractual provisions. Interpetatio fienda est ut res magis valeat quam pereat. Such
interpretation is to be adopted, that the thing may continue to have efficacy rather
than fail.
3. ID.; ID.; ID.; SICK LEAVE BENEFITS; NATURE AND PURPOSE. — Sick leave
benefits, like other economic benefits stipulated in the CBA such as maternity leave
and vacation leave benefits, among others, are by their nature, intended to be
replacements for regular income which otherwise would not be earned because an
employee is not working during the period of said leaves. They are non -contributory
in nature, in the sense that the employees contribute nothing to the operation of the
benefits. By their nature, upon agreement of the parties, they are intended to
alleviate the economic condition of the workers.
4. ID.; ID.; JURISDICT ION OF VOLUNTARY ARBITRATOR; CASE AT BAR. —
Petitioner-company's objection to the authority of the Voluntary Arbitrator to direct
the commutation of the unenjoyed portion of the sick leave with pay benefits of
intermittent workers in his decision is misplaced. Article 261 of the Labor Code is
clear. The questioned directive of the herein public respondent is the necessary
consequence of the exercise of his arbitral power as Voluntary Arbitrator under
Article 261 of the Labor Code "to hear and decide all unresolved grievances arising
from the interpretation or implementation of the Collective Bargaining Agreement."
We, therefore, find that no grave abuse of discretion was committed by public
respondent in issuing the award (decision). Moreover, his interpretation of Sections
1 and 3, Article VIII of the 1989 CBA cannot be faulted with and is absolutely
correct.
5. ID.; CONDITIONS OF EMPLOYMENT; PROHIBITION AGAINST ELIMINAT ION
OR DIMINUTION OF BENEFITS; BENEFITS GRANTED PURSUANT TO
COMPANY PRACTICE OR POLICY CANNOT BE PEREMPTORILY
WITHDRAWN. — Whatever doubt there may have been early on was clearly
obliterated when petitioner-company recognized the said privilege and paid its
intermittent workers the cash equivalent of the unenjoyed portion of their sick leave
with pay benefits during the lifetime of the CBA of October 16, 1985 until three (3)
months from its renewal on April 15, 1989. Well-settled is it that the said privilege of
commutation or conversion to cash, being an existing benefit, the petitioner -
company may not unilaterally withdraw, or diminish such benefits. It is a fact that
petitioner-company had, on several instances in the past, granted and paid the cash
equivalent of the unenjoyed portion of the sick leave benefits of some intermittent
workers. Under the circumstances, these may be deemed to have ripened into
company practice or policy which cannot be peremptorily withdrawn.
DEC I SI O N
ROMERO, J p:

ROMERO, J p:
In this petition for certiorari, petitioner Davao Integrated Port Services Corporation
seeks to reverse the Award 1 issued on September 10, 1991 by respondent Ruben
V. Abarquez, in his capacity as Voluntary Arbitrator of the National Conciliation and
Mediation Board, Regional Arbitration Branch XI in Davao City in Case No. AC -211-
BX1-10-003-91 which directed petitioner to grant and extend the privilege of
commutation of the unenjoyed portion of the sick leave with pay benefits to its
intermittent field workers who are members of the regular labor pool and the present
regular extra pool in accordance with the Collective Bargaining Agreement (CBA)
executed between petitioner and private respondent Association of Trade Unions
(ATU-TUCP), from the time it was discontinued and henceforth.
The facts are as follows:
Petitioner Davao Integrated Port Stevedoring Services (petitioner -company) and
private respondent ATU-TUCP (Union), the exclusive collective bargaining agent of
the rank and file workers of petitioner -company, entered into a collective bargaining
agreement (CBA) on October 16, 1985 which, under Sections 1 and 3, Article VIII
thereof, provide for sick leave with pay benefits each year to its employees who
have rendered at least one (1) year of service with the company, thus:
"ARTICLE VIII
Section 1. Sick Leaves — The Company agrees to grant 15 days sick leave with
pay each year to every regular non-intermittent worker who already rendered at
least one year of service with the company. However, such sick leave can only be
enjoyed upon certification by a company designated physician, and if the same is
not enjoyed within one year period of the current year, any unenjoyed portion
thereof, shall be converted to cash and shall be paid at the end of the said one year
period. And provided however, that only those regular workers of the company
whose work are not intermittent, are entitled to the herein sick leave privilege.
xxx xxx xxx
Section 3. — All intermittent field workers of the company who are members of the
Regular Labor Pool shall be entitled to vacation and sick leaves per year of service
with pay under the following schedule based on the number of hours rendered
including overtime, to wit:
Hours of Service Per Vacation Sick Leave
Calendar Year Leave
Less than 750 NII NII
751 — 825 6 days 6 days
826 — 900 7 7
901 — 925 8 8
926 — 1,050 9 9
1,051 — 1,125 10 10
1,126 — 1,200 11 11
1,201 — 1,275 12 12
1,276 — 1,350 13 13
1,351 — 1,425 14 14
1,426 — 1,500 15 15
The conditions for the availment of the herein vacation and sick leaves shall be in
accordance with the above provided Sections 1 and 2 hereof, respectively."
Upon its renewal on April 15, 1989, the provisions for sick leave with pay benefits
were reproduced under Sections 1 and 3, Article VIII of the new CBA, but the
coverage of the said benefits was expanded to include the "present Regular Extra
Labor Pool as of the signing of this Agreement." Section 3, Article VIII, as revised,
provides, thus:
"Section 3. — All intermittent field workers of the company who are members of the
Regular Labor Pool and present Regular Extra Labor Pool as of the signing of this
agreement shall be entitled to vacation and sick leaves per year of service with pay
under the following schedule based on the number of hours rendered including
overtime, to wit:
Hours of Service Per Vacation Sick Leave
Calendar Year Leave
Less than 750 NII NII
751 — 825 6 days 6 days
826 — 900 7 7

826 — 900 7 7
901 — 925 8 8
926 — 1,050 9 9
1,051 — 1,125 10 10
1,126 — 1,200 11 11
1,201 — 1,275 12 12
1,276 — 1,350 13 13
1,351 — 1,425 14 14
1,426 — 1,500 15 15
The conditions for the availment of the herein vacation and sick leaves shall be in
accordance with the above provided Sections 1 and 2 hereof, respectively."
During the effectivity of the CBA of October 16, 1985 until three (3) months after its
renewal on April 15, 1989, or until July 1989 (a total of three (3) years and nine (9)
months), all the field workers of petitioner who are members of the regular labor
pool and the present regular extra labor pool who had rendered at least 750 hours
up to 1,500 hours were extended sick leave with pay benefits. Any unenjoyed
portion thereof at the end of the current year was converted to cash and paid at the
end of the said one-year period pursuant to Sections 1 and 3, Article VIII of the
CBA. The number of days of their sick leave per year depends on the number of
hours of service per calendar year in accordance with the schedule provided in
Section 3, Article VIII of the CBA.
The commutation of the unenjoyed portion of the sick leave with pay benefits of the
intermittent workers or its conversion to cash was, however, discontinued or
withdrawn when petitioner-company under a new assistant manager, Mr. Benjamin
Marzo (who replaced Mr. Cecilio Beltran, Jr. upon the latter's resignation in June
1989), stopped the payment of its cash equivalent on the ground that they are not
entitled to the said benefits under Sections 1 and 3 of the 1989 CBA.
The Union objected to the said discontinuance of commutation or conversion to
cash of the unenjoyed sick leave with pay benefits of petitioner's intermittent
workers contending that it is a deviation from the true intent of the parties that
negotiated the CBA; that it would violate the principle in labor laws that benefits
already extended shall not be taken away and that it would result in discrimination
between the non-intermittent and the intermittent workers of the petitioner -company.
Upon failure of the parties to amicably settle the issue on the interpretation of
Sections 1 and 3, Article VIII of the 1989 CBA, the Union brought the matter for
voluntary arbitration before the National Conciliation and Mediation Board, Regional
Arbitration Branch XI at Davao City by way of complaint for enforcement of the CBA.
The parties mutually designated public respondent Ruben Abarquez, Jr. to act as
voluntary arbitrator.
After the parties had filed their respective position papers, 2 public respondent
Ruben Abarquez, Jr. issued on September 10, 1991 an Award in favor of the Union
ruling that the regular intermittent workers are entitled to commutation of their
unenjoyed sick leave with pay benefits under Sections 1 and 3 of the 1989 CBA, the
dispositive portion of which reads:
"WHEREFORE, premises considered, the management of the respondent Davao
Integrated Port Stevedoring Services Corporation is hereby directed to grant and
extend the sick leave privilege of the commutation of the unenjoyed portion of the
sick leave of all the intermittent field workers who are members of the regular labor
pool and the present extra pool in accordance with the CBA from the time it was
discontinued and henceforth.
SO ORDERED."
Petitioner-company disagreed with the aforementioned ruling of public respondent,
hence, the instant petition.
Petitioner-company argued that it is clear from the language and intent of the last
sentence of Section 1, Article VIII of the 1989 CBA that only the regular workers
whose work are not intermittent are entitled to the benefit of conversion to cash of
the unenjoyed portion of sick leave, thus: ". . . And provided, however, that only
those regular workers of the Company whose work are not intermittent are entitled
to the herein sick leave privilege."
Petitioner-company further argued that while the intermittent workers were paid the
cash equivalent of their unenjoyed sick leave with pay benefits during the previous
management of Mr. Beltran who misinterpreted Sections 1 and 3 of Article VIII of

management of Mr. Beltran who misinterpreted Sections 1 and 3 of Article VIII of
the 1985 CBA, it was well within petitioner -company's rights to rectify the error it had
committed and stop the payment of the said sick leave with pay benefits. An error in
payment, according to petitioner-company, can never ripen into a practice.
We find the arguments unmeritorious.
A collective bargaining agreement (CBA), as used in Article 252 of the Labor Code,
refers to a contract executed upon request of either the employer or the exclusive
bargaining representative incorporating the agreement reached after negotiations
with respect to wages, hours of work and all other terms and conditions of
employment, including proposals for adjusting any grievances or questions arising
under such agreement.
While the terms and conditions of a CBA constitute the law between the parties, 3 it
is not, however, an ordinary contract to which is applied the principles of law
governing ordinary contracts. 4 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 a
practical and realistic construction upon it, giving due consideration to the context in
which it is negotiated and purpose which it is intended to serve. 5
It is thus erroneous for petitioner to isolate Section 1, Article VIII of the 1989 CBA
from the other related section on sick leave with pay benefits, specifically Section 3
thereof, in its attempt to justify the discontinuance or withdrawal of the privilege of
commutation or conversion to cash of the unenjoyed portion of the sick leave benefit
to regular intermittent workers. The manner they were deprived of the privilege
previously recognized and extended to them by petitioner -company during the
lifetime of the CBA of October 16, 1985 until three (3) months from its renewal on
April 15, 1989, or a period of three (3) years and nine (9) months, is not only tainted
with arbitrariness but likewise discriminatory in nature. Petitioner -company is of the
mistaken notion that since the privilege of commutation or conversion to cash of the
unenjoyed portion of the sick leave with pay benefits is found in Section 1, Article
VIII, only the regular non-intermittent workers and no other can avail of the said
privilege because of the proviso found in the last sentence thereof.
It must be noted that the 1989 CBA has two (2) sections on sick leave with pay
benefits which apply to two (2) distinct classes of workers in petitioner's company,
namely: (1) the regular non-intermittent workers or those workers who render a daily
eight-hour service to the company and are governed by Section 1, Article VIII of the
1989 CBA; and (2) intermittent field workers who are members of the regular labor
pool and the present regular extra labor pool as of the signing of the agreement on
April 15, 1989 or those workers who have irregular working days and are governed
by Section 3, Article VIII of the 1989 CBA.
It is not disputed that both classes of workers are entitled to sick leave with pay
benefits provided they comply with the conditions set forth under Section 1 in
relation to the last paragraph of Section 3, to wit: (1) the employee -applicant must
be regular or must have rendered at least one year of service with the company;
and (2) the application must be accompanied by a certification from a company -
designated physician.
Sick leave benefits, like other economic benefits stipulated in the CBA such as
maternity leave and vacation leave benefits, among others, are by their nature,
intended to be replacements for regular income which otherwise would not be
earned because an employee is not working during the period of said leaves. 6
They are non-contributory in nature, in the sense that the employees contribute
nothing to the operation of the benefits. 7 By their nature, upon agreement of the
parties, they are intended to alleviate the economic condition of the workers.
After a careful examination of Section 1 in relation to Section 3, Article VIII of the
1989 CBA in light of the facts and circumstances attendant in the instant case, we
find and so hold that the last sentence of Section 1, Article VIII of the 1989 CBA,
invoked by petitioner-company does not bar the regular intermittent workers from
the privilege of commutation or conversion to cash of the unenjoyed portion of their
sick leave with pay benefits, if qualified. For the phrase "herein sick leave privilege,"
as used in the last sentence of Section 1, refers to the privilege of having a fixed 15 -
day sick leave with pay which, as mandated by Section 1, only the non -intermittent

day sick leave with pay which, as mandated by Section 1, only the non -intermittent
workers are entitled to. This fixed 15-day sick leave with pay benefit should be
distinguished from the variable number of days of sick leave, not to exceed 15 days,
extended to intermittent workers under Section 3 depending on the number of hours
of service rendered to the company, including overtime pursuant to the schedule
provided therein. It is only fair and reasonable for petitioner -company not to stipulate
a fixed 15-day sick leave with pay for its regular intermittent workers since, as the
term "intermittent" implies, there is irregularity in their work -days. Reasonable and
practical interpretation must be placed on contractual provisions. Interpetatio fienda
est ut res magis valeat quam pereat. Such interpretation is to be adopted, that the
thing may continue to have efficacy rather than fail. 8
We find the same to be a reasonable and practical distinction readily discernible in
Section 1, in relation to Section 3, Article VIII of the 1989 CBA between the two
classes of workers in the company insofar as sick leave with pay benefits are
concerned. Any other distinction would cause discrimination on the part of
intermittent workers contrary to the intention of the parties that mutually agreed in
incorporating the questioned provisions in the 1989 CBA.
Public respondent correctly observed that the parties to the CBA clearly intended
the same sick leave privilege to be accorded the intermittent workers in the same
way that they are both given the same treatment with respect to vacation leaves -
non-commutable and non-cumulative. If they are treated equally with respect to
vacation leave privilege, with more reason should they be on par with each other
with respect to sick leave privileges. 9 Besides, if the intention were otherwise,
during its renegotiation, why did not the parties expressly stipulate in the 1989 CBA
that regular intermittent workers are not entitled to commutation of the unenjoyed
portion of their sick leave with pay benefits?
Whatever doubt there may have been early on was clearly obliterated when
petitioner-company recognized the said privilege and paid its intermittent workers
the cash equivalent of the unenjoyed portion of their sick leave with pay benefits
during the lifetime of the CBA of October 16, 1985 until three (3) months from its
renewal on April 15, 1989. Well-settled is it that the said privilege of commutation or
conversion to cash, being an existing benefit, the petitioner -company may not
unilaterally withdraw, or diminish such benefits. 10 It is a fact that petitioner -
company had, on several instances in the past, granted and paid the cash
equivalent of the unenjoyed portion of the sick leave benefits of some intermittent
workers. 11 Under the circumstances, these may be deemed to have ripened into
company practice or policy which cannot be peremptorily withdrawn. 12
Moreover, petitioner-company's objection to the authority of the Voluntary Arbitrator
to direct the commutation of the unenjoyed portion of the sick leave with pay
benefits of intermittent workers in his decision is misplaced. Article 261 of the Labor
Code is clear. The questioned directive of the herein public respondent is the
necessary consequence of the exercise of his arbitral power as Voluntary Arbitrator
under Article 261 of the Labor Code "to hear and decide all unresolved grievances
arising from the interpretation or implementation of the Collective Bargaining
Agreement." We, therefore, find that no grave abuse of discretion was committed by
public respondent in issuing the award (decision). Moreover, his interpretation of
Sections 1 and 3, Article VIII of the 1989 CBA cannot be faulted with and is
absolutely correct.
WHEREFORE, in view of the foregoing, the petition is DISMISSED. The award
(decision) of public respondent dated September 10, 1991 is hereby AFFIRMED.
No costs.
SO ORDERED.
Feliciano, Bidin, Davide, Jr. and Melo, JJ., concur.
Gutierrez, Jr., on terminal leave.
Footnotes
1. Annex "E," Petition, pp. 39-43, Rollo. Article 262-A of the Labor Code used the
terms "decision order or award" in describing the decision of the voluntary arbitrator.
There is no significance attached to the use of term "award" by public respondent
contrary to petitioner's apprehension.
2. pp. 24-38, Rollo.
3. Meycauayan College v. Drilon, 185 SCRA 50 (1990); Kapisanan ng mga
Manggagawa sa La Suerte-FOITAF v. Noriel, G.R. No. L-45475, June 20, 1977, 77

Manggagawa sa La Suerte-FOITAF v. Noriel, G.R. No. L-45475, June 20, 1977, 77
SCRA 414; Mactan Workers Union v. Aboitiz, G.R. No. L -30241, June 30, 1972, 45
SCRA 577.
4. Transportation-Communication Employees Union v. Union P.R. Co., 385 US 157,
17 L Ed 2d 264, 87 S Ct 369; John Wiley & Sons, Inc. v. Livingston, 376 US 543, 11
L Ed 2d 898, 84 S Ct 909.
5. 48A Am Jur 2d, s. 1800, pp. 255-256.
6. Singapore Airlines Local Employees Association v. NLRC, G.R. No. L -65786,
July 16, 1984, 130 SCRA 472.
7. Nestle Philippines, Inc. v. NLRC, G.R. No. 921231, February 4, 1991, 193 SCRA
504.
8. Singapore Airlines Local Employees Association v. NLRC, supra, citing Martin v.
Sheppard, 102 S Co. 2nd p. 1036; Adamowski v. Bard, AC Pa. 193F 2d p. 578.
9. p. 43, Rollo.
10. Article 100, Labor Code of the Philippines; Nestle Philippines, Inc. v. NLRC,
G.R. No. 91231, February 4, 1991, 193 SCRA 504; Tiangco, et. al. v. Leogardo,
G.R. No. L-57636, May 16, 1983, 122 SCRA 267.
11. p. 29, Rollo; p. 36, Rollo.
12. Republic Planters Bank v. NLRC, G.R. No. L -79488, September 30, 1988, 166
SCRA 197.

Kimberly Clark Phil. Vs. Lorredo
2:28 AM

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 103090 September 21, 1993

KIMBERLY CLARK PHILIPPINES, petitioner,
vs.
VOLUNTARY ARBITRATOR DANILO LORREDO and UNITED KIMBERLY CLARK EMPLOYEES
UNION-PTGWO, respondents.
Quiason, Makalintal, Barrot, Torres, Ibarra & Sison Law Office for petitioner.
Romeo C. Lagman for private respondent.
VITUG, J.:
A Voluntary Arbitrator's decision which is final and unappealable, as a rule, 1 is assailed in this
special civil action for certiorari under Rule 65 of the Rules of Court. Since the voluntary arbitrator
regrettably has not expounded on what appears to be the threshold issue, we have decided to
accept for consideration the petition.
Petitioner Kimberly-Clark Philippines, Inc. (KCPI), seeks to set aside the Resolutions of 15 October
1991 and 21 November 1991 of public respondent Voluntary Arbitrator Danilo Lorredo, holding that
the nephew of a retired employee should be employed by KCPI as his replacement pursuant to
Section 1, Article XX, of their Collective Bargaining Agreement ("CBA").
The pertinent provisions of the CBA, 2 relevant to the controversy, is hereinafter quoted:
Art. XX — Resignation, Retirement, Disability and Death.
Sec. 1. The COMPANY agrees to employ, the immediate member of the family of an employee
provided qualified, upon the employee's resignation, retirement, disability or death. In case of
resignation, however, employment of an immediate member of the family of an employee may be
allowed provided the employee has rendered a service of ten (10) years and above and the
resignation is not a forced resignation. For the purpose of this section, the phrase "immediate
member of the family of an employee" shall refer to the employee's legitimate children and in default
thereof to the employee's collateral relative within the third civil degree. The recommendee of the
retired/resigned employee shall, if qualified, be hired on probationary status.
Danilo L. Guerrero, an employee assigned as Operator B in KCPI's Finishing Section, voluntarily
resigned on 02 January 1991, after thirteen (13) years and three (3) months of employment with the
petitioner corporation. 3
Pursuant to Section I, Article XX, of the aforementioned CBA, Guerrero, through the Union,
recommended for hiring his nephew (name undisclosed from the records), who is a collateral relative
within the third civil degree.
In a letter, dated 16 April 1991, 4 KCPI informed the Union, through its President, that it could not act
favorably on Guerrero's recommendee "(i)n as much as Mr. Danilo L. Guerrero has legitimate
children . . .", namely: Joanne Guerrero (ten years of age), Mary Anne Guerrero (seven years of
age) and Dianne Guerrero (three years of age). The private respondent argued that, since
Guerrero's legitimate children are still minors, he could validly recommend for hiring his nephew.
Failing to agree on the proper interpretation of Article XX, Section 1, of the CBA and after exhausting
remedies through the grievance machinery, the parties agreed to submit their dispute for voluntary
arbitration.
A submission agreement 5 was the filed with the National Conciliation and Mediation Board, Regional
Branch No. IV. Arbitrator Danilo Lorredo was assigned to resolve the central issue of how the above
cited CBA provision should be construed. 6
On 15 October 1991, after hearing and the submission of position papers, reply, rejoinder and
counter-rejoinder, the voluntary arbitrator rendered his disputed resolution, 7 the pertinent portions of
which read:
xxx xxx xxx
Indeed the issue that needs resolution is not whether the Union's or the Company's interpretation is
correct. What should be resolved is whether or not the implementation of the questioned provision of
the CBA is well within the spirit of the provision. The relationships of the replacements with the
retired employees should control. They are within the covered provision. Admittedly, they were hired

retired employees should control. They are within the covered provision. Admittedly, they were hired
as replacements of the concerned retired employees pursuant to the questioned CBA provision. We
have to agree with the Union's posturing on this point. The Company's argument evades the issue. It
maintains that these relatives who replaced the resigned employees were hired as contractual
before they became regular employees. The fact is not in issue. In what status the replacement
started at the company is not in issue. The issue is they were employed by the Company as
replacements of the resigned, retired and dead employees. This has not been controverted. It is
basic that mere denials cannot prevail over positive assertion.
In fine, the Company has implemented the questioned provision of the CBA in such a manner that
retired employees have been replaced by their relatives within the degree allowed by the CBA. This
is the fact of the matter. And no reason has been put forth why the nephew of Mr. Guerrero should
be treated differently.
What has appeared as a sore thumb in the whole exercise is the lack of procedure in the
replacement. There is no showing how the retired employee manifests his intent to be replaced.
However, the fact remains that the replacements were hired at the instance of the retired employee.
And the Company accepted them. We find nothing illegal or immoral in the manner the questioned
CBA provision has been implemented. What is disturbing is why all of a sudden the Company now
objects to the hiring of Mr. Guerrero's nephew as his replacement. We hold that the nephew of
retired employee Danilo Guerrero should be employed by the Company as his replacement pursuant
to Section 1, Article XX of the Collective Bargaining Agreement. (emphasis supplied)
xxx xxx xxx
SO ORDERED.
A motion for reconsideration was denied in the arbitrator's resolution of 21 November 1991. 8
The question, as aforesaid, focuses on the proper interpretation of the aforequoted Section 1, Article
XX, of the Collective Bargaining Agreement. KCPI reiterates its stand that since Danilo Guerrero has
legitimate children of his own, he cannot recommend his nephew for hiring under the pertinent
provisions of the CBA. Private respondent, on the other hand, asserts that since Guerrero's children
are still minors, he can recommend his nephew (a collateral relative within the third civil degree) for
hiring, and the petitioner corporation is obligated to hire him under the same CBA provision.
A collective bargaining agreement, just like any other contract, is respected as the law between the
contracting parties and compliance therewith in good faith is mandated. 9 Similarly, the rules
embodied in the Civil Code 10 on the proper interpretation of contracts can very well govern. 11 The
intention of the parties is primodial; 12 if the terms of the contract are clear, the literal meaning of the
stipulations shall control, 13 but if the words appear to be contrary to the evident intention of the
parties, the latter shall prevail over the former. 14
The company has agreed in its CBA with the employees "to employ (an) immediate member of the
family provided qualified upon the employee's resignation, retirement, disability or death." This is its
basic covenant. Covered by the term "(an) immediate member of the family" are the employee's
legitimate children and, in default thereof, a collateral relative within the third civil degree; it is thus a
definition by inclusion. As we see it, the phrase "in default thereof" has not been intended or
contemplated by the parties as having a preclusive effect within the group. It simply sets a priority on
who can possibly be recommendees for employment. The employee, in fine, need not be childless at
all for him to be allowed to nominate a third degree collateral relative; otherwise, his ability to
designate such relative is all but suddenly lost by the birth of an only child and regained by the
latter's demise. This situation could not have been intended.
Even in government and corporate hierarchy, when a next ranking official is to take over the
authorities and responsibilities of a superior, such as when the latter is "absent" (the literal and
ordinary meaning of "in default of"), such absence merely means his non-availability, not necessarily
that he be extant, in order to permit the former to assume the office.
We take note, furthermore, that KCPI is not obligated to unconditionally accept the recommendee
since the latter must still meet the required employment standards theretofore set by it. And even
when the recommendee is qualified, he, nonetheless, shall be hired only, pursuant to the agreement,
on a "probationary status," an added measure, we assume, to further prove his worth for eventual
regular employment. The company is not, therefore, left without its own safeguards under the
agreement.
WHEREFORE, the petition is hereby DISMISSED. The questioned resolutions of 15 October 1991
and 21 November 1991 are hereby AFFIRMED. no costs.
SO ORDERED.
Bidin, Romero and Melo, JJ., concur.
Feliciano, J., is on leave.
# Footnotes

# Footnotes
1 Eternit Employees and Workers Union v. De Veyra, G.R. No. 50110, 189 SCRA 752 [1990].
2 Annex "C", Petition, Rollo, 41.
3 Ibid., 45; 160.
4 Annex "D", Petition, Rollo, p. 42.
5 Annex E-1, Ibid., 44.
6 Annex "E", Ibid., 43.
7 Annex "A", Ibid., 35-39.
8 Annex "B", Petition, Rollo, 40.
9 Article 1159, Civil Code; Alex Ferrer v. NLRC, G.R. No. 100898, 05 July 1993; Marcopper Mining
v. NLRC, G.R. No. 83207, 200 SCRA 167 [1991]; Pe v. IAC, 195 SCRA 137.
10 Article 1370 to Article 1379, Civil Code.
11 Marcopper Mining v. NLRC, 200 SCRA 167, supra.
12 Article 1170, Civil Code; Kasilag v. Rodriguez, 69 Phil. 217 [1939].
13 Ibid; Alim v. CA, 200 SCRA 450; Honrado, Jr. v. CA, 198 SCRA 326; Papa v. Alonzo, 198 SCRA
564.
14 Article 1370, Civil Case; Sy vs. Court of Appeals, 131 SCRA 116.

United Kimberly Union vs. KCPI
2:28 AM
PHILIPPINE JURISPRUDENCE – FULL TEXT

G.R. No. 162957 March 6, 2006
UNITED KIMBERLY-CLARK EMPLOYEES UNION ETC. VS. KIMBERLY – CLARK PHILIPPINES, INC.

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 162957 March 6, 2006
UNITED KIMBERLY-CLARK EMPLOYEES UNION – PHILIPPINE TRANSPORT GENERAL
WORKERS’ ORGANIZATION (UKCEU-PTGWO), Petitioner,
vs.
KIMBERLY – CLARK PHILIPPINES, INC., Respondent.
DEC I SI O N
CALLEJO, SR., J.:
Before the Court is a Petition for Review on Certiorari of the Decision 1 of the Court of Appeals (CA)
which partially reversed and set aside the March 19, 2001 Resolution 2 of the Voluntary Arbitrator
(VA).
Following are the factual antecedents:
United Kimberly-Clark Employees Union (UKCEU), a local chapter affiliate of the Philippine
Transport General Workers’ Organization (PTGWO), is the certified collective bargaining agent of all
rank-and-file employees of the San Pedro milling plant of Kimberly-Clark Philippines, Inc. (KCPI), a
multinational corporation engaged in the manufacture of bathroom and facial tissues, paper napkins,
feminine care products, disposable diapers and absorbent cotton.
Way back in 1980, KCPI and the UKCEU executed a Collective Bargaining Agreement (CBA).
Article XX, Section 1 of the CBA reads:
Section 1. The Company agrees to employ, regardless of sex, the immediate member of the family
of an employee provided qualified, upon the employee's resignation, retirement, disability or death.
In case of resignation, however, employment of an immediate member of the family of an employee
may be allowed provided the employee has rendered a service of ten (10) years and above and the
resignation is not a forced resignation. For the purpose of this section, the phrase "immediate
member of the family of an employee" shall refer to the employee's legitimate children and in default
thereof to the employee's collateral relative within the third civil degree. The recommendee of the
retired/resigned employee shall, if qualified, be hired on probationary status. (Emphasis added) 3
However, KCPI did not set any other employment qualifying standards for the recommendees of
retired, resigned, deceased or disabled employees and agreed to hire such recommendees who
were high school graduates as an act of liberality and generosity. The provision remained
unchanged.4 Through the years, several UKCEU members who resigned or were disabled availed of
the said benefits and recommended their successors. Although such recommendees were merely
high school graduates, KCPI nonetheless employed them.
Sometime in 1991, Danilo L. Guerrero retired and recommended his nephew as his replacement.
KCPI rejected Guerrero’s recommendation because his nephew was not a member of his
(Guerrero’s) immediate family. The matter was brought to Voluntary Arbitrator Danilo Lorredo who
ruled that Guerrero’s nephew should be employed as his replacement in accordance with the CBA.
KCPI brought the matter to the Court. On September 21, 1993, the Court affirmed the ruling of the
VA in Kimberly Clark Philippines v. Lorredo,5 where it was held that:
As we see it, the phrase "in default thereof" has not been intended or contemplated by the parties as
having a preclusive effect within the group. It simply sets a priority on who can possibly be
recommendees for employment. The employee, in fine, need not be childless at all for him to be
allowed to nominate a third degree collateral relative; otherwise, his ability to designate such relative
is all but suddenly lost by the birth of an only child and regained by the latter's demise. This situation
could not have been intended.6
However, the Court also ruled that KCPI was not obliged to unconditionally accept the
recommendee since the latter must still meet the required employment standard theretofore set by it.

recommendee since the latter must still meet the required employment standard theretofore set by it.
Even a qualified recommendee would be hired only on a "probationary status." As such, KCPI was
not left without its own safeguards under the agreement. 7
On November 7, 1995, KCPI issued Guidelines on the Hiring of Replacements of Retired/Resigned
Employees8 for the effective implementation of Article XX, Section 1 of the existing CBA, to take
effect on January 1, 1996. The Guidelines require, among others, that: (a) such recommendees
must be at least 18 years of age but not more than 30 years old at the time of the hiring, and (b)
have completed, after graduating from high school, at least a two-year technical/vocational course or
a third year level of college education. Moreover, where both husband and wife are employees of the
company, they shall be treated as one family; hence, only one of the spouses would be allowed to
avail of the benefit.9
UKCEU, through its President, Reynaldo B. Hermoso, requested for a grievance meeting, which was
held on November 22, 1995.10 During the meeting, UKCEU specifically requested the deferment of
the implementation of the Guidelines until January 1, 1997, after the next CBA negotiations in 1997
during which the matter will be taken up. KCPI agreed to postpone the implementation of the
Guidelines until January 1, 1997 but only with respect to the educational qualification. 11
During the negotiation for the 1997 CBA, UKCEU proposed the amendment of Article XX, Section 1
of the existing CBA. After the negotiation, KCPI and UKCEU executed a CBA to cover the period
from July 1, 1997 to June 30, 1999. The educational qualifications contained in the Guidelines
prepared and issued by KCPI were not incorporated in the CBA. Neither were the proposed
amendment of UKCEU. Article XX, Section 1 of the preceding CBA was retained without any
modification.12 KCPI continued to hire employees pursuant to the CBA up to 1998. It had employed
44 employees from 1995 to 1998.13
However, in the second half of 1998, KCPI started to suspend the implementation of the CBA. This
was partly due to the depressed economic conditions then prevailing in the Philippines, and in
compliance with the freeze hiring policy of its Asia-Pacific headquarters.14 It refused to hire, as
regular employees, 80 recommendees of retiring employees. 15KCPI and UKCEU failed to settle the
matter through the existing grievance machinery.
On April 23, 1999, the parties filed before the National Conciliation and Mediation Board (NCMB), a
Submission Agreement referring to arbitration the issue of whether KCPI violated Article XX, Section
1 of the CBA. The parties agreed not to appeal any resolution/decision of the VA. 16
Meantime, in August 1999, KCPI and UKCEU executed a new CBA. Article XX, Section 1 of the
preceding CBA was incorporated in the new CBA, governing the relation of the parties up to June
30, 2002.17
UKCEU averred in its pleadings that the "qualification in terms of education," that is, admitting
recommendees who were at least high school graduates, had been an established practice of KCPI
since 1980. They appended to their position paper as Annexes "A," "A-1" to "A-5" thereof, a list of
such recommendees who were hired by KCPI.18 This being the case, KCPI could not just unilaterally
revoke such practice without its (UKCEU) consent and approval. UKCEU explained that while KCPI,
in general, had the discretion to raise the educational qualification of its applicants for employment,
this did not apply to recommendees due to the manner by which Article XX, Section 1 was
implemented in the past. UKCEU emphasized that its benefits had already been institutionalized in
the CBAs executed by the parties through the years. Thus, in refusing to hire the 80 recommendees
as regular employees, KCPI violated its CBA with the union, 19 equivalent to breach of contract and
unfair labor practice. It was further pointed out that contrary to its claim that KCPI was implementing
a freeze hiring policy, KCPI even hired more or less 400 casuals, most of whom were only high
school graduates who performed activities necessary and desirable to KCPI’s regular and usual
business. They averred that the hiring of such employees was continuous, and on a five-month
contract without extension or rehiring. UKCEU insisted that it was not estopped to question the move
to "upgrade the academic standards" of recommendees, and that KCPI should have indicated its
counter-proposal during the 1997 and 1999 CBA negotiations. Since KCPI preferred to retain Article
XX, Section 1 where the dispute and ambiguity developed, the union opined that such provision
should be strictly construed against the company.
UKCEU averred that either the husband or wife had the "right of replacement," and to the benefits
offered by Article XX, Section 1; to deny them the right would be a clear discrimination and violation
of the CBA, since both are paying members of union dues and individually vote for any policy
determination.
In its pleadings, KCPI maintained that pursuant to its management prerogative, it had the right to
determine hiring standards under Article XX, Section 1 of the CBA without the consent or approval of
UKCEU. It argued that like applicants for regular positions, recommendees of retiring employees
must also be college graduates, in accordance with its November 7, 1995 Guidelines. It explained
that such recommendees are applying for regular positions and not as casual, who are hired on a
temporary basis. KCPI averred that the employment educational standards in the Guidelines it

temporary basis. KCPI averred that the employment educational standards in the Guidelines it
issued on November 7, 1995 took effect on January 1, 1997 and that after its implementation was
deferred, the union did not take any action. Hence, UKCEU was estopped from questioning the
implementation of Article XX, Section 1 in the 1999 CBA. In fact, such upgraded educational
qualifications under the November 7, 1995 Guidelines were never brought up by UKCEU, and were
never discussed during the 1997 CBA negotiations. It asserted, however, that it was justified to
temporarily suspend the implementation because the freeze hiring policy of its Asia-Pacific
headquarters had affected both existing and new regular positions in the company. It pointed out
that, in order to enforce the CBA provision, it normally fills up two regular positions because the
recommendee of a union member who resigns, retires, dies or is disabled does not usually possess
the same qualifications and skills of his/her predecessor. KCPI averred that it never anticipated this
undue burden and was not in a position to sustain the practice, considering the lower volume in
sales and a reduction in the number of working days in some areas of its operations.
With respect to spouses who are both employed in KCPI, it was maintained that the policy regarding
the availment of their benefits had always been consistent since 1980: only one of the spouses is
entitled thereto, like the CBA provisions on the employees’ medical and funeral benefits. It pointed
out that at the time Article XX, Section 1 was adopted, there was already an existing policy in KCPI
prohibiting the hiring of a relative of an employee within the fourth civil degree of consanguinity or
affinity. Thus, if the interpretation of UKCEU would be considered, an unwarranted and anomalous
situation would result, since children of spouses who are both employed in the company fall within
the second degree of consanguinity. Moreover, spouses should be treated as one family, much like
the tax treatment on the claim for additional dependents. KCPI stressed that, as stated in the
guidelines, the rationale for the policy is to maintain fairness and equality since the intended or
actual beneficiary is the child of an employee.
On May 8, 1999, the VA visited the premises of KCPI with prior notice to the parties, and discovered
that KCPI employed casuals who performed the work of certain regular employees covered by the
CBA.20
On March 19, 2001, the VA issued a Resolution in favor of UKCEU. The dispositive portion of the
resolution reads:
WHEREFORE, premises considered, this Voluntary Arbitrator, finds that (a) the Company cannot
suspend implementation of Section 1, Article XX of the existing CBA unilaterally by upgrading the
educational qualifications of "applicants-replacements" than are required previously, and (b) the
husband and the wife, under the said provision, are each entitled separately to recommend an
applicant-replacement.
SO ORDERED.21
The VA ruled that since the CBA is the law between the parties, KCPI could not just unilaterally
change or suspend the implementation of the existing employment requirements, even in the light of
the business situation then prevailing in the Philippines. Moreover, an unambiguous CBA provision
must be interpreted according to its literal meaning and not beyond the parties' actual intendment,
and, in case of doubts, the same should be resolved in favor of labor. The VA declared that
management prerogative does not give license to a company to set aside or ignore what had been
agreed upon through negotiation. According to the VA, since KCPI failed to explain why it continued
to hire casual workers doing the jobs of regular employees, it failed to substantiate its contention that
the economic crisis did not warrant the hiring of regular employees. 22
As to the applicability of Article XX, Section 1 to spouses employed by KCPI, the VA referred to
Article I of the CBA, which provides that the Agreement covers all regular rank-and-file employees.
Had the intention of the parties been to grant husband and wife employees the privilege of
recommending only one applicant-replacement, it should have been stated in unequivocal terms. 23
KCPI assailed the decision of the VA via petition for review24 before the CA. It alleged that:
A. Contrary to the ruling of the Honorable Voluntary Arbitrator, petitioner may validly suspend the
implementation of Section 1, Article XX, by reason of economic difficulty.
B. Contrary to the ruling of the Honorable Voluntary Arbitrator, law and jurisprudence [recognize]
management's prerogative to set the qualifications for [the] hiring of employees, including those
hired as replacements under Section 1, Article XX.
C. Contrary to the ruling of the Honorable Voluntary Arbitrator, reasonable application of statutory
and contractual interpretation supports only one conclusion - that, in case of both spouses being
KCPI employees, only one of them may avail himself or herself of the benefits of Section 1, Article
XX.25
On July 23, 2003, the CA partially set aside the Resolution of the VA.26 The fallo of the decision
reads:
WHEREFORE, the petition is PARTIALLY GRANTED, and the Resolution of Voluntary Arbitrator
Jose A. Cabatuando, Jr. dated March 19, 2001 is PARTIALLY REVERSED AND SET ASIDE.
Petitioner may not suspend the implementation of Section 1, Article XX of the Collective Bargaining

Petitioner may not suspend the implementation of Section 1, Article XX of the Collective Bargaining
Agreement on account of alleged economic distress. Petitioner, however, may require that
recommendees under the said provision must have completed at least a two-year
technical/vocational course or reached the third year of any college-level course, as a valid exercise
of management prerogative. And when spouses are both employed by petitioner, each may
recommend a replacement in case of his death, disability, retirement or voluntary resignation
pursuant to Section 1, Article XX of the Collective Bargaining Agreement.
SO ORDERED.27
The CA ruled that KCPI may validly exercise its management prerogative and impose the
requirement that recommendees should have at least completed a two-year technical/vocational
course or reached the third year of any college-level course. While the right of KCPI to set hiring
standards for recommendees under the disputed provision of the CBA is apparent in the ruling of the
Court in Kimberly Clark Philippines v. Lorredo,28 the CA concluded that the right of retired, resigned,
disabled or deceased employees to recommend their replacements is not absolute. It emphasized
that the recommendees must still meet the standard set by petitioner. The CA further opined that
Article XX, Section 1 is not an inheritance the right to which attaches immediately upon an
employee's death, disability, retirement or voluntary resignation. However, as to whether spouses
employed by petitioner may separately recommend a replacement, the CA affirmed the observation
of the VA that the provision was literally made to apply to "all" employees, and does not mean that
only one of the spouses may avail of said benefit.29
The CA rejected the claim of KCPI that it (the court) should take judicial notice of the adverse effects
of the Asian economic crisis to the operation of its business in the Philippines. As in the case of
retrenchment, it was ruled that the company must still prove financial distress by sufficient and
convincing evidence. Moreover, the CA held that for the theory of rebus sic stantibus to apply, it
must be shown that the economic crisis made it extremely difficult for the company to comply with
Article XX, Section 1 of the CBA, and that the change in the circumstances of the parties must be
one which could not be foreseen at the time the contract was executed. 30
Only UKCEU moved for a partial reconsideration of the CA Decision with respect to its ruling on the
upgraded educational qualification of the recommendees. 31 The CA denied the motion in a
Resolution32 dated March 23, 2004.
UKCEU, now petitioner, seeks relief from this Court in the instant petition.
The issue in this case is whether or not the CA erred in ruling that, under Article XX, Section 1 of the
1997 CBA, respondent is required to hire only those recommendees of retired/resigned, deceased or
disabled members of petitioner who had completed at least a two-year technical/vocational course or
a third-year level of college education. This is anchored on the resolution of the issue of whether the
November 7, 1995 Guidelines issued by respondent took effect on January 1, 1997.
Petitioner avers that the CA erred in holding that, under Article XX, Section 1 of the 1997 CBA and
the ruling of this Court in Kimberly Clark Philippines v. Lorredo, respondent is required to hire
recommendees of retired/resigned, deceased or disabled employees who possess the educational
qualification standards for employees contained in the November 7, 1995 Guidelines issued by
respondent.
Petitioner asserts that the employment qualification standards in Article XX, Section 1 of the CBA
requiring the recommendees to be at least high school graduates is contrary to the practice that had
been followed by respondent since 1980 up to 1998. Petitioner further avers that such practice,
which had been established by respondent in implementing the CBA, cannot be unilaterally revoked
by it. Petitioner argues that to allow respondent to set higher educational standards for employment
of such recommendees is to render nugatory the right granted to them under the CBA and would
defeat the ruling of the Court in Kimberly Clark Philippines v. Lorredo. Petitioner avers that 70% of
the employees of respondent are mere high school graduates who did not finish any technical or
vocational course. This, notwithstanding, respondent had a profit of P527,000,000.00 in 1999.
Petitioner stresses that the exercise of management prerogative must be circumscribed by the CBA
of the parties.
For its part, respondent maintains that under Article XX, Section 1 of its CBA with petitioner, a
recommendee of retired/resigned, deceased or disabled members of petitioner must also be
qualified for the position. Respondent also invokes Kimberly Clark Philippines v. Lorredo, insisting
that the Court ruled therein that such recommendees must meet the employment standards set by
respondent; conformably with such ruling, it issued said Guidelines on November 7, 1995. Thus, it is
not proscribed from setting out higher qualification standards for said recommendees, such as those
set forth in said Guidelines. Contrary to petitioner’s claim of employing recommendees who were
only high school graduates, was not an established practice, as its policy had always been to hire
college graduates for regular employment. Finally, respondent avers that the implementation of
qualifications for the recommendees is a valid exercise of its management prerogative.
Respondent also points out during their 1997 CBA negotiations, petitioner proposed the following

Respondent also points out during their 1997 CBA negotiations, petitioner proposed the following
revisions of Article XX, Section 1:
Section 1. A replacement of a deceased employee or recommendee of a retiring or resigning
employee with at least 10 years of service, when at least High School Graduate and able bodied,
shall be hired by the Company as Trainee for the first six (6) months, and then probationary
employee to a permanent position and if passed to qualifications made known to him shall be hired
as a regular employee of the Company. Recommendee entitled to this right shall be limited to up to
the third civil degree only.33

Manalang vs. Artex
2:29 AM
G.R. No. L-20432 October 30, 1967

JOSE MANALANG, ET AL., petitioners,
vs.
ARTEX DEVELOPMENT CO., INC., ET AL., respondents.
Beltran and Lacson for petitioners.
Emiliano Morabe and Mariano V. Ampil for respondents.
CASTRO, J.:
This is a petition for certiorari by Jose E. Manalang, Marcelino de Leon and Bernardo Lactao to set
aside the resolution en banc of the Court of Industrial Relations (CIR) dated September 14, 1962 in
case 2490-ULP,1 which reversed the decision of Presiding Judge Jose Bautista of June 30, 1962.
The latter decision ordered the respondent Bagong Buhay Labor Union (hereinafter referred to as
the BBLU) to readmit the complainants to active membership in the said union, and directed the
respondent Artex Development Co., Inc. (hereinafter referred to as the Company) to reinstate them
to their former positions, with back wages from the date of their dismissal to the time of their actual
reinstatement, and with all the appertaining rights and privileges.
The facts that gave rise to the present petition are not disputed. The Federation of Free Workers
(FFW), in a letter dated May 3, 1960, informed the Company that a "great majority" of the latter's
employees had organized the Artex Free Workers (FFW), 2 that this new union had affiliated with the
FFW, and that a set of proposals was being formulated as the basis of a prospective collective
bargaining agreement between the said new union and the Company. In another letter dated May 4,
1960, the FFW asked the Company to give a "thorough study" to the collective bargaining proposals
therein enclosed. In its reply of May 12, 1960, the Company stated that it had "nothing against your
union", but called attention to the fact that it had already recognized the BBLU, which union had then
been in existence for four years, and with which it had concluded two collective bargaining
agreements. FFW then requested that it be furnished a copy of the second collective bargaining
agreement. When the Company did not honor the request, the FFW gave a copy of its May 4 letter
to the Conciliation Service, Regional Office 3 of the Department of Labor, on the basis of which a
labor conciliator scheduled conferences between the FFW and the Company. After the conference
held on May 12, 17, and 30, and June 9, 1960 in the office of the labor conciliator, the latter ordered
the Company to furnish the FFW a copy of the collective bargaining agreement. This order was not
complied with.
In the meantime, the board of directors of the BBLU held a special meeting on June 1, 1960, for the
purpose of taking appropriate steps against the petitioners herein who were employees of the
Company and members of the union. The board found that the petitioners had "affiliated themselves
with another labor union (Artex Free Workers [FFW]), without first terminating their membership" with
the BBLU and "without the knowledge of the officers" of the latter union. On the same date, the
board adopted a resolution, the pertinent portions of which read as follows:
WHEREAS, the union after due investigation, has found Messrs. Jose Manalang, Marcelino de Leon
and Bernardo Lactao, guilty of disloyalty to the union and for the reason, have been expelled from
the union, thereby losing their good standing in the union.
WHEREFORE, by virtue of the provisions of the Collective Bargaining Agreement above mentioned,
and in order to promote sanctity in the observance of the Collective Bargaining Agreements, it has
been resolved, as it is hereby resolved, to inform the management of the Artex Development Co.,
Inc., of the loss of good standing as members of the Bagong Buhay Labor Union and said Messrs.
Manalang, de Leon and Lactao, by virtue of which they should be dismissed, as it is now resolved to
ask the Company to dismiss them;
Be it resolved further that the Company be furnished a copy of this resolution, and that the said firm
be advised that the union will be compelled to take such action as maybe necessary to protect its
interest, in case the Management should fail to comply with its contractual obligation above-
mentioned. (Emphasis supplied)
After receipt of the above resolution, the Company, having in mind the closed-shop stipulation in the
collective bargaining agreement, sent three identical letters, all dated June 3, 1960, to the
petitioners, advising them of the termination of their employment effective June 3, 1960.
On July 20, 1960 the petitioners lodged an unfair labor practice charge with the CIR against the
Company and the BBLU. They alleged that they "were engaged in concerted activities, more
particularly to form the Artex Free Workers (FFW) due to the inability and refusal of the respondent
company to furnish them with [a copy of] an alleged collective bargaining agreement between the

company to furnish them with [a copy of] an alleged collective bargaining agreement between the
respondent labor union and respondent company", and that without any valid cause but "due to said
concerted activities, the company dismissed them."
In its answer, the respondent BBLU admitted that the petitioners were bona fide members thereof,
but averred that they were expelled from the union, after due investigation, for acts of disloyalty. In
its answer, the Company denied the charge. It alleged that on March 4, 1960, it entered into a
collective bargaining agreement with the BBLU after the latter had satisfactorily demonstrated
majority representation; that the petitioners were dismissed at the behest of the BBLU due to loss of
their good standing as union members; and that refusal on the part of the Company of the union's
demand for the dismissal of the petitioners would constitute a violation of the collective bargaining
agreement and might result in a union strike or in other punitive acts against the Company.
After due trial, Presiding Judge Bautista rendered judgment finding that the petitioners were not
aware of the existence of the collective bargaining agreement, much less of its closed-shop
provision, and holding, in consequence that they were not bound by it. The decision observed that
the provision in question was "merely a cloak to cover the discriminatory dismissal of the complaints,
due to their union activities in forming another union, which the company did not like." The Company
was ordered to reinstate the petitioners, with back wages from the date of their dismissal and "all the
rights and privileges formerly appertaining thereto". The BBLU was ordered to readmit them to active
membership therein.
Thereafter the CIR, en banc, set aside the judgment. It found that the failure of the Company to
furnish the petitioners a copy of the collective bargaining agreement did not constitute an unfair labor
practice because furnishing them with any and all information on union matters was the obligation of
the BBLU; that the Company in dismissing them merely complied with the provisions of the collective
bargaining agreement; and that if there was any party liable under Republic Act 875, it was the
BBLU and not the Company. The CIR, en banc, concluded with the observation that "if warranted
and desired, they [the petitioners] may file a case against respondent labor union [BBLU] under the
provisions of the Magna Carta of Labor, unless it could be said that there is already res judicata."
Hence, the present recourse.
The validity of the collective bargaining agreement of March 4, 1960 is not here assailed by the
petitioners. Nor do they deny that they were members of the BBLU prior to March 4, 1960, and until
they were expelled from the union. That the BBLU was the lawful and proper bargaining
representative of the non-supervisory employees of the Company, is not traversed.
The issue tendered for resolution, by the petitioners' formulation, is: "Is it just and lawful to enforce a
contract [referring to the collective bargaining agreement] against the employees who were unduly,
unreasonably and illegally denied knowledge of the contents thereof?" More particular reference is
made by them to the closed shop provision of the agreement that states, "All employees of the
COMPANY must be members in good standing of the UNION as a condition of employment with the
COMPANY", which provision, the petitioners claim, they were totally unaware of. They argue, in
essence, that because they were ignorant of the provisions of the agreement, they cannot be bound
by such agreement, and that, therefore, their dismissal from the Company on the strength of the
closed-shop provision is unlawful and constitutes an unfair labor practice on the part of both the
Company and the BBLU.
Were the petitioners really unaware of the provisions of the collective bargaining agreement during
the period from March 4, 1960, when the agreement was entered into, to the time they organized the
Artex Free Workers which was in the following month of April? This, in our view, is the vital issue of
fact that constitutes the vertex of this case, especially because the CIR, en banc, did not make any
unequivocal findings of fact relative thereto.
A host of circumstances can be gleaned from the record that would demonstrate persuasively that
the petitioners were not unaware of the provisions of the agreement in question prior to their
organization of the Artex Free Workers union.
From the admitted facts that the petitioners started working in the Company in December, 1959, and
that they succeeded in wielding sufficient influence to persuade other employees to join them in
forming the Artex Free Workers, we can reasonably infer that they knew of the existence of the first
collective bargaining agreement between the BBLU and the Company, as well especially of the
fundamental provisions thereof regarding check-off or payroll deduction of union dues and
assessments, vacation and sick leaves, hospital, medical and dental care, working hours and
overtime service, union meetings, and the duration of the agreement — provisions which are
standard stipulations in collective bargaining agreements and which affect them directly, personally
and individually. They can therefore be properly charged with knowledge specifically of the expiry
date of the agreement and, consequently, of the negotiations between the BBLU and the Company
before the said expiry date toward the execution of a second agreement — which is the agreement
in question.
Since in their petition they do not deny that they knew of the existence of the second agreement, it is

in question.
Since in their petition they do not deny that they knew of the existence of the second agreement, it is
only natural to presume that they knew of its provisions, and that they had actually studied them in a
comparative way in order to be able to formulate the collective bargaining proposals submitted by
them (the Artex Free Workers) to the Company on May 4, 1960.
The evidence on record is unmistakable that before the BBLU recommended the dismissal of the
petitioners because they had violated the agreement, the officials of the said union conducted an
investigation of the actuations of the petitioners. The record does not reveal any disavowal made by
any of the petitioners of knowledge of the closed-shop provision at any time prior to their dismissal.
Disavowal came as an afterthought and was articulated only after they had received their notices of
discharge. Even after their dismissal, not one of them protested either to the BBLU or the Company.
True it is that the petitioner Manalang testified that he went to Mauricio Mariñas, personnel manager
of the Company, and protested his dismissal, but Mariñas categorically declared that Manalang
never went to see him regarding the matter of his dismissal.
The petitioners' further contention that the closed-shop provision in the collective bargaining
agreement is illegal because it is an unreasonable restriction of the right of freedom of association
guaranteed by the Constitution is a futile exercise in argumentation, as this Court has in a number of
cases sustained closed-shop as a valid form of union security.3
Finally, even if we assume, in gratia argumentis, that the petitioners were unaware of the stipulations
set forth in the collective bargaining agreement, since their membership in the BBLU prior to their
expulsion therefrom is undenied, there can be no question that as long as the agreement with
closed-shop provision was in force, they were bound by it. Neither their ignorance of, nor their
dissatisfaction with, its terms and conditions would justify breach thereof or the formation by them of
a union of their own. As has been aptly said, "a collective bargaining agreement entered into by
officers of a union, as agent of the members, and an employer, gives rise to valid enforcible
contractual relations, against the individual union members in matters that affect them peculiarly,
and against the union in matters that affect the entire membership or large classes of its
members,"4 and "a union member who is employed under an agreement between the union and his
employer is bound by the provisions thereof, since it is a joint and several contract of the members
of the union entered into by the union as their agent." 5
On the basis of all the foregoing, we do not see any unfair labor practice committed by either the
Company or the BBLU.
ACCORDINGLY, the resolution of the CIR en banc of September 14, 1962, setting aside the
decision of the trial judge of June 30, 1962, is affirmed. No pronouncement as to costs.
Concepcion, C.J., Reyes J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Angeles and
Fernando, JJ.,concur.
Footnotes
1 "Jose Manalang, et al., complainants vs. Artex Development Co., Inc., et al., respondents."
2 The Artex Free Workers (FFW) was organized in April 1960.
3
National Brewery & Allied Industries labor Union of the Philippines vs. San Miguel Brewery, Inc., et
al., L-18170, Aug. 31, 1963; Bacolod-Murcia Milling Co. vs. National Employees' Security Union,
L-9003, Dec. 21, 1956; National Labor Union vs. Aguinaldo's Echague, L-7358, May 31, 1655; Ang
Malayang Manggagawa ng Ang Tibay Enterprises vs. Ang Tibay, L-8259, Dec. 28, 1957.
4
Dangel & Shriber, The Law of Labor Unions, 1941 ed., p. 340.
5 See Capra v. Local Lodge, 102 Colo. 63, cited in Dangel & Shriber, The Law of Labor Unions, 1941
ed., p. 342.
Pasted from <http://www.lawphil.net/judjuris/juri1967/oct1967/gr_l-20432_1967.html>

TSPIC Corp v. TSPIC Union (2008)
12:10 AM
SECOND DIVISION
[G.R. No. 163419, February 13, 2008]
TSPIC CORPORATION, Petitioner, vs. TSPIC EMPLOYEES UNION (FFW), representing MARIA
FE FLORES, FE CAPISTRANO, AMY DURIAS,[1] CLAIRE EVELYN VELEZ, JANICE OLAGUIR,
JERICO ALIPIT, GLEN BATULA, SER JOHN HERNANDEZ, RACHEL NOVILLAS, NIMFA ANILAO,
ROSE SUBARDIAGA, VALERIE CARBON, OLIVIA EDROSO, MARICRIS DONAIRE, ANALYN
AZARCON, ROSALIE RAMIREZ, JULIETA ROSETE, JANICE NEBRE, NIA ANDRADE, CATHERINE
YABA, DIOMEDISA ERNI,[2] MARIO SALMORIN, LOIDA COMULLO,[3] MARIE ANN DELOS
SANTOS,[4] JUANITA YANA, and SUZETTE DULAY, Respondents.
DEC I SI ON
VELASCO JR., J.:

The path towards industrial peace is a two-way street. Fundamental fairness and protection to labor should
always govern dealings between labor and management. Seemingly conflicting provisions should be harmonized
to arrive at an interpretation that is within the parameters of the law, compassionate to labor, yet, fair to
management.
In this Petition for Review on C ertiorari under Rule 45, petitioner TSPIC C orporation (TSPIC) seeks to annul and
set aside the October 22, 2003 Decision[5] and April 23, 2004 Resolution[6] of the C ourt of Appeals (C A) in C A-
G.R. SP No. 68616, which affirmed the September 13, 2001 Decision[7] of Accredited Voluntary Arbitrator
Josephus B. Jimenez in National C onciliation and Mediation Board C ase No. JBJ-AVA-2001-07-57.
TSPIC is engaged in the business of designing, manufacturing, and marketing integrated circuits to serve the
communication, automotive, data processing, and aerospace industries. Respondent TSPIC Employees Union
(FFW) (Union), on the other hand, is the registered bargaining agent of the rank-and-file employees of TSPIC.
The respondents, Maria Fe Flores, Fe C apistrano, Amy Durias, C laire Evelyn Velez, Janice Olaguir, Jerico Alipit,
Glen Batula, Ser John Hernandez, Rachel Novillas, Nimfa Anilao, Rose Subardiaga, Valerie C arbon, Olivia
Edroso, Maricris Donaire, Analyn Azarcon, Rosalie Ramirez, Julieta Rosete, Janice Nebre, Nia Andrade,
C atherine Yaba, Diomedisa Erni, Mario Salmorin, Loida C omullo, Marie Ann Delos Santos, Juanita Yana, and
Suzette Dulay, are all members of the Union.
In 1999, TSPIC and the Union entered into a C ollective Bargaining Agreement (C BA)[8] for the years 2000 to
2004. The C BA included a provision on yearly salary increases starting January 2000 until January 2002.
Section 1, Article X of the C BA provides, as follows:
Section 1. Salary/ Wage Increases.â€“â€“Employees covered by this Agreement shall be granted
salary/wage increases as follows:
a) Effe ctive January 1, 2000, all employees on re gular status and within the bargaining unit on or before
said date shall be granted a salary incre ase equivalent to te n percent (10%) of their basic monthly
salary as of December 31, 1999.
b) Effe ctive January 1, 2001, all employees on re gular status and within the bargaining unit on or before
said date shall be granted a salary incre ase equivalent to twe lve (12%) of their basic monthly salary as
of De ce mber 31, 2000.
c) Effe ctive January 1, 2002, all employees on re gular status and within the bargaining unit on or before
said date shall be granted a salary incre ase equivalent to e leven perce nt (11%) of their basic monthly
salary as of December 31, 2001.
The wage salary increase of the first year of this Agreement shall be over and above the wage/salary
increase, including the wage distortion adjustment, granted by the C OMPANY on November 1, 1999 as
per Wage Order No. NC R-07.
The wage/salary increases for the years 2001 and 2002 shall be deemed inclusive of the mandated
minimum wage increases under future Wage Orders, that may be issued after Wage Order No. NC R -07,
and shall be considered as correction of any wage distortion that may have been brought about by the
said future Wage Orders. Thus the wage/salary increases in 2001 and 2002 shall be deemed as
compliance to future wage orders after Wage Order No. NC R-07.

compliance to future wage orders after Wage Order No. NC R-07.
C onsequently, on January 1, 2000, all the regular rank-and-file employees of TSPIC received a 10% increase in
their salary. Accordingly, the following nine (9) respondents (first group) who were already regular employees
received the said increase in their salary: Maria Fe Flores, Fe C apistrano, Amy Durias, Claire Evelyn Velez,
Janice Olaguir, Jerico Alipit, Glen Batula, Ser John Hernandez, and Rachel Novillas.[9]
The C BA also provided that employees who acquire regular employment status within the year but after the
effectivity of a particular salary increase shall receive a proportionate part of the increase upon attainment of
their regular status. Sec. 2 of the C BA provides:
SEC TION 2. Regularization Increase.â€“â€“A covered daily paid employee who acquires regular status
within the year subsequent to the effectivity of a particular salary/wage increase mentioned in Section 1
above shall be granted a salary/wage increase in proportionate basis as follows:
R e gularization Period Equiva lent Increase
- 1 st Q uarter 100%
- 2 nd Q uarte r 75%
- 3 rd Q uarter 50%
- 4 th Q uarter 25%
Thus, a daily paid employee who becomes a regular employee covered by this Agreement only on May 1,
2000, i.e., during the second quarter and subsequent to the January 1, 2000 wage increase under this
Agreement, will be entitled to a wage increase equivalent to seventy -five percent (75%) of ten percent
(10%) of his basic pay. In the same manner, an employee who acquires regular status on December 1,
2000 will be entitled to a salary increase equivalent to twenty -five percent (25%) of ten percent (10%)
of his last basic pay.
On the other hand, any monthly-paid employee who acquires regular status within the term of the
Agreement shall be granted regularization increase equivalent to 10% of his regular basic salary.
Then on October 6, 2000, the Regional Tripartite Wage and Productivity Board, National C apital Region, issued
Wage Order No. NC R-08[10] (WO No. 8) which raised the daily minimum wage from PhP 223.50 to PhP 250
effective November 1, 2000. C onformably, the wages of 17 probationary employees, namely: Nimfa Anilao,
Rose Subardiaga, Valerie Carbon, Olivia Edroso, Maricris Donaire, Analyn Azarcon, Rosalie Ramirez, Julieta
Rosete, Janice Nebre, Nia Andrade, C atherine Yaba, Diomedisa Erni, Mario Salmorin, Loida Comullo, Marie Ann
Delos Santos, Juanita Yana, and Suzette Dulay (second group), were increased to PhP 250.00 effective
November 1, 2000.
On various dates during the last quarter of 2000, the above named 17 employees attained regular
employment[11] and received 25% of 10% of their salaries as granted under the provision on regularization
increase under Article X, Sec. 2 of the C BA.
In January 2001, TSPIC implemented the new wage rates as mandated by the C BA. As a result, the nine
employees (first group), who were senior to the above-listed recently regularized employees, received less
wages.
On January 19, 2001, a few weeks after the salary increase for the year 2001 became effective, TSPICâ€™s
Human Resources Department notified 24 employees,[12]namely: Maria Fe Flores, Janice Olaguir, Rachel
Novillas, Fe C apistrano, Jerico Alipit, Amy Durias, Glen Batula, Claire Evelyn Velez, Ser John Hernandez, Nimfa
Anilao, Rose Subardiaga, Valerie C arbon, Olivia Edroso, Maricris Donaire, Analyn Azarcon, Rosalie Ramirez,
Julieta Rosete, Janice Nebre, Nia Andrade, C atherine Yaba, Diomedisa Erni, Mario Salmorin, Loida C omullo, and
Marie Ann Delos Santos, that due to an error in the automated payroll system, they were overpaid and the
overpayment would be deducted from their salaries in a staggered basis, starting February 2001. TSPIC
explained that the correction of the erroneous computation was based on the crediting provision of Sec. 1, Art.
X of the C BA.
The Union, on the other hand, asserted that there was no error and the deduction of the alleged overpayment
from employees constituted diminution of pay. The issue was brought to the grievance machinery, but TSPIC
and the Union failed to reach an agreement.
C onsequently, TSPIC and the Union agreed to undergo voluntary arbitration on the solitary issue of whether or
not the acts of the management in making deductions from the salaries of the affected employees constituted
diminution of pay.
On September 13, 2001, Arbitrator Jimenez rendered a Decision, holding that the unilateral deduction made by
TSPIC violated Art. 100[13] of the Labor C ode. The falloreads:
WHEREFORE, in the light of the law on the matter and on the facts adduced in evidence, judgment is
hereby rendered in favor of the Union and the named individual employees and against the company,
thereby ordering the [TSPIC] to pay as follows:
1) to the sixteen (16) newly re gularized employees named above, the amount of P12,642.24 a m onth or
a total of P113,780.16 for nine (9) months or P7,111.26 for e ach of them as we ll as an additional

a total of P113,780.16 for nine (9) months or P7,111.26 for e ach of them as we ll as an additional
P12,642.24 (for all), or P790.14 (for e ach), for e very month after 30 September 2001, until full
paym ent, with le gal interests for every m onth of delay;
2) to the nine (9) who we re hired e arlier than the sixteen (16); also named above, their re spective
am ount of e ntitlements, according to the Unionâ €™s correct computation, ranging from P110.22 per
m onth (or P991.98 for nine months) to P450.58 a month (or P4,055.22 for nine months), as we ll as
corre sponding monthly e ntitlements after 30 September 2001, plus legal interests until full payment,
3) to Suze tte Dulay, the amount of P608.14 a month (or P5,473.26), as we ll as corresponding monthly
e ntitlements after 30 Se ptember 2001, plus legal interest until full payment,
4) Attorne yâ€™s fees equal to 10% of all the above monetary awards.
The claim for exemplary damages is denied for want of factual basis.
The parties are hereby directed to comply with their joint voluntary commitment to abide by this Award
and thus, submit to this Office jointly, a written proof of voluntary compliance with this DEC ISION within
ten (10) days after the finality hereof.
SO ORDERED.[14]
TSPIC filed a Motion for Reconsideration which was denied in a Resolution dated November 21, 2001.
Aggrieved, TSPIC filed before the C A a petition for review under Rule 43 docketed as C A-G.R. SP No. 68616.
The appellate court, through its October 22, 2003 Decision, dismissed the petition and affirmed in toto the
decision of the voluntary arbitrator. The C A declared TSPICâ€™s computation allowing PhP 287 as daily wages
to the newly regularized employees to be correct, noting that the computation conformed to WO No. 8 and the
provisions of the C BA. According to the C A, TSPIC failed to convince the appellate court that the deduction was
a result of a system error in the automated payroll system. The C A explained that when WO No. 8 took effect
on November 1, 2000, the concerned employees were still probationary employees who were receiving the
minimum wage of PhP 223.50. The C A said that effective November 1, 2000, said employees should have
received the minimum wage of PhP 250. The C A held that when respondents became regular employees on
November 29, 2000, they should be allowed the salary increase granted them under the C BA at the rate of
25% of 10% of their basic salary for the year 2000; thereafter, the 12% increase for the year 2001 and the
10% increase for the year 2002 should also be made applicable to them.[15]
TSPIC filed a Motion for Reconsideration which was denied by the C A in its April 23, 2004 Resolution.
TSPIC filed the instant petition which raises this sole issue for our resolution: Does the TSPIC â€™s decision to
deduct the alleged overpayment from the salaries of the affected members of the Union constitute diminution of
benefits in violation of the Labor C ode?
TSPIC maintains that the formula proposed by the Union, adopted by the arbitrator and affirmed by the C A, was
flawed, inasmuch as it completely disregarded the â€œcrediting provisionâ€ contained in the last paragraph
of Sec. 1, Art. X of the C BA.
We find TSPIC â€™s contention meritorious.
A Collective Bargaining Agreement is the law between the parties
It is familiar and fundamental doctrine in labor law that the C BA is the law between the parties and they are
obliged to comply with its provisions.[16] We said so in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa
sa Honda:
A collective bargaining agreement or C BA refers to the negotiated contract between a legitimate labor
organization and the employer concerning wages, hours of work and all other terms and conditions of
employment in a bargaining unit. As in all contracts, the parties in a C BA may establish such stipulations,
clauses, terms and conditions as they may deem convenient provided these are not contrary to law,
morals, good customs, public order or public policy. Thus, where the C BA is clear and unambiguous, it
becomes the law between the parties and compliance therewith is mandated by the express policy of the
law.[17]
Moreover, if the terms of a contract, as in a C BA, are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of their stipulations shall control.[18] However, sometimes, as in this
case, though the provisions of the C BA seem clear and unambiguous, the parties sometimes arrive at conflicting
interpretations. Here, TSPIC wants to credit the increase granted by WO No. 8 to the increase granted under
the C BA. According to TSPIC, it is specifically provided in the C BA that â€œthe salary/wage increase for the
year 2001 shall be deemed inclusive of the mandated minimum wage increases under future wage orders that
may be issued after Wage Order No. 7.â€ The Union, on the other hand, insists that the â€œcreditingâ€
provision of the C BA finds no application in the present case, since at the time WO No. 8 was issued, the
probationary employees (second group) were not yet covered by the C BA, particularly by its crediting provision.
As a general rule, in the interpretation of a contract, the intention of the parties is to be pursued.[19] Littera
necat spiritus vivificat. An instrument must be interpreted according to the intention of the parties. It is the
duty of the courts to place a practical and realistic construction upon it, giving due consideration to the context

duty of the courts to place a practical and realistic construction upon it, giving due consideration to the context
in which it is negotiated and the purpose which it is intended to serve.[20] Absurd and illogical interpretations
should also be avoided. C onsidering that the parties have unequivocally agreed to substitute the benefits
granted under the C BA with those granted under wage orders, the agreement must prevail and be given full
effect.
Paragraph (b) of Sec. 1 of Art. X of the C BA provides for the general agreement that, effective January 1, 2001,
all employees on regular status and within the bargaining unit on or before said date shall be granted a salary
increase equivalent to twelve (12%) of their basic monthly salary as of December 31, 2000. The 12% salary
increase is granted to all employees who (1) are regular employees and (2) are within the bargaining unit.
Second paragraph of (c) provides that the salary increase for the year 2000 shall not include the increase in
salary granted under WO No. 7 and the correction of the wage distortion for November 1999.
The last paragraph, on the other hand, states the specific condition that the wage/salary increases for the years
2001 and 2002 shall be deemed inclusive of the mandated minimum wage increases under future wage orders,
that may be issued after WO No. 7, and shall be considered as correction of the wage distortions that may be
brought about by the said future wage orders. Thus, the wage/salary increases in 2001 and 2002 shall be
deemed as compliance to future wage orders after WO No. 7.
Paragraph (b) is a general provision which allows a salary increase to all those who are qualified. It, however,
clashes with the last paragraph which specifically states that the salary increases for the years 2001 and 2002
shall be deemed inclusive of wage increases subsequent to those granted under WO No. 7. It is a familiar rule
in interpretation of contracts that conflicting provisions should be harmonized to give effect to all.[21] Likewise,
when general and specific provisions are inconsistent, the specific provision shall be paramount to and govern
the general provision.[22] Thus, it may be reasonably concluded that TSPIC granted the salary increases under
the condition that any wage order that may be subsequently issued shall be credited against the previously
granted increase. The intention of the parties is clear: As long as an employee is qualified to receive the 12%
increase in salary, the employee shall be granted the increase; and as long as an employee is granted the 12%
increase, the amount shall be credited against any wage order issued after WO No. 7.
Respondents should not be allowed to receive benefits from the C BA while avoiding the counterpart crediting
provision. They have received their regularization increases under Art. X, Sec. 2 of the C BA and the yearly
increase for the year 2001. They should not then be allowed to avoid the crediting provision which is an
accompanying condition.
Respondents attained regular employment status before January 1, 2001. WO No. 8, increasing the minimum
wage, was issued after WO No. 7. Thus, respondents rightfully received the 12% salary increase for the year
2001 granted in the C BA; and consequently, TSPIC rightfully credited that 12% increase against the increase
granted by WO No. 8.
Proper formula for computing the salaries for the year 2001
Thus, the proper computation of the salaries of individual respondents is as follows:
(1) With regard to the first group of respondents who attained regular employment status before the effectivity
of WO No. 8, the computation is as follows:
For respondents Jerico Alipit and Glen Batula:[23]
W a ge ra te before WO No. 8 .............................. PhP 234.67

Incre a se due to WO No. 8
se tting the minimum wa ge at PhP 250 .................. 15.33

Total Salary upon effectivity of WO No. 8 ........... PhP 250.00
Incre a se for 2001 (12% of 2000 salary) .............. PhP 30.00
Le ss the wa ge incre ase under W O No. 8 ............ ____15.33
Total differe nce betwe en the wage incre ase
for 2001 and the incre ase granted under W O No. 8 ............. PhP 14.67
W a ge ra te by De cember 2000 ............................ PhP 250.00
Plus total difference betwe en the wa ge increase for 2001
a nd the increase granted under W O No. 8 ........... 14.67

Total (W a ge ra te ra nge beginning January 1, 2001) PhP 264.67

Total (W a ge ra te ra nge beginning January 1, 2001) PhP 264.67
For respondents Ser John Hernandez and Rachel Novillas:[24]
W a ge ra te ra nge before W O No. 8 ..................... PhP 234.68

Incre ase due to WO No. 8
se tting the minimum wage at PhP 250 .................. 15.32

Tota l Salary upon effectivity of WO No. 8 ........... PhP 250.00
Incre a se for 2001 (12% of 2000 salary) .............. PhP 30.00
Le ss the wage incre ase under W O No. 8 ............ 15.32
Tota l differe nce betwe en the wa ge incre ase
for 2001 and the incre ase gra nted under W O No. 8 ........................ PhP 14.68
W a ge ra te by De cember 2000 ............................ PhP 250.00
a nd the increase granted under W O No. 8 ........... _____14.68

Total (W a ge ra te ra nge beginning January 1, 2001) ...................... PhP 264.68
For respondents Amy Durias, Claire Evelyn Velez, and Janice Olaguir:[25]
W a ge ra te ra nge before W O No. 8 .................................... PhP 240.26

Incre ase due to WO No. 8
se tting the minimum wage at PhP 250 ................... 9.74

Tota l Salary upon effectivity of WO No. 8 ...................... PhP 250.00
Incre a se for 2001 (12% of 2000 salary) ............................. PhP 30.00
Le ss the wage incre ase under W O No. 8 ................... _____9.74
Tota l differe nce betwe en the wa ge incre ase for 2001
a nd the increase granted under W O No. 8 ......................... PhP 20.26

W a ge ra te by De cember 2000 ........................................... PhP 250.00
a nd the increase granted under W O No. 8 ............... _____20.26

Total (W a ge ra te ra nge beginning January 1, 2001) ....... PhP 270.26
For respondents Ma. Fe Flores and Fe Capistrano:[26]
W a ge ra te ra nge before W O No. 8 .............................. PhP 245.85

Incre a se due to WO No. 8
se tting the minimum wa ge at PhP 250 ............................... 4.15

Total Salary upon effectivity of WO No. 8 ......................... PhP 250.00
Incre a se for 2001 (12% of 2000 salary) ................................ PhP 30.00
Le ss the wa ge incre ase under W O No. 8 ............ 4.15
Total differe nce betwe en the wage incre ase for 2001
a nd the increase granted under W O No. 8 ................................ PhP 25.85

W a ge ra te by De cember 2000 .......................................
PhP 250.00
a nd the increase granted under W O No. 8 ........... _____25.85

Total (W age rate range beginning January 1, 2001) ................... PhP 275.85
(2) With regard to the second group of employees, who attained regular employment status after the
implementation of WO No. 8, namely: Nimfa Anilao, Rose Subardiaga, Valerie Carbon, Olivia Edroso, Maricris
Donaire, Analyn Azarcon, Rosalie Ramirez, Julieta Rosete, Janice Nebre, Nia Andrade, C atherine Yaba,
Diomedisa Erni, Mario Salmorin, Loida C omullo, Marie Ann Delos Santos, Juanita Yana, and Suzette Dulay, the
proper computation of the salaries for the year 2001, in accordance with the C BA, is as follows:

proper computation of the salaries for the year 2001, in accordance with the C BA, is as follows:
C ompute the increase in salary after the implementation of WO No. 8 by subtracting the minimum wage before
WO No. 8 from the minimum wage per the wage order to arrive at the wage increase, thus:
Minim um Wage per W age Order .................................. PhP 250.00

W a ge ra te before W age Order ...................................... 223.50
W a ge Incre ase ...................................... PhP 26.50
Upon attainment of regular employment status, the employeesâ€™ salaries were increased by 25% of 10% of
their basic salaries, as provided for in Sec. 2, Art. X of the C BA, thus resulting in a further increase of PhP 6.25,
for a total of PhP 256.25, computed as follows:
W a ge ra te after WO No. 8 .................................................. PhP 250.00

R e gularization incre ase (25 % of 10% of basic salary) .......... 6.25
Total (Salary for the end of year 2000) ................................ PhP 256.25
To compute for the increase in wage rates for the year 2001, get the increase of 12% of the employeesâ€™
salaries as of December 31, 2000; then subtract from that amount, the amount increased in salaries as granted
under WO No. 8 in accordance with the crediting provision of the C BA, to arrive at the increase in salaries for
the year 2001 of the recently regularized employees. Add the result to their salaries as of December 31, 2000
to get the proper salary beginning January 1, 2001, thus:
Incre a se for 2001 (12% of 2000 salary) ....................................... PhP 30.75

Le ss the wa ge incre ase under W O No. 8 ..................................... 26.50
Diffe re nce betwe en the wa ge incre ase
for 2001 and the incre ase gra nted under W O No. 8 ..................... PhP 4.25
W age rate after re gularization increase .......................................... PhP 256.25
Plus total difference betwe en the wa ge increase and
the incre ase granted under W O No. 8 .......................................... 4.25

Total (W a ge ra te beginning January 1, 2001) ............................... PhP 260.50
With these computations, the crediting provision of the C BA is put in effect, and the wage distortion between
the first and second group of employees is cured. The first group of employees who attained regular
employment status before the implementation of WO No. 8 is entitled to receive, starting January 1, 2001, a
daily wage rate within the range of PhP 264.67 to PhP 275.85, depending on their wage rate before the
implementation of WO No. 8. The second group that attained regular employment status after the
implementation of WO No. 8 is entitled to receive a daily wage rate of PhP 260.50 starting January 1, 2001.
Diminution of benefits
TSPIC also maintains that charging the overpayments made to the 16 respondents through staggered
deductions from their salaries does not constitute diminution of benefits.
We agree with TSPIC .
Diminution of benefits is the unilateral withdrawal by the employer of benefits already enjoyed by the
employees. There is diminution of benefits when it is shown that: (1) the grant or benefit is founded on a policy
or has ripened into a practice over a long period; (2) the practice is consistent and deliberate; (3) the practice
is not due to error in the construction or application of a doubtful or difficult question of law; and (4) the
diminution or discontinuance is done unilaterally by the employer.[27]
As correctly pointed out by TSPIC , the overpayment of its employees was a result of an error. This error was
immediately rectified by TSPIC upon its discovery. We have ruled before that an erroneously granted benefit
may be withdrawn without violating the prohibition against non-diminution of benefits. We ruled in Globe-
Mackay Cable and Radio Corp. v. NLRC:
Absent clear administrative guidelines, Petitioner C orporation cannot be faulted for erroneous application
of the law. Payment may be said to have been made by reason of a mistake in the construction or
application of a â€œdoubtful or difficult question of lawâ€. (Article 2155, in relation to Article 2154 of
the C ivil C ode). Since it is a past error that is being corrected, no vested right may be said to have arisen
nor any diminution of benefit under Article 100 of the Labor C ode may be said to have resulted by virtue
of the correction.[28]
Here, no vested right accrued to individual respondents when TSPIC corrected its error by crediting the salary
increase for the year 2001 against the salary increase granted under WO No. 8, all in accordance with the C BA.

increase for the year 2001 against the salary increase granted under WO No. 8, all in accordance with the C BA.
Hence, any amount given to the employees in excess of what they were entitled to, as computed above, may
be legally deducted by TSPIC from the employeesâ€™ salaries. It was also compassionate and fair that TSPIC
deducted the overpayment in installments over a period of 12 months starting from the date of the initial
deduction to lessen the burden on the overpaid employees. TSPIC, in turn, must refund to individual
respondents any amount deducted from their salaries which was in excess of what TSPIC is legally allowed to
deduct from the salaries based on the computations discussed in this Decision.
As a last word, it should be reiterated that though it is the stateâ€™s responsibility to afford protection to labor,
this policy should not be used as an instrument to oppress management and capital.[29] In resolving disputes
between labor and capital, fairness and justice should always prevail. We ruled in Norkis Union v. Norkis
Trading that in the resolution of labor cases, we have always been guided by the State policy enshrined in the
C onstitution: social justice and protection of the working class. Social justice does not, however, mandate that
every dispute should be automatically decided in favor of labor. In any case, justice is to be granted to the
deserving and dispensed in the light of the established facts and the applicable law and doctrine.[30]
WHEREFORE, premises considered, the September 13, 2001 Decision of the Labor Arbitrator in National
C onciliation and Mediation Board C ase No. JBJ-AVA-2001-07-57 and the October 22, 2003 C A Decision in C A-
G.R. SP No. 68616 are herebyAFFIRMED with MODIFICATION. TSPIC is hereby ORDERED to pay
respondents their salary increases in accordance with this Decision, as follows:
Name of Employee Daily Wage No. of Working Days in a No. of Months in a Total Salary for
Rate Month Year 2001
Nim fa Anilao 260.5 26 12 81,276.00
R ose Subardiaga 260.5 26 12 81,276.00
Va le rie C arbon 260.5 26 12 81,276.00
O livia Edroso 260.5 26 12 81,276.00
Ma ricris Donaire 260.5 26 12 81,276.00
Analyn Azarcon 260.5 26 12 81,276.00
R osalie Ramirez 260.5 26 12 81,276.00
Julie ta R osete 260.5 26 12 81,276.00
Janice Ne bre 260.5 26 12 81,276.00
Nia Andra de 260.5 26 12 81,276.00
C a therine Yaba 260.5 26 12 81,276.00
Diom edisa Erni 260.5 26 12 81,276.00
Ma rio Sa lmorin 260.5 26 12 81,276.00
Loida Camullo 260.5 26 12 81,276.00
Ma rie Ann De los 260.5 26 12 81,276.00
Sa ntos
Jua nita Yana 260.5 26 12 81,276.00
Suze tte Dulay 260.5 26 12 81,276.00
Je rico Alipit 264.67 26 12 82,577.04
Gle n Ba tula 264.67 26 12 82,577.04
Se r John Hernandez 264.68 26 12 82,580.16
R a chel Novillas 264.68 26 12 82,580.16
Am y Duria s 270.26 26 12 84,321.12
C la ire Evelyn Ve lez 270.26 26 12 84,321.12
Ja nice Olaguir 270.26 26 12 84,321.12
Ma ria Fe Flores 275.85 26 12 86,065.20
Fe C a pistra no 275.85 26 12 86,065.20
The award for attorneyâ€™s fees of ten percent (10%) of the total award isMAINTAINED.
SO ORDERED.
Quisumbing, (Chairperson), Carpio, Carpio-Morales, and Tinga, JJ., concur.

[1] Also appears as Amie Durias in some parts of the records.
[2] Also appears as Deomedisa Erne in some parts of the records.
[3] Also appears as Loida C amullo in some parts of the records.
[4] Also appears as Mary Ann delos Santos in some parts of the records.
Rollo, pp. 31-39-A. Penned by Associate Justice C onrado M. Vasquez, Jr., and concurred in by Associate
[5]
Justices Bienvenido L. Reyes and Arsenio J. Magpale.
[6] Id. at 41-42.
[7] Id. at 118-132.
[8] Id. at 188-212.
[9] Id. at 122.
â€œProviding an Increase in the Daily Minimum Wage in the National C apital Region, and Its Implementing
[10]
Rules: Rules Implementing Wage Order No. NC R-08,â€ approved on October 25, 2000.
[11] Rollo, p. 32.
[12] Id. at 43.
Art. 100. Prohibition against elimination or diminution of benefits. Nothing in this Book shall be
[13]
construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the
time of promulgation of this C ode.
[14] Rollo, pp. 131-132.
[15] Id. at 37-38.
Centro Escolar University Faculty and Allied Workers Union-Independent v. Court of Appeals, G.R. No.
[16]
165486, May 31, 2006, 490 SC RA 61, 72.
[17] G.R. No. 145561, June 15, 2005, 460 SC RA 187, 190-191.
[18] C IVIL C ODE, Art. 1370.
[19] See RULES OF C OURT, Rule 130, Sec. 11.
[20]Marcopper Mining Corporation v. NLRC, G.R. No. 103525, March 29, 1996, 255 SC RA 322, 333;
citing Davao Integrated Port Stevedoring Services v. Abarquez, G.R. No. 102132, March 19, 1993, 220 SC RA
197.
[21] C IVIL C ODE, Art. 1374; RULES OF C OURT, Rule 130, Sec. 11.
[22] See RULES OF C OURT, Rule 130, Sec. 12.
Rollo, p. 537. It appears from the records that they attained regular employment status on July 31, 2000
[23]
with a basic wage rate of PhP 234.67.
Id. It appears from the records that they attained regular employment status on August 21, 2000 with a
[24]
basic wage rate of PhP 234.68.
Id. It appears from the records that respondents Amy Durias and C laire Evelyn Velez attained regular
[25]
employment status on April 11, 2000, while Janice Olaguir on April 18, 2000, all with a basic wage rate of PhP
240.26.
Id. It appears from the records that respondent Maria Fe Flores attained regular employment status on
[26]
February 22, 2000, while Fe C apistrano on March 22, 2000, both with a basic wage rate of PhP 245.85.

February 22, 2000, while Fe C apistrano on March 22, 2000, both with a basic wage rate of PhP 245.85.
[27] C .A. Azucena, THE LABOR C ODE WITH C OMMENTS AND CASES 222 (2004).
[28] No. L-74156, June 29, 1988, 163 SC RA 71, 78.
[29] Agabon v. NLRC, G.R. No. 158693, November 17, 2004, 442 SC RA 573, 614.
[30] G.R. No. 157098, June 30, 2005, 462 SC RA 485, 497.
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Bobcock vs. Union (2005)
12:11 AM
THIRD DIVISION
[G.R. No. 156260. March 10, 2005]
BABCOCK-HITACHI (PHILS.), INC., petitioner, vs. BABCOCK-HITACHI (PHILS.), INC., MAKATI
EMPLOYEES UNION (BHPIMEU), respondent.
DECI SION
SANDOVAL-GUTIERREZ, J.:
At bar is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as
amended, assailing the Decision[1] dated May 14, 2002 and Resolution[2] dated November 26, 2002
rendered by the Court of Appeals in CA-G.R. SP No. 65260, entitled “Babcock-Hitachi (Phils.), Inc. vs.
Babcock-Hitachi (Phils.), Inc., Makati Employees Union (BHPIMEU).”
The facts as borne by the records are:
Babcock-Hitachi (Phils.), Inc., petitioner, is a manufacturing corporation, with branches at Makati City
and Bauan, Batangas.
Sometime in December 1997, petitioner, to improve the operating efficiency and coordination among its
various departments, formulated a plan to transfer the Design Department from its Makati office to
Bauan, Batangas.
With this development, petitioner, on February 24, 1999, sent separate notices to Justiniano G. Iniego,
Xavier Aguila and Bonifacio B. Vergara, who occupied Engineer 1 positions at the Design Department,
of their re-assignment and transfer to Bauan, Batangas effective April 1, 1999. This prompted them to
claim for their relocation allowance provided by Sections 1 and 2, Article XXI of the collective
bargaining agreement (CBA).[3]
However, petitioner refused to implement the CBA, claiming that the affected employees are not entitled
to relocation allowance under Policy Statement No. BHPI-G-044A dated October 1, 1996[4]considering
that they are residents of Bauan or its adjacent towns.[5]
Thus, the affected union members (Justiniano Iniego, et al.), represented by Babcock-Hitachi (Phils.),
Inc., Makati Employees Union, respondent, filed with the National Conciliation and Mediation Board
(NCMB) a complaint for payment of relocation allowance against petitioner. In a Submission Agreement
dated March 18, 1999, the parties stipulated to submit the case for voluntary arbitration.
On July 25, 2000, after the parties submitted their pleadings and position papers, the Voluntary Arbitrator
rendered a Decision ordering petitioner to pay respondent‟s concerned members their relocation
allowances. Petitioner then filed a motion for reconsideration but was denied in a Resolution dated May
30, 2001.
Thereafter, petitioner filed with the Court of Appeals a petition for review with prayer for issuance of a
temporary restraining order and/or writ of preliminary injunction.
On May 14, 2002, the Appellate Court promulgated its Decision affirming the Voluntary Arbitrator‟s
assailed Decision. The Court of Appeals ratiocinated as follows:
“After a thorough study of the case at hand, we are convinced that the affected employees are entitled to
the relocation allowance provided for in the Collective Bargaining Agreement (CBA) entered into and
signed by both the Union and petitioner Company on July 18, 1997. We share the posture adopted by the
Voluntary Arbitrator in rejecting petitioner‟s arguments that the affected employees are not entitled to
relocation allowance. Pursuant to the basic and irrefragable rule that in carrying out and interpreting the
provisions of the Labor Code and its implementing rules and regulations, the workingman‟s welfare
should be the primordial and paramount consideration. Undoubtedly, this rule must likewise find
application in the interpretation and meaning of the CBA entered into by both the parties, for the same is
the law between the parties. x x x.
xx x xxx
In the case before this Court, petitioner Company‟s contention that the policy statement they issued still
finds application in the present CBA is misplaced. With the advent of the new CBA dated July 18, 1997,
the policy statement, which previously finds application can no longer be controlling in the present
situation. Had it been the intent of the proponents of the CBA, then it could have been incorporated in the
agreement or contract, otherwise, it contravenes the very essence and purpose of the CBA. Obviously,
the purpose of collective bargaining agreement is the reaching of an agreement resulting in a contract
binding on the parties.
Moreover, the policy statement being invoked by petitioner Company is not a part of the contract or CBA,
thus, it cannot remain in full force and effect even beyond the stipulated term, especially, in the light of

thus, it cannot remain in full force and effect even beyond the stipulated term, especially, in the light of
the present CBA. Under the circumstances, the policy statement issued by the petitioner company is a
unilateral policy, which is contrary to the provisions of the CBA. The CBA operates as the law that
governs the employer-employee relationship of herein petitioner Company and the Union.
Second. Petitioner Company contends that the rationale behind the CBA provision on relocation
allowance is clearly spelled out in the company policy on relocation allowance.
Under the circumstances obtaining in this case, petitioner Company‟s argument falters. The benefits
available in the present CBA (dated July 18, 1997) does not provide for any qualification, it was written
in straight and unequivocal terms, not susceptible to any other interpretation. x x x.
xx x xxx
WHEREFORE, in view of the foregoing, the instant petition is hereby DISMISSED for lack of merit.
SO ORDERED.”
On November 26, 2002, the Court of Appeals issued a Resolution denying petitioner‟s motion for
reconsideration.
Hence, this petition for review on certiorari.
Petitioner contends that the Court of Appeals, in affirming the Voluntary Arbitrator‟s Decision, erred in
relying solely upon the parties‟ CBA providing that employees transferred from Makati to Bauan,
Batangas are entitled to relocation allowance equivalent to 1,500.00. Petitioner invokes Policy Statement
No. BHPI-G-044A (earlier quoted) expressly providing that employees, who are “residents of Bauan or
adjacent Batangas towns and assigned permanently back to the Bauan Plant,” are not entitled to relocation
allowance.
Petitioner‟s contention lacks merit.
The basic issue for our resolution is whether union members are entitled to relocation allowance in light
of the CBA between the parties.
To begin with, any doubt or ambiguity in the contract between management and the union members
should be resolved in favor of the latter. This is pursuant to Article 1702 of the Civil Code which
provides: “(I)n case of doubt, all labor legislation and all labor contracts shall be construed in favor of the
safety and decent living for the laborer.”[6]
Pertinent are Sections 1 and 2, Article XXI of the CBA which provide:
“Section 1. The COMPANY shall provide a relocation allowance of ONE THOUSAND EIGHT
HUNDRED PESOS (1,800.00) per month for employees who will be transferred from Bauan to
Makati. For employees who will be transferred from Makati to Bauan, the relocation assistance
shall be ONE THOUSAND FIVE HUNDRED PESOS (1,500.00).
Section 2. Employees can avail this provision provided their transfer is on a permanent basis or for a
duration exceeding one (1) month.”
The above provisions state that employees transferred from Makati City to Bauan, Batangas are entitled to
a monthly relocation allowance of 1,500.00, provided their transfer is permanent or for a period exceeding
one month. Such provisions need no interpretation for they are clear. Contracts which are not ambiguous
are to be interpreted according to their literal meaning and not beyond their obvious intendment. [7]
In Mactan Workers Union vs. Aboitiz,[8] we held that “the terms and conditions of a collective
bargaining contract constitute the law between the parties. Those who are entitled to its benefits
can invoke its provisions. In the event that an obligation therein imposed is not fulfilled, the aggrieved
party has the right to go to court for redress.”
Finally, we sustain the finding of the Court of Appeals that the policy statement being invoked by
petitioner is not a part of the CBA which is the law between the parties.
Thus, the Court of Appeals did not commit any error when it rendered the assailed Decision and
Resolution, the same being consistent with law and jurisprudence.
WHEREFORE, the petition is DENIED. The assailed Decision dated May 14, 2002 and Resolution
dated November 26, 2002 rendered by the Court of Appeals in CA-G.R. SP No. 65260 are
AFFIRMED. Costs against petitioner.
SO ORDERED.
Panganiban, (Chairman), Corona, and Garcia, JJ., concur.
Carpio-Morales, J., on leave.
[1] Penned by Justice Perlita J. Tria Tirona, and concurred in by Justices Buenaventura J. Guerrero
(retired) and Rodrigo V. Cosico, Annex “A” of the Petition, Rollo at 31-43.
[2] Annex “B”, id. at 44-45.
[3] “ARTICLE XXI
RELOCATION ASSISTANCE

RELOCATION ASSISTANCE
Section 1. The COMPANY shall provide a relocation allowance of ONE THOUSAND EIGHT
HUNDRED PESOS (P 1,800.00) per month for employees who will be transferred from Bauan to
Makati. For employees who will be transferred from Makati to Bauan, the relocation assistance shall be
ONE THOUSAND FIVE HUNDRED PESOS (P 1,500.00).
Section 2. Employees can avail this provision provided their transfer is on a permanent basis or for a
duration exceeding one (1) month.”
[4] “The RELOCATION ASSISTANCE is, therefore, created to cover what is considered a reasonable,
safe, comfortable and presentable means of transportation, from Batangas to Manila and vice
versa. Furthermore, the assistance is intended to help defray the relatively higher meal expenses after the
relocation takes effect. x x x
COVERAGE AND ELIGIBILITY
1. Those employees whose residence or birthplace is situated in Bauan or any adjacent town, who
applied and were hired for employment in the Bauan Plant, but transferred to Makati Office.
2. Those who live in Metro Manila whose family is also based in Metro Manila, but assigned to
work at the Bauan plant.
xx x xxx
EXCEPTIONS
xx x xxx
2. Enjoyment shall cease upon permanent transfer back to the original place of employment (Makati
Office or Bauan Plant) where the residence is proximate.
xx x xxx
4.Resident of Bauan or adjacent Batangas town and assigned permanently back to the Bauan Plant.
xx x x x x.”
[5] Xavier Aguila, Bonifacio B. Vergara and Justiniano G. Iniego are permanent residents of Bayanan,
San Pascual, Batangas; Tubigan, Lemery, Batangas and Cuenca, Batangas, respectively.
[6] Plastic Town Center Corporation vs. NLRC, G.R. No. 81176, April 19, 1989, 172 SCRA 580, 587,
cited in Mindanao Steel Corporation vs. Minsteel Free Workers Organization (MINFREWO-NFL)
Cagayan de Oro, G.R. No. 130693, March 4, 2004 at 6.
[7] See Id., citing Herrera vs. Petrophil Corp., 146 SCRA 385 (1986).
[8] G.R. No. L-30241, June 30, 1972, 45 SCRA 577, 581, citing Shell Oil Workers Union vs. Shell
Company of the Philippines, 39 SCRA 276 (1971).
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Caltex Refinery vs. Brillantes
12:13 AM
THIRD DIVISION
[G.R. No. 123782. September 16, 1997]
CALTEX REFINERY EMPLOYEES ASSOCIATION
(CREA), petitioner, vs. HON. JOSE S. BRILLANTES, in his
capacity as Acting Secretary of the Department of Labor and
Employment, and CALTEX (PHILIPPINES), Inc., respondents.
RESOLUTI ON
PANGANIBAN, J.:
Unless shown to be clearly whimsical, capricious or arbitrary, the orders or
resolutions of the secretary of labor and employment resolving conflicts on
what should be the contents of a collective bargaining agreement will be
respected by this Court. We realize that, oftentimes, such orders and
resolutions are based neither on definitive shades of black or white, nor on
what is legally right or wrong. Rather, they are grounded largely on what is
possible, fair and reasonable under the peculiar circumstances of each case.
Statement of the Case

Petitioner Caltex Refinery Employees Association (CREA) seeks through
Rule 65 of the Rules of Court “reversal or modification” of three orders of
public respondent, then Acting Secretary of Labor of Employment Jose S.
Brillantes, in Case No. OS-AJ-0044-95 [1] entitled “ In re: Labor Dispute at
Caltex (Phils.), Inc.” The disposition of the first assailed Order [2]of public
respondent dated October 29, 1995: [3]
“WHEREFORE, ON THE BASIS OF THE FOREGOING, the Caltex Refinery Employees
Association and Caltex Philippines, Inc. are hereby directed to execute a new collective bargaining
agreement embodying therein the appropriate dispositions above spelled out including those subject
of previous agreements.
Provisions in the old CBA, or existing benefits subject of Company policy or practice not otherwise
modified or improved herein are deemed maintained.
New demands not otherwise touched upon or disposed of are hereby denied.”
The motions for reconsideration and clarification of the above Order filed by
both petitioner and private respondent were denied in the second assailed
Order dated November 21, 1995, which disposed: [4]
“WHEREFORE, except the modifications hereinabove set forth, the Order dated 9 October 1995 is
hereby affirmed.
Moreover, pursuant to the Agreement reached by the parties on 13 September 1995 for this Office
to commence the proceedings concerning the legality of strike and the termination of the union
officers, after the resolution of the CBA issues, both parties are hereby directed to submit their
position papers and evidence within ten (10) days from receipt of a copy of this Order. For this
purpose, Atty. Tito F. Genilo is hereby designated as Hearing Officer and authorized as such, to
immediately conduct hearings and receive evidence and, thereafter, submit his report and
recommendations thereon.”
Petitioner‟s second motion for reconsideration of the above Order was
likewise denied by the third assailed Order dated January 9, 1996, as
follows: [5]
“WHEREFORE, PREMISES CONSIDERED, our Order of 21 November 1995 is hereby
affirmed en toto, subject to the afore-mentioned clarification on the issue of Sunday work.
No further motions of this nature shall be entertained by this Office.

No further motions of this nature shall be entertained by this Office.
The parties are given another ten (10) days from receipt hereof to submit their respective position
papers and evidences (sic) relative to the issue of the legality of strike and termination of the union
officers.”
The Facts
Anticipating the expiration of their Collective Bargaining Agreement on July
31, 1995, petitioner and private respondent negotiated the terms and
conditions of employment to be contained in a new CBA. The negotiation
between the two parties was participated in by the National Conciliation and
Meditation Board (NCMB) and the Office of the Secretary of Labor and
Employment. Some items in the new CBA were amicably arrived at and
agreed upon, but some others were unresolved.
To settle the unresolved issues, eight meetings between the parties were
conducted. Because the parties failed to reach any significant progress in
these meetings, petitioner declared a deadlock. On July 24, 1995, petitioner
filed a notice of strike. Six (6) conciliation meetings conducted by the NCMB
failed to settle the parties‟ differences. Then, the parties held marathon
meetings at the plant level, but this remedy proved also unavailing.
During a strike vote on August 16, 1995, the members of petitioner opted for
a walkout. Private respondent then filed with the Department of Labor and
Employment (DOLE) a petition for assumption of jurisdiction in accordance
with Article 263 (g) of the Labor Code.
In an Order dated August 22, 1995, public respondent assumed jurisdiction
“over the entire labor dispute at Caltex (Philippines) Inc.,” with the following
disposition: [6]
“WHEREFORE ABOVE PREMISES CONSIDERED, this Office hereby assumes jurisdiction over
the entire labor dispute at Caltex (Philippines) Inc. pursuant to Article 263 (g) of the Labor Code, as
amended.
Accordingly, any strike or lockout, whether actual or intended, is hereby enjoined.
The parties are further directed to cease and desist from committing any and all acts which might
exacerbate the situation.
To expedite the resolution of the instant dispute, the parties are further directed to submit their
respective position papers and evidence within ten (10) days from receipt hereof.”
In defiance of the above Order expressly restraining any strike or lockout,
petitioner began a strike and set up a picket in the premises of private
respondent on August 25, 1995. Thereafter, several company notices
directing the striking employees to return to work were issued, but the
members of petitioner defied them and continued their mass action.
In the course of the strike, DOLE Undersecretary Bienvenido Laguesma
interceded and conducted several conciliation meetings between the
contending parties. He was able to convince the members of the union to
return to work and to enter into a memorandum of agreement with private
respondent. On September 9, 1995, the picket lines were finally
lifted. Thereafter, the contending parties filed their position papers pertaining
to unresolved issues. [7]
Because of the strike, private respondent terminated the employment of some
officers of petitioner union. The legality of these dismissals brought additional
contentious issues.[8]
Again, the parties tried to resolve their differences through
conciliation. Failing to come to any substantial agreement, the parties
stopped further negotiation and, on September 13, 1995, decided to refer the
problem to the secretary of labor and employment: [9]
“It appearing that the possibility of an amicable settlement appears remote, the parties agreed to
submit their respective position paper and evidence simultaneously on 27 September 1995 at the
Office of the Secretary. The parties further agreed that there will be no extension of time for filing

Office of the Secretary. The parties further agreed that there will be no extension of time for filing
and no further pleading will be filed.
The decision of the Secretary of Labor and Employment will be rendered on or before October 9,
1995.
The proceedings concerning the legal issues involving the legality of strike and the termination of
the Union officers will be commenced by the Office of the Secretary after the resolution of the
CBA issues.”
As already stated, public respondent issued as scheduled on October 9, 1995
the assailed Order resolving the deadlock, followed by two more assailed
Orders on November 21, 1995 and January 16, 1996 disposing of the
motions for reconsideration/clarification of both parties. Dissatisfied with
these Orders issued by public respondent, petitioner sought remedy from this
Court.
After realizing the urgency of the case and after meticulously reviewing
the Petition dated February 23, 1996; Comment by the private respondent
dated April 16, 1996 which was adopted as its own by the public
respondent; Reply by the petitioner dated September 7,
1996; Rejoinder dated October 3, 1996 and Sur-Rejoinder dated November
12, 1996, the Court resolved to give due course to the petition and to consider
the case submitted for resolution without requiring memoranda from the
parties.
The Issues
Petitioner does not specifically pinpoint the issues it wants the Court to rule
upon. It appears, however, that petitioner questions public respondent‟s
resolution of five issues in the CBA, specifically on wage increase, union
security clause, retirement benefits or application of the new retirement plan,
signing bonus and grievance and arbitration machineries.
Private respondent, on the other hand, submits this lone issue: [10]
“Whether or not the Honorable Secretary of Labor and Employment committed grave abuse of
discretion in resolving the instant labor dispute.”
The Court’s Ruling

The petition is partly meritorious.
Preliminary Matter: Certiorari in Labor Cases

At the outset, we must reiterate several settled rules in a petition
for certiorari involving labor cases.
First, the factual findings of quasi-judicial agencies (such as the Department
of Labor and Employment), when supported by substantial evidence, are
binding on this Court and entitled to great respect, considering the expertise
of these agencies in their respective fields. [11] It is well-established that
findings of these administrative agencies are generally accorded not only
respect but even finality. [12]
Second, substantial evidence in labor cases is such amount of relevant
evidence which a reasonable mind will accept as adequate to justify a
conclusion. [13]
Third, in Flores vs. National Labor Relations Commission [14] we explained the
role and function of rule 65 as an extraordinary remedy:
“It should be noted, in the first place, that the instant petition is a special civil action for certiorari
under Rule 65 of the Revised Rules of Court. An extraordinary remedy, its use is available only
and restrictively in truly exceptional cases -- those wherein the action of an inferior court, board or
officer performing judicial or quasi-judicial acts is challenged for being wholly void on grounds of
jurisdiction. The sole office of the writ of certiorari is the correction of errors of jurisdiction
including the commission of grave abuse of discretion amounting to lack or excess of
jurisdiction. It does not include correction of public respondent NLRC‟s evaluation of the evidence

jurisdiction. It does not include correction of public respondent NLRC‟s evaluation of the evidence
and factual findings based thereon, which are generally accorded not only great respect but even
finality.
No question of jurisdiction whatsoever is being raised and/or pleaded in the case at bench. Instead,
what is being sought is a judicial re-evaluation of the adequacy or inadequacy of the evidence on
record, which is certainly beyond the province of the extraordinary writ of certiorari. Such demand
is impermissible for it would involve this court in determining what evidence is entitled to belief
and the weight to be assigned it. As we have reiterated countless times, judicial review by this
Court in labor cases does not go so far as to evaluate the sufficiency of the evidence upon which the
proper labor officer or office based his or its determination but is limited only to issues of
jurisdiction or grave abuse of discretion amounting to lack of jurisdiction.”
We shall thus use the foregoing time-tested standards in deciding this
petition.
1. Wage Increase
The main assailed Order dated October 9, 1995 resolved the ticklish demand
for wage increase as follows: [15]
“With this in mind and taking into view similar factors as financial capacity, position in the
industry, package of existing benefits, inflation rate, seniority, and maintenance of the wage
differentiation between and among the various classes of employees within the entire Company,
this Office hereby finds the following improved benefits fair, reasonable and equitable:
1. Wage Increases
Effective August 1, 1995 - 14%
2. meal subsidy - P15.00”
In denying the motions for reconsideration/clarification of the above award,
public respondent rules in the challenged Order dated November 21, 1995: [16]
“First, on the matter of wages, we find no compelling reasons to alter or modify our award after
having sufficiently passed upon the same arguments raised by both parties in our previous
Order. The subsequent agreement on a package of wage increases at Shell Company, adverted to
by the Union as the usual yardstick for purposes of developing its own package of improved wage
increases, would not be sufficient basis to grant the same increases to the Union members herein
considering that other factors, among which is employment size, were carefully taken into
account. While it is true that inflation has direct impact on wage increases, it is not quite accurate
to state that inflation „as of September 1995‟ is already registered at 11.8%. The truth of the matter
is that the average inflation for the first ten (10) months was only 7.496% and Central Bank
projections indicate that it will take a 13.5% inflation for November and December to record an
average inflation of 8.5% for the year. We, therefore, maintain the reasonableness of the package
of wage increases that we awarded.”
Petitioner belittles the awarded increases. It insists that the increase should
be ruled on the basis of four factors: “(a) the economic needs of the [u]nion‟s
members; (b) the [c]ompany‟s financial capacity; (c) the bargaining history
between the [u]nion and the [c]ompany; and (d) the traditional parity in wages
between Caltex and Shell Refinery Employees.” [17]
Petitioner contends that the “inflation rate rose to 11.8% in September [1995],
rose further in October, and is still a double-digit figure at the time of this
writing.” Therefore, public respondent‟s so-called “improved benefits” are in
reality “retrogressive.” [18]
Petitioner tries to show private respondent‟s “immense financial capacity” by
citing Caltex‟s “Banaba Housing Up-grading” which would cost “not less
than P200,000,000.00” [19]Petitioner does “not begrudge” private respondent‟s
“pampering of its [r]efinery [m]anagers and supervisors,” but asks that the
rank and file employees be “not left too far behind.” [20]
Petitioner maintains that the salaries of Shell Refinery employees be used as
a “reference point” in upgrading the compensation of private respondent‟s
employees because these two companies are in the “same industry and their
refineries are both in Batangas.” Thus, the wage increase of petitioner‟s

refineries are both in Batangas.” Thus, the wage increase of petitioner‟s
members should be “15%/15%/15%.” [21]
Private respondent counters with a “proposed 9% 7% 7% increase for the
same period with automatic adjustment should the increase fall short of the
inflation rate.” Hence, the Secretary‟s award of “14% 14% 13%” increase
really comes “closer to the Union‟s position.” [22]
Petitioner‟s arguments fail to impress us. First, the matter of inflation rate was
clearly addressed in public respondent‟s Order dated November 21,
1995. Contrary to petitioners undocumented claim of 11.8% inflation in
September of 1995, the “truth of the matter is that the average inflation for the
first ten (10) months was only 7.496%, and Central Bank projections indicate
that it will take a 13.5% inflation for November and December to record an
average inflation of 8.5% for the year.” [23] Second, private respondent‟s
financial capacity has been insufficiently explained in its Comment dated April
16, 1996 in which it stated that the Banaba “upgrading” should not be
construed as a yardstick of its financial standing: [24]
“It is equally amazing how the Union (petitioner) desperately justifies their demands by comparing
the „upgrading cost‟ of the Company‟s (private respondent) Banaba Housing Facilities, a matter
totally unrelated to the case, to the cost of their demands. The Union not only errs in its choice of
yardstick of the Company‟s capacity to pay, it likewise displays its ignorance of the Banaba
Housing Program.
The Banaba Housing Facility is not a benefit. It is an integral part of an indispensable requirement
for smooth Plant operations and assurance of an emergency response crew in times of calamities
and accidents. Employees who are required to stay in the housing facility are members of the
Refinery‟s emergency response organization. It is also not a case of „upgrading‟. The Banaba
Housing Facility was built in 1954. A significant number of its structure are dilapidated and in dire
need of rehabilitation and preservation. Finally, Banaba is not a yardstick of the Company‟s
capacity to pay, but rather, an eloquent demonstration of the Company‟s will to survive and remain
globally competitive.”
The above reasoning convinces us that such upgrading should not be equated with
private respondent‟s financial capacity to pay the proposed wage increase, but
should be evaluated as a business judgment “to survive and remain globally
competitive.” We believe that the standard proof of a company‟s financial standing
is its financial statements duly audited by independent and credible external
auditors. [25] Third, the traditional parity in wages used by petitioner to justify its
proposal is flimsy and trivial. Aside from its bare allegation of “similarity” in salaries
and locations, petitioner did not proffer any substantial reason to impute grave
abuse of discretion on the part of the public respondent. On the other hand, we
find private respondent‟s discussion of this matter reasonable, as the following
shows: [26]
“It is further amazing that the Union continues to use an outmoded concept of the „Shell yardstick‟
and „relative parities in wages‟ to justify an imperative need for them to keep their traditional edge
in pay over their industry counterparts. It is not just a matter of being above the rest. Sound
compensation principle of higher productivity equals higher pay, as well as, recent developments in
the industry have negated this argument. Both Shell and Petron continue to benefit from increasing
manpower productivity. Shell, for instance, produces 155,000 barrels per day on a 120 manpower
complement of operatives and rank and file; while the Company only produces 65,000 barrels per
day with its 221 manpower complement. In addition, the counterpart union at Shell incurs an
average overtime rate of 37%, as a percentage of base pay; the Union‟s overtime rate is 102%.
Thus, the issue is productivity, not sales, and so far, the Company‟s Refinery is not as productive as
Shell‟s or Petron‟s. To ask for relative parity in the face of this reality is not only unreasonable, it
is likewise illogical.
As it is, the wage increase of 14%, 14% and 13% will result in an average basic salary
of P23,510.00 at the end of the three-year cycle. The resulting pay is excessive and
disproportionately high compared with the value of the jobs within the bargaining unit. Stated
differently, this average salary will be unreasonably high for the skills and qualifications needed for
the job.
Even now, with an average monthly salary (prior to the DOLE awarded CBA increases)

Even now, with an average monthly salary (prior to the DOLE awarded CBA increases)
of P16,010 plus overtime, holiday and other premiums way above those mandated by law, the
Union members are already the highest paid in the Philippines, in terms of gross income.”
The alleged “similarity” in the situation of Caltex and Shell cannot be
considered a valid ground for a demand of wage increase, in the absence of a
showing that the two companies are also similar in “substantial aspects,” as
discussed above. Private respondent is merely asking that an employee
should be paid on the basis of work done. If such employee is absent on a
certain day, he should not, as a rule, be paid wages for that day. And if the
employee has worked only for a portion of a day, he is not entitled to the pay
corresponding to a full day. A contrary precept would ultimately result in the
financial ruin of the employer. The age-old general rule governing relations
between labor and capital, or management and employee, is “a fair day‟s
wage for a fair day‟s work.” If no work is performed by the employee, there
can be no wage or pay unless, of course, the laborer was ready, willing and
able to work but was locked out, dismissed, suspended or otherwise illegally
prevented from working. [27] True, union members have the right to demand
wage increases through their collective force; but it is equally cogent that they
should also be able to justify an appreciable increase in wages. We observe
that private respondent‟s detailed allegations on productivity are
unrebutted. It is noteworthy that petitioner ignored this argument of private
respondent and based its demand for wage increase not on the ground that
they were as productive as the Shell employees. Thus, we cannot attribute
grave abuse of discretion to public respondent.
2. Union Security Clause

In the impugned Order dated October 9, 1995, public respondent‟s contested
resolution on the “union [security] clause” reads: [28]
“The relevant provisions found in Article III of the CBA, which is hereby read, thus:
„Section 1. Employees of the COMPANY who at the signing of this Agreement are members of
the UNION and those who subsequently become members thereof shall maintain their membership
with the UNION for the duration of this Agreement as a condition of employment.
Section 2. Members of the UNION who cease to be members of the UNION in good standing by
reason of resignation or expulsion shall not be retained in the employment of the COMPANY.
x x x x x x x‟
are sought to be amended by the Union, to read as follows:
„Section 1. Employees of the Company who at the signing of this Agreement are members of the
Union and those who subsequently become members thereof shall maintain their membership in
GOOD STANDING with the Union for the duration of this Agreement as a condition of
CONTINUOUS employment.
Section 2. PURSUANT TO THE FOREGOING, ANY UNION MEMBER WHO CEASES TO BE
SUCH MEMBER ON GROUNDS PROVIDED IN ITS CONSTITUTION AND BY-LAWS
SHALL , UPON PRIOR WRITTEN NOTICE BY THE UNION TO THE COMPANY, BUT
SUBJECT TO THE OBSERVANCE OF DUE PROCESS AND THE EXPRESS RATIFICATION
OF THE MAJORITY OF THE UNION MEMBERSHIP, BE DISMISSED FROM
EMPLOYMENT BY THE COMPANY; PROVIDED, HOWEVER, THAT THE UNION SHALL
HOLD THE COMPANY FREE AND BLAMELESS FROM ANY LIABILITY IN THE EVENT
THAT THE EMPLOYEE IN ANY MANNER QUESTIONS HIS DISMISSAL.‟
The proposed amendment of the Union gives the same substantial effect as the existing
provision. Rather, the same tackles more on procedure which, to our belief, is already sufficiently
provided under its constitution and by-laws. Insofar as Union security is concerned, this is
sufficiently addressed by the present provisions in the CBA. Hence, we find we are not competent
to arbitrarily incorporate any modification thereof. We are convinced that any amendment on this
matter should be a product of mutual concern and agreement.” [29]
Petitioner contends that the foregoing disposition leaving to the parties the
decision on the union security clause issue is “contrary to the whole idea of

assumption of jurisdiction.” Petitioner argues that in spite of the provisions on
the “union security clause,” it may expel a member only on any of three
grounds: non-payment of dues, subversion, or conviction for a crime
involving moral turpitude. If the employee‟s act does not constitute any of
these three grounds, the member would continue to be employed by private
respondent. Thus, the disagreement between petitioner and private
respondent on this issue is not only “procedural” but also “substantial.” [30]
On the other hand, private respondent argues that nothing prevents petitioner
from expelling its members; however, termination of employment should be
based only on these three grounds agreed upon in the existing CBA. Further,
private respondent explains that petitioner‟s citation of Article 249 (a) [31] of the
Labor Code is out of context. It adds that the cited section provides only for
the right of a union to prescribe its own rules with respect to the acquisition
and retention of membership, and that upholding the arguments of petitioner
would make the private respondent a policeman of the union. [32]
We agree with petitioner. The disagreement between petitioner and private
respondent on the union security clause should have been definitively
resolved by public respondent. The labor secretary should take cognizance of
an issue which is not merely incidental to but essentially involved in the labor
dispute itself, or which is otherwise submitted to him for resolution. [33] In this
case, the parties have submitted the issue of the union security clause for
public respondent‟s disposition. But the secretary of labor has given no valid
reason for avoiding the said issue; he merely points out that this issue is a
procedural matter. Such vacillation clearly sidesteps the nature of the union
security clause as one intended to strengthen the contracting union and to
protect it from the fickleness or perfidy of its own members. Without such
safeguard, group solidarity becomes uncertain; the union becomes gradually
weakened and increasingly vulnerable to company machinations. In this
security clause lies the strength of the union during the enforcement of the
collective bargaining agreement. It is this clause that provides labor with
substantial power in collective bargaining. The secretary of labor assumed
jurisdiction over this labor dispute in an industry indispensable to national
interest, precisely to settle once and for all the disputes over which he has
jurisdiction at his level. In not performing his duty, the secretary of labor
committed a grave abuse of discretion.
3. New Retirement Plan

Public respondent‟s contested resolution on “retirement benefits (application
of the new retirement plan)”in the Order dated November 21, 1995 reads: [34]
“Third, the matter of retirement benefits deserves a second look considering that the concerned
employees were already previously granted the option to choose between the old and the new plan
at the time the latter was initiated and they choose to be covered under the Old Plan. To accede to
the Union‟s demand to cover them under the new plan entails a different arrangement under a new
scheme and likewise requires the approval of a Board of Trustees. It is, therefore, understood that
the new Retirement Plan does not apply to the more or less 40 employees being sought by the
Union to be covered under the New Plan.”
Petitioner contends that “40 of its members who are still covered by the Old
Retirement Plan because they were not able to exercise the option to shift to
the New Retirement Plan, for one reason or another, when such option was
given in the past” are included in the New Retirement Plan. Petitioner argues
that the exclusion of forty employees from the New Plan constitutes grave
abuse of discretion for three reasons. First, “ it is a case of the left hand
taking away, so to speak, what the right hand had given.” Second, the
change “was done for a very shallow reason.” The new scheme was no
longer new, “as the New Retirement Plan had been in place for at least two
years.” Third, in not applying the New Retirement Plan to the 40 employees,

years.” Third, in not applying the New Retirement Plan to the 40 employees,
public respondent was perpetrating his department‟s discriminatory
practice. [35]
Private respondent counters that “these 40 or so employees have opted to
remain covered by the old plan despite opportunities given them in 1985 to
shift to the New Plan.” [36]
We hold that public respondent did not commit grave abuse of discretion in
respecting the free and voluntary decision of the employees in regard to the
Provident Plan and the irrevocable one-time option provided for in the New
Retirement Plan. Although the union has every right to represent its
members in the negotiation regarding the terms and conditions of their
employment, it cannot negate their wishes on matters which are purely
personal and individual to them. In this case, the forty employees freely
opted to be covered by the Old Plan; their decision should be respected. The
company gave them every opportunity to choose, and they voluntarily
exercised their choice. The union cannot pretend to know better; it cannot
impose its will on them.
4. Grievance Machinery and Arbitration

The public respondent‟s contested resolution on “grievance and arbitration
machineries” in the Order dated November 21, 1995 reads: [37]
“Seventh, we are constrained to take a closer look at the existing procedure concerning grievance in
relation to the modifications being proposed by the Union. In this regard, we affirm our resolution
to shorten the periods to process/resolve grievances based on existing practice from (45) days to
(30) days at the first step and (10) days to seven (7) days at the second step which is the level of the
VP for manufacturing. We further reviewed the steps through which a grievance may be processed
and in line with the principle to expedite the early resolution of grievances, we find that the
establishment of a joint Council as an additional step in the grievance procedure, may only serve to
protract the proceeding and, therefore, no longer necessary. Instead, the unresolved grievance, if,
not settled within (7) days at the level of the VP for Manufacturing, shall automatically be referred
by both parties to voluntary arbitration in accordance with R.A. 6715. As to the number of
Arbitrators for which the Union proposes to employ only one instead of a panel of three Arbitrators,
we find it best to leave the matter to the agreement of both parties. Finally, we hereby advise the
parties that the list of accredited voluntary arbitrators is now being maintained and disseminated by
the National Conciliation and Meditation Board and no longer by the Bureau of Labor Relations.”
Petitioner contends that public respondent “derailed the grievance and
arbitration scheme proposed by the Union.” [38] Petitioner argues that the
proposed “Grievance Settlement Council” is intended to “supplement the
effort of the Vice President for Manufacturing in reviewing the grievance
elevated to him, so that instead of acting alone x x x he will be obliged to
convoke a conference of the Council to afford the grievant a thorough
hearing.” Petitioner‟s recommendation for a “single arbitrator is based on the
proposition that if voluntary arbitration should be resorted to at all, this
recourse should entail the least possible expense.” [39]
Private respondent counters that the disposition on the grievance machinery
is likewise “fair and reasonable under the circumstances and in fact was
merely a reiteration of the (u)nion‟s position during the conciliation meetings
conducted by Undersecretary Bienvenido Laguesma.” [40]
No particular setup for a grievance machinery is mandated by law. Rather,
Article 260 of the Labor Code, as incorporated by RA 6715, provides for only
a single grievance machinery in the company to settle problems arising from
“interpretation or implementation of their collective bargaining agreement and
those arising from the interpretation or enforcement of company personnel
policies.” Article 260, as amended, reads:
Article 260. Grievance Machinery and Voluntary Arbitration. The parties to a Collective
Bargaining Agreement shall include therein provisions that will ensure the mutual observance of its

Bargaining Agreement shall include therein provisions that will ensure the mutual observance of its
terms and conditions. They shall establish a machinery for the adjustment and resolution of
grievances arising from the interpretation or implementation of their Collective Bargaining
Agreement and those arising from the interpretation or enforcement of company personnel policies.
All grievances submitted to the grievance machinery which are not settled within seven (7) calendar
days from the date of its submission shall automatically be referred to voluntary arbitration
prescribed in the Collective Bargaining Agreement.
For this purpose, parties to a Collective Bargaining Agreement shall name and designate in advance
a Voluntary Arbitrators or panel of voluntary arbitrators, include in the agreement a procedure for
the selection of such Voluntary Arbitrator or panel of Voluntary Arbitrators, preferably from the
listing of qualified Voluntary Arbitrators duly accredited by the Board. In case the parties fail to
select a Voluntary Arbitrator or panel of Voluntary Arbitrators, the Board shall designate the
Voluntary Arbitrator or panel of Voluntary Arbitrators, as may be necessary, pursuant to the
selection procedure agreed upon in the Collective Bargaining Agreement, which shall act with same
force and effect as if the Arbitrator or panel of Arbitrators has been selected by the parties as
described above.”
We believe that the procedure described by public respondent sufficiently
complies with the minimum requirement of the law. Public respondent even
provided for two steps in hearing grievances prior to their referral to
arbitration. The parties will decide on the number of arbitrators who may hear
a dispute only when the need for it arises. Even the law itself does not
specify the number of arbitrators. Their alternatives – whether to have one or
three arbitrators – have their respective advantages and disadvantages. In
this matter, cost is not the only consideration; full deliberation on the issues is
another, and it is best accomplished in a hearing conducted by three
arbitrators. In effect, the parties are afforded the latitude to decide for
themselves the composition of the grievance machinery as they find
appropriate to a particular situation. At bottom, we cannot really impute grave
abuse of discretion to public respondent on this issue.
5. Signing Bonus
The public respondent’s contested resolution on the ―signing bonus‖ in the
Order dated November 21, 1995 reads: [41]
“Fifth, specifically on the issue of whether the signing bonus is covered under the „maintenance of
existing benefits‟ clause, we find that a clarification is indeed imperative. Despite the expressed
provision for a signing bonus in the previous CBA, we uphold the principle that the award for a
signing bonus should partake the nature of an incentive and premium for peaceful negotiations and
amicable resolution of disputes which apparently are not present in the instant case. Thus, we are
constrained to rule that the award of signing bonus is not covered by the „maintenance of existing
benefits‟ clause.”
Petitioner asseverates that the ―signing bonus is an existing benefit embodied
in the old CBA.‖ [42] It explains that public respondent erred in removing the
award of a signing bonus which is ―given not only as an incentive for peaceful
negotiations and amicable settlement of disputes but also as an extra award
to the workers following the settlement of a CBA dispute by whatever
means.‖ [43]
Private respondent disagrees, contending that a signing bonus is not awarded
when CBA negotiations ―result in a strike.‖ There are two reasons
therefor: First, ―the grant of a signing bonus is a matter of discretion and
cannot be demanded as a matter of right;‖ and second, the signing bonus is
meant as an incentive for a peaceful negotiation. Once these negotiations
result in a strike, an illegal one at that, the basis or rationale for such an
award is lost.‖ [44]
Although proposed by petitioner, [45] the signing bonus was not accepted by
private respondent. [46] Besides, a signing bonus is not a benefit which may be
demanded under the law. Rather, it is now claimed by petitioner under the
principle of ―maintenance of existing benefits‖ of the old CBA. However, as

principle of ―maintenance of existing benefits‖ of the old CBA. However, as
clearly explained by private respondent, a signing bonus may not be
demanded as a matter of right. If it is not agreed upon by the parties or
unilaterally offered as an additional incentive by private respondent, the
condition for awarding it must be duly satisfied. In the present case, the
condition sine qua non for its grant – a non strike – was not complied with. In
fact, private respondent categorically stated in its counter-proposal – to the
exclusion of those agreed upon before – that new collective bargaining
agreement would constitute the only agreement between the parties, as
follows:
“SECTION 4. Scope of Agreement. – The terms and conditions of employment of the employees
within the appropriate bargaining unit are embodied in this Agreement. On the other hand, all such
benefits which are not expressly provided for in this Agreement, but which are now being accorded,
may in the future be accorded, or might have been previously accorded to employees, by the
COMPANY shall be deemed as purely discretionary or pure acts of grace and magnanimity on the
part of the COMPANY in each particular case, and the continuance or repetition thereof now or in
the future, no matter how long or how often, shall not be construed as establishing a right for the
employee and/or obligation on the part of the COMPANY.” [47]
This provision on the scope of the agreement is further buttressed by the
clause on waiver: [48]
“The parties acknowledge that during the negotiations which resulted in the execution of this
Agreement, each of them had the unlimited opportunity to make demands and proposals with
respect to any and all subjects and matters proper for collective bargaining and not prohibited by
law; and the parties further acknowledge that the understandings and agreements arrived at by
them after the exercise of that right and unlimited opportunity are fully set forth in this
Agreement. Therefore, the COMPANY and the UNION during the life of this Agreement, each
voluntarily and unqualifiedly waives the right and each agrees that the other shall not be obligated
to bargain collectively with respect to any subject or matter referred to or covered in this
Agreement or with respect to any subject or matter not specifically referred to or covered in this
Agreement even though such subject or matter may not have been within the knowledge or
contemplation of either or both parties at the time they negotiated or signed this Agreement.”
Epilogue
We have carefully reviewed the assailed Orders. Other than his failure to rule
on the issue of union security, the secretary of labor cannot be indicted for
grave abuse of discretion amounting to want or excess of jurisdiction.
“Basically, there is grave abuse of discretion amounting to lack of jurisdiction where the respondent
board, tribunal or officer exercising judicial functions exercised its judgment in a capricious,
whimsical, arbitrary or despotic manner. However, it has also been said that grave abuse is
committed when “the lower court acted capriciously, and whimsically or the petitioner‟s contention
appears to be clearly tenable or the broader interest of justice or public policy [so] require x x
x.” Also, grave abuse of discretion is committed when the board, tribunal or officer exercising
judicial function fails to consider evidence adduced by the parties.” [49]
In Saballa vs. National Labor Relations Commission, [50] we ruled on how a
decision of an administrative body must be drawn:
“The Court has previously held that judges and arbiters should draw up their decisions and
resolutions with due care, and make certain that they truly and accurately reflect their conclusions
and their final dispositions. x x x The same thing goes for the findings of fact made by the NLRC,
as it is a settled rule that such findings are entitled to great respect and even finality when supported
by substantial evidence; otherwise, they shall be struck down for being whimsical and capricious
and arrived at with grave abuse of discretion. It is a requirement of due process and fair play that
the parties to a litigation be informed of how it was decided, with an explanation of the factual and
legal reasons that led to the conclusions of the court. A decision that does not clearly and distinctly
state the facts and the law of which it is based leaves the parties in the dark as to how it was reached
and is especially prejudicial to the losing party, who is unable to pinpoint the possible errors of the
court for review by a higher tribunal.”
In the present case, the foregoing requirements has been sufficiently
met. Petitioner’s claim of grave abuse of discretion is anchored on the simple

met. Petitioner’s claim of grave abuse of discretion is anchored on the simple
fact that public respondent adopted largely the proposals of private
respondent. It should be understood that bargaining is not equivalent to an
adversarial litigation where rights and obligations are delineated and
remedies applied. It is simply a process of finding a reasonable solution to a
conflict and harmonizing opposite positions into a fair and reasonable
compromise. When parties agree to submit unresolved issues to the
secretary of labor for his resolution, they should not expect their positions to
be adopted in toto. It is understood that they defer to his wisdom and
objectivity in insuring industrial peace. And unless they can clearly
demonstrate bias, arbitrariness, capriciousness or personal hostility on the
part of such public officer, the Court will not interfere or substitute the said
officer’s judgment with its own. In this case, it is possible that this Court, or
some its members at least, may even agree with the wisdom of petitioner’s
claims. But unless grave abuse of discretion is cogently shown, this Court will
refrain from using its extraordinary power of certiorari to strike down decisions
and orders of quasi-judicial officers specially tasked by law to settle
administrative questions and disputes. This is particularly true in the
resolution of controversies in collective bargaining agreements where the
question is rarely one of legal right or wrong – nay, of black and white – but
one of wisdom, cogency and compromise as to what is possible, fair and
reasonable under the circumstances.
WHEREFORE, premises considered, the petition is partly GRANTED. The
assailed Orders are AFFIRMED with the modification that the issue on the
union security clause be REMANDED to the Department of Labor and
Employment for definite resolution within one month from the finality of this
Decision. No costs.
SO ORDERED.
Narvasa, C.J., (Chairman), Romero, Melo and Francisco, JJ., concur.
[1] With National Conciliation and Mediation Board case number NCMB-RBIV-NS-07-088-95.
[2] Rollo, pp. 164-178.
[3] Ibid., p. 178.
[4] Ibid., p. 204.
[5] Ibid., p. 242.
[6] Ibid., pp. 47-48.
[7] Ibid., p. 285.
[8] Ibid., p. 165.
[9] Ibid., p. 166.
[10] Ibid., p. 288; original text in upper case.
[11] Association of Marine Officers and Seamen of Reyes and Lim Co. vs. Laguesma, 239 SCRA
460, 465, December 27, 1994, citing Loadstar Shipping Co., Inc. vs. Gallo, G.R. No. 102845,
February 4, 1994; PAL Employees’ Association vs. Ferrer-Calleja, 162 SCRA 426.
[12] Villanueva, Sr. vs. Leogardo, Jr. 215 SCRA 835, 838, November 20, 1992, citing Special Events
& Central Shipping Office Workers Union vs. San Miguel Corp., 122 SCRA 557.
[13] Madlos vs. National Labor Relations Commission, 254 SCRA 248, 257, March 4, 1996, citing
Section 5, Rule 133, Rules of Court. See Rase vs. NLRC, 237 SCRA 523 (1994).
[14] 253 SCRA 494, 497, February 9, 1996, per Panganiban, J., citing Sajonas vs. NLRC, 183 SCRA
182, March 15, 1990; Special Events & Central Shipping Office Workers Union vs. San Miguel
Corporation, supra, and Yap vs. Inciong, 186 SCRA 664, June 21, 1990.
[15] Ibid., p. 172.
[16] Ibid., p. 202.
[17] Ibid., p. 12.
[18] Ibid., p. 14.
[19] Ibid., pp. 15-16.
[20] Ibid., p. 16.
[21] Ibid., pp. 18-20.
[22] Ibid., p. 290.

[22] Ibid., p. 290.
[23] Ibid., p. 202.
[24] Ibid., pp. 291-292; Comment, pp. 11-12.
[25] Saballa vs. National Labor Relations Commission, 260 SCRA 697, 709, August 22, 1996 per
Panganiban, J. citing Lopez Sugar Corporation vs. Federation of Free Workers, 189 SCRA 179,
190, August 30, 1990.
[26] Comment, pp. 12-13; Rollo, pp. 292-293.
[27] Social Security System vs. SSS Supervisor’s Union, 117 SCRA 746, 749, October 23, 1982,
citing J.P. Heilbronn Co. vs. National Labor Union, 92 Phil. 577 (1953).
[28] Rollo, p. 20.
[29] Ibid., pp. 175-176.
[30] Ibid., p. 25.
[31] ―Article 249. Unfair labor practices of labor organizations. – It shall be unfair labor practice for a
labor organization, its officers, agents or representatives:

(a) To restrain or coerce employees in the exercise of their rights to self-organization. However, a
labor organization shall have the right to prescribe its own rules with respect to the acquisition or
retention of membership;
xxx xxx xxx
[32] Comment, pp. 13-15; Rollo, pp. 293-295.
[33] St. Scholastica’s College vs. Torres, 210 SCRA 565, 571, June 29, 1992.
[34] Rollo, p. 202.
[35] Ibid., pp. 26-29.
[36] Ibid., p. 295.
[37] Ibid., pp. 203-204.
[38] Ibid., p. 36.
[39] Ibid., pp. 36-38.
[40] Ibid., p. 297.
[41] Ibid., p. 203.
[42] Ibid., p. 30; underscoring omitted.
[43] Ibid., pp. 32-33.
[44] Ibid., pp. 297-298.
[45] Ibid., p. 121.
[46] Ibid., p. 136.
[47] Counter-Proposal of Caltex, p. 3; Rollo, p. 130.
[48] Ibid., p. 10; rollo, p. 137.
[49] Philippine Airlines, Inc. vs. Confessor, 231 SCRA 41-42, March 10, 1994, per Nocon, J.
[50] G.R. No. 102472-84, August 22, 1996, per Panganiban, J.
Pasted from <http://sc.judiciary.gov.ph/jurisprudence/1997/sep1997/123782.htm>

Master Iron Labor Union vs. NLRC
12:13 AM

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 92009 February 17, 1993

MASTER IRON LABOR UNION (MILU), WILFREDO ABULENCIA, ROGELIO CABANA, LOPITO
SARANILLA, JESUS MOISES, BASILIO DELA CRUZ, EDGAR ARANES, ELY BORROMEO,
DANIEL BACOLON, MATIAS PAJIMULA, RESTITUTO PAYABYAB, MELCHOR BOSE, TEOFILO
ANTOLIN, ROBERT ASPURIA, JUSTINO BOTOR, ALFREDO FABROS, AGAPITO TABIOS,
BENARDO ALFON, BENIGNO BARCENA, BERNARDO NAVARRO, MOISES LABRADOR,
ERNESTO DELA CRUZ, EDUARDO ESPIRITU, IGNACIO PAGTAMA, BAYANI PEREZ,
SIMPLICIO PUASO, EDWIN VELARDE, BEATO ABOGADO, DANILO SAN ANTONIO, BERMESI
BORROMEO, and JOSE BORROMEO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MASTER IRON WORKS AND
CONSTRUCTION CORPORATION, respondents.
Banzuela, Flores, Mirrales, Rañeses, Sy, Taquio and Associates for petitioners.
Carlos L. Galarrita for private respondent.
MELO, J.:
The petition for certiorari before us seeks to annul and to set aside the decision of the
National Labor Relations Commission (Second Division) dated July 12, 1986 which affirmed that
of Labor Arbiter Fernando V. Cinco declaring illegal the strike staged by petitioners and terminating
the employment of the individual petitioners.
The Master Iron Works Construction Corporation (Corporation for brevity) is a duly organized
corporate entity engaged in steel fabrication and other related business activities. Sometime in
February 1987, the Master IronLabor Union (MILU) entered into a collective barganing agreement
(CBA) with the Corporation for the three-year period between December 1, 1986 and November 30,
1989 (Rollo, p. 7). Pertinent provisions of the CBA state:
Sec. 1. That there shall be no strike and no lockout, stoppage or shutdown of work, or any other
interference with any of the operation of the COMPANY during the term of this AGREEMENT,
unless allowed and permitted by law.
Sec. 2. Service Allowance — The COMPANY agrees to continue the granting of service allowance
of workers assigned to work outside the company plant, in addition to his daily salary, as follows:
(a) For those assigned to work outside the plant within Metro Manila, the service allowance shall be
P12.00;
(b) For those assigned to work outside Metro Manila, the service allowance shall be P25.00/day;
(c) The present practice of conveying to and from jobsites of workers assigned to work outside of the
company plant shall be maintained.
Right after the signing of the CBA, the Corporation subcontracted outside workers to do the usual
jobs done by its regular workers including those done outside of the company plant. As a result, the
regular workers were scheduled by the management to work on a rotation basis allegedly to prevent
financial losses thereby allowing the workers only ten (10) working days a month (Rollo, p. 8). Thus,
MILU requested implementation of the grievance procedure which had also been agreed upon in the
CBA, but the Corporation ignored the request.
Consequently, on April 8, 1987, MILU filed a notice of strike (Rollo,
p. 54) with the Department of Labor and Employment. Upon the intervention of the DOLE, through
one Atty. Bobot Hernandez, the Corporation and MILU reached an agreement whereby the
Corporation acceded to give back the usual work to its regular employees who are members of
MILU (Rollo, p. 55).
Notwithstanding said agreement, the Corporation continued the practice of hiring outside workers.
When the MILU president, Wilfredo Abulencia, insisted in doing his regular work of cutting steel bars
which was being done by casual workers, a supervisor reprimanded him, charged him with
insubordination and suspended him for three (3) days (Rollo, pp. 9 & 51-52). Upon the request of
MILU, Francisco Jose of the DOLE called for conciliation conferences. The Corporation, however,
insisted that the hiring of casual workers was a management prerogative. It later ignored subsequent

insisted that the hiring of casual workers was a management prerogative. It later ignored subsequent
scheduled conciliation conferences (Rollo, pp. 51-52 & 57-58).
Hence, on July 9, 1987, MILU filed a notice of strike on the following grounds: (a) violation of CBA;
(b) discrimination; (c) unreasonable suspension of union officials; and (d) unreasonable refusal to
entertain grievance (Rollo,
p. 9). On July 24, 1987, MILU staged the strike, maintaining picket lines on the road leading to the
Corporation's plant entrance and premises.
At about 11 o'clock in the morning of July 28, 1987, CAPCOM soldiers, who had been summoned by
the Corporation's counsel, came and arrested the picketers. They were brought to Camp Karingal
and, the following day, to the Caloocan City jail. Charges for illegal possession of firearms and
deadly weapons were lodged against them. Later, however, those charges were dismissed for
failure of the arresting CAPCOM soldiers to appear at the investigation (Rollo, p. 10). The dispersal
of the picketlines by the CAPCOM also resulted in the temporary lifting of the strike.
On August 4, 1987, the Corporation filed with the NLRC National Capital Region arbitration branch a
petition to declare the strike illegal (Rollo,
p. 40). On September 7, 1987, MILU, with the assistance of the Alyansa ng Manggagawa sa
Valenzuela (AMVA), re-staged the strike. Consequently, the Corporation filed a petition for injunction
before the NLRC which, on September 24, 1987, issued an order directing the workers to remove
the barricades and other obstructions which prevented ingress to and egress from the company
premises. The workers obliged on October 1, 1987 (Rollo, p. 25). On October 22, 1987, through its
president, MILU offered to return to work in a letter which states:
22 Okt. 1987
Mr. Elieze Hao
Master Iron Works & Construction Corp.
790 Bagbagin, Caloocan City
Dear Sir:
Ang unyon, sa pamamagitan ng nakalagda sa ibaba, ay nagmumungkahi, nagsusuhestiyon o nag-
oofer sa inyong pangasiwaan ng aming kahilingan na bumalik na sa trabaho dahilan din lang sa
kalagayan na tuloy tuloy ang ating pag-uusap para sa ikatitiwasay ng ating relasyon. Gusto naming
manatili ang ating magandang pagtitinginan bilang magkasangga para sa ika-uunlad ng ating
kumpanya. Sana ay unawain niyo kami dahil kailangan namin ng trabaho.
Gumagalang,
(Sgd.)
WILFREDO ABULENCIA
Pangulo
(Rollo, p. 590)
On October 30, 1987, MILU filed a position paper with counter-complaint before the NLRC. In said
counter-complaint, the workers charged the Corporation with unfair labor practice for subcontracting
work that was normally done by its regular workers thereby causing the reduction of the latter's
workdays; illegal suspension of Abulencia without any investigation; discrimination for hiring casual
workers in violation of the CBA, and illegal dispersal of the picket lines by CAPCOM agents (Rollo,
pp. 26-27).
In due course, a decision dated March 16, 1988 was rendered by Labor Arbiter Fernando Cinco
declaring illegal the strike staged by MILU. The dispositive portion of the decision reads:
WHEREFORE, in the light of the foregoing premises, judgment is hereby rendered, as follows:
1. Declaring the strike by the respondents illegal and unlawful;
2. Ordering the cancellation of the registered permit of respondent union MILU for having committed
an illegal strike;
3. Ordering the termination of employment status of the individual respondents, including the
forfeiture of whatever benefits are due them under the law, for having actively participated in an
illegal strike, namely: Wilfredo Abulencia, President; Rogelio Cabana, Vice-President; Lopito
Saranilla, Secretary; Jesus Moises, Treasurer; Basilio dela Cruz, Auditor; as Members of the
Board: Edgar Aranes, Melchor Bose, Restituto Payabyab, Matias Pajimula, Daniel Bacolon, and Ely
Borromeo, as Members of the Union: Teofilo Antolin, Robert Aspuria, Justino Botor, Alfredo Fabros,
Agapito Tabios, Bernardo Alfon, Benigno Barcena, Bernardo Navaro, Moises Labrador, Ernesto dela
Cruz, Eduardo Espiritu, Ignacio Pagtama, Bayani Perez, Simplicio Puaso, Edwin Velarde, Beato
Abogado, Danila San Antonio, Bermes Borromeo and Jose Borromeo.
The respondents as appearing in Annex "A" of the Petition, but not included as among those whose
employment status were not terminated as above-mentioned, are given priority of reinstatement,
without backwages, in the event petitioner starts its normal operations, or shall be paid their
separation pay according to law.
4. Ordering the respondents to cease and desist from further committing the illegal acts complained
of;

of;
5. Ordering Respondent Union to pay the amount of P10,000.00 to Petitioner's Counsel as
attorney's fees;
6. Ordering the dismissal of the claim for damages for lack of merit; and
7. Ordering the dismissal of the counter-complaint in view of the filing of a separate complaint by the
respondents.
SO ORDERED. (pp. 35-36, Rollo.)
On appeal to the NLRC, MILU and the individual officers and workers named in Labor Arbiter
Cinco's decision alleged that said labor arbiter gravely abused his discretion and exhibited bias in
favor of the Corporation in disallowing their request to cross-examine the Corporation's witnesses,
namely, Corporate Secretary Eleazar Hao, worker Daniel Ignacio and foreman Marcial Barcelon,
who all testified on the manner in which the strike was staged and on the coercion and intimidation
allegedly perpetrated by the strikers (Rollo,
p. 151).
The Second Division of the NLRC affirmed with modifications the decision of the labor arbiter. The
decision, which was promulgated on July 12, 1989 with Commissioners Domingo H. Zapanta and
Oscar N. Abella concurring and Commissioner Daniel M. Lucas, Jr. dissenting, disagreed with
the labor arbiter on the "summary execution of the life of Master Iron Labor Union (MILU)" on the
grounds that the Corporation did not specifically pray for the cancellation of MILU's registration and
that pursuant to Articles 239 and 240 of the Labor Code, only the Bureau of Labor Relations may
cancel MILU's license or certificate of registration. It also deleted the award of P10,000.00 as
attorney's fees for lack of sufficient basis but it affirmed the labor arbiter with regard to the
declaration of illegality of the strike and the termination of employment of certain employees and the
rest of the dispositive portion of the labor arbiter's decision (Rollo, pp. 48-49).
In his dissent, Commissioner Lucas stated that he is "for the setting aside of the decision appealed
from, and remanding of the case to the labor arbiter of origin, considering the respondent's
countercharge or complaint for unfair labor practice was not resolved on the merits" (Rollo, p. 49).
MILU filed a motion for the reconsideration but the same was denied by the NLRC for lack of merit in
its Resolution of August 9, 1989 (Rollo, p. 50). Hence, the instant petition. 1
Petitioners contend that notwithstanding the non-strike provision in the CBA, the strike they staged
was legal because the reasons therefor are non-economic in nature. They assert that
the NLRC abused its discretion in holding that there was "failure to exhaust the provision on
grievance procedure" in view of the fact that they themselves sought grievance meetings but the
Corporation ignored such requests. They charge the NLRC with bias in failing to give weight to the
fact that the criminal charges against the individual petitioners were dismissed for failure of the
CAPCOM soldiers to testify while the same individual strikers boldly faced the charges against them.
Lastly, they aver that the NLRC abused its discretion in holding that the workers' offer to return to
work was conditional.
In holding that the strike was illegal, the NLRC relied solely on the no-strike no-lockout provision of
the CBA aforequoted. As this Court has held in Philippine Metal Foundries, Inc. vs. CIR (90 SCRA
135 [1979]), a no-strike clause in a CBA is applicable only to economic strikes. Corollarily, if the
strike is founded on an unfair laborpractice of the employer, a strike declared by the union cannot
be considered a violation of the no-strike clause.
An economic strike is defined as one which is to force wage or other concessions from the employer
which he is not required by law to grant (Consolidated Labor Association of the Philippines vs.
Marsman & Co., Inc., 11 SCRA 589 [1964]). In this case, petitioners enumerated in their notice of
strike the following grounds: violation of the CBA or the Corporation's practice of subcontracting
workers; discrimination; coercion of employees; unreasonable suspension of union officials, and
unreasonable refusal to entertain grievance.
Private respondent contends that petitioner's clamor for the implementation of Section 2, Article VIII
of the CBA on service allowances granted to workers who are assigned outside the company
premises is an economic issue (Rollo, p. 70). On the contrary, petitioners decry the violation of the
CBA, specifically the provision granting them service allowances. Petitioners are not, therefore,
already asking for an economic benefit not already agreed upon, but are merely asking for the
implementation of the same. They aver that the Corporation's practice of hiring subcontractors to do
jobs outside of the company premises was a way "to dodge paying service allowance to the workers"
(Rollo, pp. 61 & 70).
Much more than an economic issue, the said practice of the Corporation was a blatant violation of
the CBA — and unfair labor practice on the part of the employer under Article 248(i) of
the Labor Code. Although the end result, should the Corporation be required to observe the CBA,
may be economic in nature because the workers would then be given their regular working hours
and therefore their just pay, not one of the said grounds is an economic demand within the meaning
of the law on labor strikes. Professor Perfecto Fernandez, in his

of the law on labor strikes. Professor Perfecto Fernandez, in his
book Law on Strikes,Picketing and Lockouts (1981 edition, pp. 144-145), states that an economic
strike involves issues relating to demands for higher wages, higher pension or overtime rates,
pensions, profit sharing, shorter working hours, fewer work days for the same pay, elimination of
night work, lower retirement age, more healthful working conditions, better health services, better
sanitation and more safety appliances. The demands of the petitioners, being covered by the CBA,
are definitely within the power of the Corporation to grant and therefore the strike was not an
economic strike.
The other grounds, i.e., discrimination, unreasonable suspension of union officials and
unreasonable refusal to entertain grievance, had been ventilated before the Labor Arbiter. They are
clearly unfair labor practices as defined in Article 248 of the Labor Code. 2 The subsequent
withdrawal of petitioners' complaint for unfair laborpractice (NLRC-NCR Case No. 00-11-04132-87)
which was granted by Labor Arbiter Ceferina Diosana who also considered the case closed and
terminated (Rollo, pp. 97 & 109) may not, therefore, be considered as having converted their other
grievance into economic demands.
Moreover, petitioners staged the strike only after the Corporation had failed to abide by the
agreement forged between the parties upon the intervention of no less than the DOLE after
the union had complained of the Corporation's unabated subcontracting of workers who performed
the usual work of the regular workers. The Corporation's insistence that the hiring of casual
employees is a management prerogative betrays its attempt to coat with legality the illicit curtailment
of its employees' rights to work under the terms of the contract of employment and to a fair
implementation of the CBA.
While it is true that an employer's exercise of management prerogatives, with or without reason,
does not per seconstitute unjust discrimination, such exercise, if clearly shown to be in grave abuse
of discretion, may be looked into by the courts (National Federation of Labor Unions vs. NLRC, 202
SCRA 346 [1991]). Indeed, the hiring, firing, transfer, demotion, and promotion of employees are
traditionally identified as management prerogatives. However, they are not absolute prerogatives.
They are subject to limitations found in law, a collective bargaining agreement, or general principles
of fair play and justice (University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990] citing Abbott
Laboratories [Phil.], Inc. vs. NLRC, 154 SCRA 713 [1987]). The Corporation's assertion that it was
exercising a management prerogative in hiring outside workers being contrary to the contract of
employment which, of necessity, states the expected wages of the workers, as well as the CBA, is
therefore untenable.
Private respondent's failure to traverse petitioners' allegations that the NLRC abused its discretion in
holding that the provision on grievance procedure had not been exhausted clearly sustains such
allegation and upholds the petitioners' contention that the Corporation refused to undergo said
procedure. It should be remembered that a grievance procedure is part of the continuous process of
collective bargaining (Republic Savings Bank. vs. CIR, et al., 21 SCRA 226 [1967]). It is intended to
promote a friendly dialogue between labor and management as a means of maintaining industrial
peace. The Corporation's refusal to heed petitioners' request to undergo the grievance procedure
clearly demonstrated its lack of intent to abide by the terms of the CBA.
Anent the NLRC's finding that Abulencia's offer to return to work is conditional, even a cursory
reading of the letter aforequoted would reveal that no conditions had been set by petitioners. It is
incongruous to consider as a "condition" the statement therein that the parties would continue talks
for a peaceful working relationship ("tuloy tuloy ang ating pag-uusap sa ikatitiwasay ng ating
relasyon"). Conferences form part of the grievance procedure and their mere mention in Abulencia's
letter did not make the same "conditional".
In the same manner, the following findings of the Labor Arbiter showed the illegal breakup of the
picket lines by the CAPCOM:
d) On 28 July 1987, CAPCOM soldiers, on surveillance mission, arrived at the picket line of
respondents and searches were made on reported deadly weapons and firearms in the possession
of the strikers. Several bladed weapons and firearms in the possession of the strikers were
confiscated by the CAPCOM soldiers, as a result of which, the apprehended strikers were brought to
Camp Tomas Karingal in Quezon City for proper investigation and filing of the appropriate criminal
charges against them. The strikers who were charged of illegal possession of deadly weapon and
firearms were: Edgar Aranes, Wilfredo Abulencia, Ernesto dela Cruz, Beato Abogado, Lopito
Saranilla, Restituto Payabyab, Jose Borromeo and Rogelio Cabana. Criminal informations were filed
by Inquest Fiscal, marked as Exhibits "E", "E-1 to E-8". These strikers were jailed for sometime until
they were ordered release after putting up the required bail bond. Other strikers were also arrested
and brought to Camp Tomas Karingal, and after proper investigation as to their involvement in the
offense charged, they were released for lack of prima facie evidence. They were Edwin Velarde,
Bayani Perez, Daniel Bacolon, Jesus Moises, Robert Aspurias and Benigno Barcena.
After the strikers who were arrested were brought to Camp Tomas Karingal on 28 July 1987, the rest

After the strikers who were arrested were brought to Camp Tomas Karingal on 28 July 1987, the rest
of the strikers removed voluntarily their human and material barricades which were placed and
posted at the road leading to the premises of the Company. (Rollo, p. 32)
The bringing in of CAPCOM soldiers to the peaceful picket lines without any reported outbreak of
violence, was clearly in violation of the following prohibited activity under Article 264 of
the Labor Code:
(d) No public official or employee, including officers and personnel of the New Armed Forces of the
Philippines or the Integrated National Police, or armed person, shall bring in, introduce or escort in
any manner any individual who seeks to replace strikers in entering or leaving the premises of a
strike area, or work in place of the strikers. The police force shall keep out of the picket lines unless
actual violence or other criminal acts occur therein; Provided, That nothing herein shall be
interpreted to prevent any public officer from taking any measure necessary to maintain peace and
order, protect life and property, and/or enforce the law and legal order. (Emphasis supplied.)
As the Labor Arbiter himself found, no pervasive or widespread coercion or violence were
perpetrated by the petitioners as to warrant the presence of the CAPCOM soldiers in the picket lines.
In this regard, worth quoting is the following excerpt of the decision in Shell Oil
Workers' Union vs. Shell Company of the Philippines, Ltd., 39 SCRA 276 [1971], which was decided
by the Court under the old Industrial Peace Act but which excerpt still holds true:
. . . What is clearly within the law is the concerted activity of cessation of work in order that . . .
employer cease and desist from an unfair labor practice. That the law recognizes as a right. There is
though a disapproval of the utilization of force to attain such an objective. For implicit in the very
concept of the legal order is the maintenance of peaceful ways. A strike otherwise valid, if violent in
character, may be placed beyond the pale. Care is to be taken, however, especially where an
unfairlabor practice is involved, to avoid stamping it with illegality just because it is tainted with such
acts. To avoid rendering illusory the recognition of the right to strike, responsibility in such a case
should be individual and not collective. A different conclusion would be called for, of course, if the
existence of force while the strike lasts is pervasive and widespread, consistently and deliberately
resorted to as a matter of policy. It could be reasonably concluded then that even if justified as to
ends, it becomes illegal because of the means employed. (at p. 292.)
All told, the strike staged by the petitioners was a legal one even though it may have been called to
offset what the strikers believed in good faith to be unfair labor practices on the part of the employer
(Ferrer, et al. vs. Court of Industrial Relations, et al., 17 SCRA 352 [1966]). Verily, such presumption
of legality prevails even if the allegations of unfair labor practices are subsequently found out to be
untrue (People's Industrial and Commercial Employees and Workers Org. [FFW] vs. People's
Industrial and Commercial Corporation, 112 SCRA 440 [1982]). Consonant with these jurisprudential
pronouncements, is Article 263 of the Labor Code which clearly states "the policy of the State to
encourage free trade unionism and free collective bargaining". Paragraph (b) of the same article
guarantees the workers' "right to engage in concerted activities for purposes of collective bargaining
or for their mutual benefit and protection" and recognizes the "right of legitimate labor organizations
to strike and picket and of employers to lockout" so long as these actions are "consistent with the
national interest" and the grounds therefor do not involve inter-union and intra-union disputes.
The strike being legal, the NLRC gravely abused its discretion in terminating the employment of the
individual petitioners, who, by operation of law, are entitled to reinstatement with three years
backwages. Republic Act No. 6715 which amended Art. 279 of the Labor Code by giving "full
backwages inclusive of allowances" to reinstated employees, took effect fifteen days from the
publication of the law on March 21, 1989. The decision of the LaborArbiter having been promulgated
on March 16, 1988, the law is not applicable in this case.
WHEREFORE, the questioned decision and resolution of the NLRC as well as the decision of
the Labor Arbiter are hereby SET ASIDE and the individual petitioners are reinstated to their
positions, with three years backwages and without loss of seniority rights and other privileges.
Further, respondent corporation is ordered to desist from subcontracting work usually performed by
its regular workers.
SO ORDERED.
Feliciano, Bidin, Davide, Jr. and Romero, JJ., concur.
Gutierrez, Jr., J., is on leave.
# Footnotes
1 The Solicitor General at first refused to file a comment on the petition in view of his stand which is
contrary to that of the NLRC (Rollo, p. 81). Hence, the NLRC itself was directed to file comment on
the petition in the Resolution of June 20, 1990 (Rollo, p. 83). The NLRC's Legal Division filed two
motions for extension of time to file comment (Rollo, pp. 86 & 90). However, in the Resolution of
November 14, 1990 (Rollo, p. 110), the Court noted the private respondent's manifestation and
motion "pending filing of comment by the Solicitor General on the petition." The NLRC Legal Division

motion "pending filing of comment by the Solicitor General on the petition." The NLRC Legal Division
having failed to file comment within the extended period to file the same, in the Resolution of
December 10, 1990, the Court dispensed with the filing of the NLRC's comment. On December 14,
1990, the Solicitor General, taking note of the Resolution of November 14, 1990, requested a new
period within which to file comment for the NLRC. On January 21, 1991, he filed said comment
praying that the NLRC decision be set aside and instead judgment be rendered directing the
reinstatement of the individual petitioners with backwages and without loss of seniority rights and
other employment privileges and enjoining the private respondent from subcontracting work regularly
within the functions of petitioners (Rollo, p. 122).
2 Art. 248. Unfair labor practices of employers. — It shall be unlawful for an employer to commit any
of the following unfair labor practice:
(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization;
(b) To require as a condition of employment that a person or an employee shall not join
a labororganization or shall withdraw from one to which he belongs;
(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 right to self-organization;
(d) To initiate, dominate, assist or otherwise interfere with the formation or administration of
any labororganization, including the giving of financial or other support to it or its organizations or
supporters;
(e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment
in order to encourage or discourage membership in any labor organization. Nothing in this Code or
in any other law shall stop the parties from requiring membership in a recognized collective
bargaining agent as a condition of employment, except those employees who are already members
of anotherunion at the time of the signing of the collective bargaining agreement. Employees of an
appropriate collective bargaining agent may be assessed a reasonable fee equivalent to the dues
and other fees paid by members of the recognized collective bargaining agent, if such non-
union members accept the benefits under the collective agreement: Provided, that the individual
authorization required under Article 242, paragraph (o) of this Code shall not apply to the non-
members of the recognized collective bargaining agent;
(f) To dismiss, discharge, or otherwise prejudice or discriminate against an employee for having
given or being about to give testimony under this Code;
(g) To violate the duty to bargain collectively as prescribed by this Code;
(h) To pay negotiation or attorney's fees to the union or its officers or agents as part of the
settlement of any issue in collective bargaining or any other dispute; or
(i) To violate a collective bargaining agreement.
The provisions of the preceding paragraph notwithstanding, only the officers and agents of
corporations, associations or partnerships who have actually participated in, authorized or ratified
under unfair labor practices shall be held criminally liable.
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PAL v. Santos (1993)
12:15 AM
G.R. No. 77875 February 4, 1993

PHILIPPINE AIRLINES, INC., petitioner,
vs.
ALBERTO SANTOS, JR., HOUDIEL MAGADIA, GILBERT ANTONIO, REGINO DURAN,
PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION, and THE NATIONAL LABOR RELATIONS
COMMISSION, respondents.
Fortunato Gupit, Jr., Solon R. Garcia, Rene B. Gorospe, Bienvinodo T. Jamoralin, jr. and Paulino D.
Ungos, Jr. for petitioner.
Adolpho M. Guerzon for private respondents.
REGALADO, J.:
The instant petition for certiorari seeks to set aside the decision of The National Labor Relations
Commission (NLRC) in NLRC Case No. 4-1206-85, promulgated on December 11,
1986, 1 containing the following disposition:
WHEREFORE, in view of the foregoing consideration, the Decision appealed from is set aside and
another one entered, declaring the suspension of complainants to be illegal and consequently,
respondent PAL is directed to pay complainants their salaries corresponding to the respective period(s) of
their suspension, and to delete the disciplinary action from complainants' service records. 2
These material facts recited in the basic petition are virtually undisputed and we reproduce the same
hereunder:
1. Individual respondents are all Port Stewards of Catering Sub-Department, Passenger Services
Department of petitioner. Their duties and responsibilities, among others, are:
Prepares meal orders and checklists, setting up standard equipment in accordance with the
requirements of the type of service for each flight; skiing, binning, and inventorying of Commissary
supplies and equipment.
2. On various occasions, several deductions were made from their salary. The deductions
represented losses of inventoried items charged to them for mishandling of company properties . . .
which respondents resented. Such that on August 21, 1984, individual respondents, represented by
the union, made a formal notice regarding the deductions to petitioner thru Mr. Reynaldo Abad,
Manager for Catering. . . .
3. As there was no action taken on said representation, private respondents filed a formal grievance
on November 4, 1984 pursuant to the grievance machinery Step 1 of the Collective Bargaining
Agreement between petitioner and the union. . . . The topics which the union wanted to be discussed
in the said grievance were the illegal/questionable salary deductions and inventory of bonded goods
and merchandise being done by catering service personnel which they believed should not be their
duty.
4. The said grievance was submitted on November 21, 1984 to the office of Mr. Reynaldo Abad,
Manager for Catering, who at the time was on vacation leave. . . .
5. Subsequently, the grievants (individual respondents) thru the shop steward wrote a letter on
December 5, 1984 addressed to the office of Mr. Abad, who was still on leave at the time, that
inasmuch as no reply was made to their grievance which "was duly received by your secretary" and
considering that petitioner had only five days to resolve the grievance as provided for in the CBA,
said grievance as believed by them (private respondents) was deemed resolved in their favor. . . .
6. Upon Mr. Abad's return on December 7, 1984, he immediately informed the grievants and
scheduled a meeting on December 12, 1984. . . .
7. Thereafter, the individual respondents refused to conduct inventory works. Alberto Santos, Jr. did
not conduct ramp inventory on December 7, 10 and 12. Gilbert Antonio did not conduct ramp
inventory on December 10. In like manner, Regino Duran and Houdiel Magadia did not conduct the
same on December 10 and 12.
8. At the grievance meeting which was attended by some union representatives, Mr. Abad resolved
the grievance by denying the petition of individual respondents and adopted the position that
inventory of bonded goods is part of their duty as catering service personnel, and as for the salary
deductions for losses, he rationalized:
1. It was only proper that employees are charged for the amount due to mishandling of company
property which resulted to losses. However, loss may be cost price 1/10 selling price.
9. As there was no ramp inventory conducted on the mentioned dates, Mr. Abad, on January 3,

1985 wrote by an inter-office memorandum addressed to the grievants, individual respondents
herein, for them to explain on (sic) why no disciplinary action should be taken against them for not
conducting ramp inventory. . . .
10. The directive was complied with . . . . The reason for not conducting ramp inventory was put forth
as:
4. Since the grievance step 1 was not decided and no action was done by your office within 5 days
from November 21, 1984, per provision of the PAL-PALEA CBA, Art. IV, Sec. 2, the grievance is
deemed resolved in PALEA's favor.
11. Going over the explanation, Mr. Abad found the same unsatisfactory. Thus, a penalty of suspension
ranging from 7 days to 30 days were (sic) imposed depending on the number of infractions committed. *
12. After the penalty of suspension was meted down, PALEA filed another grievance asking for
lifting of, or at least, holding in abeyance the execution of said penalty. The said grievance was
forthwith denied but the penalty of suspension with respect to respondent Ramos was modified,
such that his suspension which was originally from January 15, 1985 to April 5, 1985 was shortened
by one month and was lifted on March 5, 1985. The union, however, made a demand for the
reimbursement of the salaries of individual respondents during the period of their suspension.
13. Petitioner stood pat (o)n the validity of the suspensions. Hence, a complaint for illegal suspension was
filed before the
Arbitration Branch of the Commission, . . . Labor Arbiter Ceferina J. Diosana, on March 17, 1986, ruled in
favor of petitioner by dismissing the complaint. . . . 3
Private respondents appealed the decision of the labor arbiter to respondent commission which
rendered the aforequoted decision setting aside the labor arbiter's order of dismissal. Petitioner's
motion for reconsideration having been denied, it interposed the present petition.
The Court is accordingly called upon to resolve the issue of whether or not public respondent NLRC
acted with grave abuse of discretion amounting to lack of jurisdiction in rendering the
aforementioned decision.
Evidently basic and firmly settled is the rule that judicial review by this Court in labor cases does not
go so far as to evaluate the sufficiency of the evidence upon which the labor officer or office based
his or its determination, but is limited to issues of jurisdiction and grave abuse of discretion. 4 It has
not been shown that respondent NLRC has unlawfully neglected the performance of an act which
the law specifically enjoins it to perform as a duty or has otherwise unlawfully excluded petitioner
from the exercise of a right to which it is entitled.
The instant case hinges on the interpretation of Section 2, Article IV of the PAL-PALEA Collective
Bargaining Agreement, (hereinafter, CBA), to wit:
Sec. 2 — Processing of Grievances
xxx xxx xxx
STEP 1 — Any employee who believes that he has a justifiable grievance shall take the matter up with
his shop steward. If the shop steward feels there is justification for taking the matter up with the
Company, he shall record the grievance on the grievance form heretofore agreed upon by the parties.
Two (2) copies of the grievance form properly filled, accepted, and signed shall then be presented to and
discussed by the shop steward with the division head. The division head shall answer the grievance
within five (5) days from the date of presentation by inserting his decision on the grievance form, signing
and dating same, and returning one copy to the shop steward. If the division head fails to act within the
five (5)-day regl(e)mentary period, the grievance must be resolved in favor of the aggrieved party. If the
division head's decision is not appealed to Step II, the grievance shall be considered settled on the basis
of the decision made, and shall not be eligible for further appeal. 5 (Emphasis ours.)
Petitioner submits that since the grievance machinery was established for both labor and
management as a vehicle to thresh out whatever problems may arise in the course of their
relationship, every employee is duty bound to present the matter before management and give the
latter an opportunity to impose whatever corrective measure is possible. Under normal
circumstances, an employee should not preempt the resolution of his grievance; rather, he has the
duty to observe the status quo. 6
Citing Section 1, Article IV of the CBA, petitioner further argues that respondent employees have the
obligation, just as management has, to settle all labor disputes through friendly negotiations. Thus,
Section 2 of the CBA should not be narrowly interpreted. 7 Before the prescriptive period of five days
begins to run, two concurrent requirements must be met, i.e., presentment of the grievance and
its discussion between the shop steward and the division head who in this case is Mr. Abad. Section
2 is not self-executing; the mere filing of the grievance does not trigger the tolling of the prescriptive
period. 8
Petitioner has sorely missed the point.
It is a fact that the sympathy of the Court is on the side of the laboring classes, not only because the
Constitution imposes such sympathy, but because of the one-sided relation between labor and
capital. 9 The constitutional mandate for the promotion of labor is as explicit as it is demanding. The
purpose is to place the workingman on an equal plane with management — with all its power and

purpose is to place the workingman on an equal plane with management — with all its power and
influence — in negotiating for the advancement of his interests and the defense of his rights. 10 Under
the policy of social justice, the law bends over backward to accommodate the interests of the
working class on the humane justification that those with less privileges in life should have more
privileges in law. 11
It is clear that the grievance was filed with Mr. Abad's secretary during his absence. 12 Under Section
2 of the CBA aforequoted, the division head shall act on the grievance within five (5) days from the
date of presentation thereof, otherwise "the grievance must be resolved in favor of the aggrieved
party." It is not disputed that the grievants knew that division head Reynaldo Abad was then "on
leave" when they filed their grievance which was received by Abad's secretary. 13 This knowledge,
however, should not prevent the application of the CBA.
On this score, respondent NLRC aptly ruled:
. . . Based on the facts heretofore narrated, division head Reynaldo Abad had to act on the grievance of
complainants within five days from 21 November 1984. Therefore, when Reynaldo Abad, failed to act
within the reglementary period, complainants, believing in good faith that the effect of the CBA had
already set in, cannot be blamed if they did not conduct ramp inventory for the days thereafter. In this
regard, respondent PAL argued that Reynaldo Abad was on leave at the time the grievance was
presented. This, however, is of no moment, for it is hard to believe that everything under Abad's authority
would have to stand still during his absence from office. To be sure, it is to be expected that someone has
to be left to attend to Abad's duties. Of course, this may be a product of inadvertence on the part of PAL
management, but certainly, complainants should not be made to suffer the consequences. 14
Contrary to petitioner's submission, 15 the grievance of employees is not a matter which requires the
personal act of Mr. Abad and thus could not be delegated. Petitioner could at least have assigned an
officer-in-charge to look into the grievance and possibly make his recommendation to Mr. Abad. It is
of no moment that Mr. Abad immediately looked into the grievance upon returning to work, for it
must be remembered that the grievants are workingmen who suffered salary deductions and who
rely so much on their meager income for their daily subsistence and survival. Besides, it is
noteworthy that when these employees first presented their complaint on August 21, 1984, petitioner
failed to act on it. It was only after a formal grievance was filed and after Mr. Abad returned to work
on December 7, 1984 that petitioner decided to turn an ear to their plaints.
As respondent NLRC has pointed out, Abad's failure to act on the matter may have been due to
petitioner's inadvertence, 16 but it is clearly too much of an injustice if the employees be made to bear
the dire effects thereof. Much as the latter were willing to discuss their grievance with their employer,
the latter closed the door to this possibility by not assigning someone else to look into the matter
during Abad's absence. Thus, private respondents should not be faulted for believing that the effects
of the CBA in their favor had already stepped into the controversy.
If the Court were to follow petitioner's line of reasoning, it would be easy for management to delay
the resolution of labor problems, the complaints of the workers in particular, and hide under the cloak
of its officers being "on leave" to avoid being caught by the 5-day deadline under the CBA. If this
should be allowed, the workingmen will suffer great injustice for they will necessarily be at the mercy
of their employer. That could not have been the intendment of the pertinent provision of the CBA,
much less the benevolent policy underlying our labor laws.
ACCORDINGLY, on the foregoing premises, the instant petition is hereby DENIED and the assailed
decision of respondent National Labor Relations Commission is AFFIRMED. This judgment is
immediately executory.
SO ORDERED.
Narvasa, C.J., Feliciano, Nocon and Campos, Jr., JJ., concur.
# Footnotes
1 Per Presiding Commissioner Edna Bonto-Perez and Commissioners Daniel M. Lucas, Jr. and
Mirasol V. Corleto.
2 Original Record, 119.
* Private respondents were meted the penalty of suspension without pay as follows: Alberto Santos,
Jr., from January 15 to April 5, 1985 (Exh. H, Original Record, 45); Regino Duran, from January 15
to February 4, 1985 (Exh. I, ibid., 46); Gilbert Antonio, from January 15 to 21, 1985 (Exh. J, ibid.,
47); and Houdiel Magadia, from January 15 to February 4, 1985 (Exh. K, ibid., 48).
3 Petition, 2-5; Rollo, 3-6.
4 Pan Pacific Industrial Sales, Inc. vs. NLRC, et al., 194 SCRA 633 (1991).
5 Exhibit S; Original Record, 57.
6 Petition, 8; Rollo, 9.
7 Ibid., 8-9; Rollo, 9-10.
8 Ibid., 9, Rollo, 10.
9 Reliance Surety and Insurance Co., Inc. vs. NLRC, et al., 193 SCRA 365 (1991).

9 Reliance Surety and Insurance Co., Inc. vs. NLRC, et al., 193 SCRA 365 (1991).
10 Dagupan Bus Company, Inc. vs. NLRC, et al., 191 SCRA 328 (1990).
11 Ditan vs. POEA, et al., 191 SCRA 823 (1990).
12 Exhibit E; Original Record, 42.
14 Ibid., 118-119.
15 Petition, 9-10; Rollo, 10-11.
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SMC vs. NLRC (1999)

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 99266 March 2, 1999

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

Step 3. — If no satisfactory adjustment is arrived at Step 2, the employee may appeal
the Decision to the Conciliation Board as provided under Section 6 hereof, within fifteen
(15) working days from the date of receipt of the decision of the Plant Manager/Director
or his designate. Otherwise, the decision in Step 2 shall be deemed accepted by the
employee.
The Conciliation Board shall meet on the grievance in such dates as shall be designated
by the Division/Business Unit Manager or his representative. In every Division/Business
Unit, Grievance Meetings of the Conciliation Board shall be scheduled at least once a
month.
The Conciliation Board shall have fifteen (15) working days from the date of submission
of the grievance for resolution within which to decide on the grievance.
Sec. 6. Conciliation Board. — There shall be a conciliation Board per Business Unit or
Division. Every Conciliation Board shall be composed of not more than five (5)
representatives each from the Company and the Union. Management and the Union
may be assisted by their respective legal counsels.
In every Division/Business Unit, the names of the Company and Union representatives
to the Conciliation Board shall be submitted to the Division/Business Unit Manager not
later than January of every year. The Conciliation Board members shall act as such for
one (1) year until removed by the Company or the Union, as the case may be.
xxx xxx xxx
Sec. 8. Submission to Arbitration. — If the employee or Union is not satisfied with the
Decision of the Conciliation Board and desires to submit the grievance to arbitration, the
employee or the Union shall serve notice of such intention to the Company within fifteen (15)
working days after receipt of the Board's decision. If no such written notice is received by the
Company within fifteen (15) working days, the grievance shall be considered settled on the
basis of the company's position and shall no longer be available for arbitration. 4
During the grievance proceedings, however, most of the employees were redeployed,
while others accepted early retirement. As a result only 17 employees remained when
the parties proceeded to the third level (Step 3) of the grievance procedure. In a meeting
on October 26, 1990, petitioner informed private respondent union that if by October 30,
1990, the remaining 17 employees could not yet be redeployed, their services would be
terminated on November 2, 1990. The said meeting adjourned when Mr. Daniel S. L.
Borbon II, a representative of the union, declared that there was nothing more to discuss
in view of the deadlock. 5
On November 7, 1990, the private respondent filed with the National Conciliation and
Mediation Board (NCMB) of the Department of Labor and Employment (DOLE) a notice
of strike on the following grounds: a) bargaining deadlock; b) union busting; c) gross
violation of the Collective Bargaining Agreement (CBA), such as non-compliance with
the grievance procedure; d) failure to provide private respondent with a list of vacant
positions pursuant to the parties side agreement that was appended to the 1990 CBA;
and e) defiance of voluntary arbitration award. Petitioner on the other hand, moved to
dismiss the notice of strike but the NCMB failed to act on the motion.
On December 21, 1990, petitioner SMC filed a complaint 6 with the respondent NLRC,
praying for: (1) the dismissal the notice of strike; (2) an order compelling the respondent
union to submit to grievance and arbitration the issue listed in the notice of strike; (3) the
recovery of the expenses of litigation.
On April 16, 1991, respondent NLRC came out with a minute resolution dismissing the
complaint; holding, thus:
NLRC NCR IC NO. 000094-90, entitled San Miguel Corporation, Complainant -versus- San
Miguel Employees Union-PTWO (SMCEU), Respondent. — Considering the allegations in
the complaint to restrain Respondent Union from declaring a strike and to enforce mutual
compliance with the provisions of the collective bargaining agreement on grievance
machinery, and the no-strike clause, with prayer for issuance of temporary restraining order,
and the evidence adduced therein, the Answer filed by the respondent and the memorandum
filed by the complainant in support of its application for the issuance of an injunction, the
Second Division, after due deliberation, Resolved to dismiss the complaint for lack of merit. 7
Aggrieved by the said resolution, petitioner found its way to this court via the present
petition, contending that:
I
IT IS THE POSITIVE LEGAL DUTY OR RESPONDENT NLRC TO COMPEL
ARBITRATION AND TO ENJOIN A STRIKE IN VIOLATION OF A NO STRIKE
CLAUSE.
II

II
INJUNCTION IS THE ONLY IMMEDIATE, EFFECTIVE SUBSTITUTE FOR THE
8
DISASTROUS ECONOMIC WARFARE THAT ARBITRATION IS DESIGNED TO AVOID.
On June 3, 1991, to preserve the status quo, the Court issued a Resolution 9 granting
petitioners prayer for the issuance of a Temporary Restraining Order.
The Petition is impressed with merit.
Rule XXII, Section I, of the Rules and Regulations Implementing Book V the Labor
Code 10, reads:
Sec.1. Grounds for strike and lockout. — A strike or lockout may be declared in cases of
bargaining deadlocks and unfair labor practices. Violations of the collective bargaining
agreements, except flagrant and/or malicious refusal to comply with its economic
provisions, shall not be considered unfair labor practice and shall not be strikeable. No
strike or lockout may be declared on grounds involving inter-union and intra-union
disputes or on issues brought to voluntary, or compulsory, arbitration.
In the case under consideration, the grounds relied upon by the private respondent
union are non-strikeable. The issues which may lend substance to the notice of strike
filed by the private respondent union are: collective bargaining deadlock and petitioner's
alleged violation of the collective bargaining agreement. These grounds, however,
appear more illusory than real.
Collective Bargaining Deadlock is defined as "the situation between the labor and the
management of the company where there is failure in the collective bargaining
negotiations resulting in a stalemate" 11 This situation, is non-existent in the present case
since there is a Board assigned on the third level (Step 3) of the grievance machinery to
resolve the conflicting views of the parties. Instead of asking the Conciliation Board
composed of five representatives each from the company and the union, to decide the
conflict, petitioner declared a deadlock, and thereafter, filed a notice of strike. For failing
to exhaust all the steps in the grievance machinery and arbitration proceedings provided
in the Collective Bargaining Agreement, the notice of strike should have been dismissed
by the NLRC and private respondent union ordered to proceed with the grievance and
arbitration proceedings. In the case of Liberal Labor Union vs. Phil. Can
Co. 12, the court declared as illegal the strike staged by the union for not complying with
the grievance procedure provided in the collective bargaining agreement, ruling that:
. . . the main purpose of the parties in adopting a procedure in the settlement of their disputes
is to prevent a strike. This procedure must be followed in its entirety if it is to achieve its
objective. . . . strikes held in violation of the terms contained in the collective bargaining
agreement are illegal, specially when they provide for conclusive arbitration clauses. These
agreements must be strictly adhered to and respected if their ends have to be
achieved. . . . 13
As regards the alleged violation of the CBA, we hold that such a violation is chargeable
against the private respondent union. In abandoning the grievance proceedings and
stubbornly refusing to avail of the remedies under the CBA. private respondent violated
the mandatory provisions of the collective bargaining agreement.
Abolition of departments or positions in the company is one of the recognized
management prerogatives. 14Noteworthy is the fact that the private respondent does not
question the validity of the business move of petitioner. In the absence of proof that the
act of petitioner was ill-motivated, it is presumed that petitioner San Miguel Corporation
acted in good faith. In fact, petitioner acceded to the demands of the private respondent
union by redeploying most of the employees involved; such that from an original 17
excess employees in BLD, 15 were successfully redeployed. In AOC, out of the 17
original excess, 15 were redeployed. In the Magnolia — Manila Buying Station, out of 18
employees, 6 were redeployed and only 12 were terminated. 15
So also, in filing complaint with the NLRC, petitioner prayed that the private respondent
union be compelled to proceed with the grievance and arbitration proceedings. Petitioner
having evinced its willingness to negotiate the fate of the remaining employees affected,
there is no ground to sustain the notice of strike of the private respondent union.
All things studiedly considered. we are of the ineluctable conclusion, and so hold, that
the NLRC gravely abused its discretion in dismissing the complaint of Petitioner SMC for
the dismissal of the notice of strike, issuance of a temporary restraining order, and an
order compelling the respondent union to settle the dispute under the grievance
machinery of their CBA..
WHEREFORE, the instant petition is hereby GRANTED. Petitioner San Miguel
Corporation and private respondent San Miguel Corporation Employees Union —

Corporation and private respondent San Miguel Corporation Employees Union —
PTGWO are hereby directed to complete the third level (Step 3) of the Grievance
Procedure and proceed with the Arbitration proceedings if necessary. No
pronouncement as to costs.
SO ORDERED.
Romero and Gonzaga-Reyes, JJ., concur.
Vitug, J., abroad on official business.
Panganiban, J., is on leave.
Footnotes
1 Dated April 16, 1991; Rollo, pp. 183-184.
2 Annex: "A" of Petition.
3 Complaint Annex "F", Rollo, p. 53.
4 Annex "A", Petition; Collective Bargaining Agreement, pp.18-19.
5 Annex "B-3", Petition, Rollo, p. 31.
6 Annex "F", Petition, Rollo, pp. 48-65.
7 Annex "J"; Petition; Rollo, p. 183.
8 Rollo, p. 14.
9 Rollo, p. 185.
10 As amended by D.O. No 09 which took effect on June 21, 1997.
11 Tayag & P.F. Jardiniano, Dictionary of Philippine Labor Terms. p. 36.
12 91 Phil. 72.
13 Id. p. 77-78. citing; Shop N. Save vs. Retail Food Clerks Union (1940) Cal. Super. Ct.
CCT. Tab. Case 91-18675; 2 A.L.R. Ann., 2nd Series, pp. 1278-1282.
14 Dangan vs. NLRC et al., 127 SCRA 706, p. 713.
15 Complaint; Annex "A"; Rollo, p. 54.

Seno v. Mendoza (1967)
12:20 AM
G.R. No. L-20565 November 29, 1967

JANUARIO T. SENO, ET AL., petitioners,
vs.
THE HONORABLE JUDGE JOSE M. MENDOZA of the Court of First Instance of Cebu and
CARLOS A. GO THONG & CO., respondents.
Mendoza and Seno for petitioners.
Norberto J. Quisumbing for respondents.
MAKALINTAL, J.:
This is an original action in certiorari and prohibition with preliminary injunction brought by the above-
named petitioners against the Honorable Jose M. Mendoza, presiding Judge of the Court of First
Instance of Cebu, and Carlos A. Go Thong and Company.
It appears that petitioners other than Januario T. Seno, who is their counsel, were members of the
United Seamen's Union of the Philippines. Pursuant to a letter-request of the Union stating that they
"had ceased to be members in good standing" and citing a closed shop clause in its bargaining
agreement1 with respondent Carlos A. Go Thong & Co., the latter dismissed said petitioners.
Through counsel, petitioners requested that they be reinstated to their former positions and paid
their backwages, otherwise they would picket respondent's offices and vessels. The request was
denied on the ground that the dismissal was unavoidable under the terms of the collective
bargaining agreement. Conciliation conferences in Regional Office of the Department of Labor in
Cebu City failed to resolve the dispute, and on the morning of November 7, 1962 petitioners,
together with their sympathizers, picketed the vessels of respondent Carlos A. Go Thong & Co. On
the same day petitioners filed a charge of unfair labor practice against the company and the United
Seamen's Union of the Philippines before the Special Prosecutor of the Court of Industrial Relations,
Cebu Branch, which charge was docketed as Case No. 322-ULP-Cebu.
On November 8, 1962 the company filed a complaint (Civil Case No. R-7743) against the United
Seamen's Union of the Philippines and petitioners herein in the Court of First Instance of Cebu City,
with the following prayer for relief:
(a) Ordering the defendants jointly and severally, to pay the plaintiff the amount of TEN THOUSAND
PESOS (P10,000.00) and such additional amounts representing actual damages which may be
proven during the trial of this case including attorney's fees occasioned to the plaintiff by reason of
the illegal acts of the defendants.
(b) Ordering the defendants, their agents, and all persons acting on their behalf to forever refrain
from molesting plaintiff's employees of its vessels, all actual and prospective passengers of its
vessels, all actual and prospective shippers of its vessels, and all persons engaged in loading and
unloading cargoes of plaintiff's vessels, and after trial to make said injuction permanent.
(c) That pending the final termination of this case a writ of preliminary injunction be issued to all the
defendants ordering them and all their agents and persons acting in their behalf to refrain from
molesting, disturbing, or in any manner whatsoever hindering the free movements of all the
employees of plaintiff's vessels, all actual and prospective pasengers of plaintiff vessels, all actual
and prospective shippers of plaintiff's vessels, and all persons engaged in the loading and unloading
of cargoes of plaintiff's vessels.
(d) That plaintiff be exempted from complying with that provisions of paragraph 1 of Article II of
Annex "A" to the effect that the company hire all unlicensed members of the crew needed for the
service through the hiring office of the union (USUP).
(e) That the defendants be ordered to pay the costs of this action.
Plaintiff further prays for such other reliefs which may be just, legal and equitable in view of the
premises.
On the same day, petitioners through counsel appeared before respondent Judge and opposed the
issuance of the writ of preliminary injunction on the ground of lack of jurisdiction, alleging that the
case involved a labor dispute and that a charge of unfair labor practice had already been filed with
the Court of Industrial Relations. They also requested that they be given until the next day,
November 9, 1962, to file a memorandum of the matter, with citations of authorities. However, on
that same day respondent judge issued an order directing the issuance of a writ of preliminary
injunction, which reads:
After hearing the arguments of all the parties, the Court is of the opinion and so holds that for the
interest of all parties concerned and in order to maintain a status quo during the pendency of this
action, a writ of preliminary injunction issue upon the filing of the plaintiff of a bond of P5,000.00,

action, a writ of preliminary injunction issue upon the filing of the plaintiff of a bond of P5,000.00,
which maybe increased or decreased as circumstances may afterward warrant duly approved by this
Honorable Court, directing all the defendants United Seamen's Union of the Philippines, Atty.
Januario T. Seno, and all the other defendants in this case, and all persons, agents and
sympathizers to refrain from molesting, disturbing, or in any manner whatsoever hindering the free
movements of all the employees of plaintiff's vessels, all actual and prospective shippers of plaintiff's
vessels, and all persons engaged in the loading and unloading of cargoes of plaintiff's vessels.
Let this case be called again for tomorrow, November 9, 1962, at 8:00 o'clock in the morning, to give
the defendants another opportunity to show cause if any, why the aforementioned writ of preliminary
injunction should be dissolved.
On November 9, 1962 petitioners moved to reconsider, but the motion was denied on November 13,
1962.
Petitioners have come to us contesting the jurisdiction of the lower court in taking cognizance of the
case (Civil Case No. R-7743). Pursuant to one of the prayers in the petition we issued a writ of
preliminary injunction on December 2, 1962, ordering respondent Judge to desist from further
proceeding in the case and from enforcing the injunction he had issued.
In support of the contention that the Industrial Court and not the Court of First Instance has exclusive
jurisdiction over the matters involved in Civil Case No. R-7743 petitioners claim: (1) that a labor
dispute exists and (2) that their dismissal consitutes an unfair labor practice, being an act of
discrimination in regard to hire or tenure of employment.
There is no question that a labor dispute arose when petitioners were dismissed from their
employment. Under Section 2(j) of Republic Act 875 a question involving tenure of employment is
included in the term "labor dispute."
The main issue, however, is whether such dismissal constitutes an unfair labor practice so as to
bring the case under the jurisdiction of the Industrial Court. Sustaining the affirmative of the issue,
petitioners contend that the closed shop agreement between the United Seamen's Union of the
Philippines and respondent company, on the strength of which petitioners were dismissed, is null
and void for being violative of Sections 4(a) (1) and 4(a) (4), of Republic Act 875, inasmuch as the
matter of union representation of the employees was still pending before the Court of Industrial
Relations at the time said closed shop agreement was executed.
The following facts are pertinent to the resolution of the issue: On October 4, 1957 respondent
company entered into a collective bargaining agreement with the United Seamen's Union of the
Philippines, effective for a period of two (2) years, and thereafter for another period of one (1) year
unless either party should notify the other in writing, not less than sixty (60) days prior to the expiry
date, of its intention and election to terminate the agreement as of the end of the current term.
On July 18, 1959 said collective bargaining agreement was extended for another period of two (2)
years, counted from October 4, 1959.
On October 6 and 31, 1959 the Philippine Labor Federation and the General Maritime Stevedores
Union of the Philippines filed separate petitions for certification election with the Court of Industrial
Relations, to which the United Seamen's Union of the Philippines presented an opposition. On
January 17, 1961 respondent company and the United Seamen's Union of the Philippines renewed
their collective bargaining agreement, with additional conditions for a period of five (5) years counted
from its execution.2
We agree with respondent company that the pendency of the petitions for certification election did
not bar or preclude the renewal of the collective bargaining agreement with the United Seamen's
Union of the Philippines.3Otherwise there would be a gap or interregnum during which no agreement
would govern, that is, from the time the old collective bargaining contract expired to the time the
petition for certification election is decided and a new agreement entered into with the Union that
may be duly certified as the proper bargaining unit. Without any agreement to govern the relations
between labor and management in the interim, the situation would well be productive of confusion
and result in breaches of the law by either party (Victorias Milling Co. vs. Victorias-Manapla Workers
Organization vs. Court of Industrial Relations and Free Visayan Workers, Nos. L-18467 & L-18470,
Sept. 30, 1963). The question may be asked: What would be the effect on the renewed bargaining
agreement if a union other than the one that executed it should be certified? In a similar case it has
been held that the union thus certified would have to respect the contract, but that it may bargain
with the management to shorten the life of the contract if it is too long (General Maritime Stevedores
Union of the Philippines, et al., vs. South Sea Shipping Lines, et al., L-14689, July 26, 1960).
Section 4 (a) of the Industrial Peace Act provides that it shall be unfair labor practice for an
employer:
(4) to discriminate in regard to hire or tenure of employment or any term or condition of employment
to encourage or discourage membership in any labor organization: Provided, That nothing in this Act
or in any other Act or statute of the Republic of the Philippines shall preclude an employer from
making an agreement with a labor organization to require as a condition of employment membership

making an agreement with a labor organization to require as a condition of employment membership
therein, if such labor organization is the representative of the employees as provided in section
twelve, but such agreement shall not cover members of any religious sects which prohibit affiliation
of their members in any such labor organization. (As amended by Republic Act 3350 which took
effect on June 17, 1961).
The dismissal of petitioners was in compliance with an existing collective bargaining agreement, the
validity of which is sanctioned by the provision just quoted, and therefore does not constitute an
unfair labor practice exclusively cognizable by the Industrial Court.
Because of their dismissal petitioners picketed the vessels of respondent company. This gave rise to
the complaint in the Court of First Instance (Civil Case No. R-7743) to enforce the contract with the
United Seamen's Union of the Philippines, to recover damages, and at the same time to restrain
petitioners from "molesting, stopping, obstructing, and interfering with the free movements of the
employees of plaintiff's vessels and all its passengers, prospective and actual, as well as shippers,
prospective and actual, within the port of the City of Cebu." Actually, the intention of respondent
company in filing the action was to shift to the union the liabilities that arose by virtue of petitioners'
dismissal as provided in the renewed collective bargaining contract, particularly the first paragraph of
Article II, which states: ". . . provided, however, that the UNION shall assume all the responsibilities
and shall answer for any and all liabilities that may arise by virtue of such dismissal."
As the issue involved in the instant case, although arising from a labor dispute, does not refer to one
affecting an industry which is indispensable to the national interest and certified by the President to
the Industrial Court, nor to minimum wage under the Minimum Wage Law, or to hours of
employment under the Eight-Hour Labor Law, nor to an unfair labor practice, but seeks the
enforcement of a provision of the collective bargaining agreement, and to recover damages
occasioned by the alleged unlawful acts of petitioner, jurisdiction pertains to the ordinary courts and
not to the Industrial Court. (PAFLU, et al. vs. Tan & REMA, Inc., 99 Phil. 854; Dee Cho Lumber
Workers' Union vs. Dee Cho Lumber Co., 101 Phil. 417; Cebu Port Labor Union vs. State Marine
Corp., et al., 101 Phil. 468; Phil. Sugar Institute vs. CIR, G. R. No. L-13098, Oct. 29, 1959, and in
Elizalde Paint & Oil Factory vs. Bautista, G. R. No. L-15994, Nov. 23, 1960).
The remaining question to be resolved is whether or not the procedure followed by the lower court in
issuing the injunction is correct. In Associated Watchmen & Security Union vs. Union States Lines,
et al., (101 Phil. 896), it was held that if a labor dispute exists the provisions of the Magna Charta of
Labor (R.A. 875) should be strictly followed. The same ruling was laid down in PAFLU vs. TAN, et
al., supra, and in PAFLU vs. Barot, et al. (99 Phil. 1008). On the other hand, if no labor dispute exists
the court may issue an ordinary injunction in accordance with the Rules of Court. While the trial court
had jurisdiction to take cognizance of the case, the injunction issued by it was nevertheless void
because the procedure laid down by Section 9 (d) of R.A. 875 was not followed in its issuance. The
law provides that the testimony of witnesses in open court (with opportunity for cross-examination) in
support of the allegations of the complaint made under oath, and the testimony in opposition thereto,
if offered, should be heard and that a finding of fact by the court must be made, to the effect that
unlawful acts have been threatened and will be committed unless restrained; that substantial and
irreparable injury to complainant's property will follow; that as to each item or relief granted greater
injury will be inflicted upon complainant by the denial of relief than will be inflicted upon defendants
by the granting of relief; that complaint has no adequate remedy at law; and that public officers
charged with the duty to protect complainant's property are unable or unwilling to furnish adequate
protection. The instant case being an outgrowth of a labor dispute, the trial court cannot grant the
injunction merely under Section 6, Rule 60 of the Rules of Court (now Section 6, Rule 58), but must
follow what is provided for in R. A. 875 (Allied Free Workers' Union, et al. vs. Hon. Judge Segundo
Apostol, et al., 102 Phil. 292).
WHEREFORE, the order of the lower court dated November 8, 1962 is set aside and the case is
remanded to the court of origin for further proceedings. The preliminary injunction issued by this
Court is modified accordingly. No pronouncement as to costs.
Dizon, Bengzon, J.P., Zaldivar, Castro, Angeles and Fernando, JJ., concur.
Sanchez, J., concurs in the result.
Concepcion, C.J. and Reyes, J.B.L., J., are on leave.
Footnotes
1 "That the Company hire all unlicensed members of the crew needed for the service of the
Company through the hiring office of the Union and that membership in good standing with the
Union shall be a strict requirement as a condition of employment of all unlicensed members
employed by the said Company . . ."
"Upon written notification by the Union that an unlicensed member of the crew is no longer in good
standing with the UNION, the COMPANY shall immediately dismiss such crew member from
employment; provided, however, that the UNION shall assume all the responsibilities and shall
answer for any and all liabilities that may arise by virtue of such dismissal." [Paragraphs 1 and 2,

answer for any and all liabilities that may arise by virtue of such dismissal." [Paragraphs 1 and 2,
Article 11, Close Shop Agreement.]
2 The petitions for certification election were still pending when the collective bargaining agreement
was renewed, and also when respondents herein filed their answer to the instant petition
for certiorari.
3 Petitioners here were not members of either the Philippine Labor Federation or the General
Maritime Stevedores Union.
Pasted from <http://www.lawphil.net/judjuris/juri1967/nov1967/gr_l-20565_1967.html>

Lopez Sugar v. Federation of Free Workers (1990)
12:21 AM
LOPEZ SUGAR CORPORATION, petitioner,

vs.
FEDERATION OF FREE WORKERS, PHILIPPINE LABOR UNION ASSOCIATION (PLUA-
NACUSIP) and NATIONAL LABOR RELATIONS COMMISSION, respondents.
Sicangco, Diaz, Ortiz and Lapak for petitioner.
Reynaldo J. Gulmatico for private respondents.
FELICIANO, J.:
In this Petition, petitioner Lopez Sugar Corporation seeks reversal of the Decision dated 2 July 1986
of public respondent National labor Relations Commission ("NLRC") which affirmed the decision of
the Labor Arbiter dated 30 September 1983. The Labor Arbiter (a) had denied petitioner's application
to retrench some of its employees and (b) had ordered the reinstatement of twenty-seven (27)
employees and to pay them full backwages from the time of termination until actual reinstatement.
Petitioner, allegedly to prevent losses due to major economic problems, and exercising its privilege
under Article XI, Section 2 of its 1975-1977 Collective Bargaining Agreement ("CBA") entered into
between petitioner and private respondent Philippine Labor Union Association ("PLUA-NACUSIP"),
caused the retrenchment and retirement of a number of its employees.
Thus, on 3 January 1980, petitioner filed with the Bacolod District Office of the then Ministry of Labor
and Employment ("MOLE") a combined report on retirement and application for clearance to
retrench, dated 28 December 1979, 1 affecting eighty six (86) of its employees. This was docketed
as NLRC Case Ne. A-217-80. Of these eighty-six (86) employees, fifty-nine (59) were retired
effective 1 January 1980 and twenty-eight (27) were to be retrenched effective 16 January 1980 "in
order to prevent losses."
Also, on 3 January 1980, private respondent Federation of Free Workers ("FFW"), as the certified
bargaining agent of the rank-and-file employees of petitioner, filed with the Bacolod District Office of
the MOLE a complaint dated 27 December 1979 for unfair labor practices and recovery of union
dues docketed as NLRC Case No. A-198-80. In said complainant, FFW claimed that the
terminations undertaken by petitioner were violative of the security of tenure of its members and
were intended to "bust" the union and hence constituted an unfair labor practice. FFW claimed that
after the termination of the services of its members, petitioner advised 110 casuals to report to its
personnel office. FFW further argued that to justify retrenchment, serious business reverses must be
"actual, real and amply supported by sufficient and convincing evidence." FFW prayed for
reinstatement of its members who had been retired or retrenched.
Petitioner denied having hired casuals to replace those it had retired or retrenched. It explained that
the announcement calling for 110 workers to report to its personnel office was only for the purpose
of organizing a pool of extra workers which could be tapped whenever there were temporary
vacancies by reason of leaves of absence of regular workers.
On 22 January 1980, another report on retirement affecting an additional twenty-five (25) employees
effective 1 February 1980 was filed by petitioner. 2
On 3 March 1980, petitioner filed its Position Paper in NLRC Case No. A-217-80 contending that
certain economic factors jeopardizing its very existence rendered the dismissals necessary.
Petitioner explained:
As a business firm, the Applicant must earn [a] fair return of (sic) its investment. Its income is
generated from the sales of the Central's shares of sugar and molasses production. It has however
no control of the selling price of both products. It is of common knowledge that for the past years the
price of sugar has been very low. In order to survive, the Applicant has effected several forms of
cost reduction. Now that there is hope in the price of sugar the applicant is again faced with two
major economic problems, i.e., the stoppage of its railway operation and the spiralling cost of
production.
The Applicant was forced to stop its railway operation because the owners of the land upon which
the Applicant's railway lines traverse are no longer willing to allow the Applicant to make further use
of portions of their lands. . . .
The other economic problem that confronted the Applicant is the rising cost of labor, materials,
supplies, equipment, etc. These two major economic problems the rising cost of production and the
stoppage of its railway facilities, put together pose a very serious threat against the economic
survival of the Applicant. In view of this, the Applicant was constrained to touch on the last phase of

its cost reduction program which is the reduction of its workforce.
xxx xxx xxx
The Applicant as a business proposition must be allowed to earn income in order to survive. This is the
essence of private enterprise. Being plagued with two major economic problems, the applicant is not
expected to remain immobile. It has to react accordingly. As many other business firms have resorted to
reduction of force in view of the present economic crisis obtaining here and abroad, the applicant was
likewise compelled to do the same as a last alternative remedy for survival. 3
In a decision dated 30 September 1983, 4 the Labor Arbiter denied petitioner's application for
clearance to retrench its employees on the ground that for retrenchment to be valid, the employer's
losses must be serious, actual and real and must be amply supported by sufficient and convincing
evidence. The application to retire was also denied on the ground that petitioner's prerogative to so
retire its employees was granted by the 1975-77 collective bargaining agreement which agreement
had long ago expired. Petitioner was, therefore, ordered to reinstate twenty-seven retired or
retrenched employees represented by private respondent Philippine Labor Union Association
("PLUA") and FFW and to pay them full backwages from the time of termination until actual
reinstatement.
Both dissatisfied with the Labor Arbiter's decision, petitioner and respondent FFW appealed the case
to public respondent NLRC. On appeal, the NLRC, finding no justifiable reason for disturbing the
decision of the Labor Arbiter, affirmed that decision on 2 July 1986. 5
Hence, this Petition for certiorari making the following arguments:
1. That portions of the decision of public respondent NLRC dated July 2, 1986 affirming the decision
of Labor Arbiter Ethelwoldo Ovejera dated September 30, 1983 are contrary to law and
jurisprudence;
2. That said decision subject of this petition are in some respects not supported by evidence and
self-contradictory;
3. That said decision subject of this petition were rendered with grave abuse of discretion and in
excess of jurisdiction;
4. That the dismissals at bar are valid and based on justifiable
grounds. 6
Petitioner contends that the NLRC acted with grave abuse of discretion in denying its combined
report on retirement and application for clearance to retrench. Petitioner argues that under the law, it
has the right to reduce its workforce if made necessary by economic factors which would endanger
its existence, and that for retrenchment to be valid, it is not necessary that losses
be actually sustained. The existence of valid grounds to anticipate or expect losses would be
sufficient justification to enable the employer to take the necessary actions to prevent any threat to
its survival.
Upon the other hand the Solicitor General argued that the Decision rendered by the Labor Arbiter
and affirmed by the NLRC is supported by substantial evidence on record; that, therefore, no grave
abuse of discretion was committed by public respondent NLRC when it rendered that Decision.
Article 283 of the Labor Code provides:
Article 283. Closure of establishment and reduction of personnel. — The employer may also
terminate the employment of any employee due to the installation of labor saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of cricumventing the provisions of
this Title, by serving a written notice on the workers and the Ministry of Labor and Employer at least
one (1) month before the intended date thereof. In case of termination due to the installation of labor
saving devices or redundancy, the worker affected thereby shall be entitled to a se pay equivalent to
at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is
higher. In case of retrenchment to prevent losses and in cases, of closures or cessation of
operations of establishment or undertaking not due to serious business losses or financial reverses,
the separation pay shall be equivalent to one (1) month pay or at least one half (1/2) month pay for
every year of service, whichever is higher. A fraction of at least six (6) months shall be considered
one (1) whole year. (Emphasis supplied)
In ts ordinary connotation, he phrase "to revent losses" means hat retrenchment or termination of the
services of some employees is authorized to be undertaken by the employer sometime before the
losses anticipated are actually sustained or realized. It is not, in other words, the intention of the
lawmaker to compel the employer to stay his hand and keep all his employees until sometime after
losses shall have in fact materialized ; 7 if such an intent were expressly written into the law, that law
may well be vulnerable to constitutional attack as taking property from one man to give to another.
This is simple enough.
At the other end of the spectrum, it seems equally clear that not every asserted possibility of loss is
sufficient legal warrant for reduction of personnel. In the nature of things, the possibility of incurring
losses is constantly present, in greater or lesser degree, in the carrying on of business operations,

losses is constantly present, in greater or lesser degree, in the carrying on of business operations,
since some, indeed many, of the factors which impact upon the profitability or viability of such
operations may be substantially outside the control of the employer. Thus, the difficult question is
determination of when, or under what circumstances, the employer becomes legally privileged to
retrench and reduce the number of his employees.
We consider it may be useful to sketch the general standards in terms of which the acts of petitioner
employer must be appraised. Firstly, the losses expected should be substantial and not merely de
minimis in extent. If the loss purportedly sought to be forestalled by retrenchment is clearly shown to
be insubstantial and inconsequential in character, the bona fide nature of the retrenchment would
appear to be seriously in question. Secondly, the substantial loss apprehended must be reasonably
imminent, as such imminence can be perceived objectively and in good faith by the employer. There
should, in other words, be a certain degree of urgency for the retrenchment, which is after all a
drastic recourse with serious consequences for the livelihood of the employees retired or otherwise
laid-off. Because of the consequential nature of retrenchment, it must, thirdly, be reasonably
necessary and likely to effectively prevent the expected losses. The employer should have taken
other measures prior or parallel to retrenchment to forestall losses, i.e., cut other costs than labor
costs. An employer who, for instance, lays off substantial numbers of workers while continuing to
dispense fat executive bonuses and perquisites or so-called "golden parachutes", can scarcely claim
to be retrenching in good faith to avoid losses. To impart operational meaning to the constitutional
policy of providing "full protection" to labor, the employer's prerogative to bring down labor costs by
retrenching must be exercised essentially as a measure of last resort, after less drastic means —
e.g., reduction of both management and rank-and-file bonuses and salaries, going on reduced time,
improving manufacturing efficiencies, trimming of marketing and advertising costs, etc. — have been
tried and found wanting.
Lastly, but certainly not the least important, alleged if already realized, and the expected imminent
losses sought to be forestalled, must be proved by sufficient and convincing evidence. The reason
for requiring this quantum of proof is readily apparent: any less exacting standard of proof would
render too easy the abuse of this ground for termination of services of employees. In Garcia v.
National Labor Relations Commissions, 8 the Court said:
. . . But it is essentially required that the alleged losses in business operations must be
prove[n] (National Federation of Labor Unions [NAFLU] vs. Ople, 143 SCRA 124
[1986]). Otherwise, said ground for termination would be susceptible to abuse by scheming
employers who might be merely feigning business losses or reverses in their business ventures in
order to ease out employees. (Emphasis supplied) 9
Whether or not an employer would imminently suffer serious or substantial losses for economic
reasons is essentially a question of fact for the Labor Arbiter and the NLRC to determine. In the
instant case, the Labor Arbiter found no sufficient and convincing evidence to sustain petitioner's
essential contention that it was acting in order to prevent substantial and serious losses. The Labor
Arbiter said:
There is no question that an employer may reduce its work force to prevent losses, however, these losses
must be serious, actual and real. In the instant case, even assuming arguendo that applicant company
was, in fact, surrounded by the major economic problems stated earlier, the question may be
asked — will it suffer serious losses as a result of the said economic problems? We find the answer to be
negative. We have scanned the records but failed to find evidence submitted to show that applicant
company would suffer serious business losses or reverses as a consequence of the alleged major
economic problems. In fact, applicant company asseverated that these problems only threatens its
survival, hence, it had to reduce its work force. Another thing, while applicant company was retrenching
its regular employees, it also hired the services of casuals. This militated its claim to reduce its work force
to set up cost reduction. It must be stated that settled is the rule that serious business losses or reverses
must be actual, real and amply supported by sufficient and convincing evidence. 10 (Emphasis supplied)
We are in principle bound by such findings in accordance with well-established jurisprudence that
the factual findings of labor administrative officials, if supported by substantial evidence, are entitled
not only to great respect but even to finality, 11 unless, indeed, petitioner is able to show that the
Labor Arbiter and the NLRC simply and arbitrarily disregarded evidence before them or had
misapprehended evidence of such a nature as to compel a contrary conclusion if properly
appreciated.
The submissions made by petitioner in this respect are basically that from the crop year 1975-1976
to the crop year 1980-981, the amount of cane deliveries made to petitioner Central was declining
and that the degree of utilization of the mill's capacity and the sugar recovery from the cane actually
processed, were similarly declining. 12 Petitioner also argued that the competition among the
existing sugar mills for the limited supply of sugar cane was lively and that such competition
resulted in petitioner having to close approximately — thirty-eight (38) of its railroad lines by the end
of 1979. 13According to the petitioner, the cost of producing one (1) picul of sugar during the same

of 1979. 13According to the petitioner, the cost of producing one (1) picul of sugar during the same
period (i.e., from crop year 1976-1977 to crop year 1979-1980) increased from P69.97 to P93.11.
The principal difficulty with petitioner's case as above presented was that no proof of actual declining
gross and net revenues was submitted. No audited financial statements showing the financial
condition of petitioner corporation during the above mentioned crop years were submitted. Since
financial statements audited by independent external auditors constitute the normal method of proof
of the profit and loss performance of a company, it is not easy to understand why petitioner should
have failed to submit such financial statements.
Moreover, while petitioner made passing reference to cost reduction measures it had allegedly
undertaken, it was, once more, a fairly conspicuous failure to specify the cost-reduction measures
actually undertaken in good faith before resorting to retrenchment. Upon the other hand, it appears
from the record that petitioner, after reducing its work force, advised 110 casual workers to register
with the company personnel officer as extra workers. Petitioner, as earlier noted, argued that it did
not actually hire casual workers but that it merely organize(d] a pool of "extra workers" from
whichworkers could be drawn whenever vacancies occurred by reason of regular workers going on
leave of absence. Both the Labor Arbiter and the NLRC did not accord much credit to petitioner's
explanation but petitioner has not shown that the Labor Arbiter and the NLRC were merely being
arbitrary and capricious in their evaluation. We note also that petitioner did not claim that the
retrenched and retired employees were brought into the "pool of extraworkers" rather than new
casual workers.
Petitioner next contends that the NLRC committed grave abuse of discretion in affirming the ruling of
the Labor Arbiter that the retirements effected by petitioner were na valid since the basis therefor,
i.e. Article XI Section 2 of the 1975-1977 CBA, had by then already expired and was thus no longer
enforceable or operative. 14 Article XI, 2 of the CBA provides:
2. Section 2. — Any employee may apply for after having rendered the of at least eighteen (18) year of
service to the COMPANY. The COMPANY, as a right , may retire any employee who has rendered twenty
(20) years of service, or has reached the age of sixty (60) years. Employees who are physically
incapacitated to continue to work in the COMPANY upon certification of the COMPANY Physician, shall
be entitled to a separation pay equivalent to the retirement benefits herein provided for that may have
accrued. The heirs or surviving legally married spouse of the deceased employee shall be granted by the
COMPANY the amount equivalent to the accrued retirement benefit of the deceased employee at the
time of his death." 15 (Emphasis supplied)
Petitioner argues that the CBA was "extended" not merely by implication, but by reciprocal acts — in
the sense that even after the CBA had expired, petitioner continued to give, and
the workers continued to receive, the benefits and exercise the prerogatives provided therein.
Under these circumstances, petitioner urges, the employees are estopped from denying the
extended effectivity of the CBA.
The Solicitor General, as well as private respondents, argue basically that petitioner's right to retire
its employees was coterminous with the life of the CBA.
On this point, we must find for petitioner. Although the CBA expired on 31 December 1977, it
continued to have legal effects as between the parties until a new CBA had been negotiated and
entered into. This proposition finds legal support in Article 253 of the Labor Code, which provides:
Article 253 — Duty to bargain collectively when there exists a collective bargaining agreement. —
When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that
new agreement is reached by the parties. (Emphasis supplied)
Accordingly, in the instant case, despite the lapse of the formal effectivity of the CBA by virtue of its
own provisions, the law considered the same as continuing in force and effect until a new CBA shall
have been validly executed. Hence, petitioner acted within legal bounds when it decided to retire
several employees in accordance with the CBA. That the employees themselves similarly acted in
accordance with the CBA is plain from the record. Even after the expiration of the CBA, petitioner's
employees continued to receive the benefits and enjoy the privileges granted therein. They
continued to avail of vacation and sick leaves as computed in accordance with Articles VII and VIII of
the CBA. They also continued to avail of medical and dental aid under Article IX, death aid and
bereavement leave under Articles X and XIV, insurance coverage under Article XVI and housing
allowance under Article XVIII. Seventeen (17) employees even availed of Section XI (dealing with
retirement) when they voluntarily retired between 1 January 1978 and 31 December 1980 and
received retirement pay computed on the basis of Section 3 of the same article. If
the workers chose to avail of the CBA despite its expiration, equity — if not the law-dictates that the
employer should likewise be able to invoke the CBA.

employer should likewise be able to invoke the CBA.
The fact that several workers signed quitclaims will not by itself bar them from joining in the
complaint. Quitclaims executed by laborers are commonly frowned upon as contrary to public policy
and ineffective to bar claims for the full measure of the worker's legal rights. In AFP Mutual Benefit
Association, Inc. v. AFP-MBAI-EU, 16 the Court held:
In labor jurisprudence, it is well establish that quitclaims and/or complete releases executed by the
employees do not estop them from pursuing their claims arising from the unfair labor practice of the
employer. The basic reason for this is that such quitclaimants and/or complete releases are against
public policy and, therefore, null and void. The acceptance of termination pay does not divest a
laborer of the right to prosecute his employer for unfair labor practice acts. (Cariño vs. ACCFA,
L-19808, September 29, 1966, 18 SCRA 183; Philippine Sugar Institute vs. CIR, L-13475,
September 29, 1960, 109 Phil. 452; Mercury Drug Co. vs. CIR, L-23357, April 30, 1974, 56 SCRA
694, 704)
In the Cariño case, supra, the Supreme Court, speaking thru Justice Sanchez, said:
Acceptance of those benefits would not amount to estoppel. The reason is plain. Employer and
employee, obviously, do not stand on the same footing The employer drove the employee to the
wall. The latter must have to get hold of money. Because, out of job, he had to face the harsh
necessities of life. He thus found himself in no position to resist money proffered. His, then, is a case
of adherence, not of choice. One thing sure, however, is that petitioners did not relent their claim.
They pressed it. They are deemed not to have waived any of their rights. Renuntiatio non
praesumitur (Emphasis supplied)
We conclude that because the attempted retrenchment on the part of the petitioner was legally
ineffective, all retrenched employees should be reinstated and backwages paid them corresponding
to a period of three (3) years without qualification or deduction, in accordance with the three-year
rule laid down in a long line of cases. 17 In the case of employees who had received payments for
which they had executed quitclaims, the amount of such payments shall be deducted from the
backwages due to them. Where reinstatement is no longer possible because the positions they had
previously filled are no longer in existence, petitioner shall pay backwages plus, in lieu of
reinstatement, separation pay in the amount of one-month's pay for every year of service including
the three (3) year-period of putative service for which backwages will be paid. Upon the other hand,
we find valid the retirement of those employees who were retired by petitioner pursuant to the
applicable provisions of the CBA.
WHEREFORE, the Petition for Certiorari is partially GRANTED due course and the Decision dated 2
July 1986 of the public respondent NLRC is hereby MODIFIED to the extent that it had affirmed that
portion of the Decision of the Labor Arbiter dated 30 September 1983 ordering the reinstatement
judgment of employees who had been retired by petitioner under the applicable provisions of the
CBA. Except as so modified, the Decision of the NLRC is hereby AFFIRMED. No pronouncement as
to costs.
SO ORDERED.
Fernan (Chairman), Gutierrez, Jr., Bidin and Cortes, JJ., concur.
Footnotes
1 Rollo, pp. 38-39; Annexes "A" and "A-l" of Petition.
2 Id., pp. 40-41; Annexes "B" and "B-1" of the Petition.
3 Id., pp. 46-48; Annex "E" of Petition.
4 Id., pp. 86-100; Annex "J" of Petition.
5 Id., pp. 114-119; Annex "L" of Petition.
6 Id., p. 20.
7 Indino v. National Labor Relations Commission, et al., G.R. No. 80352, September 29, 1989.
8 153 SCRA 639 (1987); See also Camara Shoes v. Kapisanan ng Manggagawa sa Camara
Shoes,173 SCRA 127 (1989); and Indino v. National Labor Relation Commision, supra.
9 153 SCRA at 651.
10 Rollo, p. 98.
11 Mamerto v. Inciong, 118 SCRA 265 (1982); Atlas Consolidated Mining and Development Corp. v.
National Labor Relations Commission, 167 SCRA 758 (1988); Reyes v. Minister of Labor, 170
SCRA 134 (1989); Bristol Laboratories Employees Association-DFA, et al. v. National Labor
Relations Commission, et al., G.R. No. 87974, 2 July 1990.
12 In its Petition, petitioner alleged that:
1. Based on its sugar mills' rated capacity of 7,500 to 8,000 tons of cane per day, petitioner's
production figures were as follows:
Crop Year Cane Deliveries Rate of Degree Sugar Rate
(CY) inTons Increase Mill Recoveries Increase

(CY) inTons Increase Mill Recoveries Increase
(Decrease) Utili- in (Decrease)
zation Pisculs
1975-76 1,307,121,901 71.96% 2,047,291
1976-77 1,282,189,530 (1%) 70.80% 1,934,830 (5%)
1977-78 1,004,490,358 (21%) 55.56% 1,709,504 (11%)
1978-79 1,161,604.791 15% 64.25% 1,884,611 10%
1979-80 1,163,662,687 .0177% 64.26% 1,854,115 (1%)
1980-81 1,008,643,990 (13%) 55.64% 1,594,310 (14%)
These figures show that there was a continued decrease in production, both in cane deliveries and
in sugar recoveries from CY 1975-76 to CY 1977-78. While there were increase in cane deliveries in
CY 1978-79 and CY 1979-80, this was more because of Petitioner's increased trucking allowance
which proved to be too expensive But petitioner's studies projected that such increase were
temporary and would not hold, as tonnage of deliveries did fall in CY 1980-81 to a level only slightly
higher than those in CY 1977-78. (Rollo, p. 32)
13 Rollo, p. 33.
14 This CBA lapsed on 31 December 1977. The retirements, on the other hand, were made on 1
January 1980 and 1 February 1980.
15 Rollo, p. 143; Comment of the Solicitor General, p. 5.
16 97 SCRA 715 (1980).
17 Insular Life Assurance Co., Ltd. v. National Labor Relations Commission, 135 SCRA 697 (1985);
Lepanto Consolidated Mining Company v. Encarnacion, 136 SCRA 256 (1985); Panay Railways,
Inc. v. NLRC, 137 SCRA 480 (1985); Atlas Consolidated Mining and Development Corp. v. National
Labor Relations Commission, et al., 167 SCRA 758 (1988).

q=cache:1gt27mgc5UQJ:www.lawphil.net/judjuris/juri1990/aug1990/gr_75700_01_1990.html+Lopez+Sugar+v.
+Federation+of+Free+Workers+(1990)&cd=1&hl=en&ct=clnk&ie=UTF-8>

Meralco vs. Quisumbing
12:22 AM

Manila Central Line vs. Manila Central Line Free Workers Union
(1998)
12:23 AM
G.R. No. 109383 June 15, 1998

MANILA CENTRAL LINE CORPORATION, petitioner,
vs.
MANILA CENTRAL LINE FREE WORKERS UNION-NATIONAL FEDERATION OF LABOR and
the NATIONAL LABOR RELATIONS COMMISSION, respondents.
MENDOZA, J.:
This is a petition for certiorari to set aside the resolution dated October 10, 1991 of the National
Labor Relations Commission in NLRC NCR Case No. 000977-90, dismissing the appeal of
petitioner Manila Central LineCorporation from the order of Labor Arbiter Donato G. Quinto, Jr. in
NLRC NCR Case No. 02-00813-90, as well as the resolution dated March 11, 1993 of the NLRC,
denying reconsideration.
This case arose out of a collective bargaining deadlock between petitioner and private
respondent ManilaCentral Line Free Workers Union-National Federation of Labor. The parties'
collective bargaining agreement had expired on March 15, 1989. As the parties failed to reach a new
agreement, private respondent sought the aid of the National Conciliation and Mediation Board on
October 30, 1989, but the deadlock remained unresolved.
On February 9, 1990, private respondent filed a "Petition for Compulsory Arbitration" in the
Arbitration Branch for the National Capital Region of the National Labor Relations Commission. At
the initial hearing before the labor arbiter, the parties declared that conciliation efforts before the
NCMB had terminated and it was their desire to submit the case for compulsory arbitration.
Accordingly, they were required to submit their position papers and proposals, which they did, and in
which they indicated portions of their respective proposals to which they agree, leaving the rest for
arbitration. 1
On September 28, 1990, the labor arbiter rendered a decision embodying provisions for a new
collective bargaining agreement. The dispositive portion of his decision reads:
WHEREFORE, the petitioner UNION and the respondent COMPANY are directed to execute and
formalize their new five-year collective bargaining agreement (CBA) retroactive to the date of expiry
of the 1986-1989 CBA by adopting the provisions in the aforementioned text which incorporated
therein in the dispositions set forth by this Arbitrator within thirty (30) days from receipt of this
Decision.
SO ORDERED. 2
Petitioner appealed, but its appeal was denied by the NLRC in its questioned resolution of October
10, 1991. On March 11, 1993, the NLRC denied petitioner's motion for reconsideration. Hence, this
petition with the following assignment of errors:
a) The NLRC erred in affirming the Labor Arbiter's decision —
1. increasing the commission rate, the incentive pay, the salaries and wage of the fixed income
employees covered by the CBA;
2. granting P500.00 signing bonus to the complaint-appellee; and
3. holding that the effectivity of the renegotiated CBA shall be retroactive to March 15, 1989, the
expiry date of the old CBA.
b) There are serious errors in the findings of facts of the Labor Arbiter which were unqualified
affirmed by the NLRC and which justify the review by this Honorable SUPREME COURT;
c) The NLRC erred in upholding the jurisdiction of the Labor Arbiter; and
d) The NLRC erred in affirming the finalization of the CBA by the Labor Arbiter in disregard of the
provisions agreed upon by the parties.
The petition is without merit. We shall deal with these contentions in the order they are presented,
with the exception of the argument concerning the jurisdiction of the Labor Arbiter (par. (c)), which
we shall treat first since it raises a threshold question.
First. Despite the fact that it agreed with the union to submit their dispute to the labor arbiter for
arbitration, petitioner questions the jurisdiction of the labor arbiter to render the decision in question.
Petitioner contends that the policy of the law now is to encourage resort to conciliation and voluntary
arbitration as Art. 250 (e) of the Labor Code provides.
Indeed, the Labor Code formerly provided that if the parties in collective bargaining fail to reach an

arbitration as Art. 250 (e) of the Labor Code provides.
Indeed, the Labor Code formerly provided that if the parties in collective bargaining fail to reach an
agreement, the Bureau of Labor Relations should call them to conciliation meetings and, if its efforts
were not successful, certify the dispute to a labor arbiter for compulsory arbitration. 3 But this was
changed by R.A. No. 6715 which took effect on March 21, 1989. Art. 250(e) of the Labor Code now
provides that if efforts at conciliation fail, the Board shall "encourage the parties to submit their case
to a voluntary arbitrator." With specific reference to cases involving deadlocks in collective
bargaining, Art. 262 provides:
Jurisdiction over other labor disputes. — The Voluntary Arbitrator or panel of Voluntary Arbitrators,
upon agreement of the parties, shall also hear and decide all other labor disputes including unfair
labor practices and bargaining deadlocks.
This is what the parties did in this case. After the Board failed to resolve the bargaining deadlock
between the parties, the union filed a petition for compulsory arbitration in the Arbitration Branch of
the NLRC. Petitioner joined the petition and the case was submitted for decision. Although the
union's petition was for "compulsory arbitration," the subsequent agreement of petitioner to submit
the matter for arbitration in effect made the arbitration a voluntary one. The essence of voluntary
arbitration, after all, is that it is by agreement of the parties, rather than compulsion of law, that a
matter is submitted for arbitration. 4 It does not matter that the person chosen as arbitrator is a labor
arbiter who, under Art. 217 of the Labor Code, is charged with the compulsory arbitration of certain
labor cases. There is nothing in the law that prohibits these labor arbiters from also acting
as voluntary arbitrators as long as the parties agree to have him hear and decide their dispute.
Moreover, petitioner must be deemed to be estopped from questioning the authority of Labor Arbiter
Donato G. Quinto, Jr. to act as voluntary arbitrator and render a decision in this case. Petitioner
agreed, together with theunion, to refer their dispute for arbitration to him. It was only after a
decision was rendered that petitioner raised the question of lack of jurisdiction. Even the, petitioner
did so only for the first time in a "supplemental memorandum of appeal" to the NLRC. 5 As the
NLRC, through Commissioner Romeo B. Putong, held, it was too late in the day for petitioner to do
this. 6
Indeed, it is inconsistent for petitioner to contend, on the one hand, that this case should have been
resolved through voluntary arbitration and, on the other, to follow the procedure for compulsory
arbitration by appealing the decision of the labor arbiter to the NLRC and subsequently questioning
the latter's decision through this special civil action of certiorari. Pursuant to our decision in Luzon
Development Bank v. Luzon Development Bank Employees Association, 7 this case, considered as a
special civil action for certiorari to set aside the decision of a voluntary arbitrator, should have been
referred, as a matter of policy, to the Court of Appeals. However, it was not evident in the beginning
from a cursory consideration of the pleadings that what actually took place in the labor agency was a
proceeding for voluntary arbitration. Accordingly, so as not to delay the disposition of this case, we
have thought on balance that this case should be retained and decided on the merits.
Second. In par. (a)(1) and par. (b) of its assignment of errors, petitioner questions factual findings of
the labor arbiter and the NLRC. Such findings are generally held to be binding, and even final, so
long as they are substantially supported by evidence in the record of the case. 8 This is specially so
where, as here, the agency and a subordinate one which heard the case in the first instance are in
full agreement as to the facts. 9
The decisions of both the NLRC and the labor arbiter contain an exhaustive discussion of the issues,
belying petitioner's claim that they did not fully consider the evidence and appreciate what it claims
are the "dire economics straits" it is in. This is evident from the following portion of the labor arbiter's
order dated September 28, 1990, which the NLRC adopted:
From the foregoing allegations of the parties and as expound (sic), discussed and/or argued by them
in their respective position paper, the disagreement, or deadlock, as we say it, focus (sic) and
centers on the so called "economic issues" particularly on the provisions on Salaries and Wages.
Petitioner-Union proposed that the commission for drivers, conductors and conductresses shall be
10% and 8%, respectively, of their gross collections. In addition, as incentive pay, it proposed that
drivers, conductors and conductresses shall be entitled to incentive pay as follows: (a) For a quota of
P2,600.00, the incentive should be P40.00; (b) for a quota of P2,875.00, the incentive should be
P50.00, and (c) for a quota of P3,155.00 the incentive pay should be P60.00.
Further, petitioner-Union, insofar as the "fixed income employees" are concerned, they proposed
that they should be granted a salary/wage increase as follows: (a) effective March 15, 1989 —
P12.00; (b) Effective March 15, 1990 — P10.00; and (c) effective March 15, 1991 — P8.00.
Respondent, on the other hand, proposes that the commission for drivers and conductor/tresses
shall be 8.5% and 6.5% of their gross collections, respectively. And in addition, these drivers and
conductor/tresses shall be entitled to an incentive pay based on the following quota, to wit: (a) for
quota of P3,276.00, the incentive pay is P35.00; (b) for quota of P3,635.00, it is P45.00; and for
quota of P3,994.00, it is P55.00. Respondent management has no proposal insofar as grant of
increase/s to fixed income employees' subject of the bargaining unit.

increase/s to fixed income employees' subject of the bargaining unit.
As noted at present under the old CBA, the commission being paid to drivers and conductor/tresses
is 8% and 6%, respectively. During and in the negotiation, respondent proposes to raise this rate
by .5% thus making it 8.5 and 6.5 respectively. Respondent in proposing an increase of .5% justifies
the same by saying that such is only what it can afford as it had been incurring financial losses as
shown by Financial Statement it submitted in evidence. This was rejected by the union which
proposes that the rate of the commission be raised to 10% and 8% respectively, from 8% and 6%, or
an increase by 2%, respectively. The union debunked the claim of the respondent-company that it
had been financially suffering and had claim (sic) that it had earned profit in all the years that it had
been under operation.
A look at the parties' proposal and counter-proposal shows that the union was demanding that the
rate be increased to 10% and 8% from the old rate of 8% and 6% or an increase of 2%, while that of
the company effectively increased the rate by .5% to make the rate at 8.5% and 6.5%. From this, it
appears that the disagreement lies on how much would the increase in the rate be. As appearing
theunion was asking for an increase equivalent to at least 25% for the drivers and at least 33% for
the conductor/tresses, while that which proposed (sic) by the company shows an increase of at least
6% and 8% respectively. The difference between the parties proposal and counter-proposal is at
least 19% and 25%, respectively. With this disagreement in this difference, it is thought of to be
practical and reasonable to meet at the middle of the difference in the rate by dividing the same into
two. Hence, the increase in the rate should be from the present 8% and 6% to 8.75% and 6.75%.
However, in order to make the increase realistic it is opined that it should be rounded off to the
nearest full number that is to 9% and 7%, respectively.
As regards the incentive pay, the following appears:
OLD CBA RESPONDENT'S PROPOSAL UNION'S PROPOSAL
Quota Incentive Quota Incentive Quota Incentive
P2,800.00 P35.00 P3,276.00 P35.00 P2,600.00 P40.00
3,100.00 P45.00 3,635.00 P45.00 2,600.00 50.00
3,400.00 P55.00 3,994.00 P55.00 3,155.00 60.00
As can be gleaned from the above respondent raised the quota but maintained the rate for the
incentive pay, while the union lowers (sic) the quota and raises (sic) the rate for the incentive. To
the mind of this arbitrator, he deems it proper and fair for both parties, to adopt the quota as
proposed by the respondent and the rate for the incentive pay as proposed by the union. It is
believe (sic) that such is fair and reasonable because as appearing in the parties' proposal and
counter-proposal, it would seem that they are trying to out-wit each other. Hence, such would be as
follows:
Quota Rate of Incentive Pay
P3,276.00 P40.00
3,635.00 50.00
3,994.00 60.00
Another issue where the parties are in statements (sic) is the matter of increase in the salary and wages
of the fixed income employees covered by the CBA. The union proposes an increase of P12.00, P10.00
and P8.00 to be spread in the three-year period, while the company did not submit a proposal for an
increase claiming that it cannot afford to give any increase as it had suffered financial difficulty. However,
as already discussed earlier where it is found that respondent, as shown by its financial statement, is not
really in the verge of financial collapse, it is believed that it is reasonable and fair to the parties,
particularly to the union that increase would be mandated. However, we could not adopt in toto the
proposal of the union. Instead, we are to adopt the increase as provided under the old CBA , that is,
P6.00 for the first year, P5.00 for the second year and P4.00 for the third year. 10
Petitioner contends, however, that the labor arbiter has a duty to indicate in his order every relevant
proof necessary to show that the opposing party's evidence is superior to that of petitioner. This is
not so. The quantum of proof required in proceeding before administrative agencies is "substantial
evidence," not overwhelming or preponderant evidence. 11 The quoted portion of the labor arbiter's
order shows that the proposals of the parties as well as petitioner's order shows that the proposals of
the parties as well as petitioner's financial statements were carefully considered by him in arriving at
his judgment. As the Solicitor General states:
Nor did respondent NLRC overlook the protestations of the COMPANY that it is suffering from
"gargantuan economic trouble." This assertion, however, was sufficiently refuted by the UNION by
presenting proof that the COMPANY had acquired a bus terminal area in Tunasa. Moreover, the
COMPANY had just imported machines to recondition their old buses. Also, as can be seen in the
1992 Financial Statement of the COMPANY, it acquired new buses worth P2,400,000.00. These
facts verify the findings of the Labor Arbiter that the COMPANY is not on the verge of financial
collapse . . . Also, the COMPANY had offered an increase of .5% but in the same breath, it claims
that it can hardly maintain the commission rate of 8% and 6%. There is a contradiction of facts right

that it can hardly maintain the commission rate of 8% and 6%. There is a contradiction of facts right
there and then, which considerably weakens its assertions.
The increase in commission rate will not really affect the income of the COMPANY. By their very
nature, commissions will only be given to the employees if the COMPANY receives income. They
are given in the form of incentives or encouragement so that employees would be inspired to put a
little more industry on their particular tasks. This is unlike salaries and wages which are fixed
amounts and which should be given to the employees regardless of whether the COMPANY is
making any collection or not. Therefore, the employees are merely asking a percentage of the
earnings of the COMPANY, which they, through their efforts, helped produce.
As regards the incentive pay increase, the COMPANY's financial position was also taken into
consideration. It appears that the COMPANY and the UNION were trying to outwit each other in their
respective proposals. Thus, the position adopted by the Labor Arbiter — increasing the quota and
the amount of incentive — is a middle ground which is fair to both parties.
The increase in salaries and wages was premised on the findings of the Labor Arbiter that the COMPANY
was not on the verge of financial collapse and that an increase would be mandated, particularly taking
into consideration the inflation or increase in the cost of living the subsequently years after the CBA was
finalized. In adopting the wage increase rates provided in the old CBA, the financial condition of the
COMPANY as well as the needs of the employees were taken into consideration. When conclusions of
the Labor Arbiter are sufficiently corroborated by the evidence on record, the same should be respected
by the appellant tribunals since he is in a better position to assess or evaluate the credibility of the
contending parties [CDCP Tollways Operation Employees and Workers Union v. NLRC, 211 SCRA
58) . . . . 12
Nor is the grant of a P500.00 "signing bonus" to employees unreasonable or arbitrary. The amount is
a modest sum, to be given by petitioner only once, in order to make employees finally agree to the
new CBA. In ordering payment of this amount, the labor arbiter acted in accordance with Art. 262-A
of the Labor Code which provides in part:
Procedures. — The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have the power to
hold hearings, receive evidences and take whatever action is necessary to resolve the issue or
issues subject to the dispute, including efforts to effect a voluntary settlement between parties.
(emphasis added)
Third. Petitioner also contends that in ordering the new CBA to be effective on March 15, 1989, the
expiry date of the old CBA, the labor arbiter acted contrary to Art. 253-A of the Labor Code. This
provision states, among others, that:
Any agreement on such other provisions of the Collective Bargaining Agreement entered into within
six (6) months from the date of expiry of the term of such other provisions as fixed in such Collective
Bargaining Agreement, shall retroact to the day immediately following such date. If any such
agreement is entered into beyond six months, the parties shall agree on the duration of retroactivity
thereof. In case of a deadlock in the negotiation of the collective bargaining agreement, the parties
may exercise their rights under this Code.
Art. 253-A refers to collective bargaining agreements entered into by the parties as a result of their
mutual agreement. The CBA in this case, on the other hand, is part of an arbitral award. As such, it
may be made retroactive to the date of expiration of the previous agreement. As held In St. Luke's
Medical Center, Inc. v.Torres:
Finally, the effectivity of the Order of January 28, 1991, must retroact to the date of the expiration of
the previous CBA, contrary to the position of petitioner. Under the circumstances of the case, Article
253-A cannot be properly applied to herein case. As correctly stated by public respondent in his
assailed Order of April 12, 1991 dismissing petitioner's Motion for Reconsideration —
Anent the alleged lack of basis for the retroactivity provisions awarded, we would stress that the
provision of law invoked by the Hospital, Article 253-A of the Labor Code, speaks of agreements by
and between the parties, and not arbitral awards . . . (p. 818 Rollo).
Therefore, in the absence of a specific provision of law prohibiting retroactivity of the effectivity of arbitral
awards issued by the Secretary of Labor pursuant to Article 263(g) of the Labor Code, such as herein
involved, public respondent is deemed vested with plenary and discretionary powers to determine the
effectivity thereof. 13
Indeed, petitioner has not shown that the question of effectivity was not included in the general
agreement of the parties to submit their dispute for arbitration. To the contrary, as the order of the
labor arbiter states, this question was among those submitted for arbitration by the parties:
As regards the "Effectivity and Duration" clause, the company proposes that the collective bargaining
agreement shall take effect only upon its signing and shall remain in full force and effect for a period
of five years. The union proposes that the agreement shall take effect retroactive to March 15, 1989,
the expiration date of the old CBA.
And after an evaluation of the parties' respective contention and argument thereof, it is believed that of
theunion is fair and reasonable. It is the observation of this Arbitrator that in almost subsequent CBAs,

the effectivity of the renegotiated CBA, usually and most often is made effective retroactive to the date
when the immediately proceeding CBA expires so as to give a semblance of continuity. Hence, for this
particular case, it is believed that there is nothing wrong adopting the stand of the union, that is that this
CBA be made retroactive effective March 15, 1989. 14
Fourth. It is finally contended that the labor arbiter disregarded many provisions of the old CBA
which the parties had "retained, improved and agreed upon," with the result that "the CBA finalized
by the Honorable Labor Arbiter does not reflect the true intention of the parties." 15 Petitioner does
not specify, however, what provisions of the old CBA were disregarded by the labor arbiter.
Consequently, this allegation should simply be dismissed.
WHEREFORE, the petition is DISMISSED for lack of merit.
SO ORDERED.
Regalado, Puno and Martinez, JJ., concur.
Melo, J., is on leave.
Footnotes
1 Rollo, pp. 29-31.
2 Id., p. 28.
3 Pres. Decree No. 1691, §3 (1980) and Pres. Decree No. 442, Art. 297 as originally numbered
(1974).
4 See Luzon Development Bank v. Luzon Development Bank Employees Ass'n. 249 SCRA 162
(1995); 2 C.A. AZUCENA, THE LABOR CODE 353 (1996).
5 Rollo, p. 39.
6 Id., pp. 39-40; M. Ramirez Industries vs. Secretary of Labor, G.R. No. 89894, Jan. 3, 1997; Stalt-
Nielsen Marine Services (Phils.) Inc. v. NLRC, 264 SCRA 307 (1996).
7 249 SCRA 162 (1995).
8 International Container Terminal Services, Inc. v. NLRC, 256 SCRA 124 (1996).
9 Belaunzaran v. NLRC, 265 SCRA 800 (1996).
10 Rollo, pp. 34-36.
11 Ynson v. Court of Appeals, 257 SCRA 411 (1996); RULES OF COURT, Rule 133, §5.
12 Rollo, pp. 95-98.
13 223 SCRA 779, 729-793 (1993); reiterated in Philippine Airlines, Inc. v. Confessor, 231 SCRA 41
(1994).
14 Rollo, pp. 38-39.
15 Id., p. 22.

q=cache:8uDXlJUrnCYJ:www.lawphil.net/judjuris/juri1998/jun1998/gr_109383_1998.html+Manila+Central+Line+vs.
+Manila+Central+Line+Free+Workers+Union+(1998)&cd=1&hl=en&ct=clnk&ie=UTF-8>

Sundower Development Corp vs. Drilon
12:30 AM
G.R. No. 82341 December 6, 1989

SUNDOWNER DEVELOPMENT CORPORATION, petitioner,
vs.
HON. FRANKLIN M. DRILON, in his capacity as Secretary of the Department of Labor and
Employment, NATIONAL UNION OF WORKERS IN HOTEL, RESTAURANT AND ALLIED
INDUSTRIES, (NUWHRAIN), HOTEL MABUHAY CHAPTER, THE CHAPTER OFFICERS AND
MEMBERS, HOTEL MABUHAY, INC. and MR. MARIANO PENANO, President of Hotel
Mabuhay, Inc., respondents.
Carmelita S. Bautista-Lozada for petitioner.
Paterno D. Menzon Law Office for private respondent NUWHRAIN.
GANCAYCO, J.:
The principal issue in this case is whether or not the purchaser of the assets of an employer
corporation can be considered a successor employer of the latter's employees.
Private respondent Hotel Mabuhay, Inc. (Mabuhay for short,) leased the premises belonging to
Santiago Syjuco, Inc. (Syjuco for short) located at 1430 A. Mabini St., Ermita, Manila. However, due
to non-payment of rentals, a case for ejectment was filed by Syjuco against Mabuhay in the
Metropolitan Trial Court of Manila. Mabuhay offered to amicably settle the case by surrendering the
premises to Syjuco and to sell its assets and personal property to any interested party.
Syjuco offered the said premises for lease to petitioner. The negotiation culminated with the
execution of the lease agreement on April 16, 1987 to commence on May 1, 1987 and to expire on
April 30,1992. 1 Mabuhay offered to sell its assets and personal properties in the premises to
petitioner to which petitioner agreed. A deed of assignment of said assets and personal properties
was executed by Mabuhay on April 29,1987 in favor of petitioner. 2
On same date Syjuco formally turned over the possession of the leased premises to petitioner who
actually took possession and occupied the same on May 1, 1987.
On May 4, 1987, respondent National Union of Workers in Hotel, Restaurant and Allied Services
(NUWHRAIN for short) picketed the leased premises, barricaded the entrance to the leased
premises and denied petitioner's officers, employees and guests free access to and egress from said
premises. Thus, petitioner wrote a letter-complaint to Syjuco.
A complaint for damages with preliminary injunction and/or temporary restraining order was filed by
petitioner on May 7, 1987 with the Regional Trial Court of Manila docketed as Civil Case No.
87-40436. On the same day, the Executive Judge of said court issued a restraining order against
respondent NUWHRAIN and its officers and members as prayed for in the petition. Nevertheless,
NUWHRAIN maintained their strike on the subject premises but filed an answer to the complaint.
On May 14, 1987, an order was issued by public respondent Secretary of Labor assuming
jurisdiction over the labor dispute pursuant to Article 263(g) of the Labor Code as amended and in
the interim, requiring all striking employees to return to work and for respondent Mabuhay to accept
all returning employees pending final determination of the issue of the absorption of the former
employees of Mabuhay. The parties were also directed to submit their respective position papers
within ten (10) days from receipt of the order.
On May 25, 1987, Mabuhay submitted its position paper alleging among others that it had sold all its
assets and personal properties to petitioner and that there was no sale or transfer of its shares
whatsoever and that Mabuhay completely ceased operation effective April 28,1987 and surrendered
the premises to petitioner so that there exists a legal and physical impossibility on its part to comply
with the return to work order specifically on absorption.
On June 26, 1987, petitioner in order to commence its operation, signed a tri-partite agreement so
the workers may lift their strike, by and among petitioner, respondents NUWHRAIN and Mabuhay
whereby the latter paid to respondent NUWHRAIN the sum of P 638,000.00 in addition to the first
payment in the sum of P 386,447.11, for which reason respondent NUWHRAIN agreed to lift the
picket . 3
Respondent NUWHRAIN on July 13, 1987 filed its position paper alleging connivance between
Mabuhay and petitioner in selling the assets and closing the hotel to escape its obligations to the
employees of Mabuhay and so it prays that petitioner accept the workforce of Mabuhay and pay
backwages from April 15,1986 to April 28,1987, the day Mabuhay stopped operation.
On the other hand, petitioner filed a "Partial Motion for Reconsideration and Position Paper," alleging
that it was denied due process; that there were serious errors in the findings of fact which would

that it was denied due process; that there were serious errors in the findings of fact which would
cause grave and irreparable damage to its interest; as well as on questions of law. On January 20,
1988, the public respondent issued an order requiring petitioner to absorb the members of the union
and to pay backwages from the time it started operations up to the date of the order. 4
Petitioner filed on January 27,1988 a motion for reconsideration of the aforesaid order alleging that
the theory of implied acceptance and assumption of statutory wrong does not apply in the instant
case; that the prevailing doctrine that there is no law requiring bona fide purchasers of the assets of
an on-going concern to absorb in its employ the employees of the latter should be applied in this
case; that the order for absorption of the employees of Mabuhay as well as the payment of their
backwages is contrary to law. Respondent NUWHRAIN also filed a motion for clarification of the
aforesaid order.
On March 8, 1988, the public respondent denied said motion for reconsideration and motion for
clarification for lack of merit.
Hence, this petition for review by certiorari with prayer for preliminary injunction and/or temporary
restraining order filed by petitioner in this Court. Petitioner presents seven issues for resolution
which all revolve about the singular issue of whether or not under the circumstances of this case the
petitioner may be compelled to absorb the employees of respondent Mabuhay.
On March 23, 1988, this Court, without giving due course to the petition, required respondents to
comment thereon within ten (10) days from notice and issued a temporary restraining order enjoining
public respondent or his duly authorized representatives from executing and implementing the
orders dated January 20, 1988 and March 8, 1988.
The petition is impressed with merit.
The rule is that unless expressly assumed, labor contracts such as employment contracts and
collective bargaining agreements are not enforceable against a transferee of an enterprise, labor
contracts being in personam, thus binding only between the parties .5 A labor contract merely
creates an action in personally and does not create any real right which should be respected by third
parties. This conclusion draws its force from the right of an employer to select his employees and to
decide when to engage them as protected under our Constitution, and the same can only be
restricted by law through the exercise of the police power. 6
As a general rule, there is no law requiring a bona fide purchaser of assets of an on-going concern
to absorb in its employ the employees of the latter. 7
However, although the purchaser of the assets or enterprise is not legally bound to absorb in its
employ the employers of the seller of such assets or enterprise, the parties are liable to the
employees if the transaction between the parties is colored or clothed with bad faith. 8
In the case at bar, contrary to the claim of the public respondent that the transaction between
petitioner and Mabuhay was attended with bad faith, the court finds no cogent basis for such
contention. Thus, the absorption of the employees of Mabuhay may not be imposed on petitioner.
It is undisputed that when Mabuhay surrendered the leased premises to Syjuco and asked Syjuco to
offer same to other lessees it was Syjuco who found petitioner and persuaded petitioner to lease
said premises. Mabuhay had nothing to do with the negotiation and consummation of the lease
contract between petitioner and Syjuco.
It was only when Mabuhay offered to sell its assets and personal properties in the premises to
petitioner that they came to deal with each other. It appears that petitioner agreed to purchase said
assets of respondent Mabuhay to enable Mabuhay to pay its obligations to its striking employees
and to Syjuco. Indeed, in the deed of assignment that was executed by Mabuhay in favor of
petitioner on April 14, 1 987 for and in consideration of P2,500,000.00, it is specifically provided
therein that the same is "purely for and in consideration of the sale/transfer and assignment of the
personal properties and assets of Hotel Mabuhay, Inc. listed . . . " and "in no way involves any
assumption or undertaking on the part of Second Party (petitioner) of any debts or liabilities
whatsoever of Hotel Mabuhay, Inc." 9 The liabilities alluded to in this agreement should be
interpreted to mean not only any monetary liability of Mabuhay but any other liability or obligation
arising from the operation of its business including its liability to its employees.
Moreover, in the tripartite agreement that was entered into by petitioner with respondents
NUWHRAIN and Mabuhay, it is clearly stipulated as follows:
8. That, immediately after the execution of this Agreement, the FIRST PARTY shall give a list of its
members to the THIRD PARTY that it desires to recommend for employment so that the latter can
consider them for employment, with no commitment whatsoever on the part of the THIRD PARTY to hire
them in the business that it will operate in the premises formerly occupied by the Hotel Mabuhay; 10
From the foregoing, it is clear that petitioner has no liability whatsoever to the employees of
Mabuhay And its responsibility if at all, is only to consider them for re-employment in the operation of
the business in the same premises. There can be no implied acceptance of the employees of
Mabuhay by petitioner and acceptance of statutory wrong as it is expressly provided in the
agreement that petitioner has no commitment or duty to absorb them.

agreement that petitioner has no commitment or duty to absorb them.
Moreover, the court does not subscribe to the theory of public respondent that petitioner should have
informed NUWHRAIN of its lease of the premises and its purchase of the assets and personal
properties of Mabuhay therein so that said employees could have taken steps to protect their
interest. The court finds no such duty on the part of petitioner and its failure to notify said employees
cannot be an indicium of bad faith.
Much less is there any evidence that petitioner and respondent Mabuhay are joint tortfeasors as
found by public respondent. While it is true that petitioner is using the leased property for the same
type of business as that of respondent Mabuhay, there can be no continuity of the business
operations of the predecessor employer by the successor employer as respondent Mabuhay had not
retained control of the business. Petitioner is a corporation entirely different from Mabuhay. It has no
controlling interest whatever in respondent Mabuhay. Petitioner and Mabuhay have no privity and
are strangers to each other.
What is obvious is that the petitioner, by purchasing the assets of respondent Mabuhay in the hotel
premises, enabled Mabuhay to pay its obligations to its employees. There being no employer-
employee relationship between the petitioner and the Mabuhay employees, the petition must fail.
Petitioner can not be compelled to absorb the employees of Mabuhay and to pay them backwages.
WHEREFORE, the petition is GRANTED and the questioned orders of public respondent Secretary
of Labor and Employment dated January 20, 1988 and March 8, 1988 are reversed and set aside.
The restraining order that this Court issued on March 20,1988 is hereby made permanent. No
pronouncement as to costs.
SO ORDERED.
Narvasa, Cruz, Griño-Aquino and Medialdea, JJ., concur.
Footnotes
1 Annex B to petition.
2 Annex C to petition.
3 Annex K to petition.
4 Annex N to petition.
5 Fernando vs. Angat Labor Union, 5 SCRA 248, 251 (1962).
6 Visayan Transportation Co., Inc. vs. Java, 93 Phil. 962, 967-968 (1953).
7 MDII Supervisors & Confidential Employees Association vs. Presidential Assistant on Legal affairs,
79 SCRA 40 (1977).
8 Majestic and Republic Theaters Employees' Association vs. CIR, 4 SCRA 457, 460 (1962); Cruz
vs. PAFLU, 42 SCRA 68, 77-78 (1971).
9 Annex C to petition, page 27, Rollo.
10 Annex K to petition; page 54, Rollo.

Manlimos vs. NLRC (1995)
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SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 113337 March 2, 1995

RONALD MANLIMOS, FROILAN PAGALAN, MERLITA DUHAY LUNGSOD,
ELIZABETH ANDAGAN, DORIS SERDAN, LEONORA BIBIANO, PERLA
CUMPAY, VIRGINIA ETIC, REMEGIA NOEL, ROSARIO CUARTO, RONALD
BOOC, JAIME TIMBAL, GERMAN GISTA, FEDERICO AMPER, FRANCISCO
EVALE, and RENANTE YACAPIN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and SUPER MAHOGANY
PLYWOOD CORPORATION/ALBERT GO, respondents.
DAVIDE, JR., J.:

This is a special civil action for certiorari under Rule 65 of the Rules of Court to set
aside, for having been rendered with grave abuse of discretion, the resolutions of 2
August 1993 1 and 14 October 1993 2 of public respondent National Labor Relations
Commission (NLRC) in NLRC CA No. M-001378-93. The 2 August 1993 resolution
reversed the decision of Labor Arbiter Marissa Macaraig-Guillen of 30 April
1993 3 which ordered private respondent Super Mahogany Plywood
Corporation/Albert Go to reinstate the petitioners to their positions without loss of
seniority rights and privileges and to pay them their back wages, 13th month pay,
service incentive leave pay, and attorney's fees, while the 14 October 1993
resolution denied the motion to reconsider the 2 August 1993 resolution.
After the private respondent and the public respondent, through the Office of the
Solicitor General, had filed their separate comments and the petitioners, their
consolidated reply to the comments, this Court resolved to give due cause to the
petition.
The petitioners were among the regular employees of the Super Mahogany
Plywood Corporation, a domestic corporation organized in 1988 and based in
Butuan City. They had been hired as patchers, taper-graders, and receivers-dryers.
On 1 September 1991, a new owner/management group headed by Alfredo Roxas
acquired complete ownership of the corporation. The petitioners were advised of
such change of ownership; however, the petitioners continued to work for the new
owner and were considered terminated, with their conformity, only as of December

owner and were considered terminated, with their conformity, only as of December
1991 when they received their separation pay, 13th month pay, and all other
benefits due them computed as of the said month. Each of them then executed on
17 December 1991 a Release and Waiver which they acknowledged before Atty.
Nolasco Discipulo, Hearing Officer of the Butuan City District Office of the
Department of Labor and Employment (DOLE).
On 27 December 1991, the new owner caused the publication of a notice for the
hiring of workers, indicating therein who of the separated employees could be
accepted on probationary basis. The petitioners then filed their applications for
employment. Except for Rosario Cuarto, they were hired on probationary basis for
six months as patchers or tapers, but were compensated on piece-rate or task
basis.
For their alleged absence without leave, Perla Cumpay and Virginia Etic were
considered, as of 4 May 1992, to have abandoned their work. The rest were
dismissed on 13 June 1992 because they allegedly committed acts prejudicial to
the interest of the new management which consisted of their "including unrepaired
veneers in their reported productions on output as well as untaped corestock or
whole sheets in their supposed taped veneers/corestock." However, upon their
appeal, the effectivity of such termination was deferred to 20 June 1992. 4
Petitioners Ronald Booc, Jaime Timbal, German Gista, Federico Amper, Francisco
Evale, and Renante Yacapin then filed against the private respondent with the Sub -
Regional Arbitration Branch No. X of the NLRC in Butuan City a complaint (NLRC-
SRAB 10-07-00104-92) for "non-payment of wages, underpayment of wages,
incentive leave pay, non-payment of holiday pay, overtime pay, 13th month pay,
separation pay, reinstatement with back wages, illegal termination and damages."
Petitioners Ronald Manlimos, Froilan Pagalan, Merlita Duhay Lungsod, Elizabeth
Andagan, Doris Serdan, Leonora Bibiano, Perla Cumpay, Virginia Etic, Remegia
Noel, and Rosario Cuarto also filed against the private respondent with the same
office a complaint (NLRC Case No. SRAB-10-08-00124-92) for "illegal termination;
reinstatement with back wages; non-payment of wages; underpayment of wages;
non-payment of incentive leave pay, overtime pay, 13th month pay; and damages."
Both complaints were later amended and consolidated. 5
The private respondent answered the amended complaints 6 and thereafter the
parties submitted their position papers. 7
The petitioners maintained that they remained regular employees regardless of the
change of management in September 1991 and their execution of the Release and
Waiver. They argue that being a corporation, the private respondent's juridical
personality was unaffected even if ownership of its shares of stock changed hands.
Their signing of the Release and Waiver was of no moment not only because the
consideration was woefully inadequate, but also because employees who receive
their separation pay are not barred from contesting the legality of their dismissal
and quit claims executed by laborers are frowned upon for being contrary to public
policy.
On the other hand, the private respondent contended that the petitioners were
deemed legally terminated from their previous employment as evidenced by the
execution of the Release and Waiver and the filing of their applications for
employment with the new owner; that the new owner was well within its legal right
or prerogative in considering as terminated the petitioners' probationary/temporary
appointment; and that the petitioners were not illegally dismissed; hence, they are
not entitled to the reliefs prayed for.
In her decision of 30 April 1993, 8 Labor Arbiter Marissa Macaraig-Guillen ruled for
the petitioners and decreed as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered declaring the
dismissals of complainant Ronald Manlimos, Froilan Pagalan, Merlita Duhay
lungsod, Elizabeth Andagan, Doris Serdan, Leonora Bibiano, Perla Cumpay,
Virginia Etic, Remegia Noel, Ronald Booc, German Gista, Jaime Timber [sic],
Federico Amper, Renante Yacapin, and Francisco Evale as invalid and illegal and
ordering respondent Super Mahogany Plywood Corporation represented by its Vice
President, Mr. Alberto Go to:
1. To reinstate the complainants to their positions without loss of seniority rights
and privileges;
2. To pay then backwages, 13th month pay, service incentive leave pay and
attorney's fees in the total sum of FIVE HUNDRED FORTY TWO THOUSAND

attorney's fees in the total sum of FIVE HUNDRED FORTY TWO THOUSAND
ONE HUNDRED FIFTY PESOS and 40/100 ONLY (P542,150.40) in accordance
with the computation herein provided for.
All other claims are dismissed for lack of merit.
It is the thesis of the Labor Arbiter that the transfer of ownership partook of a
cessation of business operation not due to business reverses under Article 283 of
the Labor Code and pursuant to the doctrine laid down in MobilEmployees
Association vs. National Labor Relations Commission, 9 the following requisites
must be complied with before the dismissal of employees may be effected: (1)
service of written notice to the employees and to the Ministry of Labor and
Employment (MOLE) at least one month before the intended date thereof; (2) the
cessation of or withdrawal from business operations must be bona fide in character;
and (3) payment to the employees of termination pay amounting to at least one-half
month pay for each year of service or one month pay whichever is higher.
The Labor Arbiter ruled that the first and third requisites were present in this case;
she explicitly held that each of the petitioners signed freely and voluntarily the
Release and Waiver and that the termination and payment of separation pay by the
previous owner of the corporation were done in good faith. The Labor Arbiter,
however, ruled that there was no "cessation of operations which would lead to the
dismissal of the employees." Thus:
In this case, there was actually no cessation of business operations except for the
traditional break between Christmas and New Year.
In fact the notice given by Acting Resident Manager Jesus A. Cu on December 27,
1991 which is Annex 11 for respondent, clearly indicates that there was no gap to
speak, between the time the previous management turned over their
responsibilities to the new team of managers and the corresponding takeover.
Secondly, we are merely presuming that there was a purchase because a new list
of stockholders now sit on the board of the corporation and occupy various
positions as corporate officers, but this Office had never been formally apprised of
what actually occurred so that the bulk of existing shareholdings were transferred to
the group of Mr. Alfredo Roxas.
The Labor Arbiter then concluded that "upon resumption of their work in January of
1992, the complainant re-entered respondent's employ, not as probationary
employees, but as regular employees, because they were engaged in work which
was necessary and desirable to the company's operations." As regular employees,
they could not be dismissed without cause and without due process. She found that
in this case the irregularities allegedly committed by the petitioners were not
proven.
From the above adverse judgment of the Labor Arbiter, the private respondent
appealed to the NLRC (Fifth Division, Cagayan de Oro City).
In its resolution of 2 August 1993, the NLRC reversed the judgment of the Labor
Arbiter, except as to the 13th month pay which was sustained subject, however, to
recomputation based on the actual services of the petitioners under the new owner
up to the actual date of their separation from the service on 20 June 1992. It found
that the change of ownership in this case was made in good faith since there was
no evidence on record that "the former owners conspired with the new owners to
insulate the former management of any liability to its workers." It ruled that the
Labor Arbiter:
has not only misappreciated the facts but . . . has as well distorted the facts by
erroneously applying the ruling in the case of MOBIL. The facts in said Mobil are far
different from the facts in the instant case. The Mobil case refers to retrenchment or
termination of employment under Article 283 (ART. 284) of the Labor Code, as
mended. It does not involve termination of employment as a result of the change of
corporate ownership or corporate consolidation or merger.
xxx xxx xxx
The case cited by appellants in their position paper is more in point. General rule is
that "(C)hange of ownership or management of a business establishment or
enterprise however, is not one of the just causes . . . to terminate employment
without a definite period." That "(N)either can it be considered as synonymous with
nor or analogous to closing or cessation of operation of an establishment or
enterprise . . . ." (Central Azucarera del Danao vs. Court of Appeals, 137 SCRA
295, 303).
However, it is equally a well settled rule that the sale or disposition of a business

However, it is equally a well settled rule that the sale or disposition of a business
enterprise which has been motivated by good faith is "an element of exemption
from liability." Thus, "an innocent transferee of a business has no liability to the
employees of the transfer or to continue employing them. Nor is the transferee
liable for past unfair labor practices of the previous owner, except, when the liability
is assumed by the new employer under the contract of sale, or when liability arises
because the new owners participated in thwarting or defeating the rights of the
employees." (Central Azucarera del Danao, ibid.).
xxx xxx xxx
The hiring of employees on probationary basis is an exclusive management
prerogative. The labor tribunal cannot substitute its own judgment on the manner how
the employer will run its own business. (National Labor Union vs. Insular Yebana
Tobacco Corporation, 2 SCRA 924). The right to hire and fire is basically a sole
management prerogative which the courts may not interfere .
xxx xxx xxx
On the other hand, the subsequent hiring of complainants on probationary basis by
the new management/corporate owners being the prerogative of management must
be sustained. Since the corporate business is under a new management, the latter
will therefore need time to determine the qualifications of the newly hired workers,
herein complainants. As probationary employees, they are therefore on trial to
afford new management to determine whether or not they would qualify for
permanent employment.
Their motion to reconsider the resolution having been denied by the NLRC in its
resolution of 14 October 1993, the petitioners filed this special civil action
for certiorari. They claim that the NLRC acted with grave abuse of discretion when
it reversed the decision of the Labor Arbiter.
We disagree with the Labor Arbiter's reliance on the case of Mobil Employees
Association vs. National Labor Relations Commission. 10 The NLRC was correct in
holding that Mobil was not applicable because Mobil involved the termination of
employment under Article 283 (before Article 284) of the Labor Code and not
termination of employment as a result of the change of corporate ownership, as in
the case of private respondent Super Mahogany Plywood Corporation. In Mobil, the
original employer; Mobil Oil Philippines, Inc., completely withdrew from business
and was even dissolved. In the case at bar, there was only a change of ownership
of Super Mahogany Plywood Corporation which resulted in a change of ownership.
In short, the corporation itself, as a distinct and separate juridical entity, continues
to exist. The issue of whether there was a closing or cessation of business
operations which could have operated as a just cause for the termination of
employment was not material. The change in ownership of the management was
done bona fide and the petitioners did not for any moment before the filing of their
complaints raise any doubt on the motive for the change. On the contrary, upon
being informed thereof and of their eventual termination from employment, they
freely and voluntarily accepted their separation pay and other benefits and
individually executed the Release or Waiver which they acknowledged before no
less than a hearing officer of the DOLE.
A change of ownership in a business concern is not proscribed by law. 11 In Central
Azucarera del Danao vs.Court of Appeals, 12 this Court-stated:
There can be no controversy for it is a principle well-recognized, that it is within the
employer's legitimate sphere of management control of the business to adopt
economic policies or make some changes or adjustments in their organization or
operations that would insure profit to itself or protect the investment of its
stockholders. As in the exercise of such management prerogative, the employer
may merge or consolidate its business with another, or sell or dispose all or
substantially all of its assets and properties which may bring about the dismissal or
termination of its employees in the process. Such dismissal or termination should
not however be interpreted in such a manner as to permit the employer the very
concept of social justice.
In a number of cases on this point, the rule has been laid down that the sale or
disposition must be motivated by good faith as an element of exemption from liability.
Indeed, an innocent transferee of a business establishment has no liability to the
employees of the transfer or to continue employing them. Nor is the transferee liable for
past unfair labor practices of the previous owner, except, when the liability therefor is
assumed by the new employer under the contract of sale, or when liability arises

assumed by the new employer under the contract of sale, or when liability arises
because of the new owner's participation in thwarting or defeating the rights of the
employees. 13
Where such transfer of ownership is in good faith, the transferee is under no legal
duty to absorb the transferor employees as there is no law compelling such
absorption. The most that the transferee may do, for reasons of public policy and
social justice, is to give preference to the qualified separated employees in the
filling of vacancies in the facilities of the purchaser. 14
Since the petitioners were effectively separated from work due to a bona
fide change of ownership and they were accordingly paid their separation pay,
which they freely and voluntarily accepted, the private respondent corporation was
under no obligation to employ them; it may, however, give them preference in the
hiring. The private respondent in fact hired, but on probationary basis, all the
petitioners, except Rosario Cuarto. The non-hiring of Cuarto was legally
permissible.
The hiring of employees on a probationary basis is an exclusive management
prerogative. The employer has the right or privilege to choose who will be hired and
who will be denied employment. It is within the exercise of this right that the
employers may set or fix a probationary period within which it may test and observe
the employee's conduct before hiring him permanently. 15
It is settled that while probationary employees do not enjoy permanent status, they
are accorded the constitutional protection of security of tenure. They may only be
terminated for just cause or when they fail to qualify as regular employees in
accordance with reasonable standards made known to them by the employer at the
time of their engagement. 16 This constitutional protection, however, ends upon the
expiration of the period provided for in their probationary contract of employment.
Thereafter, the parties are free to renew the contract or not. 17
The petitioners themselves admit that upon their request the effective date of their
separation was deferred from 13 June 1992 to 20 June 1992. The latter date
apparently coincided with the expiration of the six-month probationary period. This
development has rendered moot the question of whether there was a just cause of
the dismissal of the petitioners other than Perla Cumpay and Virginia Etic.
A different conclusion would have to be reached with respect to Perla Cumpay and
Virginia Etic. They were dismissed on 4 May 1992 for having allegedly abandoned
their work. It is settled that to constitute abandonment, there must be a clear and
deliberate intent to discontinue one‟s employment, without deliberate intent to
discontinue one's employment, without any intention of returning. 18 In this case, the
private respondent not only failed to prove such intent, it as well violated the due
process rule in dismissal of employees. The requirements of lawful dismissal of an
employee by his employer are two-fold, viz., notice and hearing. 19 These
requirements constitute the essential elements of due process. 20 These
requirements not having been met with respect to Cumpay and Etic, their dismissal
was, consequently, illegal.
It results, therefore, that only petitioners Perla Cumpay and Virginia Etic were
entitled to reinstatement and back wages. Nonetheless, considering that their
probationary employment would have similarly expired six months after
commencement, reinstatement is no longer feasible.
WHEREFORE, the instant petition is partly GRANTED. The challenged resolutions
of public respondent National Labor Relations Commission (Fifth Division) of 2
August 1993 and 14 October 1993 in NLRC Case No. M-001378-93 are hereby
MODIFIED; and as modified, private respondent Super Mahogany Plywood
Corporation is further ordered to pay petitioners Perla Cumpay and Virginia Etic
their backwages corresponding to the period from 4 May 1992 up to the expiration
of their probationary employment contracts.
No pronouncements as to costs in this instance.
SO ORDERED.
Padilla, Bellosillo, Quiason and Kapunan, JJ., concur.
Footnotes
1 Annex "K" of Petition; Rollo, 167.
2 Annex "8," Id.; Id., 186.
3 Annex "J," Id.; Id., 138.
5 Annexes "A" and "C" of Petition; Rollo, 39; 43.

5 Annexes "A" and "C" of Petition; Rollo, 39; 43.
6 Annex "D," Id.; Id., 46.
7 Annexes "F" and "H," Id.; Id., 96, 109.
8 Annex "J" of Petition; Rollo, 138.
9 183 SCRA 737 [1990].
10 Supra note 9.
11 Sunio vs. NLRC, 127 SCRA 390 [1984].
12 137 SCRA 295 [1985].
13 Id. at 304-305 (citations omitted). See also San Felipe Neri School of
Mandaluyong, Inc. vs.NLRC, 201 SCRA 478 [1991].
14 MDII Supervisors and Confidential Employees Association vs. Presidential
Assistant on Legal Affairs, 79 SCRA 40 [1977]; San Felipe Neri School of
Mandaluyong, Inc. vs. NLRC, supra note 13.
15 Grand Motor Parts Corp. vs. Minister of Labor, 130 SCRA 436 [1984].
16 Article 281, Labor Code.
17 Biboso vs. Victorias Milling Co., 76 SCRA 250 [1977]; Colegio de San
Agustin vs. NLRC, 201 SCRA 398 [1991].
18 Nueva Ecija I Electric Cooperative, Inc. vs. Minister of Labor, 184 SCRA 25
[1990]; Dagupan Bus Co. vs. NLRC, 191 SCRA 328 [1990]; Batangas Laguna
Tayabas Bus Co. vs. NLRC, 212 SCRA 792 [1992]
19 Cathedral School of Technology vs. NLRC, 214 SCRA 551 [1992];
Tiu vs. NLRC, 215 SCRA 540 [1992].
20 Abiera vs. NLRC, 215 SCRA 476 [1992].

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Benguet Consolidated vs. BCI Employees & Workers Union
12:33 AM
lawphil
Today is
Thursda
y, July
01, 2004

SUPREME COURT
Manila
EN BANC
G.R. No. L-25471 March 27, 1968
BENGUET CONSOLIDATED, INC., STANLEY WILLIMONT, EUGENE
KNEEBONE, C.W. HEROLD, A.P. DAVIDSON, G.N. WRIGHT and O.M.
WESTERFIELD, petitioners,
vs.
BCI EMPLOYEES & WORKERS UNION-PAFLU and DONACIANO S. ANDRADA
and the COURT OF INDUSTRIAL RELATIONS, respondents.
Ross, Selph, Salcedo, Del Rosario, Bito & Misa for petitioners.
Leonardo C. Fernandez and Cipriano Cid & Associates for respondents.
BENGZON, J.P., J.:
On May 3, 1963, respondent labor union and Donaciano Andrada filed an
unfair labor practice charge in the Court of Industrial Relations against petitioner
company alleging that the latter unduly discriminated against respondent Andrade,
one of its employees, with regard to his status and conditions of employment in
violation of Sec. 4(a) (4) of Republic Act 875.
After investigating the charge, the acting prosecutor of the Court filed on
September 4, 1963, the formal complaint against petitioners company and some of
its officials. The principal averment in the complaint was 1 —
That in the year 1954, complainant Danaciano Andrada was promoted to the
position of Invoice Processing Clerk, but respondents refused to implement his
wage scale as embodied in the several collective bargaining agreements between
the Benguet Balatoc Workers Union, the complainant labor organization and the
company, starting 1954, on account of:
(a) His militant union activities;
(b) his persistent refusal to disaffiliate from complainant union;
(c) his petitions for the betterment of his co -employees for which he was
discriminated by the company; 1äwphï 1. ñë
t
Petitioners filed their answer on September 28, 1963 denying the alleged
discrimination against respondent Andrada and the alleged unjust refusal on their
part to implement the wage scale under the Collective Bargaining Agreements.
Issues having been joined, trial was conducted. On March 23, 1965,
Associate Judge Amando Bugayong before whom the hearings were made,
rendered decision finding petitioners guilty of unfair labor practice based on the

following of facts: 2
Respondent Benguet Consolidated, Inc., is a domestic corporation engaged
in the mining industry with respondents Stanley Willimont, Eugene Kneebone, C.W.
Herold, G.N. Wright, O.M. Westerfield, A.P. Davidson and William Johnson as its
officers. Complainant BCI Employees and Workers Union (PAFLU) is a legitimate
labor union while complainant Donaciano Andrada is a member thereof.
Prior to December 19, 1954, complainant Andrada was a payroll clerk in the
respondent Company with a salary of P3.24 per day. On August 28, 1954, he and
several others petitioned the respondent company that they be given the rates of
pay as prescribed in the collective bargaining contract. It appears that at that time
there was an existing collective bargaining contract between the respondent
company then operating under the trade name Benguet Consolidated Mining
Company and Balatoc Mining Company and the Benguet -Balatoc Workers Union of
which complainant Andrada was then a member. Said contract (Exh. "A") provides
for the wage scales of the workers and pursuant thereto, the wage scale of a payroll
clerk, first class category, was P3.56 per day (Exh. "A-1"). Thus, complainant
Andrada, together with several others, requested for adjustment of their wages
(Exh. "B") and the respondent company, in compliance thereto made the necessary
salary adjustment with the exception of complainant Andrada who, although he was
reclassified from clerk second class to clerk first class, did not receive any
corresponding increase in his pay (Exh. "1").
Then, on or about January 1, 1955, he was transferred from the Accounting
Department, clerk first class, to the Purchasing Department also as clerk first class
with the same salary of P97.20 per month or P3.24 per day (Exh. "E"). His
assignment in the Purchasing Department was recommended by S.J. Willimont, his
former department head, and C.W. Herold, head of the Purchasing Department,
and approved by A.P. Davidson, General Superintendent. He was assigned to
replace Ramon M. Alvia, a bodeguero performing invoice clearing duties who
resigned December 19, 1954 and who was receiving a salary of P4.60 per day
(Exh. "E-1").
To support his claim that he was discriminated against because of his militant
union activities, complainant Andrada testified that sometime after he, together with
several others, petitioned the respondent company for a reclassification and
readjustment of their wages, as first class clerk (Exh. "B") he brought the matter to
the attention of his union, then the Benguet -Balatoc Workers Union and accordingly
the latter, through Braulio Oximana, union steward, wrote a letter dated October 6,
1954 (Exh. "F") to the respondent company requesting information as to the action
taken by said respondent on the aforesaid petition for reclassification. He also
testified that an or about October 8, 1954, he had occasion to talk with Stanley
Willimont, then his department head, and the latter told him that had he not brought
his petition to the union, his future would have been better; and that as a matter of
fact he was the only employee who did not receive any adjustment in his salary
although he was placed in the first class clerk category . Complaint Andrada further
testified that sometime in 1955 after he was transferred to the Purchasing
Department, as replacement of Ramon M. Alvia, a "bodeguero" performing invoice
clearing duties and who was receiving a salary of P4.60 per day, he received the
same salary as payroll clerk which was P97.20 per month or P3.24 per day. So, he
approached C. W. Herold, head of the Purchasing Department, and complained to
the latter about his situation hoping that he will be extended the proper wage
appertaining to the position of "bodeguero" as provided in the collective bargaining
contract, but nothing came out of his request.
He also declared that on or about August 26, 1967, on the occasion of a
grievance meeting concerning the adjustment of his wages, Eugene Kneebone, one
of the respondent herein, said to him, "am spending much of my time for your
complaint. My time is precious. I tell you that as long as I am still connected with
Benguet Consolidated, Inc., this office cannot give you any change of classification
whatsoever"; That Mr. Kneebone further said, "By representing your grievance to
the union, you are cutting your neck entirely, and I tell you to think it over or retract
your complaint"; that complaint again met Mr. Kneebone who said to him, "The
question with you is, you are too vocal of your union activities. Had you shut your
mouth, your case should not have happened like that." He also testified that
sometime in 1958, he was elected district governor for Balatoc and on July 28,

sometime in 1958, he was elected district governor for Balatoc and on July 28,
1958 the union's counsel sent a letter to the respondent company informing the
latter of the appointment of complainant Andrada as union steward for Balatoc
(Exh. "D"); that as district governor and steward of the union, he was most often
alone in representing the workers in his district; that sometime in 1959, the
respondent company offered to transfer him as "bodeguero" to the Kias Dynamite
Storage area, but the same was intended to take him far from the company where
he performs his duties as union district steward. Complaint further testified that
sometime in July, 1962, there was an increase of P.24 to all kinds of categories and
that he was not benefitted by the increase; that he asked O.M. Westerfield, his
department head, to give him also an increase, but the latter said to him, "If you will
not stop asking or complaining about your rate, Mr. Crosby will step over your
head."
xx x xx x xxx1äwphï 1. ñët
Accordingly, petitioners were ordered "to implement the salary scale with
respect to the daily wage of complainant Donaciano S. Andrada from 1954 until his
wage reaches the level as embodied in the collective bargaining agreements
between the Benguet-Balatoc Workers Union, the complainant labor organization,
and the respondent company."
Petitioners subsequently moved for reconsideration, which the lower
court, en banc, denied altho one of the five judges dissented. They then elevated
the case to this Court for review by way of certiorari. Pending the appeal and at
petitioners' instance, this Court issued preliminary injunction to prevent immediate
execution of the judgment.
Petitioners' principal submission, in the first three errors assigned, is that they
were held liable for discriminating against respondent Andrada in 1954 on account
of militant union activities which, however, were conducted in 1958. This is
erroneous on two counts. First, what was charged was not discrimination committed
in 1954 alone but rather continuing acts of discrimination committed "starting 1954"
as alleged in par. 3 of the complaint for unfair labor practice. The charge of
discrimination, consisting in petitioners' refusal to implement the proper salary scale
as to respondent Andrada is adequately supported by the following findings of the
court a quo. In August, 1954, Andrada's category was changed to clerk first class
but he received no salary adjustment unlike the other employees. In 1955, after he
was transferred to the Purchasing Department and was assigned to perform the
work done by one Ramon Alvia who held the category of bodeguero (with a higher
pay rate) respondent Andrada still received no corresponding pay increase. In July,
1962, there was a general pay hike but Andrada was not benefitted.
Second, the militant union activity, involved is not Andrada's having been
elected as Union District Governor and Steward and his actuations as such, but
rather Andrada's having sought the help of his union in pursuing what he believed
was his right to salary adjustment. It should be noted that the damaging statement
on this score 3imputed to co-petitioners Stanley Willimont and Eugene Kneebone by
respondent Andrada in his testimony to which the court a quo gave credence, were
never denied or controverted by them. And it is unquestionable that the seeking of
the union's help by one of its members in connection with the latter's correct wages
constitutes proper union activity.
The claim that respondent Andrada was guilty of laches is without merit. The
discriminations, from 1954 to 1962, were continuing. Moreover, as counsel for
respondents correctly points out, the unfair labor practice charge was filed only in
1963 because respondent's complaint was first coursed thru a series of conciliation
meetings between the union and petitioner company.
In this connection, petitioner's final submission that respondent's complaint
had already been satisfactorily settled in the grievance proceedings as the latter
himself admitted is not borne out in the portion of Andrada's testimony reproduced
in Annex D of the petition. What could be inferred therefrom is that respondent
Andrada, who was on a monthly wage basis, refused to be classified on a daily
wage basis. But as the lower court found, 4respondent was justified in so refusing,
since; an employee on a daily wage basis gets less than one on the monthly basis
assuming the pay rate to be the same. This finding of the court is based on the
admission of Willimont, one co-petitioner company's own officials.
In fine, this Court finds that the findings of fact below furnish satisfactory

admission of Willimont, one co-petitioner company's own officials.
In fine, this Court finds that the findings of fact below furnish satisfactory
answers to the questions presented here by petitioners. And there is not even a
slight suggestion from them that these findings are not based on substantial
evidence. Hence, said findings are controlling.
Pasted from <http://www.lawphil.net/judjuris/juri1968/mar1968/gr_l-25471_1968.html>

Elisco-Elirol Labor Union v. Noriel (1977)
12:37 AM
lawphil
Today is
Thursday,
July 01,
2004

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-41955 December 29, 1977
ELISCO-ELIROL LABOR UNION (NAFLU) and its OFFICERS AND MEMBERS
OF THE BOARD OF DIRECTORS, petitioners
vs.
CARMELO NORIEL, in his capacity as Director of the Bureau of Labor
Relations, ELIZALDE STEEL CONSOLIDATED, INC. and NATIONAL
FEDERATION OF LABOR UNIONS (NAFLU), respondents.
Villaluz, Villaluz & Villaluz, Padilla Law Offices and Rizalindo V. Diaz for
petitioners.
Acting Solicitor General Hugo E. Gutierrez, Jr., Assistant Solicitor Reynato S.
Puno and Solicitor Ramon A. Barcelona respondent Director.
Rolando M. Olalia for respondent Union (NAFLU).
TEEHANKEE, J.:
The Court sets aside respondent director's appealed resolution and rules in
accordance with the prevailing law and settled jurisprudence that the petitioner
union consisting of the members-employees of respondent corporation is the
principal party to the collective bargaining agreement (rather than the respondent
mother union which is merely its agent) and is therefore entitled to be recognized
as the sole and exclusive bargaining representative entitled to administer and
enforce the collective bargaining agreement with the employer corporation.
The undisputed antecedent facts which gave rise to the present petition are stated
in the petition as follows:
2. That sometime on February 1974, petitioner-Elisco Elirol Labor Union (NAFLU),
negotiated and executed a collective bargaining agreement with respondent-Elizalde
Steel Consolidated, Inc. 1
3. That upon verification by individual petitioners at the Registration division,
Bureau of Labor Relations, Department of Labor, the Elisco-Elirol Labor Union
(NAFLU), the contracting party in said collective bargaining agreement, was not
then registered and therefore not entitled to the benefits and privileges embodied
in said collective bargaining agreement; thus on March 3, 1975, the member of
petitioner-appellant union in a general membership meeting decided in a
resolution to register their union to protect and preserve the integrity and
inviolability of the collective bargaining agreement between the Elisco-Elirol Labor

inviolability of the collective bargaining agreement between the Elisco-Elirol Labor
Union (NAFLU) and the Elizalde Steel Consolidated, Inc.
4. That said resolution of the members of petitioner-appellant union was passed
upon by the officers and members of the Board of Directors on May 20, 1975, at a
special meeting called for the purpose, resolution No. 6, s. 1975 was approved
requesting the Acting Directors, Registration Division, Bureau of Labor Relations,
to register the union Elisco-Elirol Labor Union (NAFLU).
5. That by virtue of resolution No. 6, Petitioner -appellant union applied for
registration with the Bureau of Labor Relations, hence on May 28, 1975,
Certificate of Registration No. 8511-IP was issued by said Office.
6. That with the issuance of the certificate of registration petitioner -appellant
acquired a personality separate and distinct from any other labor union.
7. That steps were taken by petitioner-appellant to enforce the collective
bargaining agreement as the principal party to the same representing the workers
covered by such agreement immediately after the issuance of the certificate of
registration.
8. That on June 10, 1975, at a special meeting called for the purpose, the general
membership of petitioner union decided that their mother union, the National
Federation of Labor Unions, can no longer safeguard the rights of its members
insofar as working conditions and other terms of employment are concerned and
that the interest and welfare of petitioner can be served best if it will stay
independent and disaffiliated from said mother union, hence, the general
membership adopted a resolution to disaffiliate from the National Federation of
Labor Unions.
9. That on June 11, 1975, petitioner, acting through its President Hilario Riza
informed respondents of said disaffiliation by means of a letter, and subsequently
requested respondents to recognize petitioner as the sole and exclusive
bargaining representative of the employees thereof.

Pier 8 Arrastre v. Roldan-Confessor (1995)
12:39 AM
lawphil
Today is
Thursday,
July 01,
2004

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 110854 February 13, 1995

PIER 8 ARRASTRE & STEVEDORING SERVICES, INC., petitioner,
vs.
HON. MA. NIEVES ROLDAN-CONFESOR, in her capacity as Secretary of
Labor and Employment, and GENERAL MARITIME & STEVEDORES UNION
(GMSU), respondents.
PUNO, J.:
Petitioner corporation and private respondent labor union entered into a three -
year Collective Bargaining Agreement (CBA) with expiry date on November 27,
1991. During the freedom period the National Federation of Labor Unions
(NAFLU) questioned the majority status of Private respondent through a petition
for certification election. The election conducted on February 27, 1992 was won
by private respondent. On March 19, 1992, private respondent was certified as
the sole and exclusive bargaining agent of petitioner's rank-and-file employees.
On June 22, 1992, private respondent's CBA proposals were received by
petitioner. Counter-proposals were made by petitioner. Negotiations collapsed,
and on August 24, 1992, private-respondent filed a Notice of Strike with the
National Conciliation and Mediation Board (NCMB). The NCMB tried but failed to
settle the parties' controversy.
On September 30, 1992, public respondent Secretary of Labor assumed
jurisdiction over the dispute. She resolved the bargaining deadlock between the
parties through an Order, dated March 4, 1993, which reads, in part:
xxx xxx xxx
A. The non-economic issues
1. Scope/coverage of the CBA. Article I of the 1988 CBA provides:
The Company recognizes the Union as the sole and exclusive collective
bargaining representative of all the stevedores, dockworkers, gang bosses,
foremen, rank and file employees working at Pier 8, North Harbor and its offices
and said positions are [sic] listed in ANNEX "A" hereof.
As such representative the UNION is designated as the collective bargaining
agent with respect to and concerning the terms and conditions of employment and
the interpretations and implementation of the provisions and conditions of this

Agreement.
Annex "A" of the CBA is the listing of positions covered thereby. These are:
1. Foremen;
2. Gang bosses;
3. Winchmen;
4. Signalmen;
5. Stevedores;
6. Dockworkers;
7. Tallymen;
8. Checkers;
9. Forklift and crane operators;
10. Sweepers;
11. Mechanics;
12. Utilitymen;
13. Carpenters; and
14. Other rank and file employees;
The company argues in the first instance that under Article 212(m) in relation to
Article 245 of the Labor Code, supervisors are ineligible for. membership in a
labor organization of rank and file. Being supervisors, foremen should be
excluded from the bargaining unit.
The Company likewise seeks the exclusion on the ground of lack of community of
interest and divergence in functions, mode of compensation and working
conditions of the following:
1. Accounting clerk;
2. Audit clerk;
3. Collector;
4. Payroll clerk;
5. Nurse;
6. Chief biller;
7. Biller;
8. Teller/biller;
9. Personnel clerk;
10. Timekeeper;
11. Asst. timekeeper;
12. Legal secretary;
13. Telephone operator;
14. Janitor/Utility; and
15. Clerk
These positions, the Company argues, cannot be lumped together with the
stevedores or dockworkers who mostly comprise the bargaining unit. Further,
notwithstanding the check-off provisions of the CBA, the incumbents in these
positions have never paid union dues. Finally, some of them occupy confidential
positions and therefore ought to be excluded from the bargaining unit.
The Union generally argues that the Company's proposed exclusions
retrogressive. . . .
We see no compelling justification to order the modification of Article I of the 1988
CBA as worded. For by lumping together stevedores and other rank and file
employees, the obvious intent of the parties was to treat all employees not
disqualified from union membership as members of one bargaining unit. This is
regardless of working conditions, mode of compensation, place of work, or other
considerations. In the absence of mutual agreement of the parties or evidence
that the present compositions of the bargaining unit is detrimental to the individual
and organizational rights either of the employees or of the Company, this
expressed intent cannot be set aside.
It may well be that as a consequence of Republic Act No. 6715, foremen are
ineligible to join the union of the rank and file. But this provision can be invoked
only upon proof that the foremen sought to be excluded from the bargaining unit
are cloaked with effective recommendatory powers such as to qualify them under
the legal definitions of supervisors.
xxx xxx xxx
7. Effectivity of the CBA. The Union demands that the CBA should be fully

retroactive to 28 November 1991. The Company is opposed on the ground that
under Article 253-A of the labor code, the six-month period within which the
parties must come to an agreement so that the same will be automatically
retroactive is long past.
The Union's demand for full retroactivity, we note, will result in undue financial
burden to the Company. On the other hand, the Company's reliance on Article
253-A is misplaced as this applies only to the renegotiated terms of an existing
CBA. Here, the deadlock arose from negotiations for a new CBA.
These considered, the CBA shall be effective from the time we assumed
jurisdiction over the dispute, that is, on 22 September 1992, and shall remain e
effective for five (5) years thereafter. It shall be understood that except for the
representation aspect all other provisions thereof shall be renegotiated not later
than three (3) years after its effectivity, consistently with Article 253-A of the Labor
Code.
B. The economic issues
The comparative positions of the parties are:
COMPANY UNION
xxx xxx xxx
5
. Vacation and sick leave 17 days vacation and sick leave i) For all covered employees
17 days sick leave per year and 17 days sick than gang
for employment with at least gang bosses:
five years of service.
15 working days vacation and
15 working days sick leave
for those with at least 1 year
of service
for those with more than one
year of service up to 5 years
of service
for those with more than 5
years of service up to 10
years of service
for those with more than 10
years of service
Provided that in the case Provided that in the case of a
of a rotation worker, he rotation worker, he must have
must have work for at worked for 140 days in a
least 160 days in a year calendar year as a condition
for availment for availment.

for availment for availment.
Provided, further that in the
event a rotation worker fails
to complete 140 days work in
a calendar year, he shall still
be entitled to vacation and
sick leave with pay, as follows:
139 - 120 days worked: 90%
119 - 110 days worked: 50%
ii) For Gang bosses:
Same as the above schedule
except that:
1) the condition that a gang
bosses must have worked for at
least 120 days in a calendar
year shall be reduced to 110
days; and
2) where the above number of
days worked is not met, the
gang boss shall still be entitled
to vacation and sick leave with
pay, as follows:
109 - 90 days worked: 90%
89 - 75 days worked: 50%
xxx xxx xxx
7. Death aid P1,500.00 to heirs P10,000.00 to heirs of covered
of covered employees employees
P5,000.00 assistance for death
of immediate member of
covered employee's family
xxx xxx xxx
12. Emergency loan

a) amount of P700.00 but damage 30 days salary payable through
entitlement to dwelling by fire shall payroll deduction in twelve
be included monthly installments
b) cash bond None The company shall put up a cash
for loss, damage bond of not less than P40,000.00
or accident for winchmen, crane and forklift
operators.

operators.
xxx xxx xxx

Balancing the right of the Company to remain viable and to just returns to its
investments with right of the Union members to just rewards for their labors, we
find the following award to be fair and reasonable:
xxx xxx xxx
6. Vacation and Sick Leave

a) Non-rotation workers 17 days vacation/17 days sick leave
for those with at least 1 year of service
b) Rotation workers other 17 days vacation/17 days sick leave,
than gang boss provided that the covered worker
must have worked for at least 155 days
in a calendar year
c) Gang bosses 17 days vacation/17 days sick leave,
provided that the gang boss must have
worked for at least 115 days in a
calendar year
xxx xxx xxx

8. Death aid P3,000.00 to the heirs of each covered employee
xxx xxx xxx
12. Emergency loan 30 days pay, payable through payroll deductions of 1/12 of
monthly salary
WHEREFORE, the Pier 8 Arrastre and Stevedoring Services and the General
Maritime Services Union are hereby ordered to execute new collective bargaining
agreement the incorporating the dispositions herein contained. These shall be in
addition to all other existing terms, conditions and benefits of employment, except
those specifically deleted herein, which have previously governed the relations of the
parties. All other disputed items not specifically touched upon herein are deemed
denied, without prejudice to such other agreements as the parties may have reached
in the meantime. The collective bargaining agreement so executed shall be effective
from 22 September 1992 and up to five years thereafter, subject to renegotiation on
the third year of its effectivity pursuant to Article 253-A of the Labor Code. 1
Petitioner sought partial reconsideration of the Order. On June 8, 1993, public
respondent affirmed her findings, except for the date of effectivity of the Collective
Bargaining Agreement which was changed to September 30, 1992. This is the
date when she assumed jurisdiction over the deadlock.
Petitioner now assails the Order as follows:
I
THE HONORABLE SECRETARY OF LABOR COMMITTED GRAVE ABUSE OF
DISCRETION IN NOT EXCLUDING CERTAIN POSITIONS FROM THE
BARGAINING AGREEMENT UNIT
II
DISCRETION IN MAKING THE CBA EFFECTIVE ON SEPTEMBER 30, 1992
WHEN SHE ASSUMED JURISDICTION OVER THE LABOR DISPUTE AND NOT
MARCH 4, 1993 WHEN SHE RENDERED JUDGMENT OVER THE DISPUTE
III
DISCRETION IN REDUCING THE NUMBER OF DAYS AN EMPLOYEE
SHOULD ACTUALLY WORK TO BE ENTITLED TO VACATION AND SICK
LEAVE BENEFITS
IV

IV
THE HONORABLE SECRETARY OF LABOR COMMITTE D GRAVE ABUSE OF
DISCRETION IN INCREASING WITHOUT FACTUAL BASIS THE DEATH AID AND
EMERGENCY LOAN 2
The petition is partially meritorious.
Firstly, petitioner questions public respondent for not excluding four (4) foremen, a
legal secretary, a timekeeper and an assistant timekeeper from the bargaining
unit composed of rank-and-file employees represented by private respondent.
Petitioner argues that: (1) the failure of private respondent to object when the
foremen and legal secretary were prohibited from voting in the certification
election constitutes an admission that such employees
hold supervisory/confidential positions; and (2) the primary duty and responsibility
of the timekeeper and assistant timekeeper is "to enforce company rules and
regulations by reporting to petitioner . . . those workers who committed infractions,
such as those caught abandoning their posts." and hence, they should not be
considered as rank-and-file employees.
The applicable law governing the proper composition of bargaining unit is Article
245 of the labor Code, as amended, which provides as follows:
Art. 245. Ineligibility of managerial employees to join any labor
organization; employees to join any labor organization; right of supervisory
employees. — Managerial employees are not eligible to join, assist or form any
labor organization. Supervisory employees shall not be eligible for membership in
a labor organization of the rank-and-file employees but may join, assist or form
separate labor organizations of their own.
Article 212(m) of the same Code, as well as Book V, Rule 1, Section 1(o) of the
Omnibus Rules Implementing the Labor Code, as amended by the Rules and
Regulations Implementing R.A.. 6715, differentiate managerial, supervisory, and
rank-and-file employees, thus:
"Managerial Employee" is one who is vested with powers or prerogatives to lay
down and execute management policies and/or to hire, transfer, suspend, layoff
recall, discharge, assign or discipline employees. Supervisory employees are
those who, in the interest of the employer, effectively recommend such
managerial actions if the exercise of such authority is not merely routinary or
clerical in nature but requires the use of independent judgment. All employees not
falling within any of the above definitions are considered rank-and-file employees
for purposes of the Book.
This Court has ruled on numerous occasions that the test of supervisory or
managerial status is whether an employee possesses authority to act in the
interest of his employer which authority is not merely routinary or clerical in nature
but requires use of independent judgment. 3 What governs the determination of
the nature of employment is not the employee's title, but his job description. If the
nature of the employee's job does not fall under the definition of "managerial" or
"supervisory" in the Labor Code, he is eligible to be a member of the rank-and-file
bargaining unit. 4
Foremen are chief and often especially-trained workmen who work with and
commonly are in charge of a group of employees in an industrial plant or in
construction work. 5 They are the persons designated by the employer-
management to direct the work of employees and to superintend and oversee
them. 6 They are representatives of the employer-management with authority over
particular groups of workers, processes, operations, or sections of a plant or an
entire organization. In the modern industrial plant, they are at once a link in the
chain of command and the bridge between the management and labor. 7 In the
performance their work, foremen definitely use their independent judgment and
are empowered to make recommendations for managerial action with respect to
those employees under their control. Foremen fall squarely under the category
of supervisory employees, and cannot be part of rank-and-file unions.
Upon the other hand, legal secretaries are neither managers nor supervisors.
Their work is basically routinary and clerical. However, they should be
differentiated from rank-and-file employees because they, are tasked with, among
others, the typing of legal documents, memoranda and correspondence, the
keeping of records and files, the giving of and receiving notices and such other
duties as required by the legal personnel of the corporation. 8Legal secretaries

duties as required by the legal personnel of the corporation. 8Legal secretaries
therefore fall under the category of confidential employees. Thus, to them applies
our holding in the case of Philips Industrial Development, Inv., v. NLRC, 210
SCRA 339 (1992), that:
. . . By the very functions, they assist confidential capacity to, or have access to
confidential. matters of, persons to, exercise managerial functions in the field of
labor relations. As such, the rationale behind the ineligibility of managerial
employees to form, assist or join a labor union equally applies to them.
In Bulletin Publishing Co., Inc., vs. Hon. Augusto Sanchez, this Court elaborated
on this rationale, thus:
. . . The rationale, for this inhibition has been stated to be, because if these
managerial employees would belong to or be affiliated with Union the latter might
not, be assured of their loyalty to the Union in view of evident conflict of interests.
The Union can also become company-dominated with the presence of managerial
employees in Union membership.
9
In Golden Farms, Inc., vs. Ferrer-Calleja, this court explicitly made this rationale
applicable to confidential employees:
This rationale holds true also for confidential employees . . ., who having access
to confidential information, may become the source of undue advantage. Said
employee(s) may act as a spy or spies of either party to a collective bargaining
agreement. . . .
We thus hold that public respondent acted with grave abuse of discretion in not
excluding the four foremen and legal secretary from the bargaining unit composed
of rank-and-file employees.
As for the timekeeper and assistant timekeeper it is clear from petitioner's own
pleadings that they are, neither managerial nor supervisory employees. They are
merely tasked to report those who commit infractions against company rules and
regulations. This reportorial function is routinary and clerical. They do not
determine the fate of those who violate company policy rules and regulations
function. It follows that they cannot be excluded from the subject bargaining unit.
The next issue is the date when the new CBA of the parties should be given
effect. Public respondent fixed the effectivity date on September 30, 1992. when
she assumed jurisdiction over the dispute. Petitioner maintains it should be March
4. 1993, when public respondent rendered judgment over the dispute.
The applicable laws are Articles 253 and 253- A of the Labor Code, thus:
Art. 253. Duty to bargain collectively when there exists a collective bargaining
agreement. — When there is a collective bargaining agreement, the duty to
bargain collectively shall also mean that neither party shall terminate nor modify
such agreement during its lifetime. However, either party can serve a written
notice to terminate or modify the agreement at least sixty (60) days prior to its
expiration date. It shall be the duty of both parties to keep the status quo and to
continue in full force and effect the terms and conditions of the existing agreement
during the 60-day period and/or until a new agreement is reached by the parties.
and;
Art. 253-A. Terms of a collective bargaining agreement. — Any Collective
Bargaining Agreement that the parties may enter into shall, insofar as the
representation aspect is concerned, be for a term of five (5) years. No petition
questioning the majority status of the incumbent bargaining agent shall be
entertained and no certification election shall be conducted by the Department of
Labor and Employment outside the sixty-day period immediately before the date
of expiry of such five year term of the Collective Bargaining Agreement. All other
provisions of the Collective Bargaining Agreement shall be renegotiated not later
than three (3) years after its execution. Any agreement on such other provisions
of the Collective Bargaining Agreement entered into within six (6) months from the
date of expiry of the term of such other provisions as fixed in such Collective
Bargaining Agreement, shall retroact to the day immediately following such date.
If any such agreement is entered into beyond six months, the parties shall agree
on the duration of collective bargaining agreement, the parties may exercise their
rights under this Code.
In Union of Filipino Employees v. NLRC, 192 SCRA 414 (1990), this court
interpreted the above law as follows:
In light of the foregoing, this Court upholds the pronouncement of the NLRC

In light of the foregoing, this Court upholds the pronouncement of the NLRC
holding the CBA to be signed by the parties effective upon the promulgation of the
assailed resolution. It is clear and explicit from Article 253-A that any agreement
on such other provisions of the CBA shall be given retroactive effect only when it
is entered into within six (6) months from its expiry date. If the agreement was
entered into outside the six (6) month period, then the parties shall agree on the
duration of the retroactivity thereof.
The assailed resolution which incorporated the CBA to be signed by the parties
was promulgated June 5, 1989, the expiry date of the past CBA. Based on the
provision of Section 253-A, its retroactivity should be agreed upon. by the parties.
But since no agreement to that effect was made, public respondent did not abuse
its discretion in giving the said CBA a prospective effect. The action of the public
respondent is within the ambit of its authority vested by existing law.
In the case of Lopez Sugar Corporation v. Federation of Free Workers, 189 SCRA
179 (1991), this Court reiterated the rule that although a CBA has expired, it
continues to have legal effects as between the parties until a new CBA has been
entered into. It is the duty of both parties to the to keep the status quo, and to
during the 60-day freedom period and/or until a new agreement is reached by the
parties. 10 Applied to the case at bench, the legal effects of the immediate past
CBA between petitioner and private respondent terminated, and the effectivity of
the new CBA began, only on March 4, 1993 when public respondent resolved
their dispute.
Finally, we find no need to discuss at length the merits of the third and fourth
assignments of error. The questioned Order relevantly states:
In the resolution of the economic issues, the Company urges us to consider
among others, present costs of living, its financial capacity, the present wages
being paid by the other cargo handlers at the North Harbor, and the fact that the
present average wage of its workers is P127.75 a day, which is higher than the
statutory minimum wage of P118.00 a day. The Company's evidence, consisting
of its financial statements for the past three years, shows that its net income was
P743,423.45 for 1989, P2,108,569.03 for 1990, and P1,479,671.84 for 1991, or
an average of P1,443,885.10 over the three-year period. It argues that for just the
first year of effectivity of the CBA, the Company's proposals on wages, effect
thereof on overtime, 13th month pay, and vacation and sick leave commutation,
will cost about P520,723,44, or 35.19% of its net income for 1991. The Company
likewise urges us to consider the multiplier effect of its proposals on the second
and third years of the CBA. As additional argument, the Company manifests that
a portion of its pier will undergo a six-month to one-year renovation starting
January 1993.
On the other hand, the Union's main line of argument — that is, aside from being
within the financial capacity of the Company to grant, its demands are fair and
reasonable — is not supported by evidence controverting the Company's own
presentation of its financial capacity. The Union in fact uses statements of the
Company for 1989-1991, although it interprets these data as sufficient justification
for its own proposals. It also draws our attention to the bargaining history of the
parties, particularly the 1988 negotiations during which the company was able to
grant wage increases despite operational losses.
Balancing the right of the Company to remain viable and to just returns to its
investments with right of the Union members to just
11
rewards for their labors, we find the following award to be fair and reasonable . . . .
It is evident that the above portion of the impugned Order is based on well-studied
evidence. The conclusions reached by public respondent in the discharge of her
statutory duty as compulsory arbitrator, demand the high respect of this Court.
The study and settlement of these disputes fall within public respondent's distinct
administrative expertise. She is especially trained for this delicate task, and she
has within her cognizance such data and information as will assist her in striking
the equitable balance between the needs of management, labor and the public.
Unless there is clear showing of grave abuse of discretion, this Court cannot and
will not interfere with the labor expertise of public respondent Secretary of Labor.
IN VIEW WHEREOF, public respondents Order, dated March 4, 1993, and
Resolution, dated June 8, 1993, are hereby MODIFIED to exclude foremen and

Resolution, dated June 8, 1993, are hereby MODIFIED to exclude foremen and
legal secretaries from the rank-and-file bargaining unit represented by private
respondent union, and to fix the date of effectivity of the five-year collective
bargaining agreement between petitioner corporation and private respondent
union on March 4, 1993. No costs.
SO ORDERED.
Narvasa, C.J., Bidin, Regalado and Mendoza, JJ., concur.
Footnotes
1 Order of the Secretary of Labor and Employment, dated March 4,
1993. See Annex "A" to Petition, p. 27- 47 of Rollo.
2 Rollo, pp. 6-7.
3 See Philippine Appliance Corporation v. Laguesma, 226 SCRA 730 (1993);
Pagkakaisa ng mga Manggagawa sa Triumph International-United Lumber and
General Workers of the Philippines v. Ferrer-Calleja, 181 SCRA 119 (1990). See
also Atlas Lithographic Services, Inc. v. Laguesma, 205 SCRA 12 (1992);
Philtranco Service Enterprises v. Bureau of Labor Relations, 174 SCRA 338
(1989).
4 See Southern Philippines Federation of Labor (SPFL) v. Calleja, 172 SCRA 676
(1989).
5 See Ballentine's Law Dictionary, 3rd Edition (1969); Webster's Third New
International Dictionary (1971).
6 Black's Law Dictionary, 6th Edition (1990).
7 Webster's Third New International Dictionary (1971).
8 See Black's Law Dictionary, 6th Edition (1990).
9 210 SCRA 471 (1989).
10 National Congress of Unions in the Sugar Industry of the Philippines v. Ferrer -
Calleja, 205 SCRA 478 (1992).
11 Rollo, pp. 44-45.
Pasted from <http://www.lawphil.net/judjuris/juri1995/feb1995/gr_110854_1995.html>

New Pacific Timber v. NLRC (2000)
12:44 AM
lawphil
Today is
Thursday
, July 01,
2004

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 124224 March 17, 2000

NEW PACIFIC TIMBER & SUPPLY COMPANY, CO., INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, MUSIB M. BUAT, LEON G.
GONZAGA, JR., ET AL., NATIONAL FEDERATION OF LABOR, MARIANO
AKILIT and 350 OTHERS, respondents.
KAPUNAN, J.:
May the term of a Collective Bargaining Agreement (CBA) as to its economic
provisions be extended beyond the term expressly stipulated therein, and, in the
absence of a new CBA, even beyond the three -year period provided by law? Are
employees hired after the stipulated term of a CBA entitled to the benefits provided
thereunder?
These are the issues at the heart of the instant petition for certiorari with prayer for
the issuance of preliminary injunction and/or temporary restraining order filed by
petitioner New Pacific Timber & Supply Company, Incorporated against the
National Labor Relations Commission (NLRC), et. al., and the National Federation
of Labor, et. al.
The antecedents facts, as found by the NLRC, are as follows:
The National Federation of Labor (NFL, for brevity) was certified as the sole and
exclusive bargaining representative of all the regular rank -and-file employees of
New Pacific Timber & Supply Co., Inc. (hereinafter referred to as petitioner
Company). 1 As such, NFL started to negotiate for better terms and conditions of
employment for the employees in the bargaining unit which it represented.
However, the same was allegedly met with stiff resistance by petitioner Company,
so that the former was prompted to file a complaint for unfair labor practice (ULP)
against the latter on the ground of refusal to bargain collectively. 2
On March 31, 1987, then Executive Labor Arbiter Hakim S. Abdulwahid issued an
order declaring (a) herein petitioner Company guilty of ULP; and (b) the CBA
proposals submitted by the NFL as the CBA between the regular rank -and-file
employees in the bargaining unit and petitioner Company. 3
Petitioner Company appealed the above order to the NLRC. On November 15,
1989, the NLRC rendered a decision dismissing the appeal for lack of merit. A
motion for reconsideration thereof was, likewise, denied in a Resolution, dated

motion for reconsideration thereof was, likewise, denied in a Resolution, dated
November 12, 1990. 4
Unsatisfied, petitioner Company filed a petition for certiorari with this Court. But the
Court dismissed said petition in a Resolution, dated January 21, 1991. 5
Thereafter, the records of the case were remanded to the arbitration branch of
origin of the execution of Labor Arbiter Abdulwahid's Order, dated March 31, 1987,
granting monetary benefits consisting of wage increases, housing allowances,
bonuses, etc. to the regular rank-and-file employees. Following a series of
conferences to thresh out the details of computation, Labor Arbiter Reynaldo S.
Villena issued an Order, dated October 18, 1993, directing petitioner Company to
pay the 142 employees entitled to the aforesaid benefits the respective amounts
due them under the CBA. Petitioner Company complied; and the corresponding
quitclaims were executed. The case was considered closed following NFL's
manifestation that it will no longer appeal the October 18, 1993 Order of Labor
Arbiter Villena. 6
However, notwithstanding such manifestation, a "Petition for Relief" was filed in
behalf of 186 of the private respondents "Mariano J. Akilit and 350 others" on May
12, 1994. In their petition, they claimed that they were wrongfully excluded from
enjoying the benefits under the CBA since the agreement with NFL and petitioner
Company limited the CBA's implementation to only the 142 rank -and-file
employees enumerated. They claimed that NFL's misrepresentations had
precluded them from appealing their exclusion. 7
Treating the petition for relief as an appeal, the NLRC entertained the same. On
August 4, 1994, said commission issued a resolution 8 declaring that the 186
excluded employees "form part and parcel of the then existing rank -and-file
bargaining unit" and were, therefore, entitled to the benefits under the CBA. The
NLRC held, thus:
WHEREFORE, the appeal is hereby granted and the Order of the Labor arbiter
dated October 18, 1993 is hereby. Set Aside and Vacated. In lieu hereof, a new
Order is hereby issued directing respondent New Pacific Timber & Supply Co., Inc.
to pay all its regular rank-and-file workers their wage differentials and other
benefits arising from the decreed CBA as explained above, within ten (10) days
from receipt of this order.
SO ORDERED. 9
Petitioner Company filed a motion for reconsideration of the aforequoted

resolution.
Meanwhile, four separate groups of the private respondents, including the original
186 who had filed the "Petition for Relief" filed individual money claims, docketed
as NLRC Cases Nos. M-001991-94 to M-001994-94, before the Arbitration Branch
of the NLRC, Cagayan de Oro City. However, Labor Arbiter Villena dismissed
these cases in Orders, dated March 11, 1994; April 13, 1994; March 9, 1994; and,
May 10, 1994. The employees appealed the respective dismissals of their
complainants to the NLRC. The latter consolidated these appeals with the
aforementioned motion for reconsideration filed by petitioner Company.
On February 29, 1996, the NLRC issued a resolution, the dispositive portions of
which reads as follows:
WHEREFORE, the instant petition for reconsideration of respondent is DENIED for
lack of merit and the Resolution of the Commission dated August 4,
1994 Sustained. The separate orders of the Labor Arbiter dated March 11, 1994,
April 13, 1994, March 9, 1994 and May 10, 1994, respectively, in NLRC Cases
Nos. M-001991-94 to M-001994-94 are Set Aside and Vacated for lack of legal
bases.
Conformably, respondent New Pacific Timber and Supply Co., Inc., is hereby
directed to pay individual complainants their CBA benefits in the aggregate amount
of P13,559,510.37, the detailed computation thereof is contained in Annex "A"
which forms an integral part of this resolution, plus ten (10%) percent thereof as
Attorney's fees.
SO ORDERED. 10
Hence, the instant petition wherein petitioner Company raises the following issues:
I
THE PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF

DISCRETION IN ALLOWING THE "PETITION FOR RELIEF" TO PROSPER.
II
THE PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF
DISCRETION IN RULING THAT PRIVATE RESPONDENTS MARIANO AKILIT
AND 350 OTHERS ARE ENTITLED TO BENEFITS UNDER THE COLLECTIVE
BARGAINING AGREEMENT IN SPITE OF THE FACT THAT THEY WERE NOT
EMPLOYED BY THE PETITIONER MUCH LESS WERE THEY MEMBERS OF
THE BARGAINING UNIT DURING THE TERM OF THE CBA.
III
PUBLIC RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION
IN MAKING FACTUAL FINDINGS WITHOUT BASIS.
IV
THE DISPOSITIVE PORTIONS OF THE ASSAILED RESOLUTIONS ARE
DEFECTIVE AND/OR REVEAL THE GRAVE ABUSE OF DISCRETION COMMITTE D
BY PUBLIC RESPONDENT. 11
Petitioner company contends that a "Petition of Relief" is not the proper mode of
seeking a review of a decision rendered by the arbitration branch of the
NLRC. 12 According to the petitioner, nowhere in the Labor Code or in the NLRC
Rules of Procedure is there such a pleading. Rather, the remedy of a party
aggrieved by an unfavorable of the labor arbiter is to appeal said judgment to the
NLRC. 13
Petitioners asseverates that even assuming that the NLRC correctly treated the
petition for relief as an appeal, still, it should not have allowed the same to prosper,
because the petition was filed several months after the ten -day reglementary
period for filing an appeal had expired; and therefore, it failed to comply with the
requirements of an appeal under the Labor Code and the NLRC Rules of
Procedure.
Petitioner Company further contends that in filing separate complaints and/or
money claims at the arbitration level in spite of their pending petition for relief and
in spite of the final order, dated October 18, 1993, in NLRC Case No. RAB -
IX-0334-82, the private respondents were in fact forum-shopping, an act which is
proscribed as trifling with the courts and abusing their practices.
Anent the second issue, petitioners argues that the private respondents are not
entitled to the benefits under the CBA because employees hired after the term of a
CBA are not parties to the agreement, and therefore, may not claim benefits
thereunder, even if they subsequently become members of the bargaining unit.
As for the term of the CBA, petitioner maintains that Article 253 of the Labor Code
refers to the continuation in full force and effect of the previous CBA's terms and
conditions. By necessity, it could not possibly refers to terms and conditions which,
as expressly stipulated, ceased to have force and effect. 14
According to petitioner, the provision on wage increase in the 1981 to 1984 CBA
between petitioner Company and NFL provided for yearly wage increases.
Logically, these provisions ended in the years 1984 — the last year that the
economic provisions of the CBA were, to contract and law, effective. Petitioner
claims that there is no contractual basis for the grant of CBA benefits such as wage
increases in 1985 and subsequent years, since the CBA stipulated only the
increases for the years 1981 to 1984.
Moreover, petitioner alleges that it was through no fault of theirs that no new CBA
was entered pending appeal of the decision in NLRC Case No. RAB -IX-0334-82.
Finally, petitioner Company claims that it was never given the opportunity to submit
a counter-computation of the benefits supposedly due the private respondents.
Instead, the NLRC allegedly relied on the self -serving computations of private
respondents.
Petitioner's contentions as untenable.
We find no grave abuse of discretion on the part of the NLRC, when it entertained
the petition for relief filed by the private respondents and treated it as an appeal,
even if it was filed beyond the reglementary period for filing an appeal. Ordinarily,
once a judgment has become final and executory, it can no longer be disturbed,
altered or modified. However, a careful scrutiny of the facts and circumstances of
the instant case warrants liberality in the application of technical rules and
procedure. It would be a greater injustice to deprive the concerned employees of
the monetary benefits rightly due them because of a circumstance over which they

the monetary benefits rightly due them because of a circumstance over which they
had no control. As stated above, private respondents, in their petition for relief,
claimed that they were wrongfully excluded from the list of those entitled to the
CBA benefits by their union, NFL, without their knowledge; and, because they were
under the impression that they were ably represented, they were not able to appeal
their case on time.
The Supreme Court has allowed appeals from decisions of the labor arbiter to the
NLRC, even if filed beyond the reglementary period, in the interest of
justice. 15 Moreover, under Article 218 (c) of the Labor Code, the NLRC may, in the
exercise of its appellate powers, "correct, amend or waive any error, defect or
irregularity whether in the substance or in form." Further, Article 221 of the same
provides that "In any proceeding before the Commission or any of the Labor
Arbiters, the rules of evidence prevailing in courts of law or equity shall not be
controlling and it is the spirit and intention of this Code that the Commission and its
members and the Labor Arbiter shall use every and all reasonable means to
ascertain the facts in each case speedily and objectively and without regard to
technicalities of law or procedure, all in the interest of due process. . . . 16
Anent the issue of whether or not the term of an existing CB, particularly as to its
economic provisions, can be extended beyond the period stipulated therein, and
even beyond the three-year period prescribed by law, in the absence of a new
agreement, Article 253 of the Labor Code explicitly provides:
Art. 253. Duty to bargain collectively when there exists a collective bargaining
agreement. — When there is a collective bargaining agreement, the duty to
bargain collectively shall also mean that neither party shall terminate nor modify
such agreement during its lifetime. However, either party can serve a written notice
to terminate or modify the agreement at least sixty (60) days prior to its expiration
date. It shall be the duty of both parties to keep the status quo and to continue in
full force and effect the terms and conditions of the existing agreement during the
60-day period and/or until a new agreement is reached by the parties . (Emphasis
supplied.)
It is clear from the above provision of law that until a new Collective Bargaining
Agreement has been executed by and between the parties, they are duty -bound to
keep the status quo and to continue in full force and effect the terms and conditions
of the existing agreement. The law does not provide for any exception nor
qualification as to which of the economic provisions of the existing agreement are
to retain force and effect, therefore, it must be understood as encompassing all the
terms and conditions in the said agreement.
In the case at bar, no new agreement was entered into by and between petitioner
Company and NFL pending appeal of the decision in NLRC Case No. RAB -
IX-0334-82; nor were any of the economic provisions and/or terms and conditions
pertaining to monetary benefits in the existing agreement modified or altered.
Therefore, the existing CBA in its entirety, continues to have legal effect.
In a recent case, the Court had occasion to rule that Article 253 and
253-A 17 mandate the parties to keep the status quo and to continue in full force
and effect the terms and conditions of the existing agreement during the 60 -day
period prior to the expiration of the old CBA and/or until a new agreement is
reached by the parties. Consequently, the automatic renewal clause provided for
by the law, which is deemed incorporated in all CBA's, provides the reason why the
new CBA can only be given a prospective effect. 18
In the case of Lopez Sugar Corporation vs. Federation of Free
Workers, et. al, 19 this Court reiterated the rule although a CBA has expired, it
continues to have legal effects as between the parties until a new CBA has been
entered into. It is the duty of both parties to the CBA to keep the status quo, and to
during the 60-day period and/or until a new agreement is reached by the parties. 20
To rule otherwise, i.e., that the economic provisions of the existing CBA in the
instant case ceased to have force and effect in the year 1984 would be to create a
gap during which no agreement would govern, from the time the old contract
expired to the time a new agreement shall have been entered into. For if, as
contended by the petitioner, the economic provisions of the existing CBA were to
have no legal effect, what agreement as to wage increases and other monetary
benefits would govern at all? None, it would seem, if we are to follow the logic of

benefits would govern at all? None, it would seem, if we are to follow the logic of
petitioner Company. Consequently, the employees from the year 1985 onwards
would be deprived of a substantial amount of monetary benefits which they could
have enjoyed had the terms and conditions of the CBA remained in force and
effect. Such a situation runs contrary to the very intent and purpose of Article 253
and 253-A of the Labor Code which is to curb labor unrest and to promote
industrial peace, as can be gleaned from the discussion of the legislators leading to
the passage of the said laws, thus:
HON. CHAIRMAN HERRERA: Pag nag-survey tayo sa mga unyon, ganoon ang
mangyayari. And I think our responsibility here is to create a legal framework to
promote industrial peace and to develop responsible and fair labor movement.
HON. CHAIRMAN VELOSO: In other words, the longer the period of the effectivity.
xxx xxx xxx
HON. CHAIRMAN VELOSO: (continuing) . . . . in other words, the longer the period
of effectivity of the CBA, the better for industrial peace.
xxx xxx xxx 21
Having established that the CBA between petitioner Company and NFL remained
in full force and effect even beyond the stipulated term, in the absence of a new
agreement; and, therefore, that the economic provisions such as wage increases
continued to have legal effect, we are now faced with the question of who are
entitled to the benefits provided thereunder.
Petitioner Company insists that the rank-and-file employees hired after the term of
the CBA inspite of their subsequent membership in the bargaining unit, are not
parties to the agreement, and certainly may not claim the benefits thereunder.
We do not agree. In a long line of cases, this Court has held that when a collective
bargaining contract is entered into by the union representing the employees and
the employer, even the non-member employees are entitled to the benefits of the
contract. To accord its benefits only to members of the union without any valid
reason would constitute undue discrimination against nonmembers. 22 It is even
conceded, that a laborer can claim benefits from the CBA entered into between the
company and the union of which he is a member at the time of the conclusion of
the agreement, after he has resigned from the said union. 23
In the same vein, the benefits under the CBA in the instant case should be
extended to those employees who only became such after the year 1984. To
exclude them would constitute undue discrimination and deprive them of monetary
benefits they would otherwise be entitled to under a new collective bargaining
contract to which they would have been parties. Since in this particular case, no
new agreement had been entered into after the CBA's stipulated term, it is only fair
and just that the employees hired thereafter be included in the existing CBA. This
is in consonance with our ruling that the terms and conditions of a collective
bargaining agreement continue to have force and effect even beyond the stipulated
term when no new agreement is executed by and between the parties to avoid or
prevent the situation where no collective bargaining agreement at all would govern
between the employer company and its employees.
Anent the other issues raised by petitioner Company, the Court finds that these
pertain to questions of fact that have already been passed upon by the NLRC. It is
axiomatic that, the factual findings of the National Labor Relations Commissions,
which have acquired expertise because its jurisdiction is confined to specific
matters, are accorded respect and finality by the Supreme Court, when these are
supported by substantial evidence. "A perusal of the assailed resolution reveals
that the same was reached on the basis of the required quantum of evidence.
WHEREFORE, in view of the foregoing, the instant petition for certiorari is hereby
DISMISSED for lack of merit. 1âwphi 1. nê
t
SO ORDERED.
Davide, Jr., C.J., Puno and Ynares-Santiago, JJ., concur.
Pardo, J., is on official business abroad.
Footnotes
1 Rollo, p. 42.
2 Ibid.
3 Id., at 42.
4 Id., at 43.
5 Id., at 43.

4 Id., at 43.
5 Id., at 43.
6 Id., at 46.
7 Id., at 137.
8 Id., at 40.
9 Id., at 138.
10 Id., at 69-70.
11 Id., at 12.
12 Id., at 12.
13 Id., at 13.
14 Id., at 25.
15 City Fair Corporation vs. NLRC, 243 SCRA 572 (1995).
16 Id., at 576.
17 Art. 253-A. Terms of a collective bargaining agreement. — Any Collective
Bargaining Agreement that the parties may enter into shall insofar as the
representation aspect is concerned, be for a term of five (5) years. . . . All other
provisions of the Collective Bargaining Agreement shall be renegotiated not later
than three (3) years after its execution. Any agreement on such other provisions of
the Collective Bargaining Agreement entered into within six (6) months from the
date of expiry of the term of such other provisions as fixed in such Collective
Bargaining Agreement, shall retroact to the day immediately following such date. If
any such agreement is entered into beyond six months, the parties shall agree on
bargaining agreement, the parties may exercise their rights under this Code.
18 Union of Filipino Employees vs. NLRC, 192 SCRA 414 (1990).
19 189 SCRA 179.
20 Pier 8 Arrastre & Stevedoring Services, Inc., vs. Hon. Ma. Nieves Roldan -
Confesor, et. al., 241 SCRA 294 (1995).
22 International Oil Factory Workers Union vs. Hon. Martinez, et. al., 110 Phil. 595
(1960); National Brewery & Allied Industries Labor Union vs. San Miguel Brewery
Inc., et. al., 118 Phil 806 (1963).
23 Kapisanan Ng Mga Manggagawang Pinagyakap vs. Franklin Baker Co., of the
Phil. June 3, 1949.

Faculty Association of Mapua vs. Court of Appeals (2007)
12:45 AM

G.R. No. 164060 June 15, 2007
FACULTY ASSOCIATION OF MAPUA INSTITUTE OF TECHNOLOGY vs. HON. COURT OF APPEALS, ET AL.

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 164060 June 15, 2007
FACULTY ASSOCIATION OF MAPUA INSTITUTE OF TECHNOLOGY (FAMIT), petitioner,
vs.
HON. COURT OF APPEALS, and MAPUA INSTITUTE OF TECHNOLOGY, respondents.
DEC I SI O N
QUISUMBING, J.:
This is an appeal to reverse and set aside the Decision 1 dated August 21, 2003 and the
Resolution2 dated June 3, 2004 of the Court of Appeals in CA-G.R. SP No. 71479. The appellate
court had reversed the Decision of the Office of the Voluntary Arbitrators. It held that the
incorporation of the new faculty ranking to the 2001 Collective Bargaining Agreement (CBA)
between petitioner and private respondent has been the intention of the parties to the CBA.
The facts in this case are undisputed.
In July 2000, private respondent Mapua Institute of Technology (MIT) hired Arthur Andersen to
develop a faculty ranking and compensation system. On January 29, 2001, in the 5 th CBA
negotiation meeting, MIT presented the new faculty ranking instrument to petitioner Faculty
Association of Mapua Institute of Technology (FAMIT).3 The latter agreed to the adoption and
implementation of the instrument, with the reservation that there should be no diminution in rank and
pay of the faculty members.
On April 17, 2001, FAMIT and MIT entered into a new CBA effective June 1, 2001. 4 It incorporated
the new ranking for the college faculty in Section 8 of Article V which states that, "A new faculty
ranking shall be implemented in June 2001. However, there shall be no diminution in the existing
rank and the policy „same rank, same pay‟ shall apply."5
The faculty ranking sheet was annexed to the CBA as Annex "B," while the college faculty rates
sheet for permanent faculty and which included the point ranges and corresponding pay rates per
faculty level was added as Annex "C."
When the CBA took effect, the Vice President for Academic Affairs issued a memorandum to all
deans and subject chairs to evaluate and re-rank the faculty under their supervision using the new
ranking instrument. Eight factors were to be considered and given their corresponding weights/points
according to levels attained per factor. Among these were: (1) educational attainment; (2)
professional honors received; (3) relevant training; (4) relevant professional experience; (5) scholarly
work and creative efforts; (6) award winning works; (7) officership in relevant technical and
professional organizations; and (8) administrative positions held at MIT. 6
After a month, MIT called FAMIT‟s attention to what it perceived to be flaws or omissions in the CBA
signed by the parties. In a letter 7 dated July 5, 2001 to FAMIT, MIT requested for an amendment of
the following CBA annexes – Annex "B" (Faculty Ranking Sheet); Annex "C" (College Faculty Rates
for Permanent Faculty Only); and Annex "D" (H.S. Faculty Rates for Permanent Faculty Only). MIT
claimed that with respect to Annexes "C" and "D," these contained data under the heading "TOTAL
POINTS" that were not germane to the two other columns in both annexes. With regard to the
Faculty Ranking Point Range sheet of the new faculty ranking instrument, MIT avers that this was
inadvertently not attached to the CBA.
FAMIT rejected the proposal. It said that these changes would constitute a violation of the ratified
2001 CBA and result in the diminution of rank and benefits of FAMIT college faculty. It argued that
the proposed amendment in the ranking system for the college faculty revised the point ranges
earlier agreed upon by the parties and expands the 19 faculty ranks to 23.
Meanwhile, MIT instituted some changes in the curriculum during the school year 2000-2001 which
resulted in changes in the number of hours for certain subjects. Thus, MIT adopted a new formula

resulted in changes in the number of hours for certain subjects. Thus, MIT adopted a new formula
for determining the pay rates of the high school faculty: Rate/Load x Total Teaching Load =
Salary where total teaching load equals number of classes multiplied by hours of service per week
divided by 3 hours (as practiced, one unit subject is equal to 3 hours service).
Upon learning of the changes, FAMIT opposed the formula. It averred that unknown to FAMIT, MIT
has not been implementing the relevant provisions of the 2001 CBA. In particular, FAMIT cites
Section 2 of Article VI, which states as follows:
ARTICLE VI
General Wage Clause
xx x x
Section 2. The INSTITUTE shall pay the following rate per load for high school faculty according to
corresponding faculty rank, to wit:
· 25% increase in per rate/load for all high school faculty members effective November 2000;
· 10% increase in per rate/load for all permanent high school faculty members effective June
2001.8 (Emphasis supplied.)
On July 20, 2001, FAMIT met with MIT to settle this second issue but to no avail. MIT maintained
that it was within its right to change the pay formula used.
Hence, together with the issue pertaining to the ranking of the college faculty, FAMIT brought the
matter to the National Conciliation and Mediation Board for mediation. Proceedings culminated in the
submission of the case to the Panel of Voluntary Arbitrators for resolution.
The Panel of Voluntary Arbitrators ruled in favor of the petitioner. It ordered the private respondent
to:
1. Implement the agreed upon point range system with 19 faculty ranks, along with the
corresponding pay levels for the college faculty, consistent with the provisions of Article V,
Section 8 of the 2001 CB[A] and Annex C of the said CBA, and
2. Comply with the provisions of Article VI, Section 2 of the existing CBA, using past
practices or formula in computing the pay of high school faculty based on rate per load and
to pay the faculty their corresponding rates on this basis,
Both actions of which (sic) should be made concurrent with the effectivity of the current CBA.
SO ORDERED.9
On appeal, the Court of Appeals reversed the ruling of the Panel of Voluntary Arbitrators and
decreed as follows:
WHEREFORE, the petition is hereby GRANTED. The assailed decision of the voluntary arbitrators
is REVERSED. Accordingly, petitioner‟s proposal to include the faculty point range sheet in Annex
"B" of the 2001 CBA, as well as to replace Annex "C" with the document on the 23-level faculty
ranking instrument and replace the column containing the heading "Total Points" which is attached in
Annexes "C" and "D" of the 2001 CBA with the correct data is also GRANTED.
SO ORDERED.10
Hence, the instant petition.
The petitioner enumerated issues for resolution, to wit:
I
WHETHER THE PRIVATE RESPONDENT MAY PROPERLY, LEGALLY AND VALIDLY ALTER,
CHANGE AND/OR MODIFY UNILATERAL[L]Y PROVISIONS OF THE COLLECTIVE
[BARGAINING] AGREEMENT (CBA) IT HAD NEGOTIATED, ENTERED INTO AND SIGNED WITH
THE PETITIONER AND SUBSEQUENTLY RATIFIED AND ENFORCED BY THE PARTIES; AND
II
WHETHER PRIVATE RESPONDENT MAY PROPERLY, LEGALLY AND VALIDLY CHANGE[,]
ALTER AND/OR REPLACE UNILATERAL[L]Y A PROVISION OR FORMULA EMBODIED IN A
PERFECTED, EXISTING AND ALREADY ENFORCED CBA TO THE PREJUDICE, OR MORE
SPECIFICALLY TO THE DIMINUTION OF SALARY/BENEFITS AND DOWNGRADING OF RANKS,
OF ITS COLLEGE AND HIGH SCHOOL FACULTY.11
Simply put, the issues for our determination are: (1) Is MIT‟s new proposal, regarding faculty ranking
and evaluation, lawful and consistent with the ratified CBA? and (2) Is MIT‟s development of a new
pay formula for the high school department, without the knowledge of FAMIT, lawful and consistent
with the ratified CBA?
On the first issue, FAMIT avers that MIT‟s new proposal on faculty ranking and evaluation for the
college faculty is an unlawful modification, alteration or amendment of the existing CBA without
approval of the contracting parties.
On the other hand, MIT argues that the new faculty ranking instrument was made in good faith and
in the exercise of its inherent prerogative to freely regulate according to its own discretion and
judgment all aspects of employment.
Considering the submissions of the parties, in the light of the existing CBA, we find that the new
point range system proposed by MIT is an unauthorized modification of Annex "C" of the 2001 CBA.

point range system proposed by MIT is an unauthorized modification of Annex "C" of the 2001 CBA.
It is made up of a faculty classification that is substantially different from the one originally
incorporated in the current CBA between the parties. Thus, the proposed system contravenes the
existing provisions of the CBA, hence, violative of the law between the parties.
As observed by Office of the Voluntary Arbitrators, the evaluation system differs from past evaluation
practices (e.g., those that give more weight to tenure and faculty load) such that the system can lead
to a demotion in rank for a faculty member. A perfect example of this scenario was cited by FAMIT in
its Memorandum:
xx x x
Take the case of a faculty member with 17 years of teaching experience who has a Phd. Degree.
For school year 2000-2001 his corresponding rank is Professor 3 with 4001-4500 points using the
previous CBA. If the college faculty member is ranked based on the ratified 2001 CBA, his/her
corresponding rank would increase to Professor 5 with 5001-5500 points.
But if the proposal of private respondent is used, the professor, would be ranked as Associate
Professor 5 with 5001-5749 points, instead of Professor 5 as recognized by the 2001 CBA. True,
there may be an increase in points but there is also a resulting diminution in rank from Professor 3
based on the previous CBA to Associate Professor 5. This would translate to a reduction of the
salary increase he is entitled to under the 2001 CBA.12
According to FAMIT, this patently is a violation of Section 8, Article V of the 2001 CBA.
Noteworthy, Article 253 of the Labor Code states:
ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement.–
When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that
new agreement is reached by the parties.
REVISED PAGE
Until a new CBA is executed by and between the parties, they are duty-bound to keep the status
quo and to continue in full force and effect the terms and conditions of the existing agreement. The
law does not provide for any exception nor qualification on which economic provisions of the existing
agreement are to retain its force and effect. Therefore, it must be understood as encompassing all
the terms and conditions in the said agreement.13
The CBA during its lifetime binds all the parties. The provisions of the CBA must be respected since
its terms and conditions "constitute the law between the parties." Those who are entitled to its
benefits can invoke its provisions. In the event that an obligation therein imposed is not fulfilled, the
aggrieved party has the right to go to court and ask redress. 14 The CBA is the norm of conduct
between petitioner and private respondent and compliance therewith is mandated by the express
policy of the law.15
On the second issue, FAMIT avers that MIT unilaterally modified the CBA formula in determining the
salary of a high school faculty. MIT counters that it is entitled to consider the actual number of
teaching hours to arrive at a fair and just salary of its high school faculty.
Again, we are in agreement with FAMIT‟s submission. We rule that MIT cannot adopt its unilateral
interpretation of terms in the CBA. It is clear from the provisions of the 2001 CBA that the salary of a
high school faculty member is based on a rate per load and not on a rate per hour basis. Section 2,
Article VI of the 2001 CBA provides:
xx x x
Section 2. The INSTITUTE shall pay the following rate per load for high school faculty according to
corresponding faculty rank, to wit:
· 25% increase in per rate/load for all high school faculty members effective November 2000.
· 10% increase in per rate/load for all permanent high school faculty members effective June
2001.16 (Emphasis supplied.)
In our view, there is no room for unilateral change of the formula by MIT. Needless to stress, the
Labor Code is specific in enunciating that in case of doubt in the interpretation of any law or
provision affecting labor, such should be interpreted in favor of labor. 17 The appellate court
committed a grave error in the interpretation of the CBA provision and the governing law.
WHEREFORE, the instant petition is GRANTED. The Decision dated August 21, 2003 and the
Resolution dated June 3, 2004 of the Court of Appeals denying the motion for reconsideration
are REVERSED and SET ASIDE. The decision of the Office of the Voluntary Arbitrators
is REINSTATED. MIT‟s unilateral change in the ranking of college faculty from 19 levels to 23 levels,
and the computation of high school faculty salary from rate per load to rate per hour basis
is DECLARED NULL AND VOID for being violative of the parties‟ CBA and the applicable law.

is DECLARED NULL AND VOID for being violative of the parties‟ CBA and the applicable law.
Costs against private respondent MIT.
SO ORDERED.
Carpio, Tinga, Velasco, JJ., concur.
Carpio-Morales, J., on official leave.
Footnotes
1 Rollo, pp. 43-51. Penned by Associate Justice Eloy R. Bello, Jr., with Associate Justices Amelita G.
Tolentino and Jose G. Mendoza concurring.

2
Id. at 62.
3 Id. at 86-93.
4 Id. at 132-141.
5
Id. at 134.
6 Id. at 197.
7 Id. at 153.
8
Id. at 134.
9
Id. at 212.
10 Id. at 51.
11 Id. at 331.
12
Id. at 336.
13
New Pacific Timber & Supply Company, Inc. v. NLRC, G.R. No. 124224, March 17, 2000, 328
SCRA 404, 412-413.
14 Holy Cross of Davao College, Inc. v. Holy Cross of Davao Faculty Union-KAMAPI, G.R. No.
156098, June 27, 2005, 461 SCRA 319, 327, citing Mactan Workers Union v. Aboitiz, No. L-30241,
June 30, 1972, 45 SCRA 577, 581.
15 Dole Philippines, Inc. v. Pawis ng Makabayang Obrero, G.R. No. 146650, January 13, 2003, 395
SCRA 112, 116.

16
Rollo, p. 134.
17
Labor Code, Art. 4.
ART. 4. Construction in favor of labor.-All doubts in the implementation and interpretation of the
provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of
labor.

Philcom Employees Union v. Philippine Global Telecommunications
2006
12:46 AM

G.R. No. 144315 July 17, 2006
PHILCOM EMPLOYEES UNION vs. PHILIPPINE GLOBAL COMMUNICATIONS, ET AL.

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 144315 July 17, 2006
PHILCOM EMPLOYEES UNION, petitioner,
vs.
PHILIPPINE GLOBAL COMMUNICATIONS and PHILCOM CORPORATION, respondents.
DEC I SI O N
CARPIO, J.:
The Case
This is a petition for review1 to annul the Decision2 dated 31 July 2000 of the Court of Appeals in CA-
G.R. SP No. 53989. The Court of Appeals affirmed the assailed portions of the 2 October 1998 and
27 November 1998 Orders of the Secretary of Labor and Employment in OS-AJ-0022-97.
The Facts
The facts, as summarized by the Court of Appeals, are as follows:
Upon the expiration of the Collective Bargaining Agreement (CBA) between petitioner Philcom
Employees Union (PEU or union, for brevity) and private respondent Philippine Global
Communications, Inc. (Philcom, Inc.) on June 30, 1997, the parties started negotiations for the
renewal of their CBA in July 1997. While negotiations were ongoing, PEU filed on October 21, 1997
with the National Conciliation and Mediation Board (NCMB) – National Capital Region, a Notice of
Strike, docketed as NCMB-NCR-NS No. 10-435-97, due to perceived unfair labor practice committed
by the company (Annex "1", Comment, p. 565, ibid.). In view of the filing of the Notice of Strike, the
company suspended negotiations on the CBA which moved the union to file on November 4, 1997
another Notice of Strike, docketed as NCMB-NCR-NS No. 11-465-97, on the ground of bargaining
deadlock (Annex "2", Comment, p. 566, ibid.)
On November 11, 1997, at a conciliation conference held at the NCMB-NCR office, the parties
agreed to consolidate the two (2) Notices of Strike filed by the union and to maintain the
status quo during the pendency of the proceedings (Annex "3", Comment, p. 567, ibid.).
On November 17, 1997, however, while the union and the company officers and representatives
were meeting, the remaining union officers and members staged a strike at the company premises,
barricading the entrances and egresses thereof and setting up a stationary picket at the main
entrance of the building. The following day, the company immediately filed a petition for the
Secretary of Labor and Employment to assume jurisdiction over the labor dispute in accordance with
Article 263(g) of the Labor Code.
On November 19, 1997, then Acting Labor Secretary Cresenciano B. Trajano issued an Order
assuming jurisdiction over the dispute, enjoining any strike or lockout, whether threatened or actual,
directing the parties to cease and desist from committing any act that may exacerbate the situation,
directing the striking workers to return to work within twenty-four (24) hours from receipt of the
Secretary's Order and for management to resume normal operations, as well as accept the workers
back under the same terms and conditions prior to the strike. The parties were likewise required to
submit their respective position papers and evidence within ten (10) days from receipt of said order
(Annex "4", Comment, pp. 610-611, ibid.). On November 28, 1997, a second order was issued
reiterating the previous directive to all striking employees to return to work immediately.
On November 27, 1997, the union filed a Motion for Reconsideration assailing, among others, the
authority of then Acting Secretary Trajano to assume jurisdiction over the labor dispute. Said motion
was denied in an Order dated January 7, 1998.
As directed, the parties submitted their respective position papers. In its position paper, the union

As directed, the parties submitted their respective position papers. In its position paper, the union
raised the issue of the alleged unfair labor practice of the company hereunder enumerated as
follows:
"(a) PABX transfer and contractualization of PABX service and position;
"(b) Massive contractualization;
"(c) Flexible labor and additional work/function;
"(d) Disallowance of union leave intended for union seminar;
"(e) Misimplementation and/or non-implementation of employees' benefits like shoe allowance,
rainboots, raincoats, OIC shift allowance, P450.00 monthly allowance, driving allowance, motorcycle
award and full-time physician;
"(f) Non-payment, discrimination and/or deprivation of overtime, restday work, waiting/stand by time
and staff meetings;
"(g) Economic inducement by promotion during CBA negotiation;
"(h) Disinformation scheme, surveillance and interference with union affairs;
"(i) Issuance of memorandum/notice to employees without giving copy to union, change in work
schedule at Traffic Records Section and ITTO policies; and
"(j) Inadequate transportation allowance, water and facilities."
(Annex A, Petition; pp. 110-182, ibid.)
The company, on the other hand, raised in its position paper the sole issue of the illegality of the
strike staged by the union (Annex B, Petition; pp. 302-320, ibid.).
On the premise that public respondent Labor Secretary cannot rule on the issue of the strike since
there was no petition to declare the same illegal, petitioner union filed on March 4, 1998 a
Manifestation/Motion to Strike Out Portions of & Attachments in Philcom's Position Paper for being
irrelevant, immaterial and impertinent to the issues assumed for resolution (Annex C, Petition; pp.
330-333, ibid.).
In opposition to PEU's Manifestation/Motion, the company argued that it was precisely due to the
strike suddenly staged by the union on November 17, 1997 that the dispute was assumed by the
Labor Secretary. Hence, the case would necessarily include the issue of the legality of the strike
(Opposition to PEU'S Motion to Strike Out; Annex F, Petition; pp. 389-393, ibid.).3
On 2 October 1998, the Secretary of Labor and Employment ("Secretary") issued the first assailed
order. The pertinent parts of the Order read:
Going now to the first issue at hand, a reading of the complaints charged by the Union as unfair
labor practices would reveal that these are not so within the legal connotation of Article 248 of the
Labor Code. On the contrary, these complaints are actually mere grievances which should have
been processed through the grievance machinery or voluntary arbitration outlined under the CBA.
The issues of flexible labor and additional functions, misimplementation or non-implementation of
employee benefits, non-payment of overtime and other monetary claims and inadequate
transportation allowance, are all a matter of implementation or interpretation of the economic
provisions of the CBA subject to the grievance procedure.
Neither do these complaints amount to gross violations which, thus, may be treated as unfair labor
practices outside of the coverage of Article 261. The Union failed to convincingly show that there is
flagrant and/or malicious refusal by the Company to comply with the economic provisions stipulated
in the CBA.
With respect to the charges of contractualization and economic inducement, this Office is convinced
that the acts of said company qualify as a valid exercise of management prerogative. The act of the
Company in contracting out work or certain services being performed by Union members should not
be seen as an unfair labor practice act per se. First, the charge of massive contractualization has not
been substantiated while the contractualization of the position of PABX operator is an isolated
instance. Secondly, in the latter case, there was no proof that such contracting out interfered with,
restrained or coerced the employees in the exercise of their right to self-organization. Thus, it is not
unfair labor practice to contract out work for reason of reduction of labor cost through the acquisition
of automatic machines.
Likewise, the promotion of certain employees, who are incidentally members of the Union, to
managerial positions is a prerogative of management. A promotion which is manifestly beneficial to
an employee should not give rise to a gratuitous speculation that such a promotion was made simply
to deprive the union of the membership of the promoted employee (Bulletin Publishing Co. v.
Sanchez, et. al., G.R. No. 74425, October 7, 1986).
There remains the issue on bargaining deadlock. The Company has denied the existence of any
impasse in its CBA negotiations with the Union and instead maintains that it has been negotiating
with the latter in good faith until the strike was initiated. The Union, on the other hand, contends
otherwise and further prays that the remaining CBA proposals of the Union be declared reasonable
and equitable and thus be ordered incorporated in the new CBA to be executed.
As pointed out by the Union, there are already thirty-seven (37) items agreed upon by the parties

As pointed out by the Union, there are already thirty-seven (37) items agreed upon by the parties
during the CBA negotiations even before these were suspended. Prior to this Office's assumption
over the case, the Company furnished the Union its improved CBA counter-proposal on the matter of
promotional and wage increases which however was rejected by the Union as divisive. Even as the
Union has submitted its remaining CBA proposals for resolution, the Company remains silent on the
matter. In the absence of any basis, other than the Union's position paper, on which this Office may
make its determination of the reasonableness and equitableness of these remaining CBA proposals,
this Office finds it proper to defer deciding on the matter and first allow the Company to submit its
position thereon.
We now come to the question of whether or not the strike staged by the Union on November 17,
1997 is illegal. The Company claims it is, having been held on grounds which are non-strikeable,
during the pendency of preventive mediation proceedings in the NCMB, after this Office has
assumed jurisdiction over the dispute, and with the strikers committing prohibited and illegal acts.
The Company further prays for the termination of some 20 Union officers who were positively
identified to have initiated the alleged illegal strike. The Union, on the other hand, refuses to submit
this issue for resolution.
Considering the precipitous nature of the sanctions sought by the Company, i.e., declaration of
illegality of the strike and the corresponding termination of the errant Union officers, this Office
deems it wise to defer the summary resolution of the same until both parties have been afforded due
process. The non-compliance of the strikers with the return-to-work orders, while it may warrant
dismissal, is not by itself conclusive to hold the strikers liable. Moreover, the Union's position on the
alleged commission of illegal acts by the strikers during the strike is still to be heard. Only after a full-
blown hearing may the respective liabilities of Union officers and members be determined. The case
of Telefunken Semiconductors Employees Union-FFW v. Secretary of Labor and Employment and
Temic Telefunken Micro-Electronics (Phils.), Inc. (G.R. No. 122743 and 127215, December 12,
1997) is instructive on this point:
It may be true that the workers struck after the Secretary of Labor and Employment had assumed
jurisdiction over the case and that they may have failed to immediately return to work even after the
issuance of a return-to-work order, making their continued strike illegal. For, a return-to-work order is
immediately effective and executory notwithstanding the filing of a motion for reconsideration. But,
the liability of each of the union officers and the workers, if any, has yet to be determined. xxx xxx
xxx.4
The dispositive portion of the Order reads:
WHEREFORE, in view of all the foregoing, judgment is hereby rendered as follows:
The Union's Manifestation/Motion to Implead Philcom Corporation is hereby granted. Let summons
be issued to respondent Philcom Corporation to appear before any hearing that may hereafter be
scheduled and to submit its position paper as may be required.
The Union's Manifestation/Motion to Strike Out Portions of and Attachments in Philcom's Position
Paper is hereby denied for lack of merit.
The Union's charges of unfair labor practice against the Company are hereby dismissed.
Pending resolution of the issues of illegal strike and bargaining deadlock which are yet to be heard,
all the striking workers are directed to return to work within twenty-four (24) hours from receipt of this
Order and Philcom and/or Philcom Corporation are hereby directed to unconditionally accept back to
work all striking Union officers and members under the same terms and conditions prior to the strike.
The parties are directed to cease and desist from committing any acts that may aggravate the
situation.
Atty. Lita V. Aglibut, Officer-In-Charge of the Legal Service, this Department is hereby designated as
the Hearing Officer to hear and receive evidence on all matters and issues arising from the present
labor dispute and, thereafter, to submit a report/recommendation within twenty (20) days from the
termination of the proceedings.
The parties are further directed to file their respective position papers with Atty. Lita V. Aglibut within
ten (10) days from receipt of this Order.
SO ORDERED.5
Philcom Corporation ("Philcom") filed a motion for reconsideration. Philcom prayed for
reconsideration of the Order impleading it as party-litigant in the present case and directing it to
accept back to work unconditionally all the officers and members of the union who participated in the
strike.6 Philcom also filed a Motion to Certify Labor Dispute to the National Labor Relations
Commission for Compulsory Arbitration.7
For its part, Philcom Employees Union (PEU) filed a Motion for Partial Reconsideration. PEU asked
the Secretary to "partially reconsider" the 2 October 1998 Order insofar as it dismissed the unfair
labor practices charges against Philcom and included the illegal strike issue in the labor dispute. 8
The Secretary denied both motions for reconsideration of Philcom and PEU in its assailed Order of
27 November 1998. The pertinent parts of the Order read:

27 November 1998. The pertinent parts of the Order read:
The question of whether or not Philcom Corporation should be impleaded has been properly
disposed of in the assailed Order. We reiterate that neither the Company herein nor its predecessor
was able to convincingly establish that each is a separate entity in the absence of any proof that
there was indeed an actual closure and cessation of the operations of the predecessor-company.
We would have accommodated the Company for a hearing on the matter had it been willing and
prepared to submit evidence to controvert the finding that there was a mere merger. As it now
stands, nothing on record would prove that the two (2) companies are separate and distinct from
each other.
Having established that what took place was a mere merger, we correspondingly conclude that the
employer-employee relations between the Company and the Union officers and members was never
severed. And in merger, the employees of the merged companies or entities are deemed absorbed
by the new company (Filipinas Port Services, Inc. v. NLRC, et. al., G.R. No. 97237, August 16,
1991). Considering that the Company failed miserably to adduce any evidence to provide a basis for
a contrary ruling, allegations to the effect that employer-employee relations and positions previously
occupied by the workers no longer exist remain just that — mere allegations. Consequently, the
Company cannot now exempt itself from compliance with the Order. Neither can it successfully
argue that the employees were validly dismissed. As held in Telefunken Semiconductor Employees
Union-FFW v. Secretary of Labor and Employment (G.R. Nos. 122743 and 122715, December 12,
1997), to exclude the workers without first ascertaining the extent of their individual participation in
the strike or non-compliance with the return-to-work orders will be tantamount to dismissal without
due process of law.
With respect to the unfair labor practice charges against the Company, we have carefully reviewed
the records and found no reason to depart from the findings previously rendered. The issues now
being raised by the Union are the same issues discussed and passed upon in our earlier Order.
Finally, it is our determination that the issue of the legality of the strike is well within the jurisdiction of
this Office. The same has been properly submitted and assumed jurisdiction by the Office for
resolution.9
The dispositive portion of the Order reads:
WHEREFORE, there being no merit in the remaining Motions for Reconsideration filed by both
parties, the same are hereby DENIED. Our 2 October 1998 Order STANDS. To expedite the
resolution of the Motion to Certify Labor Dispute to the NLRC for Compulsory Arbitration, Philcom
Employees Union is hereby directed to submit its Opposition thereto within ten (10) days from
receipt of the copy of this Order.
SO ORDERED.10
PEU filed with this Court a petition for certiorari and prohibition under Rule 65 of the Rules of Court
assailing the Secretary's Orders of 2 October 1998 and 27 November 1998. This Court, in
accordance with its Decision of 10 March 1999 in G.R. No. 123426 entitled National Federation of
Labor (NFL) vs. Hon. Bienvenido E. Laguesma, Undersecretary of the Department of Labor and
Employment, and Alliance of Nationalist Genuine Labor Organization, Kilusang Mayo Uno (ANGLO-
KMU),11 referred the case to the Court of Appeals.12
The Ruling of the Court of Appeals
On 31 July 2000, the Court of Appeals rendered judgment as follows:
WHEREFORE, PREMISES CONSIDERED, this petition is hereby DENIED. The assailed portions of
the Orders of the Secretary of Labor and Employment dated October 2, 1998 and November 27,
1998 are AFFIRMED.
SO ORDERED.13
The Court of Appeals ruled that, contrary to PEU's view, the Secretary could take cognizance of an
issue, even only incidental to the labor dispute, provided the issue must be involved in the labor
dispute itself or otherwise submitted to him for resolution.
The Court of Appeals pointed out that the Secretary assumed jurisdiction over the labor dispute
upon Philcom's petition as a consequence of the strike that PEU had declared and not because of
the notices of strike that PEU filed with the National Conciliation and Mediation Board (NCMB).
The Court of Appeals stated that the reason of the Secretary's assumption of jurisdiction over the
labor dispute was the staging of the strike. Consequently, any issue regarding the strike is not
merely incidental to the labor dispute between PEU and Philcom, but also part of the labor dispute
itself. Thus, the Court of Appeals held that it was proper for the Secretary to take cognizance of the
issue on the legality of the strike.
The Court of Appeals also ruled that for an employee to claim an unfair labor practice by the
employer, the employee must show that the act charged as unfair labor practice falls under Article
248 of the Labor Code. The Court of Appeals held that the acts enumerated in Article 248 relate to
the workers' right to self-organization. The Court of Appeals stated that if the act complained of has
nothing to do with the acts enumerated in Article 248, there is no unfair labor practice.

nothing to do with the acts enumerated in Article 248, there is no unfair labor practice.
The Court of Appeals held that Philcom's acts, which PEU complained of as unfair labor practices,
were not in any way related to the workers' right to self-organization under Article 248 of the Labor
Code. The Court of Appeals held that PEU's complaint constitutes an enumeration of mere
grievances which should have been threshed out through the grievance machinery or voluntary
arbitration outlined in the Collective Bargaining Agreement (CBA).
The Court of Appeals also held that even if by Philcom's acts, Philcom had violated the provisions of
the CBA, still those acts do not constitute unfair labor practices under Article 248 of the Labor Code.
The Court of Appeals held that PEU failed to show that those violations were gross or that there was
flagrant or malicious refusal on the part of Philcom to comply with the economic provisions of the
CBA.
The Court of Appeals stated that as of 21 March 1989, as held in PAL vs. NLRC, 14 violations of
CBAs will no longer be deemed unfair labor practices, except those gross in character. Violations of
CBAs, except those gross in character, are mere grievances resolvable through the appropriate
grievance machinery or voluntary arbitration as provided in the CBAs.
The Issues
In assailing the Decision of the Court of Appeals, petitioner contends that:
1. The Honorable Court of Appeals has failed to faithfully adhere with the decisions of the Supreme
Court when it affirmed the order/resolution of the Secretary of Labor denying the Union's
Manifestation/Motion to Strike Out Portions of & Attachments in Philcom's Position Paper and
including the issue of illegal strike notwithstanding the absence of any petition to declare the strike
illegal.
2. The Honorable Court of Appeals has decided a question of substance in a way not in accord with
law and jurisprudence when it affirmed the order/resolution of the Secretary of Labor dismissing the
Union's charges of unfair labor practices.
3. The Honorable Court of Appeals has departed from the edict of applicable law and jurisprudence
when it failed to issue such order mandating/directing the issuance of a writ of execution directing
the Company to unconditionally accept back to work the Union officers and members under the
same terms and conditions prior to the strike and as well as to pay their salaries/backwages and the
monetary equivalent of their other benefits from October 6, 1998 to date. 15
The Ruling of the Court
The petition must fail.
PEU contends that the Secretary should not have taken cognizance of the issue on the alleged
illegal strike because it was not properly submitted to the Secretary for resolution. PEU asserts that
after Philcom submitted its position paper where it raised the issue of the legality of the strike, PEU
immediately opposed the same by filing itsManifestation/Motion to Strike Out Portions of and
Attachments in Philcom's Position Paper. PEU asserts that it stated in its Manifestation/Motion that
certain portions of Philcom's position paper and some of its attachments were "irrelevant, immaterial
and impertinent to the issues assumed for resolution." Thus, PEU asserts that the Court of Appeals
should not have affirmed the Secretary's order denying PEU's Manifestation/Motion.
PEU also contends that, contrary to the findings of the Court of Appeals, the Secretary's assumption
of jurisdiction over the labor dispute was based on the two notices of strike that PEU filed with the
NCMB. PEU asserts that only the issues on unfair labor practice and bargaining deadlock should be
resolved in the present case.
PEU insists that to include the issue on the legality of the strike despite its opposition would convert
the case into a petition to declare the strike illegal.
PEU's contentions are untenable.
The Secretary properly took cognizance of the issue on the legality of the strike. As the Court of
Appeals correctly pointed out, since the very reason of the Secretary's assumption of jurisdiction was
PEU's declaration of the strike, any issue regarding the strike is not merely incidental to, but is
essentially involved in, the labor dispute itself.
Article 263(g) of the Labor Code provides:
When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout in an
industry indispensable to the national interest, the Secretary of Labor and Employment may assume
jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory
arbitration. Such assumption or certification shall have the effect of automatically enjoining the
intended or impending strike or lockout as specified in the assumption or certification order. If one
has already taken place at the time of assumption or certification, all striking or locked out
employees shall immediately return to work and the employer shall immediately resume operations
and readmit all workers under the same terms and conditions prevailing before the strike or lockout.
The Secretary of Labor and Employment or the Commission may seek the assistance of law
enforcement agencies to ensure the compliance with this provision as well as with such orders as he

enforcement agencies to ensure the compliance with this provision as well as with such orders as he
may issue to enforce the same.
x x x x.
The powers granted to the Secretary under Article 263(g) of the Labor Code have been
characterized as an exercise of the police power of the State, with the aim of promoting public
good.16 When the Secretary exercises these powers, he is granted "great breadth of discretion"
in order to find a solution to a labor dispute. The most obvious of these powers is the automatic
enjoining of an impending strike or lockout or its lifting if one has already taken place. 17
In this case, the Secretary assumed jurisdiction over the dispute because it falls in an industry
indispensable to the national interest. As noted by the Secretary.
[T]he Company has been a vital part of the telecommunications industry for 73 years. It is
particularly noted for its expertise and dominance in the area of international telecommunications.
Thus, it performs a vital role in providing critical services indispensable to the national interest. It is
for this very reason that this Office strongly opines that any concerted action, particularly a
prolonged work stoppage is fraught with dire consequences. Surely, the on-going strike will
adversely affect not only the livelihood of workers and their dependents, but also the company's
suppliers and dealers, both in the public and private sectors who depend on the company's facilities
in the day-to-day operations of their businesses and commercial transactions. The operational
viability of the company is likewise adversely affected, especially its expansion program for which it
has incurred debts in the approximate amount of P2 Billion. Any prolonged work stoppage will also
bring about substantial losses in terms of lost tax revenue for the government and would surely pose
a serious set back in the company's modernization program.
At this critical time when government is working to sustain the economic gains already achieved, it is
the paramount concern of this Office to avert any unnecessary work stoppage and, if one has
already occurred, to minimize its deleterious effect on the workers, the company, the industry and
national economy as a whole.18
It is of no moment that PEU never acquiesced to the submission for resolution of the issue on the
legality of the strike. PEU cannot prevent resolution of the legality of the strike by merely refusing to
submit the issue for resolution. It is also immaterial that this issue, as PEU asserts, was not properly
submitted for resolution of the Secretary.
The authority of the Secretary to assume jurisdiction over a labor dispute causing or likely to cause a
strike or lockout in an industry indispensable to national interest includes and extends to all
questions and controversies arising from such labor dispute. The power is plenary and
discretionary in nature to enable him to effectively and efficiently dispose of the dispute.19
Besides, it was upon Philcom's petition that the Secretary immediately assumed jurisdiction over the
labor dispute on 19 November 1997. 20 If petitioner's notices of strike filed on 21 October and 4
November 1997 were what prompted the assumption of jurisdiction, the Secretary would have
issued the assumption order as early as those dates.
Moreover, after an examination of the position paper 21 Philcom submitted to the Secretary, we see
no reason to strike out those portions which PEU seek to expunge from the records. A careful study
of all the facts alleged, issues raised, and arguments presented in the position paper leads us to
hold that the portions PEU seek to expunge are necessary in the resolution of the present case.
On the documents attached to Philcom's position paper, except for Annexes MM-2 to MM-22
inclusive22 which deal with the supposed consolidation of Philippine Global Communications, Inc.
and Philcom Corporation, we find the other annexes relevant and material in the resolution of the
issues that have emerged in this case.
PEU also claims that Philcom has committed several unfair labor practices. PEU asserts that there
are "factual and evidentiary bases" for the charge of unfair labor practices against Philcom.
On unfair labor practices of employers, Article 248 of the Labor Code provides:
Unfair labor practices of employers. - It shall be unlawful for an employer to commit any of the
following unfair labor practice:
(a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization;
(b) To require as a condition of employment that a person or an employee shall not join a labor
organization or shall withdraw from one to which he belongs;
(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;
(d) To initiate, dominate, assist or otherwise interfere with the formation or administration of any
labor organization, including the giving of financial or other support to it or its organizers or
supporters;
(e) To discriminate in regard to wages, hours of work, and other terms and conditions of employment
in order to encourage or discourage membership in any labor organization. x x x
(f) To dismiss, discharge, or otherwise prejudice or discriminate against an employee for having

(g) To violate the duty to bargain collectively as prescribed by this Code;
(h) To pay negotiation or attorney's fees to the union or its officers or agents as part of the settlement
of any issue in collective bargaining or any other dispute; or
(i) To violate a collective bargaining agreement.
Unfair labor practice refers to acts that violate the workers' right to organize. The prohibited acts are
related to the workers' right to self-organization and to the observance of a CBA. Without that
element, the acts, no matter how unfair, are not unfair labor practices. 23 The only exception is Article
248(f), which in any case is not one of the acts specified in PEU's charge of unfair labor practice.
A review of the acts complained of as unfair labor practices of Philcom convinces us that they do not
fall under any of the prohibited acts defined and enumerated in Article 248 of the Labor Code. The
issues of misimplementation or non-implementation of employee benefits, non-payment of overtime
and other monetary claims, inadequate transportation allowance, water, and other facilities, are all a
matter of implementation or interpretation of the economic provisions of the CBA between Philcom
and PEU subject to the grievance procedure.
We find it pertinent to quote certain portions of the assailed Decision, thus —
A reading of private respondent's justification for the acts complained of would reveal that they were
actually legitimate reasons and not in anyway related to union busting. Hence, as to compelling
employees to render flexible labor and additional work without additional compensation, it is the
company's explanation that the employees themselves voluntarily took on work pertaining to other
assignments but closely related to their job description when there was slack in the business which
caused them to be idle. This was the case of the International Telephone Operators who tried
telemarketing when they found themselves with so much free time due to the slowdown in the
demand for international line services. With respect to the Senior Combination Technician at the
Cebu branch who was allegedly made to do all around work, the same happened only once when
the lineman was absent and the lineman's duty was his ultimate concern. Moreover, the new
assignment of the technicians at CTSS who were promoted to QCE were based on the job
description of QCE, while those of the other technicians were merely temporary due to the promotion
of several technicians to QCE (pars. 9-12, Philcom's Reply to PEU's Position Paper; Annex "E",
Petition; pp. 350-351, ibid.).
On the alleged misimplementation and/or non-implementation of employees' benefits, such as shoe
allowance, rainboots, raincoats, OIC shift allowance, P450.00 monthly allowance, driving allowance,
motorcycle award and full-time physician, the company gave the following explanation which this
Court finds plausible, to wit:
16. The employees at CTSS were given One Thousand Pesos (P1,000.00) cash or its equivalent in
purchase orders because it was their own demand that they be given the option to buy the pair of
leather boots they want. For the Cebu branch, the employees themselves failed to include these
benefits in the list of their demands during the preparation of the budget for the year 1997 despite
the instruction given to them by the branch manager. According to the employees, they were not
aware that they were entitled to these benefits. They thought that because they have been provided
with two vans to get to their respective assignments, these benefits are available only to collectors,
messengers and technicians in motorcycles.
17. The P450.00 monthly allowance was provided by the CBA to be given to counter clerks.
However, the position of counter clerks had been abolished in accordance with the reorganization
plan undertaken by the company in April 1995, with the full knowledge of the Union membership. As
a result of the abolition of the position of counter clerks, there was no more reason for granting the
subject allowance.
18. The company more than satisfied the provision in the CBA to engage the services of a physician
and provided adequate medical services. Aside from a part time physician who reports for duty
everyday, the company has secured the services of Prolab Diagnostics, which has complete medical
facilities and personnel, to serve the medical needs of the employees. x x x
19. The Union demands that a full-time physician to be assigned at the Head Office. This practice, is
not provided in the CBA and, moreover is too costly to maintain. The medical services offered by
Prolab [D]iagnostics are even better and more comprehensive than any full time physician can give.
It places at the employees' disposal numerous specialists in various fields of medicine. It is beyond
understanding why the Union would insist on having a full-time physician when they could avail of
better services from Prolab Diagnostics.
(Philcom's Reply to PEU's Position Paper, pp.352, 354, ibid.)
On the issue of non-payment, discrimination and/or deprivation of overtime, restday work,
waiting/stand by time and staff meeting allowance, suffice it to state that there is nothing on record to
prove the same. Petitioner did not present evidence substantial enough to support its claim.
As to the alleged inadequate transportation allowance and facilities, the company posits that:
30. The transportation allowances given to the Dasmarinas and Pinugay employees are more than

30. The transportation allowances given to the Dasmarinas and Pinugay employees are more than
adequate to defray their daily transportation cost. Hence, there is absolutely no justification for an
increase in the said allowance. In fact, said employees at Dasmarinas and Pinugay, who are only
residing in areas near their place of work, are more privileged as they receive transportation
expenses while the rest of the company workers do not.
31. As to the demand for clean drinking water, the company has installed sufficient and potable
water inside the Head Office even before the strike was staged by the Union. Any person who visits
the Makati Head Office can attest to this fact.
(Philcom's Reply to PEU's Position Paper, p. 357, ibid.)
Anent the allegation of PABX transfer and contractualization of PABX service and position, these
were done in anticipation of the company to switch to an automatic PABX machine which requires
no operator. This cannot be treated as ULP since management is at liberty, absent any malice on its
part, to abolish positions which it deems no longer necessary (Arrieta vs. National Labor Relations
Commission, 279 SCRA 326, 332). Besides, at the time the company hired a temporary employee to
man the machine during daytime, the subject position was vacant while the assumption of the
function by the company guard during nighttime was only for a brief period.
With respect to the perceived massive contractualization of the company, said charge cannot be
considered as ULP since the hiring of contractual workers did not threaten the security of tenure of
regular employees or union members. That only 160 employees out of 400 employees in the
company's payroll were considered rank and file does not of itself indicate unfair labor practice since
this is but a company prerogative in connection with its business concerns.
Likewise, the offer or promotions to a few union members is neither unlawful nor an economic
inducement. These offers were made in accordance with the legitimate need of the company for the
services of these employees to fill positions left vacant by either retirement or resignation of other
employees. Besides, a promotion is part of the career growth of employees found competent in their
work. Thus, in Bulletin Publishing Corporation vs. Sanchez (144 SCRA 628, 641), the Supreme
Court held that "(T)he promotion of employees to managerial or executive positions rests upon the
discretion of management. Managerial positions are offices which can only be held by persons who
have the trust of the corporation and its officers. It is the prerogative of management to promote any
individual working within the company to a higher position. It should not be inhibited or prevented
from doing so. A promotion which is manifestly beneficial to an employee should not give rise to a
gratuitous speculation that such a promotion was made simply to deprive the union of the
membership of the promoted employee, who after all appears to have accepted his promotion."
That the promotions were made near or around the time when CBA negotiations were about to be
held does not make the company's action an unfair labor practice. As explained by the company,
these promotions were based on the availability of the position and the qualification of the
employees promoted (p. 6, Annex "4", Philcom's Reply to PEU's Position Paper; p. 380, ibid.)
On the union's charge that management disallowed leave of union officers and members to attend
union seminar, this is belied by the evidence submitted by the union itself. In a letter to PEU's
President, the company granted the leave of several union officers and members to attend a
seminar notwithstanding that its request to be given more details about the affair was left unheeded
by the union (Annex "Y", PEU's Position Paper; p. 222, ibid.). Those who were denied leave were
urgently needed for the operation of the company.
On the ULP issue of disinformation scheme, surveillance and interference with union affairs, these
are mere allegations unsupported by facts. The charge of "black propaganda" allegedly committed
by the company when it supposedly posted two (2) letters addressed to the Union President is totally
baseless. Petitioner presents no proof that it was the company which was behind the incident. On
the purported disallowance of union members to observe the July 27, 1997 CBA meeting, the
company explained that it only allowed one (1) employee from ITTO, instead of two (2), as it would
adversely affect the operation of the group. It also took into consideration the fact that ITTO
members represent only 20% of the union. Other union members from other departments of the
company should have equal representation (Annex "L", Position Paper for the Union; pp. 205-206,
ibid.). As to the alleged surveillance of the company guards during a union seminar, We find the idea
of sending guards to spy on a mere union seminar quite preposterous. It is thus not likely for the
company which can gain nothing from it to waste its resources in such a scheme.
On the issuance of memorandum/notice to employees without giving copy to union, change in work
schedule at Traffic Records Section and ITTO policies, the company has sufficiently rebutted the
same, thus:
27. The Union also whines about the failure of the company to furnish copies of memoranda or
notices sent to employees and change of work schedules at the Traffic Records Section and ITTO
policies. The CBA, however, does not obligate the Company to give the Union a copy of each and
every memorandum or notice sent to employees. This would be unreasonable and impractical.
Neither did the Union demand that they be furnished copies of the same. This is clearly a non-issue

Neither did the Union demand that they be furnished copies of the same. This is clearly a non-issue
as copies of all memoranda or notices issued by management are readily available upon request by
any employee or the Union.
28. Contrary to the allegations of the Union, the rationale and mechanics for the abolishment of the
midnight schedule at the Traffic Record Services had been thoroughly and adequately discussed
with the Union's President, Robert Benosa, and the staff of Traffic Record Services in the meeting
held on May 9, 1997. The midnight services were abolished for purely economic reasons. The
company realized that the midnight work can be handled in the morning without hampering normal
operations. At the same time, the company will be able to save on cost. For this objective, the
employees concerned agreed to create a manning and shifting schedule starting at 6:00 a.m. up to
10:00 p.m., with each employee rendering only eight hours of work every day without violating any
provision of the labor laws or the CBA.24
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. 25
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. 26
Even assuming arguendo that Philcom had violated some provisions in the CBA, there was no
showing that the same was a flagrant or malicious refusal to comply with its economic provisions.
The law mandates that such violations should not be treated as unfair labor practices. 27
PEU also asserts that the Court of Appeals should have issued an order directing the issuance of a
writ of execution ordering Philcom to accept back to work unconditionally the striking union officers
and members under the same terms and conditions prevailing before the strike. PEU asserts that
the union officers and members should be paid their salaries or backwages and monetary equivalent
of other benefits beginning 6 October 1998 when PEU received a copy of the Secretary's 2 October
1998 return-to-work order.
PEU claims that even if the "issue of illegal strike can be included in the assailed orders and that the
union officers and members have been terminated as a result of the alleged illegal strike, still, the
Secretary has to rule on the illegality of the strike and the liability of each striker." PEU asserts that
the union officers and members should first be accepted back to work because a return-to-work
order is immediately executory.28
We rule on the legality of the strike if only to put an end to this protracted labor dispute. The facts
necessary to resolve the legality of the strike are not in dispute.
The strike and the strike activities that PEU had undertaken were patently illegal for the following
reasons:
1. Philcom is engaged in a vital industry protected by Presidential Decree No. 823 (PD 823), as
amended by Presidential Decree No. 849, from strikes and lockouts. PD 823, as amended, provides:
Sec. 1. It is the policy of the State to encourage free trade unionism and free collective bargaining
within the framework of compulsory and voluntary arbitration. Therefore, all forms of strikes,
picketings and lockouts are hereby strictly prohibited in vital industries, such as in public utilities,
including transportation and communications, x x x. (Emphasis supplied)
Enumerating the industries considered as vital, Letter of Instruction No. 368 provides:
For the guidance of workers and employers, some of whom have been led into filing notices of
strikes and lockouts even in vital industries, you are hereby instructed to consider the following as
vital industries and companies or firms under PD 823 as amended:
1. Public Utilities:
xx x x
B. Communications:
1) Wire or wireless telecommunications such as telephone, telegraph, telex, and cable companies or
firms; (Emphasis supplied)
xx x x
It is therefore clear that the striking employees violated the no-strike policy of the State in regard to
vital industries.
2. The Secretary had already assumed jurisdiction over the dispute. Despite the issuance of the
return-to-work orders dated 19 November and 28 November 1997, the striking employees
failed to return to work and continued with their strike.
Regardless of their motives, or the validity of their claims, the striking employees should have
ceased or desisted from all acts that would undermine the authority given the Secretary under Article
263(g) of the Labor Code. They could not defy the return-to-work orders by citing Philcom's alleged
unfair labor practices to justify such defiance.29
PEU could not have validly anchored its defiance to the return-to-work orders on the motion for

unfair labor practices to justify such defiance.29
PEU could not have validly anchored its defiance to the return-to-work orders on the motion for
reconsideration that it had filed on the assumption of jurisdiction order. A return-to-work order is
immediately effective and executory despite the filing of a motion for reconsideration. It must
be strictly complied with even during the pendency of any petition questioning its validity.30
The records show that on 22 November 1997, Philcom published in the Philippine Daily Inquirer a
notice to striking employees to return to work.31 These employees did not report back to work but
continued their mass action. In fact, they lifted their picket lines only on 22 December
1997.32 Philcom formally notified twice these employees to explain in writing why they should not be
dismissed for defying the return-to-work order.33 Philcom held administrative hearings on these
disciplinary cases.34 Thereafter, Philcom dismissed these employees for abandonment of work in
defiance of the return-to-work order.35
A return-to-work order imposes a duty that must be discharged more than it confers a right that may
be waived. While the workers may choose not to obey, they do so at the risk of severing their
relationship with their employer.36
The following provision of the Labor Code governs the effects of defying a return-to-work order:
ART. 264. Prohibited activities. ─ (a) x x x x
No strike or lockout shall be declared after assumption of jurisdiction by the President or the
Minister or after certification or submission of the dispute to compulsory or voluntary arbitration or
during the pendency of cases involving the same grounds for the strike or lockout x x x x
Any union officer who knowingly participates in 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. (Emphasis supplied)
A strike undertaken despite the Secretary's issuance of an assumption or certification order
becomes a prohibited activity, and thus, illegal, under Article 264(a) of the Labor Code.
The union officers who knowingly participate in the illegal strike are deemed to have lost their
employment status. The union members, including union officers, who commit specific illegal acts
or who knowingly defy a return-to-work order are also deemed to have lost their employment
status.37 Otherwise, the workers will simply refuse to return to their work and cause a standstill in the
company operations while retaining the positions they refuse to discharge and preventing
management to fill up their positions.38
Hence, the failure of PEU's officers and members to comply immediately with the return-to-work
orders dated 19 November and 28 November 1997 cannot be condoned.Defiance of the return-to-
work orders of the Secretary constitutes a valid ground for dismissal.39
3. PEU staged the strike using unlawful means and methods.
Even if the strike in the present case was not illegal per se, the strike activities that PEU had
undertaken, especially the establishment of human barricades at all entrances to and egresses from
the company premises and the use of coercive methods to prevent company officials and other
personnel from leaving the company premises, were definitely illegal. 40 PEU is deemed to have
admitted that its officers and members had committed these illegal acts, as it never disputed
Philcom's assertions of PEU's unlawful strike activities in all the pleadings that PEU submitted to the
Secretary and to this Court.
PEU's picketing officers and members prohibited other tenants at the Philcom building from entering
and leaving the premises. Leonida S. Rabe, Country Manager of Societe Internationale De
Telecommunications Aeronautiques (SITA), a tenant at the Philcom building, wrote two letters
addressed to PEU President Roberto B. Benosa. She told Benosa that PEU's act of obstructing the
free ingress to and egress from the company premises "has badly disrupted normal operations of
their organization."41
The right to strike, while constitutionally recognized, is not without legal constrictions. Article 264(e)
of the Labor Code, on prohibited activities, provides:
No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct
the free ingress to or egress from the employer's premises for lawful purposes, or obstruct public
thoroughfares.
The Labor Code is emphatic against the use of violence, coercion, and intimidation during a strike
and to this end prohibits the obstruction of free passage to and from the employer's premises for
lawful purposes. A picketing labor union has no right to prevent employees of another company from
getting in and out of its rented premises, otherwise, it will be held liable for damages for its acts
against an innocent by-stander.42
The sanction provided in Article 264(a) is so severe that 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.43
By insisting on staging the prohibited strike and defiantly picketing Philcom's premises to prevent the

By insisting on staging the prohibited strike and defiantly picketing Philcom's premises to prevent the
resumption of company operations, the striking employees have forfeited their right to be
readmitted.44
4. PEU declared the strike during the pendency of preventive mediation proceedings at the NCMB.
On 17 November 1997, while a conciliation meeting was being held at the NCMB in NCMB-NCR-NS
10-435-97, PEU went on strike. It should be noted that in their meeting on 11 November 1997, both
Philcom and PEU were even "advised to maintain the status quo."45 Such disregard of the mediation
proceedings was a blatant violation of Section 6, Book V, Rule XXII of the Omnibus Rules
Implementing the Labor Code, which explicitly obliges the parties to bargain collectively in good faith
and prohibits them from impeding or disrupting the proceedings. 46 The relevant provision of the
Implementing Rules provides:
Section 6. Conciliation. ─ x x x x
During the proceedings, the parties shall not do any act which may disrupt or impede the early
settlement of dispute. They are obliged, as part of their duty, to bargain collectively in good faith, to
participate fully and promptly in the conciliation meetings called by the regional branch of the Board.
xx x x
Article 264(a) of the Labor Code also considers it a prohibited activity to declare a strike "during the
pendency of cases involving the same grounds for the same strike."
Lamentably, PEU defiantly proceeded with their strike during the pendency of the conciliation
proceedings.
5. PEU staged the strike in utter disregard of the grievance procedure established in the CBA.
By PEU's own admission, "the Union's complaints to the management began in June 1997 even
before the start of the 1997 CBA renegotiations."47 Their CBA expired on 30 June 1997.48 PEU could
have just taken up their grievances in their negotiations for the new CBA. This is what a Philcom
officer had suggested to the Dasmariñas staff when the latter requested on 16 June 1997 for an
increase in transportation allowance.49 In fact, when PEU declared the strike, Philcom and PEU had
already agreed on 37 items in their negotiations for the new CBA. 50
The bottom line is that PEU should have immediately resorted to the grievance machinery provided
for in the CBA.51 In disregarding this procedure, the union leaders who knowingly participated in the
strike have acted unreasonably. The law cannot interpose its hand to protect them from the
consequences of their illegal acts.52
A strike declared on the basis of grievances which have not been submitted to the grievance
committee as stipulated in the CBA of the parties is premature and illegal. 53
Having held the strike illegal and having found that PEU's officers and members have committed
illegal acts during the strike, we hold that no writ of execution should issue for the return to work of
PEU officers who participated in the illegal strike, and PEU members who committed illegal acts or
who defied the return-to-work orders that the Secretary issued on 19 November 1997 and 28
November 1997. The issue of who participated in the illegal strike, committed illegal acts, or defied
the return-to-work orders is a question of fact that must be resolved in the appropriate proceedings
before the Secretary of Labor.
WHEREFORE, we DISMISS the petition and AFFIRM the Decision of the Court of Appeals in CA-
G.R. SP No. 53989, with the MODIFICATION that the Secretary of Labor is directed to determine
who among the Philcom Employees Union officers participated in the illegal strike, and who among
the union members committed illegal acts or defied the return-to-work orders of 19 November 1997
and 28 November 1997. No pronouncement as to costs.
SO ORDERED.
Quisumbing, Chairman, Carpio-Morales, Tinga, Velasco, Jr., J.J., concur.
Footnotes
1 Under Rule 45 of the 1997 Rules of Civil Procedure.
2
Penned by Associate Justice Fermin A. Martin, Jr., with Associate Justices Salvador J. Valdez, Jr.
and Remedios S. Fernando, concurring. Rollo, pp. 869-888.
3 Rollo, pp. 871-874.
4 Id. at 582-583.
5
Id. at 584.
6 Id. at 585-595.
7 Id. at 597-603.
8
Id. at 605-612.
9
Id. at 622-623.
10 Id. at 623.
11 364 Phil. 44 (1999).
12
Rollo, p. 637.
13
Id. at 887-888.
14 347 Phil. 602 (1997).

13
Id. at 887-888.
14
347 Phil. 602 (1997).
15 Rollo, pp. 52-53.
16 Manila Diamond Hotel Employees' Union v. Court of Appeals, G.R. No. 140518, 16 December
2004, 447 SCRA 97.

17
Trans-Asia Shipping Lines, Inc.-Unlicensed Crews Employees Union-Associated Labor Unions
(Tasli-Alu) v. Court of Appeals, G.R. No. 145428, 7 July 2004, 433 SCRA 610.
18 Rollo, pp. 691-692.
19
LMG Chemicals Corporation v. Secretary of the Department of Labor and Employment, G.R. No.
127422, 17 April 2001, 356 SCRA 577; International Pharmaceuticals, Inc. v. Secretary of
Labor, G.R. Nos. 92981-83, 9 January 1992, 205 SCRA 59.
20 Rollo, p. 579.
21
Id. at 422-440.
22 Id. at 548-568.
23 Great Pacific Life Employees Union v. Great Pacific Life Assurance Corporation, G.R. No. 126717,
11 February 1999, 303 SCRA 113; Cesario A. Azucena, Jr., II The Labor Code with Comments and
Cases 210 (5th ed. 2004) [The Labor Code with Comments and Cases].
24 Rollo, pp. 880-886.
25 Unicorn Safety Glass, Inc. v. Basarte, G.R. No. 154689, 25 November 2004, 444 SCRA
287; Benguet Electric Cooperative v. Fianza, G.R. No. 158606, 9 March 2004, 425 SCRA 41.
26
II The Labor Code with Comments and Cases 214.
27 ART. 261, Labor Code. x x x 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 Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to
comply with the economic provisions of such agreement.
28 Rollo, pp. 110-112.
29
Allied Banking Corp. v. NLRC, G.R. No. 116128, 12 July 1996, 258 SCRA 724.
30
Telefunken Semiconductors Employees Union-FFW v. Sec. of Labor and Employment, 347 Phil.
447 (1997); St. Scholastica's College v. Torres, G.R. No. 100158, 29 June 1992, 210 SCRA 565.
31 Rollo, p. 444.
32
Id. at 35.
33 Id. at 1006.
34 Id. at 996.
35
Id. at 38-39.
36
Asian Transmission Corporation v. NLRC, G.R. No. 88725, 22 November 1989, 179 SCRA 582.
37 Grand Boulevard Hotel v. Genuine Labor Organization of Workers in Hotel, Restaurant and Allied
Industries (GLOWHRAIN), 454 Phil. 463 (2003).

38
St. Scholastica's College v. Torres, supra note 30.
39
Allied Banking Corp. v. NLRC, supra note 29.
40 Federation of Free Workers v. Inciong, G.R. No. 49983, 20 April 1992, 208 SCRA 157.
41 Rollo, pp. 445-448.
42
Liwayway Publications, Inc. v. Permanent Concrete Workers Union, 195 Phil. 51 (1981).
43
Great Pacific Life Employees Union v. Great Pacific Life Assurance Corporation, supra note 23.
44 St. Scholastica's College v. Torres, supra note 30.
45 Rollo, p. 443.
46
San Miguel Corp. v. NLRC, 451 Phil. 514 (2003).
47 Rollo, p. 70.
48 Id. at 579.
49
Id. at 307.
50
Id. at 583.
51 Id. at 507-508.
52 Tiu v. NLRC, 343 Phil. 478 (1997).
53
II The Labor Code with Comments and Cases 443.
Pasted from <http://www.lawphil.net/judjuris/juri2006/jul2006/gr_144315_2006.html>

Nissan Motors vs. Secretary (2006)
12:50 AM

G.R. Nos. 158190-91 October 31, 2006
NISSAN MOTORS PHILIPPINES, INC. vs. SECRETARY OF LABOR AND EMPLOYMENT, ET AL.

SUPREME COURT
Manila
SECOND DIVISION
G.R. Nos. 158190-91 October 31, 2006
NISSAN MOTORS PHILIPPINES, INC., petitioner,
vs.
SECRETARY OF LABOR AND EMPLOYMENT and BAGONG NAGKAKAISANG LAKAS SA
NISSAN MOTORS PHILIPPINES, INC. (BANAL-NMPI-OLALIA-KMU), respondents.
x------------------------------------------------x
G.R. Nos. 158276 and 158283 October 31, 2006
BAGONG NAGKAKAISANG LAKAS SA NISSAN MOTORS PHILIPPINES, INC. (BANAL-NMPI-
OLALIA-KMU), petitioner,
vs.
COURT OF APPEALS (SPECIAL DIVISION OF FIVE), SECRETARY OF LABOR and
EMPLOYMENT and NISSAN MOTORS PHILIPPINES, INC., respondents.
RESO L U TI O N
GARCIA, J.:
This resolves the motion interposed by Bagong Nagkakaisang Lakas sa Nissan Motors Philippines,
Inc. (BANAL-NMPI-OLALIA-KMU) for clarification of the Decision of the Court dated June 21, 2006,
as reiterated with finality in its Resolution of August 28, 2006, affirming with modifications the
Decision dated February 7, 2003 of the Court of Appeals (CA) and its Resolution of May 15, 2003,
in CA-G.R. SP No. 69107 and CA- G.R. SP No. 69799.
The relevant factual antecedents of the subject motion for clarification may be summarized as
follows:
A 2000-2001 labor dispute between Nissan Motors Philippines, Inc. (Nissan Motors) and BANAL-
NMPI-OLALIA-KMU ("Union" hereafter) triggered by a collective bargaining deadlock resulted in (1)
the filing of four (4) notices of strike, the first filed on December 4, 2000 on account of the alleged
suspension of about 140 employees following a disruption of company operations; and (2) the
dismissal from the service of a number of company employees. On August 22, 2001, the
Department of Labor and Employment (DOLE) issued an order assuming jurisdiction over the
dispute. In it, the DOLE Secretary expressly enjoined any strike or lockout and directed the parties to
cease and desist from committing any act that might exacerbate the situation, and for the Union to
refrain from engaging in any disruptive activity.
Eventually, the DOLE Secretary issued, on December 5, 2001, a decision which contained names of
union officers and members whom Nissan Motors dismissed for defying the directives contained in
the assumption order. Insofar as pertinent, the Secretary's decision dispositively reads:
WHEREFORE, in the light of the foregoing discussions, this Office orders the following:
1. The suspension of the 140 employees which is the subject of the first notice of strike is hereby
affirmed;
2. The dismissal of the Union officers is hereby sustained. However, the dismissal of the Union
members is recalled, hence, they are reinstated to their former positions without back wages. They
are imposed a suspension of one month which is deemed already served;
xxx xxx xxx
The DOLE Secretary would subsequently issue a resolution dated January 22, 2002 affirming with
modification her decision of December 5, 2001. The modification consisted in the deletion from the
list of dismissed Union officers the names of three (3) employees previously identified as
officers, i.e., Efimaco C. Marica, Rafael L. Guillano and Aldren Camposano, but are not listed as
such in the official records of the Bureau of Labor Relations, thus:
WHEREFORE, the motions for reconsiderations are … DENIED. Accordingly, our 05 December

WHEREFORE, the motions for reconsiderations are … DENIED. Accordingly, our 05 December
2001 Order is AFFIRMED and the directives therein contained are hereby REITERATED with a
MODIFICATION that the order affirming the order of dismissal of union officers shall not apply to
those three employees identified in this resolution who are not listed in the official records of the
BLR, and who shall be immediately reinstated to their former positions.
On February 7, 2003, in consolidated cases docketed as CA-G.R. SP No. 69107 and CA-G.R. SP
No. 69799, the CA, acting on the separate petitions for certiorari of Nissan Motors and the Union,
effectively affirmed the aforementioned decision, as modified, of the DOLE Secretary. In turn, the
Court, in its Decision of June 21, 2006, affirmed that of the CA insofar as it upheld the DOLE
Secretary on the suspension and dismissal angle of her decision, or to be precise, her order (a)
affirming the suspension of the 140 employees which is the subject of the first notice of strike; (b)
sustaining the dismissal of the Union officers; and (c) downgrading to one-month suspension the
penalty of dismissal heretofore imposed on Union members who joined the striking Union officers in
defying the assumption order and accordingly reinstating said union members having already served
the one-month suspension.
This Court in turn sustained the CA's Decision also insofar as it affirmed the disciplinary aspect of
the DOLE Secretary's case disposition.
In its present motion, the Union seeks clarification on who among the union members were ordered
reinstated, pursuant to the affirmed decision of the DOLE, considering that the Court's Decision
failed to mention the names of such union members ordered reinstated after their dismissal was
recalled.
There is really nothing to clarify. For, albeit the dispositive portion of the DOLE's decision was indeed
silent as to who were to be reinstated, the text thereof under the heading:The Issue on
Dismissal delved on the question of who were subjects of dismissal and specifically carried 44
names of "Union officers and members dismissed for carrying out slowdown in defiance of the
assumption or jurisdiction order."1 And any doubt as to who the DOLE Secretary dispositively
referred when she wrote of the union officers whose dismissal is sustained and the union officers
whose dismissal is recalled should be put to rest by the clarifying light accorded by the following
excerpts of her decision:
Thus, the Union's excuses do not hold sway on this Office. To be sure, the Union engaged in work
showdown which under the circumstances in which they were undertaken constitute illegal strike.
The company is therefore right in dismissing the subject Union officers in accordance with Article
264 (a) of the Labor Code, for participating in illegal strike in defiance of the assumption of
jurisdiction order by the Labor Secretary.
However, the members of the Union should not be as severely punished. Dismissal is a harsh
penalty as surely they were only following orders from their officers. Besides, there is no evidence
that they engaged or participated in the commission of illegal activities during the said strike. They
should thus be reinstated to their former positions, but without backwages. Their action which
resulted in prejudice to the Company cannot however go unpunished. For the injury that they have
collectively inflicted on the company, they should be disciplined. A one month suspension is a
reasonable disciplinary measure which should be deemed served during the time they out of their
jobs (sic).2 (Emphasis supplied.)
The instant motion is thus RESOLVED accordingly.
SO ORDERED.
Puno, J., Chairperson, Sandoval-Gutierrez, Corona, and Azcuna, JJ., concur.
Footnotes
1
Pages 12 & 13 of the Decision; Rollo, pp. 21-22.
2 Rollo, p. 22.
Pasted from <http://www.lawphil.net/judjuris/juri2006/oct2006/gr_158190_2006.html>

Pentagon Steel vs. CA (2009)
12:54 AM
lawphil
Today is
Thursday
, July 01,
2004

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 174141 June 26, 2009
PENTAGON STEEL CORPORATION, Petitioner,
vs.
COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION and
PERFECTO BALOGO, Respondents.
DEC I SI O N
Before this Court is the Petition for Review on Certiorari 1 under Rule 45 of the
Rules of Court filed by Pentagon Steel Corporation (the petitioner). It seeks to set
aside:
(a) the Decision of the Court of Appeals (CA) dated June 28, 2006 2 modifying the
Decision of the National Labor Relations Commission (NLRC) dated January 31,
2005;3 and
(b) the Resolution of the CA dated August 15, 2006, 4 denying the motion for
reconsideration that the petitioner subsequently filed.
THE FACTUAL ANTECEDENTS
The petitioner, a corporation engaged in the manufacture of G.I. wire and nails,
employed respondent Perfecto Balogo (the respondent) since September 1, 1979
in its wire drawing department. The petitioner alleged that the respondent absented
himself from work on August 7, 2002 without giving prior notice of his absence. As
a result, the petitioner sent him a letter by registered mail dated August 12, 2002,
written in Filipino, requiring an explanation for his absence. The petitioner sent
another letter to the respondent on August 21, 2002, also by registered mail,
informing him that he had been absent without official leave (AWOL) from August
7, 2002 to August 21, 2002. Other letters were sent to the respondent by
registered mail, all pointing out his absences; however, the respondent failed to
respond. Thus, the petitioner considered him on AWOL from August 7, 2002. 5
On September 13, 2002, the respondent filed a complaint with the Arbitration
Branch of the NLRC for underpayment/nonpayment of salaries and wages,
overtime pay, holiday pay, service incentive leave, 13th month pay, separation
pay, and ECOLA. The respondent alleged that on August 6, 2002, he contracted
flu associated with diarrhea and suffered loose bowel movement due to the
infection. The respondent maintained that his illness had prevented him from
reporting for work for ten (10) days. When the respondent finally reported for work
on August 17, 2002, the petitioner refused to take him back despite the medical
certificate he submitted. On August 19, 2002, the respondent again reported for

certificate he submitted. On August 19, 2002, the respondent again reported for
work, exhibiting a note from his doctor indicating that he was fit to work. The
petitioner, however, did not allow him to resume work on the same date.
Subsequently, the respondent again reported for work on August 21 and 23, 2002
and October 10 and 18, 2002, to no avail. He was thus driven to file a complaint
against the petitioner. 6
During the conciliation proceedings on October 9, 2002, the respondent presented
the medical certificate covering his period of absence. The petitioner required him,
however, to submit himself to the company physician to determine whether he was
fit to return to work in accordance with existing policies. On October 22, 2002, still
during the conciliation proceedings, the respondent presented a medical certificate
issued by the company physician; according to the petitioner, the respondent
refused to return to work and insisted that he be paid his separation pay. The
petitioner refused the respondent‟s demand for separation pay for lack of basis.
On January 20, 2003, the respondent formally amended his complaint to include
his claim of illegal dismissal. 7
The Labor Arbiter Ruling
On October 27, 2003, the labor arbiter rendered his decision dismissing the illegal
dismissal charge, but directed the petitioner "to pay the complainant his SIL and
13th month pay in the amount of Five Thousand One Hundred Sixty -Six Pesos and
66/100 (P5,166.66)."8
In dismissing the respondent‟s claim of illegal dismissal, the labor arbiter found that
no dismissal took place; thus, the petitioner never carried the burden of proving the
legality of a dismissal. The labor arbiter noted that the respondent‟s allegation that
he reported for work is not reliable for lack of corroborating evidence, as the
respondent in fact failed to respond to the petitioner‟s memoranda. Thus, the
decision was confined to the directive to pay service incentive leave and 13th
month pay.
The NLRC Ruling
The respondent appealed the labor arbiter‟s decision to the NLRC on November
14, 2003, specifically questioning the ruling that no illegal dismissal took place. On
January 31, 2005, the NLRC Third Division vacated and set aside the decision of
the labor arbiter. 9 The decision directed the company to pay the respondent
separation pay, backwages, 13th month pay, and service incentive leave. 10
The NLRC ruled that the petitioner‟s defense of abandonment has no legal basis
since there was no clear intent on the respondent‟s part to sever the employer -
employee relationship. The NLRC found it difficult to accept the petitioner‟s
allegation that the respondent absented himself for unknown reasons; this kind of
action is inconsistent with the respondent‟s twenty -three (23) years of service and
lack of derogatory record during these years. As a consequence, the NLRC held
that the respondent was illegally dismissed. Together with this conclusion,
however, the NLRC also considered the strained relationship existing between the
parties and, for this reason, awarded separation pay in lieu of reinstatement, in
addition to backwages. On March 31, 2005, the NLRC denied the petitioner‟s
motion for reconsideration.
The CA Ruling
On May 6, 2006, the petitioner filed a special civil action for certiorari 11 with the CA,
alleging grave abuse of discretion on the part of the NLRC in ruling that illegal
dismissal took place, and in awarding the respondent separation pay and
backwages.
In a Decision dated June 28, 2006, the CA affirmed the NLRC‟s finding that the
dismissal was illegal, but modified the challenged decision by adding reinstatement
and the payment of "full backwages, inclusive of allowances and other benefits or
their monetary equivalent computed from the time his compensation was withheld
from him up to the time of his actual reinstatement." 12
The CA held that the respondent was constructively dismissed when the petitioner
repeatedly refused to accept the respondent back to work despite the valid medical
reason that justified his absence from work. The CA concluded that the respondent
complied with the petitioner‟s directive to submit a written explanation when the
former presented the medical certificate to explain his absences.
The CA also disregarded the petitioner‟s charge of abandonment against the
respondent. The appellate court ruled that the petitioner failed to prove a clear and

respondent. The appellate court ruled that the petitioner failed to prove a clear and
deliberate intent on the respondent‟s part to discontinue working with no intention
of returning. The CA took note of the respondent‟s eagerness to return to work
when he obtained a note from his doctor about his fitness to return to work. The
CA also ruled that the respondent‟s filing of a complaint for illegal dismissal with a
prayer for reinstatement manifested his desire to return to his job, thus negating
the petitioner‟s charge of abandonment.
The CA, however, disagreed with the NLRC‟s application of the doctrine of
"strained relations," citing jurisprudence that the doctrine should be strictly applied
in order not to deprive an illegally dismissed employee of his right to reinstatement.
The CA also held that to deny the respondent the benefits due from his long
service with the company would be very harsh since his long service would not be
amply compensated by giving him only separation pay.
Petitioner moved for reconsideration of the decision, but the CA denied the motion
for lack of merit in the Resolution dated August 15, 2006. 13
In this present petition, the petitioner imputes grave abuse of discretion against the
CA:
1) in basing its decision on the proceedings that transpired when the parties were
negotiating for a compromise agreement during the preliminary conference of the
case;
2) in declaring that respondent was illegally dismissed by the petitioner; and
3) in ordering that respondent be reinstated to his former position with backwages.
THE COURT‟S RULING
We do not find the petition meritorious.
Before going into the substantive merits of the controversy, we shall first resolve
the propriety of the CA‟s consideration of the proceedings that transpired during
the mandatory preliminary conference of the case.
Statements and/or agreements made at conciliation proceedings are privileged
and cannot be used as evidence
The petitioner contends that the CA cannot use the parties‟ actions and/or
agreements during the negotiation for a compromise agreement as basis for the
conclusion that the respondent was illegally dismissed because an offer of
compromise is not admissible in evidence under Section 27, Rule 130 of the Rules
of Court.14
We agree with the petitioner, but for a different reason. The correct reason for the
CA‟s error in considering the actions and agreements during the conciliation
proceedings before the labor arbiter is Article 233 of the Labor Code which states
that "[i]nformation and statements made at conciliation proceedings shall be
treated as privileged communication and shall not be used as evidence in the
Commission. Conciliators and similar officials shall not testify in any court or body
regarding any matters taken up at conciliation proceedings conducted by them."
This was the provision we cited in Nissan Motors Philippines, Inc. v. Secretary of
Labor 15 when we pointedly disallowed the award made by the public respondent
Secretary; the award was based on the information NCMB Administrator Olalia
secured from the confidential position given him by the company during
conciliation.
In the present case, we find that the CA did indeed consider the statements the
parties made during conciliation; thus, the CA erred by considering excluded
materials in arriving at its conclusion. The reasons behind the exclusion are two -
fold.
First, since the law favors the settlement of controversies out of court, a person is
entitled to "buy his or her peace" without danger of being prejudiced in case his or
her efforts fail; hence, any communication made toward that end will be regarded
as privileged. 16 Indeed, if every offer to buy peace could be used as evidence
against a person who presents it, many settlements would be prevented and
unnecessary litigation would result, since no prudent person would dare offer or
entertain a compromise if his or her compromise position could be exploited as a
confession of weakness. 17
Second, offers for compromise are irrelevant because they are not intended as
admissions by the parties making them. 18 A true offer of compromise does not, in
legal contemplation, involve an admission on the part of a defendant that he or she
is legally liable, or on the part of a plaintiff, that his or her claim is groundless or

is legally liable, or on the part of a plaintiff, that his or her claim is groundless or
even doubtful, since it is made with a view to avoid controversy and save the
expense of litigation. It is the distinguishing mark of an offer of compromise that it
is made tentatively, hypothetically, and in contemplation of mutual concessions. 19
While we agree with the petitioner that the CA should not have considered the
agreements and/or statements made by the parties during the conciliation
proceedings, the CA‟s conclusion on illegal dismissal, however, was not grounded
solely on the parties‟ statements during conciliation, but was amply supported by
other evidence on record, which we discuss below. Based on these other pieces of
evidence, the respondent was illegally dismissed; hence, our ruling regarding the
statement made during conciliation has no effect at all on our final conclusion.
Respondent did not abandon his job
The rule is that the burden of proof lies with the employer to show that the
dismissal was for a just cause. 20 In the present case, the petitioner claims that
there was no illegal dismissal since the respondent abandoned his job. The
petitioner points out that it wrote the respondent various memoranda requiring him
to explain why he incurred absences without leave, and requiring him as well to
report for work; the respondent, however, never bothered to reply in writing.
In evaluating a charge of abandonment, the jurisprudential rule is that
abandonment is a matter of intention that cannot be lightly presumed from
equivocal acts. 21 To constitute abandonment, two elements must concur: (1) the
failure to report for work or absence without valid or justifiable reason, and (2) a
clear intent, manifested through overt acts, to sever the employer -employee
relationship. The employer bears the burden of showing a deliberate and
unjustified refusal by the employee to resume his employment without any
intention of returning. 22
We agree with the CA that the petitioner failed to prove the charge of
abandonment.
First, the respondent had a valid reason for absenting himself from work. The
respondent presented a medical certificate from his doctor attesting to the fact that
he was sick with flu associated with diarrhea or loose bowel movement which
prevented him from reporting for work for 10 days. The petitioner never effectively
refuted the respondent‟s reason for his absence. We thus concur with the CA‟s
view that the respondent submitted a valid reason for his absence and thereby
substantially complied with the petitioner‟s requirement of a written explanation.
We quote with approval the following discussion in the CA‟s decision:
In his case, Balogo should be judged as having fully complied with the petitioner‟s
directive by his presenting of the medical certificate to justify or explain his
absences because the medical certificate already constituted the required "written
explanation." Another written explanation from him would be superfluous and even
redundant if the facts already appearing in the medical certificate would inevitably
be stated again in that other written explanation.
Why the petitioner persistently refused to accept Balogo back despite his
presentation of the medical certificate and the doctor‟s note about his fitness to
work was not credibly explained by the petitioner. The refusal is indicative of the
petitioner‟s ill motive towards him, using the lack of written explanation as a clever
ruse to terminate Balogo‟s employment.
Second, there was no clear intention on the respondent‟s part to sever the
employer-employee relationship. Considering that "intention" is a mental state, the
petitioner must show that the respondent‟s overt acts point unerringly to his intent
not to work anymore. 23 In this case, we see no reason to depart from the
unanimous factual findings of the NLRC and the CA that the respondent‟s actions
after his absence from work for ten (10) days due to illness showed his willingness
to return to work. Both tribunals found that after the respondent presented his
medical certificate to the petitioner to explain his absence, he even went back to
his doctor for a certification that he was already fit to return to work. These findings
of fact we duly accept as findings that we must not only respect, but consider as
final, since they are supported by substantial evidence. 24
In addition, the respondent‟s filing of the amended complaint for illegal dismissal on
January 20, 2003 strongly speaks against the petitioner‟s charge of abandonment,
for it is illogical for an employee to abandon his employment and, thereafter, file a
complaint for illegal dismissal.

complaint for illegal dismissal.
That abandonment is negated finds support in a long line of cases where the
immediate filing of a complaint for illegal dismissal was coupled with a prayer for
reinstatement; the filing of the complaint for illegal dismissal is proof enough of the
desire to return to work. 25 The prayer for reinstatement, as in this case, speaks
against any intent to sever the employer -employee relationship. 26
We additionally take note of the undisputed fact that the respondent had been in
the petitioner‟s employ for 23 years. Prior to his dismissal, the respondent‟s service
record was unblemished having had no record of infraction of company rules. As
the NLRC correctly held, we find it difficult to accept the petitioner‟s allegation that
the respondent absented himself for unjustifiable reasons with the intent to
abandon his job. To our mind, abandonment after the respondent‟s long years of
service and the consequent surrender of benefits earned from years of hard work
are highly unlikely. Under the given facts, no basis in reason exists for the
petitioner‟s theory that the respondent abandoned his job.
Respondent was constructively dismissed
The above conclusion necessarily leads us to sustain the NLRC‟s finding, as
affirmed by the CA, that the respondent was dismissed without just cause. Again,
we quote with approval the CA‟s disquisition:
That Balogo was dismissed in contravention of the letter and spirit of the
Constitution and the Labor Code on the security of tenure guaranteed to him as
employee is clear for us. A dismissal need not be expressed orally or in writing, for
it can also be implied. When the employer continuously refuses to accept the
employee back despite his having a valid reason for his absence from work, illegal
dismissal results because the employee is thus prevented from returning to work
under the façade of a violation of a company directive.
A dismissal effected through the fig leaf of an alleged violation of a company
directive is no less than an actual illegal dismissal that jurisprudence has labeled
as a constructive dismissal. Hyatt Taxi Services, Inc. v. Catinoy 27describes this
type of company action when it ruled that "[c]onstructive dismissal does not always
involve forthright dismissal or diminution in rank, compensation, benefit and
privileges – there may be constructive dismissal if an act of clear discrimination,
insensibility, or disdain by an employer becomes so unbearable on the part of the
employee that it could foreclose any choice by him except to forego his continued
employment."
The respondent’s situation is no different from what Hyatt defined, given the result
of the petitioner’s action and the attendant insensibility and disdain the employer
exhibited. We significantly note that by reporting for work repeatedly, the
respondent manifested his willingness to comply with the petitioner’s rules and
regulations and his desire to continue working for the latter. The petitioner,
however, barred him from resuming his work under the pretext that he had violated
a company directive. This is a clear manifestation of the petitioner’s lack of respect
and consideration for the respondent who had long served the company without
blemish, but who had to absent himself because of illness. The petitioner’s
1avvphi 1
actions, under these circumstances, constitute constructive dismissal. 28

The respondent’s illegal dismissal carries the legal consequence defined under
Article 279 of the Labor Code: the illegally dismissed employee is entitled to
reinstatement without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances and other benefits or their monetary
equivalent, computed from the time his compensation was withheld from him up to
the time of his actual reinstatement. 29 The imposition of this legal consequence is a
matter of law that allows no discretion on the part of the decision maker, except
only to the extent recognized by the law itself as expressed in jurisprudence.
Respondent is entitled to reinstatement not separation pay
As the CA correctly ruled, the NLRC erred when it awarded separation pay instead
of reinstatement. The circumstances in this case do not warrant an exception to
the rule that reinstatement is the consequence of an illegal dismissal.
First. The existence of strained relations between the parties was not clearly
established. We have consistently ruled that the doctrine of strained relations
cannot be used recklessly or applied loosely to deprive an illegally dismissed
employee of his means of livelihood and deny him reinstatement. Since the
application of this doctrine will result in the deprivation of employment despite the

application of this doctrine will result in the deprivation of employment despite the
absence of just cause, the implementation of the doctrine of strained relationship
must be supplemented by the rule that the existence of a strained relationship is
for the employer to clearly establish and prove in the manner it is called upon to
prove the existence of a just cause; the degree of hostility attendant to a litigation
is not, by itself, sufficient proof of the existence of strained relations that would rule
out the possibility of reinstatement. 30 Indeed, labor disputes almost always result in
"strained relations," and the phrase cannot be given an overarching interpretation;
otherwise, an unjustly dismissed employee can never be reinstated. 31
In the present case, we find no evidentiary support for the conclusion that strained
relations existed between the parties. To be sure, the petitioner did not raise the
defense of strained relationship with the respondent before the labor arbiter.
Consequently, this issue – factual in nature – was not the subject of evidence on
the part of both the petitioner and the respondent. There thus exists no competent
evidence on which to base the conclusion that the relationship between the
petitioner and the respondent has reached the point where their relationship is now
best severed. 32 We agree with the CA’s specific finding that the conflict, if any,
occasioned by the respondent’s filing of an illegal dismissal case, does not merit
the severance of the employee-employer relationship between the parties.
Second. The records disclose that respondent has been in the petitioner’s employ
for 23 years and has no previous record of inefficiency or infraction of company
rules prior to his illegal dismissal from service. We significantly note that payment
of separation pay in lieu of respondent’s reinstatement will work injustice to the
latter when considered with his long and devoted years in the petitioner’s service.
Separation pay may take into account the respondent’s past years of service, but
will deprive the respondent of compensation for the future productive years that his
security of tenure protects. We take note, too, that the respondent, after 23 years
of service, shall in a few years retire; any separation pay paid at this point cannot
equal the retirement pay due the respondent upon retirement.
For all these reasons, we uphold the CA ruling that the respondent should be
reinstated to his former position or to a substantially equivalent position without
loss of seniority rights.
WHEREFORE, premises considered, we hereby DENY the petition, and,
consequently, AFFIRM the Decision of the Court of Appeals dated June 28, 2006
and its Resolution dated August 15, 2006 in CA-G.R. SP No. 89587.
SO ORDERED.
ARTURO D. BRION
Associate Justice
WE CONCUR:
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
CONSUELO YNARES-SANTIAGO* MINITA V. CHICO-NAZARIO**
Associate Justice Associate Justice
TERESITA J. LEONARDO-DE CASTRO***
Associate Justice
ATT EST A TI O N
I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
LEONARDO A. QUISUMBING
Associate Justice
Chairperson
CER T IF I C A TI O N
Pursuant to Section 13, Article VIII of the Constitution, and the Division
Chairperson’s Attestation, it is hereby certified that the conclusions in the above
Decision were reached in consultation before the case was assigned to the writer
of the opinion of the Court’s Division.
REYNATO S. PUNO
Chief Justice
Footnotes
* Designated additional Member of the Second Division per Special Order No. 645

Footnotes
*
Designated additional Member of the Second Division per Special Order No. 645
dated May 15, 2009.
** Designated additional Member of the Second Division effective June 3, 2009, per
Special Order No. 658 dated June 3, 2009.

*** Designated additional Member of the Second Division effective May 11, 2009,
per Special Order No. 635 dated May 7, 2009.

1 Rollo, pp. 3-23.
2
Penned by Associate Justice Lucas P. Bersamin (now a member of this Court),
and concurred in by Associate Justice Martin S. Villarama, Jr. and Associate
Justice Celia C. Librea-Leagogo; id., pp. 144-155.
3
Id., pp. 88-96.
4
Id., pp. 178-180.
5 Id., pp. 145.
6 Id., p. 145.
7 Id., pp. 45-46.
8 Penned by Labor Arbiter Gaudencio P. Demaisip, Jr.; id., pp. 71 -77.
9 Penned by then Presiding Commissioner Lourdes C. Javier, concurred in by
Commissioner Tito F. Genilo;id., pp. 88-96.

10
The dispositive portion reads:
WHEREFORE, the decision dated 27 October 2002 is VACATED and SET ASIDE.
The respondent company is directed to pay complainant the following computed as
of date herein promulgated.
1. Separation Pay (one month for = P 182,000.0
every Year of service) 0
Sept. 1, 1979 – Jan. 31, 2005 (25
yrs.)
2. Backwages = 193,895.00
Salary August 6, 2002 – Jan. 31,
2005
P250 x 26 x 29.83
3. 13th Month Pay = 16, 157.92
4. Service Incentive Leave Pay = 3,107.29
P250 x5/12 x 29.83
P 395,160.2
1
=========
===
The other claims are
dismissed.
11 Docketed as CA-G.R. SP No. 89587; rollo, pp. 117-143.
12 Supra note 2, p. 154.
13
Supra note 4, pp. 178-180.
14
Sec. 27. Offer of compromise not admissible. – In civil cases, an offer of
compromise is not an admission of any liability, and is not admissible in evidence
against the offeror.
15 G.R. Nos. 158190-91, June 21, 2006, 401 SCRA 604, 626 -627.
16 32 C.J.S. Evidence § 522.
17 Marshall v. Taylor, 168 Mo. 9, 240, 248, 153 S.W. 527; Perkins v. Concord R.
Co., 44 H.H. 223; Pirie v. Wyld, 11 Ont. 422; New Country Corp. v. Toronto Gravel
Road, etc. C., 3 Ant. 584.
18 15 A.L.R.3d 13, §2 (a).
19
Supra note 16.
20
Hanjin Engineering and Construction Co., Ltd. v. Court of Appeals, G.R. No.
165910, April 10, 2006 487 SCRA 78; Aliten v. U-Need Lumber & Hardware, G.R.
No. 168931, September 12, 2006, 501 SCRA 577.
21 Hantex Trading Co., Inc., et al. v. Court of Appeals, G.R. No. 148241, September
27, 2002, 390 SCRA 181.

22 Labor, et al. v. NLRC and Gold City Commercial Complex, Inc., and Uy, G.R. No.

22
Labor, et al. v. NLRC and Gold City Commercial Complex, Inc., and Uy, G.R. No.
110388, September 14, 1995, 248 SCRA 183.
23 Lambo v. National Labor Relations Commission, G.R. No. 111042, October 26,
1999, 317 SCRA 420; Dagupan Bus Company v. National Labor Relations
Commission, G.R. No. 94291, November 9, 1990, 191 SCRA 328.
24 Duldulao v. Court of Appeal, G.R. No. 164893, March 1, 2007, 517 SCRA 191;
Heirs of the Late Panfilo V. Pajarillo v. Court of Appeals, G.R. Nos. 155056 -57,
October 19, 2007, 537 SCRA 96.
25
Supra note 19.
26
Big AA Manufacturer v. Antonio, et al., G.R. No. 160854, March 3, 2006, 484
SCRA 33.
27
G.R. No. 143204, June 26, 2001, 359 SCRA 686.
28 See Ruperto Suldao v. Cimech System Construction, Inc., et al., G.R. No.
171392, October 30, 2006, 506 SCRA 256.

29 Premiere Development Bank v. Mantal, G.R. No. 167716, March 23, 2006, 485
SCRA 234; Philippine Amusement Gaming Corporation v. Angara, G.R. No.

142937, July 25, 2006, 496 SCRA 453.
30
Industrial Corporation v. Morales, G.R. No. 161158, May 9, 2005, 458 SCRA
339,347 citing Procter and Gamble Philippines v. Bondesto, G.R. No. 139847,
March 5, 2004, 425 SCRA 1.
31
Quijano v. Mercury Drug Corporation, G.R. No. 126561, July 8, 1998, 292 SCRA
109, citing Capili v. NLRC, 270 SCRA 488, 295 (1997).
32 Id., p.120.

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National Union of Restaurant Workers

Thursday, July 01, 2004

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WHEREFORE, the decision appealed from is affirmed. No costs.

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Disposition Petition dismissed.

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