THIRD DIVISION Solidarity of Trade Unions in the Philippines for Empowerment and

Reforms (Union) filed on 9 January 2006, a claim for Paternity Leave,

CONTINENTAL STEEL MANUFACTURING CORPORATION, Bereavement Leave and Death and Accident Insurance for
Petitioner, dependent, pursuant to the Collective Bargaining Agreement (CBA)
concluded between Continental and the Union, which reads:
- versus -
ARTICLE X: LEAVE OF ABSENCE
HON. ACCREDITED VOLUNTARY ARBITRATOR ALLAN S. MONTAO
and NAGKAKAISANG MANGGAGAWA NG CENTRO STEEL xxxx
CORPORATION-SOLIDARITY OF UNIONS IN THE PHILIPPINES FOR
EMPOWERMENT AND REFORMS (NMCSC-SUPER), Section 2. BEREAVEMENT LEAVEThe Company agrees to grant a
Respondents. bereavement leave with pay to any employee in case of death of the
employees legitimate dependent (parents, spouse, children, brothers
G.R. No. 182836 and sisters) based on the following:
October 13, 2009
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x 2.1 Within Metro Manila up to Marilao, Bulacan - 7 days
DECISION
2.2 Provincial/Outside Metro Manila - 11 days
CHICO-NAZARIO, J.:
xxxx
Before Us is a Petition for Review on Certiorari, under Rule 45 of the
Rules of Court, assailing the Decision[1] dated 27 February 2008 and ARTICLE XVIII: OTHER BENEFITS
the Resolution[2] dated 9 May 2008 of the Court of Appeals in CA-
G.R. SP No. 101697, affirming the Resolution[3] dated 20 November xxxx
2007 of respondent Accredited Voluntary Arbitrator Atty. Allan S.
Montao (Montao) granting bereavement leave and other death Section 4. DEATH AND ACCIDENT INSURANCEThe Company shall
benefits to Rolando P. Hortillano (Hortillano), grounded on the death grant death and accidental insurance to the employee or his family in
of his unborn child. the following manner:

The antecedent facts of the case are as follows: xxxx

Hortillano, an employee of petitioner Continental Steel 4.3 DEPENDENTSEleven Thousand Five Hundred Fifty Pesos
Manufacturing Corporation (Continental Steel) and a member of (Php11,550.00) in case of death of the employees legitimate
respondent Nagkakaisang Manggagawa ng Centro Steel Corporation- dependents (parents, spouse, and children). In case the employee is

1
single, this benefit covers the legitimate parents, brothers and sisters
only with proper legal document to be presented (e.g. death
certificate).[4]
The claim was based on the death of Hortillanos unborn child.
Hortillanos wife, Marife V. Hortillano, had a premature delivery on 5
January 2006 while she was in the 38th week of pregnancy.[5]
According to the Certificate of Fetal Death dated 7 January 2006, the
female fetus died during labor due to fetal Anoxia secondary to
uteroplacental insufficiency.[6]
Continental Steel immediately granted Hortillanos claim for paternity
leave but denied his claims for bereavement leave and other death
benefits, consisting of the death and accident insurance.[7]
Seeking the reversal of the denial by Continental Steel of Hortillanos
claims for bereavement and other death benefits, the Union resorted
to the grievance machinery provided in the CBA. Despite the series of
conferences held, the parties still failed to settle their dispute,[8]
prompting the Union to file a Notice to Arbitrate before the National
Conciliation and Mediation Board (NCMB) of the Department of
Labor and Employment (DOLE), National Capital Region (NCR).[9] In a
Submission Agreement dated 9 October 2006, the Union and
Continental Steel submitted for voluntary arbitration the sole issue
of whether Hortillano was entitled to bereavement leave and other
death benefits pursuant to Article X, Section 2
and Article XVIII, Section 4.3 of the CBA.[10] The parties mutually
chose Atty. Montao, an Accredited Voluntary Arbitrator, to resolve
said issue.[11]
When the preliminary conferences again proved futile in amicably
settling the dispute, the parties proceeded to submit their respective
Position Papers, [12] Replies,[13] and Rejoinders[14] to Atty.
Montao.
The Union argued that Hortillano was entitled to bereavement leave
and other death benefits pursuant to the CBA. The Union maintained
that Article X, Section 2 and Article XVIII, Section 4.3 of the CBA did
not specifically state that the dependent should have first been born
alive or must have acquired juridical personality so that his/her
subsequent death could be covered by the CBA death benefits. The
Union cited cases wherein employees of MKK Steel Corporation (MKK
Steel) and Mayer Steel Pipe Corporation (Mayer Steel), sister
companies of Continental Steel, in similar situations as Hortillano
were able to receive death benefits under similar provisions of their
CBAs.
The Union mentioned in particular the case of Steve L. Dugan
(Dugan), an employee of Mayer Steel, whose wife also prematurely
delivered a fetus, which had already died prior to the delivery. Dugan
was able to receive paternity leave, bereavement leave, and
voluntary contribution under the CBA between his union and Mayer
Steel.[15] Dugans child was only 24 weeks in the womb and died
before labor, as opposed to Hortillanos child who was already 37-38
weeks in the womb and only died during labor.
The Union called attention to the fact that MKK Steel and Mayer Steel
are located in the same compound as Continental Steel; and the
representatives of MKK Steel and Mayer Steel who signed the CBA
with their respective employees unions were the same as the
representatives of Continental Steel who signed the existing CBA with
the Union.
2
Finally, the Union invoked Article 1702 of the Civil Code, which
provides that all doubts in labor legislations and labor contracts shall
be construed in favor of the safety of and decent living for the
laborer.
On the other hand, Continental Steel posited that the express
provision of the CBA did not contemplate the death of an unborn
child, a fetus, without legal personality. It claimed that there are two
elements for the entitlement to the benefits, namely: (1) death and
(2) status as legitimate dependent, none of which existed in
Hortillanos case. Continental Steel, relying on Articles 40, 41 and
42[16] of the Civil Code, contended that only one with civil
personality could die. Hence, the unborn child never died because it
never acquired juridical personality. Proceeding from the same line
of thought, Continental Steel reasoned that a fetus that was dead
from the moment of delivery was not a person at all. Hence, the term
dependent could not be applied to a fetus that never acquired
juridical personality. A fetus that was delivered dead could not be
considered a dependent, since it never needed any support, nor did
it ever acquire the right to be supported.
Continental Steel maintained that the wording of the CBA was clear
and unambiguous. Since neither of the parties qualified the terms
used in the CBA, the legally accepted definitions thereof were
deemed automatically accepted by both parties. The failure of the
Union to have unborn child included in the definition of dependent,
as used in the CBA the death of whom would have qualified the
parent-employee for bereavement leave and other death benefits
bound the Union to the legally accepted definition of the latter term.
Continental Steel, lastly, averred that similar cases involving the
employees of its sister companies, MKK Steel and Mayer Steel,
referred to by the Union, were irrelevant and incompetent evidence,
given the separate and distinct personalities of the companies.
Neither could the Union sustain its claim that the grant of
bereavement leave and other death benefits to the parent-employee
for the loss of an unborn child constituted company practice.
On 20 November 2007, Atty. Montao, the appointed Accredited
Voluntary Arbitrator, issued a Resolution[17] ruling that Hortillano
was entitled to bereavement leave with pay and death benefits.
Atty. Montao identified the elements for entitlement to said benefits,
thus:
This Office declares that for the entitlement of the benefit of
bereavement leave with pay by the covered employees as provided
under Article X, Section 2 of the parties CBA, three (3) indispensable
elements must be present: (1) there is death; (2) such death must be
of employees dependent; and (3) such dependent must be
legitimate.
On the otherhand, for the entitlement to benefit for death and
accident insurance as provided under Article XVIII, Section 4,
paragraph (4.3) of the parties CBA, four (4) indispensable elements
must be present: (a) there is death; (b) such death must be of
employees dependent; (c) such dependent must be legitimate; and
(d) proper legal document to be presented.[18]
Atty. Montao found that there was no dispute that the death of an
employees legitimate dependent occurred. The fetus had the right to
be supported by the parents from the very moment he/she was
conceived. The fetus had to rely on another for support; he/she could
not have existed or sustained himself/herself without the power or
aid of someone else, specifically, his/her mother. Therefore, the fetus
was already a dependent, although he/she died during the labor or
3
delivery. There was also no question that Hortillano and his wife were
lawfully married, making their dependent, unborn child, legitimate.
In the end, Atty. Montao decreed:
WHEREFORE, premises considered, a resolution is hereby rendered
ORDERING [herein petitioner Continental Steel] to pay Rolando P.
Hortillano the amount of Four Thousand Nine Hundred Thirty-Nine
Pesos (P4,939.00), representing his bereavement leave pay and the
amount of Eleven Thousand Five Hundred Fifty Pesos (P11,550.00)
representing death benefits, or a total amount of P16,489.00
The complaint against Manuel Sy, however, is ORDERED DISMISSED
for lack of merit.
All other claims are DISMISSED for lack of merit.
Further, parties are hereby ORDERED to faithfully abide with the
herein dispositions.
Aggrieved, Continental Steel filed with the Court of Appeals a Petition
for Review on Certiorari,[19] under Section 1, Rule 43 of the Rules of
Court, docketed as CA-G.R. SP No. 101697.
Continental Steel claimed that Atty. Montao erred in granting
Hortillanos claims for bereavement leave with pay and other death
benefits because no death of an employees dependent had occurred.
The death of a fetus, at whatever stage of pregnancy, was excluded
from the coverage of the CBA since what was contemplated by the
CBA was the death of a legal person, and not that of a fetus, which
did not acquire any juridical personality. Continental Steel pointed
out that its contention was bolstered by the fact that the term death
was qualified by the phrase legitimate dependent. It asserted that the
status of a child could only be determined upon said childs birth,
otherwise, no such appellation can be had. Hence, the conditions sine
qua non for Hortillanos entitlement to bereavement leave and other
death benefits under the CBA were lacking.
The Court of Appeals, in its Decision dated 27 February 2008,
affirmed Atty. Montaos Resolution dated 20 November 2007. The
appellate court interpreted death to mean as follows:
[Herein petitioner Continental Steels] exposition on the legal sense in
which the term death is used in the CBA fails to impress the Court,
and the same is irrelevant for ascertaining the purpose, which the
grant of bereavement leave and death benefits thereunder, is
intended to serve. While there is no arguing with [Continental Steel]
that the acquisition of civil personality of a child or fetus is
conditioned on being born alive upon delivery, it does not follow that
such event of premature delivery of a fetus could never be
contemplated as a death as to be covered by the CBA provision,
undoubtedly an event causing loss and grief to the affected
employee, with whom the dead fetus stands in a legitimate relation.
[Continental Steel] has proposed a narrow and technical significance
to the term death of a legitimate dependent as condition for granting
bereavement leave and death benefits under the CBA. Following
[Continental Steels] theory, there can be no experience of death to
speak of. The Court, however, does not share this view. A dead fetus
simply cannot be equated with anything less than loss of human life,
especially for the expectant parents. In this light, bereavement leave
and death benefits are meant to assuage the employee and the
latters immediate family, extend to them solace and support, rather
than an act conferring legal status or personality upon the unborn
child. [Continental Steels] insistence that the certificate of fetal death
is for statistical purposes only sadly misses this crucial point.[20]
4

Accordingly, the fallo of the 27 February 2008 Decision of the Court
of Appeals reads:
WHEREFORE, premises considered, the present petition is hereby
DENIED for lack of merit. The assailed Resolution dated November
20, 2007 of Accredited Voluntary Arbitrator Atty. Allan S. Montao is
hereby AFFIRMED and UPHELD.
With costs against [herein petitioner Continental Steel].[21]
In a Resolution[22] dated 9 May 2008, the Court of Appeals denied
the Motion for Reconsideration[23] of Continental Steel.
Hence, this Petition, in which Continental Steel persistently argues
that the CBA is clear and unambiguous, so that the literal and legal
meaning of death should be applied. Only one with juridical
personality can die and a dead fetus never acquired a juridical
personality.
We are not persuaded.
As Atty. Montao identified, the elements for bereavement leave
under Article X, Section 2 of the CBA are: (1) death; (2) the death must
be of a dependent, i.e., parent, spouse, child, brother, or sister, of an
employee; and (3) legitimate relations of the dependent to the
employee. The requisites for death and accident insurance under
Article XVIII, Section 4(3) of the CBA are: (1) death; (2) the death must
be of a dependent, who could be a parent, spouse, or child of a
married employee; or a parent, brother, or sister of a single
employee; and (4) presentation of the proper legal document to
prove such death, e.g., death certificate.
It is worthy to note that despite the repeated assertion of Continental
Steel that the provisions of the CBA are clear and unambiguous, its
fundamental argument for denying Hortillanos claim for
bereavement leave and other death benefits rests on the purportedly
proper interpretation of the terms death and dependent as used in
the CBA. If the provisions of the CBA are indeed clear and
unambiguous, then there is no need to resort to the interpretation or
construction of the same. Moreover, Continental Steel itself
admitted that neither management nor the Union sought to define
the pertinent terms for bereavement leave and other death benefits
during the negotiation of the CBA.
The reliance of Continental Steel on Articles 40, 41 and 42 of the Civil
Code for the legal definition of death is misplaced. Article 40 provides
that a conceived child acquires personality only when it is born, and
Article 41 defines when a child is considered born. Article 42 plainly
states that civil personality is extinguished by death.
First, the issue of civil personality is not relevant herein. Articles 40,
41 and 42 of the Civil Code on natural persons, must be applied in
relation to Article 37 of the same Code, the very first of the general
provisions on civil personality, which reads:
Art. 37. Juridical capacity, which is the fitness to be the subject of
legal relations, is inherent in every natural person and is lost only
through death. Capacity to act, which is the power to do acts with
legal effect, is acquired and may be lost.
We need not establish civil personality of the unborn child herein
since his/her juridical capacity and capacity to act as a person are not
in issue. It is not a question before us whether the unborn child
acquired any rights or incurred any obligations prior to his/her death
that were passed on to or assumed by the childs parents. The rights
to bereavement leave and other death benefits in the instant case
5
pertain directly to the parents of the unborn child upon the latters
death.
Second, Sections 40, 41 and 42 of the Civil Code do not provide at all
a definition of death. Moreover, while the Civil Code expressly
provides that civil personality may be extinguished by death, it does
not explicitly state that only those who have acquired juridical
personality could die.
And third, death has been defined as the cessation of life.[24] Life is
not synonymous with civil personality. One need not acquire civil
personality first before he/she could die. Even a child inside the
womb already has life. No less than the Constitution recognizes the
life of the unborn from conception,[25] that the State must protect
equally with the life of the mother. If the unborn already has life, then
the cessation thereof even prior to the child being delivered, qualifies
as death.
Likewise, the unborn child can be considered a dependent under the
CBA. As Continental Steel itself defines, a dependent is one who relies
on another for support; one not able to exist or sustain oneself
without the power or aid of someone else. Under said general
definition,[26] even an unborn child is a dependent of its parents.
Hortillanos child could not have reached 38-39 weeks of its
gestational life without depending upon its mother, Hortillanos wife,
for sustenance. Additionally, it is explicit in the CBA provisions in
question that the dependent may be the parent, spouse, or child of a
married employee; or the parent, brother, or sister of a single
employee. The CBA did not provide a qualification for the child
dependent, such that the child must have been born or must have
acquired civil personality, as Continental Steel avers. Without such
qualification, then child shall be understood in its more general
sense, which includes the unborn fetus in the mothers womb.
The term legitimate merely addresses the dependent childs status in
relation to his/her parents. In Angeles v. Maglaya,[27] we have
expounded on who is a legitimate child, viz:
A legitimate child is a product of, and, therefore, implies a valid and
lawful marriage. Remove the element of lawful union and there is
strictly no legitimate filiation between parents and child. Article 164
of the Family Code cannot be more emphatic on the matter: Children
conceived or born during the marriage of the parents are legitimate.
(Emphasis ours.)
Conversely, in Briones v. Miguel,[28] we identified an illegitimate
child to be as follows:
The fine distinctions among the various types of illegitimate children
have been eliminated in the Family Code. Now, there are only two
classes of children -- legitimate (and those who, like the legally
adopted, have the rights of legitimate children) and illegitimate. All
children conceived and born outside a valid marriage are illegitimate,
unless the law itself gives them legitimate status. (Emphasis ours.)
It is apparent that according to the Family Code and the afore-cited
jurisprudence, the legitimacy or illegitimacy of a child attaches upon
his/her conception. In the present case, it was not disputed that
Hortillano and his wife were validly married and that their child was
conceived during said marriage, hence, making said child legitimate
upon her conception.
Also incontestable is the fact that Hortillano was able to comply with
the fourth element entitling him to death and accident insurance
under the CBA, i.e., presentation of the death certificate of his
unborn child.
6
Given the existence of all the requisites for bereavement leave and
other death benefits under the CBA, Hortillanos claims for the same
should have been granted by Continental Steel.
We emphasize that bereavement leave and other death benefits are
granted to an employee to give aid to, and if possible, lessen the grief
of, the said employee and his family who suffered the loss of a loved
one. It cannot be said that the parents grief and sense of loss arising
from the death of their unborn child, who, in this case, had a
gestational life of 38-39 weeks but died during delivery, is any less
than that of parents whose child was born alive but died
subsequently.
Being for the benefit of the employee, CBA provisions on
bereavement leave and other death benefits should be interpreted
liberally to give life to the intentions thereof. Time and again, 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.[29] In the same way, the CBA and CBA
provisions should be interpreted in favor of labor. In Marcopper
Mining v. National Labor Relations Commission,[30] we pronounced:
Finally, petitioner misinterprets the declaration of the Labor Arbiter
in the assailed decision that "when the pendulum of judgment swings
to and fro and the forces are equal on both sides, the same must be
stilled in favor of labor." While petitioner acknowledges that all
doubts in the interpretation of the Labor Code shall be resolved in
favor of labor, it insists that what is involved-here is the amended
CBA which is essentially a contract between private persons. What
petitioner has lost sight of is the avowed policy of the State,
enshrined in our Constitution, to accord utmost protection and
justice to labor, a policy, we are, likewise, sworn to uphold.
In Philippine Telegraph & Telephone Corporation v. NLRC [183 SCRA
451 (1990)], we categorically stated that:
When conflicting interests of labor and capital are to be weighed on
the scales of social justice, the heavier influence of the latter should
be counter-balanced by sympathy and compassion the law must
accord the underprivileged worker.
Likewise, in Terminal Facilities and Services Corporation v. NLRC [199
SCRA 265 (1991)], we declared:
Any doubt concerning the rights of labor should be resolved in its
favor pursuant to the social justice policy.
IN VIEW WHEREOF, the Petition is DENIED. The Decision dated 27
February 2008 and Resolution dated 9 May 2008 of the Court of
Appeals in CA-G.R. SP No. 101697, affirming the Resolution dated 20
November 2007 of Accredited Voluntary Arbitrator Atty. Allan S.
Montao, which granted to Rolando P. Hortillano bereavement leave
pay and other death benefits in the amounts of Four Thousand Nine
Hundred Thirty-Nine Pesos (P4,939.00) and Eleven Thousand Five
Hundred Fifty Pesos (P11,550.00), respectively, grounded on the
death of his unborn child, are AFFIRMED. Costs against Continental
Steel Manufacturing Corporation.
7
 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.
DECISION
CALLEJO, SR., J.:
Before the Court is a Petition for Review on Certiorari of the
Decision1 of the Court of Appeals (CA) which partially reversed and
set aside the March 19, 2001 Resolution2 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
8
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. 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.15 KCPI 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
9
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 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.
10
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
11
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
12
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 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
However, said proposal was not incorporated in the CBA of the
parties since by then, the November 7, 1995 Guidelines had already
taken effect.
We rule against petitioner.
As a general proposition, an arbitrator is confined to the
interpretation and application of the collective bargaining
agreement. He does not sit to dispense his own brand of industrial
justice: his award is legitimate only in so far as it draws its essence
from the CBA,34 i.e., when there is a rational nexus between the
award and the CBA under consideration.35 It is said that an arbitral
award does not draw its essence from the CBA; hence, there is an
unauthorized amendment or alteration thereof, if:
1. It is so unfounded in reason and fact;
2. It is so unconnected with the working and purpose of the
agreement;
3. It is without factual support in view of its language, its context, and
any other indicia of the parties' intention;36
4. It ignores or abandons the plain language of the contract;37
13
5. It is mistakenly based on a crucial assumption which concededly is
a nonfact;38
6. It is unlawful, arbitrary or capricious;39 and
7. It is contrary to public policy.40
A CBA is more than a contract; it is a generalized code to govern a
myriad of cases which the draftsmen cannot wholly anticipate. It
covers the whole employment relationship and prescribes the rights
and duties of the parties. It is a system of industrial self-government
with the grievance machinery at the very heart of the system.41 The
parties solve their problems by molding a system of private law for
all the problems which may arise and to provide for their solution in
a way which will generally accord with the variant needs and desires
of the parties.
If the terms of a CBA are clear and have no doubt upon the intention
of the contracting parties, the literal meaning of its stipulation shall
prevail.42 However, if, in a CBA, the parties stipulate that the hirees
must be presumed of employment qualification standards but fail to
state such qualification standards in said CBA, the VA may resort to
evidence extrinsic of the CBA to determine the full agreement
intended by the parties. When a CBA may be expected to speak on a
matter, but does not, its sentence imports ambiguity on that
subject.43 The VA is not merely to rely on the cold and cryptic words
on the face of the CBA but is mandated to discover the intention of
the parties. Recognizing the inability of the parties to anticipate or
address all future problems, gaps may be left to be filled in by
reference to the practices of the industry, and the step which is
equally a part of the CBA although not expressed in it.44 In order to
ascertain the intention of the contracting parties, their
contemporaneous and subsequent acts shall be principally
considered.45 The VA may also consider and rely upon negotiating
and contractual history of the parties, evidence of past practices
interpreting ambiguous provisions. The VA has to examine such
practices to determine the scope of their agreement,46 as where the
provision of the CBA has been loosely formulated.47 Moreover, the
CBA must be construed liberally rather than narrowly and technically
and the Court must place a practical and realistic construction upon
it.
In the present case, the parties are in agreement that, on its face,
Article XX, Section 1 of their 1997 CBA does not contain any provision
relative to the employment qualification standards of
recommendees of retired/resigned, deceased or disabled employees
of respondent who are members of petitioner. However, in
determining the employment qualification standards for said
recommendees, the VA should have relied on the November 7, 1995
Guidelines issued by respondent, which reads:
D. Definition of the phrase "immediate member of the family of an
employee"
1. 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 relatives within the third civil
degree.
2. A resigned/retired employee may be allowed to recommend a
collateral relative within the third civil degree (e.g., brother, sister,
nephew or niece) as his/her replacement only in the following cases:
a. Where the retired/resigned employee is single or if married has no
legitimate children.
14
b. Where the retired/resigned employee’s children are still minors
(below 18 years old) at the time of his/her separation from the
company. (Emphasis added)
E. General Provisions
1. The privilege to recommend a replacement can be exercised by the
employee concerned only once. Thus, in the following cases, a
recommendee who has been hired on probationary status can no
longer be substituted with another recommendee.
a. where the recommendee fails to pass in his performance
evaluation.
b. where the recommendee resigns without completing his
probationary period.
c. where the recommendee is dismissed for cause.
d. where the recommendee dies during his probationary period.48
Respondent issued said Guidelines in light of the ruling of this Court
in Kimberly Clark Philippines v. Lorredo. Respondent saw it
imperative to do away with its practice of accommodating
recommendees who were mere high school graduates, and to
require higher employment standards for them.
By agreement of the parties, the implementation of the Guidelines
was deferred until January 1, 1997, unless revoked or amended by
the 1997 CBA. Petitioner proposed that the practice of hiring
recommendees of retired/resigned, deceased or disabled employees
who were union members, who were at least high school graduates,
be included in their CBA, but respondent did not agree. Hence, Article
XX, Section 1 of the 1997 CBA of the parties remained intact. There
was thus no more legal bar for respondent to implement the
November 7, 1995 Guidelines. By executing the 1997 CBA, in its
present form, petitioner is bound by the terms and conditions therein
set forth.
The VA, however, ignored the plain language of the 1997 CBA of the
parties, as well as the Guidelines issued by respondent. He
capriciously based his resolution on the respondent’s practice of
hiring which, however, by agreement of petitioner and respondent,
was discontinued.
The Court has recognized in numerous instances the undoubted right
of the employer to regulate, according to his own discretion and best
judgment, all aspects of employment, including but not limited to,
work assignments and supervision, working methods and
regulations, time, place and manner of work, processes to be
followed, and hiring, supervision, transfer, discipline, lay off,
dismissal and recall of workers. Encompassing though it could be, the
exercise of this right is not absolute. Management prerogative must
be exercised in good faith for the advancement of the employer’s
interest and not for the purpose of defeating or circumventing the
rights of the employees under special laws, valid agreements such as
the individual contract of employment and the collective bargaining
agreement, and general principles of justice and fair play.49 In this
case, the Court finds that respondent acted in accord with the CBA
and the November 7, 1995 Guidelines, which, by agreement of the
parties, may be implemented by respondent after January 1, 1997.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of
merit. Costs against petitioner.
SO ORDERED.
THIRD DIVISION
[G.R. No. 113856. September 7, 1998]
15

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.
DECISION
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
employers 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:
ARTICLE VII. Wages
Section 1. Defer
Section 2. Status quo
Section 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 managements
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 Ibaez
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.
16
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 respondents 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 respondents act of reneging on its undertaking/promise
clearly constitutes an 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:
17
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 unions 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 managements
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 attorneys fees may not
be granted.
Not satisfied, petitioner appealed to the NLRC that, in turn,
promulgated the assailed Resolution of April 29, 1993[9] dismissing
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.
18
-B-
THE PUBLIC RESPONDENTS SERIOUSLY ERRED IN NOT DECLARING
THE PRIVATE RESPONDENTS GUILTY OF ACTS OF DISCRIMINATION IN
THE IMPLEMENTATION 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 ATTORNEYS 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 unions 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
19
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.
Hence, petitioner unions 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 managements usual negotiation strategies is to x x x 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 respondents 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.
Petitioners reliance on this Courts 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) Companys 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 Unions 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
20
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 statutes
invite 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. x x x.[22]
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 partys 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 respondents
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.
The Court likewise finds unmeritorious petitioner unions 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:
Section 5. The COMPANY agrees to comply with all the applicable
provisions of the Labor Code of the Philippines, as amended, and all
21
other laws, decrees, orders, instructions, jurisprudence, rules and
regulations affecting labor.
Article 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 unions
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
respondents 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. x x x.[30]
The NLRC then quoted the labor arbiters 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 petitioners
contention on the issue of wage distortion and the resulting
allegation of discrimination against the private respondents
employees are anchored on its dubious position that private
respondents 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
22
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 Courts
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.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
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.
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-
23
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 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.
24
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
25
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.
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.
THIRD DIVISION
[G. R. No. 138094. May 29, 2003]
MARILOU GUANZON APALISOK, petitioner, vs. RADIO PHILIPPINES
NETWORK RADIO STATION DYKC and STATION MANAGER GEORGE
SUAZO, respondents.
DECISION
CARPIO-MORALES, J.:
Before this Court is a petition for review on certiorari under Rule 45
assailing the Court of Appeals Decision[1] of October 30, 1998 and
Resolution[2] of February 26, 1999.
On May 15, 1995, Marilou Gaunzon Apalisok (petitioner), then
Production Chief of Radio Philippines Network (RPN) Station DYKC,
received a Memorandum[3] from Branches Operations Manager
Gilito Datoc asking her to submit a written explanation why no
disciplinary action should be taken against her for performance of
acts hostile to RPN, and arrogant, disrespectful and defiant behavior
towards her superior Station Manager George Suazo.
26
Complying, petitioner submitted on May 16, 1995 her Answer[4] to
the memorandum.
On May 31, 1995, petitioner received another memorandum from
the Administrative Manager of RPN, informing her of the termination
of her services effective the close of regular office hours of June 15,
1995.
By letter of June 5, 1995, petitioner informed RPN, by letter of June
5, 1995, of her decision to waive her right to resolve her case through
the grievance machinery of RPN as provided for in the Collective
Bargaining Agreement (CBA) and to lodge her case before the proper
government forum. She thereafter filed a complaint against RPN
DYKC and Suazo (respondents) for illegal dismissal before the
National labor Relations Commission, Regional Arbitration Branch of
Region 7 which referred it to the National Conciliation and Mediation
Board.
By Submission Agreement[5] dated June 20, 1995 signed by their
respective counsels, petitioner and respondents agreed to submit for
voluntary arbitration the issue of whether petitioners dismissal was
valid and to abide by the decision of the voluntary arbitrator.
In her position paper[6] submitted before the voluntary arbitrator,
petitioner prayed that her dismissal be declared invalid and that she
be awarded separation pay, backwages and other benefits granted to
her by the Labor Code since reinstatement is no longer feasible due
to strained relations. She also prayed that she be awarded
P2,000,000.00 for moral damages and P500,000.00 for exemplary
damages.
Respondents on the other hand prayed for the dismissal of the
complaint, arguing that the voluntary arbitrator had no jurisdiction
over the case and, assuming that he had, the complaint is dismissible
for lack of merit as petitioner was not illegally dismissed.[7]
On October 18, 1995, the voluntary arbitrator rendered an Award[8]
in favor of petitioner, the dispositive portion of which reads:
WHEREFORE, above premises considered, this Voluntary Arbitrator
rules that the dismissal of complainant was invalid.
However, considering the impracticality of reinstatement because of
proven strained relation between the parties, respondents, instead
shall pay complainant the amount of FOUR HUNDRED ELEVEN
THOUSAND ONE HUNDRED TWENTY SIX PESOS & SEVENTY-SIX
CENTAVOS (P411,126.76) itemized as follows:
In summary, the total award is hereunder itemized:
1. SEPARATION PAY (P14,600.00
divide by 30 days multiplied by
15 days per year of service x 19
years) ......................................... P138,700.95
2. BACKWAGES (P14,600 X 6
months) ................................ P 88,817.00
3. MORAL AND EXEMPLARY
DAMAGES .................................. P100,000.00
4. SERVICE INCENTIVE LEAVES
(P14,600 divide by 30 days =
P486.67 x 5 days = P2,433.35 x
19 years ........................................ P 46,233.65
5. ATTORNEYS FEES (10%) .... P 37,375.16
27
All other claims are hereby denied.
SO ORDERED. (Emphasis supplied)
Respondents motion for reconsideration[9] of the Award having
been denied by the voluntary arbitrator by Order of November 21,
1995, they filed a petition for certiorari before this Court, docketed
as G. R. No. 122841.
By Resolution[10] of December 13, 1995, the Third Division of this
Court referred G. R. No. 122841 to the Court of Appeals, following
the case of Luzon Development Bank v. Association of Luzon
Development Bank Employees, et al.[11] holding that decisions or
awards of a voluntary arbitrator or panel of arbitrators in labor cases
are reviewable by the Court of Appeals.
The Court of Appeals, finding that the option of petitioner not to
subject the dispute to the grievance machinery provided for in the
CBA was tantamount to relinquishing her right to avail of the aid of a
voluntary arbitrator in settling the dispute which likewise converted
an unresolved grievance into a resolved one, held that the voluntary
arbitrator did not have jurisdiction over petitioners complaint and
accordingly nullified and set aside, by Decision of October 30, 1998,
the voluntary arbitration award.
Petitioners Motion for Reconsideration[12] of the Court of Appeals
Decision having been denied by Resolution[13] of February 26, 1999,
the present petition was filed which raises the following issues:
1. Whether or not the Voluntary Arbitrator had jurisdiction over
petitioners complaint, and
2. Whether or not respondents are guilty of estoppel.[14]
Petitioner, citing Article 262 of the Labor Code of the Philippines, as
amended which reads:
ARTICLE 262. JURISDICTION OVER OTHER LABOR DISPUTES. The
Voluntary Arbitrator or panel of Voluntary Arbitrators, upon
agreement of the parties, shall hear and decide all other labor
disputes including unfair labor practices and bargaining deadlocks.
(Emphasis and underscoring supplied),
contends that her option not to subject the dispute to the grievance
machinery of RPN did not amount to her relinquishing of her right to
avail of voluntary arbitration as a mode of settling it for she and
respondents in fact agreed to have the dispute settled by a voluntary
arbitrator when they freely executed the above-said Submission
Agreement. She thus concludes that the voluntary arbitrator has
jurisdiction over the controversy.[15]
Petitioner contends in any event that even assuming that the
voluntary arbitrator had no jurisdiction over the case, it would not be
in keeping with settled jurisprudence to allow a losing party to
question the authority of the voluntary arbitrator after it had freely
submitted itself to its authority.[16]
The petition is impressed with merit.
The above-quoted Article 262 of the Labor Code provides that upon
agreement of the parties, the voluntary arbitrator can hear and
decide all other labor disputes.
Contrary to the finding of the Court of Appeals, voluntary arbitration
as a mode of settling the dispute was not forced upon respondents.
Both parties indeed agreed to submit the issue of validity of the
dismissal of petitioner to the jurisdiction of the voluntary arbitrator
28
by the Submission Agreement duly signed by their respective
counsels.
As the voluntary arbitrator had jurisdiction over the parties
controversy, discussion of the second issue is no longer necessary.
WHEREFORE, the Court of Appeals Decision of October 30, 1998 is
hereby SET ASIDE and the voluntary arbitration Award of October 18,
1995 is hereby REINSTATED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 101619 July 8, 1992
SANYO PHILIPPINES WORKERS UNION-PSSLU LOCAL CHAPTER NO.
109 AND/OR ANTONIO DIAZ, PSSLU NATIONAL PRESIDENT,
petitioners,
vs.
HON. POTENCIANO S. CANIZARES, in his capacity as Labor Arbiter,
BERNARDO YAP, RENATO BAYBON, SALVADOR SOLIBEL, ALLAN
MISTERIO, EDGARDO TANGKAY, LEONARDO DIONISIO, ARNEL
SALVO, REYNALDO RICOHERMOSO, BENITO VALENCIA, GERARDO
LASALA AND ALEXANDER ATANASIO, respondents.
MEDIALDEA, J.:
This petition seeks to nullify: 1) the order of respondent Labor Arbiter
Potenciano Cañizares dated August 6, 1991 deferring the resolution
of the motion to dismiss the complaint of private respondents filed
by petitioner Sanyo Philippines Workers Union-PSSLU Local Chapter
No. 109 (PSSLU, for brevity) on the ground that the labor arbiter had
no jurisdiction over said complaint and 2) the order of the same
respondent clarifying its previous order and ruling that it had
jurisdiction over the case.
The facts of the case are as follows:
PSSLU had an existing CBA with Sanyo Philippines Inc. (Sanyo, for
short) effective July 1, 1989 to June 30, 1994. The same CBA
contained a union security clause which provided:
Sec. 2. All members of the union covered by this agreement must
retain their membership in good standing in the union as condition
of his/her continued employment with the company. The union shall
have the right to demand from the company the dismissal of the
members of the union by reason of their voluntary resignation from
membership or willful refusal to pay the Union Dues or by reasons of
their having formed, organized, joined, affiliated, supported and/or
aided directly or indirectly another labor organization, and the union
thus hereby guarantees and holds the company free and harmless
from any liability whatsoever that may arise consequent to the
implementation of the provision of this article. (pp. 5-6, Rollo)
In a letter dated February 7, 1990, PSSLU, through its national
president, informed the management of Sanyo that the following
employees were notified that their membership with PSSLU were
cancelled for anti-union, activities, economic sabotage, threats,
coercion and intimidation, disloyalty and for joining another union:
Benito Valencia, Bernardo Yap, Arnel Salvo, Renato Baybon, Eduardo
29
Porlaje, Salvador Solibel, Conrado Sarol, Angelito Manzano, Allan
Misterio, Reynaldo Ricohermoso, Mario Ensay and Froilan Plamenco.
The same letter informed Sanyo that the same employees refused to
submit themselves to the union's grievance investigation committee
(p. 53, Rollo). It appears that many of these employees were not
members of PSSLU but of another union, KAMAO.
On February 14, 1990, some officers of KAMAO, which included Yap,
Salvo, Baybon, Solibel, Valencia, Misterio and Ricohermoso, executed
a pledged of cooperation with PSSLU promising cooperation with the
latter union and among others, respecting, accepting and honoring
the CBA between Sanyo and specifically:
1. That we shall remain officers and members of KAMAO until
we finally decide to rejoin Sanyo Phil. Workers Union-PSSLU;
2. That henceforth, we support and cooperate with the duly
elected union officers of Sanyo Phil. Workers Union-PSSLU in any and
all its activities and programs to insure industrial peace and harmony;
3. That we collectively accept, honor, and respect the Collective
Bargaining Agreement entered into between Sanyo Phil. Inc. and
Sanyo Phil. Workers Union-PSSLU dated February 7, 1990;
4 That we collectively promise not to engage in any activities
inside company premises contrary to law, the CBA and existing
policies;
5 That we are willing to pay our individual agency fee in accordance
with the provision of the Labor Code, as amended;
6 That we collectively promise not to violate this pledge of
cooperation. (p. 55, Rollo)
On March 4, 1991, PSSLU through its national and local presidents,
wrote another letter to Sanyo recommending the dismissal of the
following non-union workers: Bernardo Yap, Arnel Salvo, Renato
Baybon, Reynaldo Ricohermoso, Salvador Solibel, Benito Valencia,
and Allan Misterio, allegedly because: 1) they were engaged and
were still engaging in anti-union activities; 2) they willfully violated
the pledge of cooperation with PSSLU which they signed and
executed on February 14, 1990; and 3) they threatened and were still
threatening with bodily harm and even death the officers of the
union (pp. 37-38, Rollo).
Also recommended for dismissal were the following union members
who allegedly joined, supported and sympathized with a minority
union, KAMAO: Gerardo Lasala, Legardo Tangkay, Alexander
Atanacio, and Leonardo Dionisio.
The last part of the said letter provided:
The dismissal of the above-named union members is without
prejudice to receive (sic) their termination pay if management decide
(sic) to grant them benefits in accordance with law. The union hereby
holds the company free and harmless from any liability that may arise
consequent to the implementation by the company of our
recommendations for the dismissal of the above-mentioned workers.
It is however suggested that the Grievance Machinery be convened
pursuant to Section 3, Article XV of the Collective Bargaining
Agreement (CBA) before their actual dismissal from the company. (p.
38, Rollo)
Pursuant to the above letter of the union, the company sent a
memorandum to the same workers advising them that:
30
As per the attached letter from the local union President SPWU and
the federation President, PSSLU, requesting management to put the
herein mentioned employees on preventive suspension, effective
immediately, preliminary to their subsequent dismissal, please be
informed that the following employees are under preventive
suspension effective March 13, 1991 to wit:
effective March 23, 1991, said listed employees shall be considered
dismissed from the company. (p 39, Rollo)
The company received no information on whether or not said
employees appealed to PSSLU. Hence, it considered them dismissed
as of March 23, 1991 (p. 40, Rollo).

1. Bernardo Yap On May 20, 1991, the dismissed employees filed a complaint (pp. 32-
35, Rollo) with the NLRC for illegal dismissal. Named respondent were
2. Renato Baybon PSSLU and Sanyo.

3. Salvador Solibel On June 20, 1991, PSSLU filed a motion to dismiss the complaint
alleging that the Labor Arbiter was without jurisdiction over the case,
4. Allan Misterio relying on Article 217 (c) of P.D. 442, as amended by Section 9 of
Republic Act No. 6715 which provides that cases arising from the
5. Edgardo Tangkay interpretation or implementation of the collective bargaining
agreements shall be disposed of by the labor arbiter by referring the
6. Leonardo Dionisio same to the grievance machinery and voluntary arbitration.

7. Arnel Salvo The complainants opposed the motion to dismiss complaint on these
grounds: 1) the series of conferences before the National Conciliation
8. Reynaldo Ricohermoso and Mediation Board had been terminated; 2) the NLRC Labor Arbiter
had jurisdiction over the case which was a termination dispute
9. Benito Valencia pursuant to Article 217 (2) of the Labor Code; and 3) there was
nothing in the CBA which needs interpretation or implementation
10. Gerardo Lasala (pp. 44-46, Rollo).

11. Alexander Atanacio On August 7, 1991, the respondent Labor Arbiter issued the first
questioned order. It held that:
The above listed employees shall not be allowed within company
premises without the permission of management. xxx xxx xxx

As per request of the union's letter to management, should the listed While there are seemingly contradictory provisions in the aforecited
employees fail to appeal the decision of the union for dismissal, then article of the Labor Code, the better interpretation will be to give

31
effect to both, and termination dispute being clearly spelled as falling
under the jurisdiction of the Labor Arbiter, the same shall be
respected. The jurisdiction of the grievance machinery and voluntary
arbitration shall cover other controversies.
However, the resolution of the instant issue shall be suspended until
both parties have fully presented their respective positions and the
said issue shall be included in the final determination of the above-
captioned case.
WHEREFORE, the instant Motions to Dismiss are hereby held
pending.
Consequently, the parties are hereby directed to submit their
position papers and supporting documents pursuant to Section 2,
Rule VII of the Rules of the Commission on or before the hearing on
the merit of this case scheduled on August 29, 1991 at 11:00 a.m. (p.
23, Rollo)
On August 27, 1991, PSSLU filed another motion to resolve motion to
dismiss complaint with a prayer that the Labor Arbiter resolve the
issue of jurisdiction.
On September 4, 1991, the respondent Labor Arbiter issued the
second questioned order which held that it was assuming jurisdiction
over the complaint of private respondents, in effect, holding that it
had jurisdiction over the case.
On September 19, 1991, PSSLU filed this petition alleging that public
respondent Labor Arbiter cannot assume jurisdiction over the
complaint of public respondents because it had no jurisdiction over
the dispute subject of said complaint. It is their submission that under
Article 217 (c) of the Labor Code, in relation to Article 261 thereof, as
well as Policy Instruction No. 6 of the Secretary of Labor, respondent
Arbiter has no jurisdiction and authority to take cognizance of the
complaint brought by private respondents which involves the
implementation of the union security clause of the CBA. The function
of the Labor Arbiter under the same law and rule is to refer this case
to the grievance machinery and voluntary arbitration.
In its comment, private respondents argue that Article 217(a) 2 and
4 of the Labor Code is explicit, to wit:
Art. 217. Jurisdiction of the Labor Arbiters and the Commission.
a) Except as otherwise provided under this Code, the Labor
Arbiters shall have original and exclusive jurisdiction to hear and
decide . . . the following cases involving all workers, . . . :
xxx xxx xxx
2) Termination disputes,
xxx xxx xxx
4) Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations.
The private respondents also claimed that insofar as Salvo, Baybon,
Ricohermoso, Solibel, Valencia, Misterio and Lasala were concerned,
they joined another union, KAMAO during the freedom period which
commenced on May 1, 1989 up to June 30, 1989 or before the
effectivity of the July 1, 1989 CBA. Hence, they are not covered by the
provisions of the CBA between Sanyo and PSSLU. Private respondents
Tangkay, Atanacio and Dionisio admit that in September 1989, they
resigned from KAMAO and rejoined PSSLU (pp.
66(a)-68, Rollo).
32
For its part, public respondent, through the Office of the Solicitor
General, is of the view that a distinction should be made between a
case involving "interpretation or implementation of collective
bargaining agreement or "interpretation" or "enforcement" of
company personnel policies, on the one hand and a case involving
termination, on the other hand. It argued that the case at bar does
not involve an "interpretation or implementation" of a collective
bargaining agreement or "interpretation or enforcement" of
company policies but involves a "termination." Where the dispute is
just in the interpretation, implementation or enforcement stage, it
may be referred to the grievance machinery set up in the CBA or by
voluntary arbitration. Where there was already actual termination,
i.e., violation of rights, it is already cognizable by the Labor Arbiter.
Article 217 of the Labor Code defines the jurisdiction of the Labor
Arbiter.
Art. 217. Jurisdiction of Labor Arbiters and the Commission. 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.
(b) The Commission shall have exclusive appellate jurisdiction over all
cases decided by Labor Arbiters.
(c) Cases arising from the interpretation or implementation of
collective bargaining agreements and those arising from the
interpretation or enforcement of company personnel policies shall be
disposed of by the Labor Arbiter by referring the same to the
grievance machinery and voluntary arbitration as may be provided in
said agreements.
It is clear from the above article that termination cases fall under the
jurisdiction of the Labor Arbiter. It should be noted however that said
article at the outset excepted from the said provision cases otherwise
provided for in other provisions of the same Code, thus the phrase
"Except as otherwise provided under this Code . . . ." Under paragraph
(c) of the same article, it is expressly provided that "cases arising from
the interpretation or implementation of collective bargaining
agreements and those arising from the interpretation and
enforcement of company personnel policies shall be disposed of by
the Labor Arbiter by referring the same to the grievance machinery
and voluntary arbitration as may be provided in said agreements.
33
It was provided in the CBA executed between PSSLU and Sanyo that
a member's voluntary resignation from membership, willful refusal
to pay union dues and his/her forming, organizing, joining,
supporting, affiliating or aiding directly or indirectly another labor
union shall be a cause for it to demand his/her dismissal from the
company. The demand for the dismissal and the actual dismissal by
the company on any of these grounds is an enforcement of the union
security clause in the CBA. This act is authorized by law provided that
enforcement should not be characterized by arbitrariness (Manila
Mandarin Employee Union v. NLRC, G.R. No. 76989, 29 Sept. 1987,
154 SCRA 368) and always with due process (Tropical Hut Employees
Union v. Tropical Food Market, Inc., L-43495-99, Jan. 20, 1990).
The reference to a Grievance Machinery and Voluntary Arbitrators
for the adjustment or resolution of grievances arising from the
interpretation or implementation of their CBA and those arising from
the interpretation or enforcement of company personnel policies is
mandatory. The law grants to voluntary arbitrators original and
exclusive jurisdiction to hear and decide all unresolved grievances
arising from the interpretation or implementation of the Collective
Bargaining Agreement and those arising from the interpretation or
enforcement of company personnel policies (Art. 261, Labor Code).
In its order of September 4, 1991, respondent Labor Arbiter explained
its decision to assume jurisdiction over the complaint, thus:
The movants failed to show (1) the provisions of the CBA to be
implemented, and (2) the grievance machinery and voluntary
arbitrator already formed and properly named. What self-respecting
judge would refer a case from his responsibility to a shadow? To
whom really and specifically shall the case be indorsed or referred?
In brief, they could have shown the (1) existence of the grievance
machinery and (2) its being effective.
Furthermore, the aforecited law merely directs the "referral" cases.
It does not expressly confer jurisdiction on the grievance machinery
or voluntary arbitration panel, created or to be created. Article 260
of the Labor Code describes the formation of the grievance and
voluntary arbitration. All this of course shall be on voluntary basis. Is
there another meaning of voluntary arbitration? (The herein
complainant have strongly opposed the motion to dismiss. Would
they go willingly to the grievance machinery and voluntary arbitration
which are installed by their opponents if directed to do so?) (p. 26,
Rollo)
The failure of the parties to the CBA to establish the grievance
machinery and its unavailability is not an excuse for the Labor Arbiter
to assume jurisdiction over disputes arising from the implementation
and enforcement of a provision in the CBA. In the existing CBA
between PSSLU and Sanyo, the procedure and mechanics of its
establishment had been clearly laid out as follows:
ARTICLE XV — GRIEVANCE MACHINERY
Sec. 1. Whenever any controversy should arise between the company
and the union as to the interpretation or application of the provision
of this agreement, or whenever any difference shall exist between
said parties relative to the terms and conditions of employment, an
earnest effort shall be made to settle such controversy in
substantially the following manner:
First step. (Thru Grievance) The dispute shall initially be
resolved by conference between the management to be represented
by the Management's authorized representatives on the one hand,
and the Union to be represented by a committee composed of the
local union president and one of the local union officer appointed by
the local union president, on the other hand within three days from
34
date of concurrence of grievance action. In the absence of the local
union president, he (shall) appoint another local union officer to take
over in his behalf. Where a controversy personally affects an
employee, he shall not be allowed to be a member of the committee
represented by the union.
Second step. (Thru Arbitrator mutually chosen) Should such
dispute remain unsettled after twenty (20) days from the first
conference or after such period as the parties may agree upon in
specified cases, it shall be referred to an arbitrator chosen by the
consent of the company and the union. In the event of failure to
agree on the choice of voluntary arbitrator, the National Conciliation
and Mediation Board, Department of Labor and Employment shall be
requested to choose an Arbitrator in accordance with voluntary
arbitration procedures.
Sec. 2. The voluntary Arbitrator shall have thirty (30) days to decide
the issue presented to him and his decision shall be final, binding and
executory upon the parties. He shall have no authority to add or
subtract from and alter any provision of this agreement. The
expenses of voluntary arbitration including the fee of the arbitrator
shall be shared equally by the company and the union. In the event
the arbitrator chosen either by the mutual agreement of the
company and the union by (the) way of voluntary arbitration or by
the National Conciliation and Mediation Board (NCMB) failed to
assume his position, died, become disabled or any other manner
failed to function and or reach a decision, the company and the union
shall by mutual agreement choose another arbitrator; in the event of
failure to agree on the choice of a new voluntary arbitrator, the
matter shall again be referred back to the NCMB who shall be
requested again to choose a new arbitrator as above provided. Any
grievance not elevated or processed as above provided within the
stipulated period shall be deemed settled and terminated.
Sec. 3. It is hereby agreed that decisions of the union relative to their
members, for implementation by the COMPANY, should be resolved
for review thru the Grievance Machinery; and management be
invited to participate in the Grievance procedure to be undertaken
by the union relative to (the) case of the union against members. (pp.
134-135, Rollo)
All that needs to be done to set the machinery into motion is to call
for the convening thereof. If the parties to the CBA had not
designated their representatives yet, they should be ordered to do
so.
The procedure introduced in RA 6715 of referring certain grievances
originally and exclusively to the grievance machinery and when not
settled at this level, to a panel of voluntary arbitrators outlined in
CBA's does not only include grievances arising from the
interpretation or implementation of the CBA but applies as well to
those arising from the implementation of company personnel
policies. No other body shall take cognizance of these cases. The last
paragraph of Article 261 enjoins other bodies from assuming
jurisdiction thereof:
The commission, its Regional Offices and the Regional Directors of
the Department of Labor and Employment shall not entertain
disputes, grievances or matters under the exclusive and original
jurisdiction of the Voluntary Arbitrator or panel of voluntary
arbitrators and shall immediately dispose and refer the same to the
grievance machinery or voluntary arbitration provided in the
Collective Bargaining Agreement.
In the instant case, however, We hold that the Labor Arbiter and not
the Grievance Machinery provided for in the CBA has the jurisdiction
to hear and decide the complaints of the private respondents. While
it appears that the dismissal of the private respondents was made
35
upon the recommendation of PSSLU pursuant to the union security
clause provided in the CBA, We are of the opinion that these facts do
not come within the phrase "grievances arising from the
interpretation or implementation of (their) Collective Bargaining
Agreement and those arising from the interpretation or enforcement
of company personnel policies," the jurisdiction of which pertains to
the Grievance Machinery or thereafter, to a voluntary arbitrator or
panel of voluntary arbitrators. Article 260 of the Labor Code on
grievance machinery and voluntary arbitrator states that "(t)he
parties to a Collective 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." It is further provided in said article that the
parties to a CBA shall name or designate their respective
representatives to the grievance machinery and if the grievance is not
settled in that level, it shall automatically be referred to voluntary
arbitrators (or panel of voluntary arbitrators) designated in advance
by the parties. It need not be mentioned that the parties to a CBA are
the union and the company. Hence, only disputes involving the union
and the company shall be referred to the grievance machinery or
voluntary arbitrators.
In the instant case, both the union and the company are united or
have come to an agreement regarding the dismissal of private
respondents. No grievance between them exists which could be
brought to a grievance machinery. The problem or dispute in the
present case is between the union and the company on the one hand
and some union and non-union members who were dismissed, on the
other hand. The dispute has to be settled before an impartial body.
The grievance machinery with members designated by the union and
the company cannot be expected to be impartial against the
dismissed employees. Due process demands that the dismissed
workers grievances be ventilated before an impartial body. Since
there has already been an actual termination, the matter falls within
the jurisdiction of the Labor Arbiter.
ACCORDINGLY, the petition is DISMISSED. Public respondent Labor
Arbiter is directed to resolve the complaints of private respondents
immediately.
SO ORDERED.
SECOND DIVISION
[G.R. No. 124013. June 5, 1998]
ROSARIO MANEJA, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION and MANILA MIDTOWN HOTEL, respondents.
DECISION
MARTINEZ, J.:
Assailed in this petition for certiorari under Rule 65 of the Revised
Rules of Court are the Resolution[1] dated June 3, 1994 of the
respondent National Labor Relations Commission in NLRC NCR-00-
10-05297-90, entitled "Rosario Maneja, Complainant, vs. Manila
Midtown Hotel, Respondent," which dismissed the illegal dismissal
case filed by petitioner against private respondent company for lack
of jurisdiction of the Labor Arbiter over the case; and its Resolution[2]
dated October 20, 1995 denying petitioner's motion for
reconsideration.
Petitioner Rosario Maneja worked with private respondent Manila
Midtown Hotel beginning January, 1985 as a telephone operator. She
was a member of the National Union of Workers in Hotels,
36
Restaurants and Allied Industries (NUWHRAIN) with an existing
Collective Bargaining Agreement (CBA) with private respondent.
In the afternoon of February 13, 1990, a fellow telephone operator,
Rowena Loleng received a Request for Long Distance Call (RLDC) form
and a deposit of P500.00 from a page boy of the hotel for a call by a
Japanese guest named Hirota Ieda. The call was unanswered. The
P500.00 deposit was forwarded to the cashier. In the evening, Ieda
again made an RLDC and the page boy collected another P500.00
which was also given to the operator Loleng. The second call was also
unanswered. Loleng passed on the RLDC to petitioner for follow-up.
Petitioner monitored the call.
On February 15, 1990, a hotel cashier inquired about the P1,000.00
deposit made by Ieda. After a search, Loleng found the first deposit
of P500.00 inserted in the guest folio while the second deposit was
eventually discovered inside the folder for cancelled calls with
deposit and official receipts.
When petitioner saw that the second RLDC form was not time-
stamped, she immediately placed it inside the machine which
stamped the date February 15, 1990. Realizing that the RLDC was
filed 2 days earlier, she wrote and changed the date to February 13,
1990. Loleng then delivered the RLDC and the money to the cashier.
The second deposit of P500.00 by Ieda was later returned to him.
On March 7, 1990, the chief telephone operator issued a
memorandum[3] to petitioner and Loleng directing the two to
explain the February 15 incident. Petitioner and Loleng thereafter
submitted their written explanation.[4]
On March 20, 1990, a written report[5] was submitted by the chief
telephone operator, with the recommendation that the offenses
committed by the operators concerned covered violations of the
Offenses Subject to Disciplinary Actions (OSDA): (1) OSDA 2.01:
forging, falsifying official document(s), and (2) OSDA 1.11: culpable
carelessness - negligence or failure to follow specific instruction(s) or
established procedure(s).
On March 23, 1990, petitioner was served a notice of dismissal[6]
effective April 1, 1990. Petitioner refused to sign the notice and wrote
therein "under protest."
Meanwhile, a criminal case[7] for Falsification of Private Documents
and Qualified Theft was filed before the Office of the City Prosecutor
of Manila by private respondent against Loleng and petitioner.
However, the resolution recommending the filing of a case for estafa
was reversed by 2nd Asst. City Prosecutor Virgilio M. Patag.
On October 2, 1990, petitioner filed a complaint for illegal dismissal
against private respondent before the Labor Arbiter. The complaint
was later amended to include a claim for unpaid wages, unpaid
vacation leave conversion and moral damages.
Position papers were filed by the parties. Thereafter, the motion to
set the case for hearing filed by private respondent was granted by
the Labor Arbiter and trial on the merits ensued.
In his decision[8] dated May 29, 1992, Labor Arbiter Oswald Lorenzo
found that the petitioner was illegally dismissed. However, in the
decision, the Labor Arbiter stated that:
Preliminarily, we hereby state that on the face of the instant
complaint, it is one that revolves on the matter of the
implementation and interpretation of existing company policies,
which per the last par. of Art. 217 of the Labor Code, as amended, is
one within the jurisdictional ambit of the grievance procedure under
the CBA and thereafter, if unresolved, one proper for voluntary
37
arbitration. This observation is re-entrenched by the fact, that
complainant claims she is a member of NUWHRAIN with an existing
CBA with respondent hotel.
On this score alone, this case should have been dismissed outright.[9]
Despite the aforequoted preliminary statement, the Labor Arbiter
still assumed jurisdiction since Labor Arbiters under Article 217 of the
same Labor Code, are conferred original and exclusive jurisdiction of
all termination case(sic.). The dispositive portion of the decision
states that:
"WHEREFORE, premises considered, judgment is hereby rendered as
follows:
Declaring complainant's dismissal by respondent hotel as illegally
effected;
Ordering respondent to immediately reinstate complainant to her
previous position without loss of seniority rights;
Ordering further respondent to pay complainant the full backwages
due her, which is computed as follows:
3/23/90 - 10/31/90 = 7.26/mos.
P2,540 x 7.26/mos. P18,440.40
11/1/90 - 1/7/91 = 2.23/mos.
P3,224.16 x 2.23/mos. 7,189.87
1/8/91 - 4/29/92 = 15.7/mos.
P3,589.16 x 15.7/mos. 56,349.89
P81,980.08
Moreover, respondent is ordered to pay the 13th month pay due the
complainant in the amount of P6,831.67 including moral and
exemplary damages of P15,000.00 and P10,000.00 respectively, as
well as attorney's fees equivalent to ten (10) percent of the total
award herein in the amount of P11,381.17;
Finally, all other claims are hereby dismissed for lack of merit.
"SO ORDERED."
Private respondent appealed the decision to the respondent
commission on the ground inter alia that the Labor Arbiter erred in
assuming jurisdiction over the illegal dismissal case after finding that
the case falls within the jurisdictional ambit of the grievance
procedure under the CBA, and if unresolved, proper for voluntary
arbitration.[10] An Opposition[11] was filed by petitioner.
In the assailed Resolution[12] dated June 3, 1994, respondent NLRC
dismissed the illegal dismissal case for lack of jurisdiction of the Labor
Arbiter because the same should have instead been subjected to
voluntary arbitration.
Petitioners motion for reconsideration[13] was denied by respondent
NLRC for lack of merit.
In this petition for certiorari, petitioner ascribes to respondent NLRC
grave abuse of discretion in -
Ruling that the Labor Arbiter was without jurisdiction over the illegal
dismissal case;
38

Not ruling that private respondent is estopped by laches from
questioning the jurisdiction of the Labor Arbiter over the illegal
dismissal case;
Reversing the decision of the Labor Arbiter based on a technicality
notwithstanding the merits of the case.
Petitioner contends that Article 217(a)(2) and (c) relied upon by
respondent NLRC in divesting the labor arbiter of jurisdiction over the
illegal dismissal case, should be read in conjunction with Article
261[14] of the Labor Code. It is the view of petitioner that
termination cases arising from the interpretation or enforcement of
company personnel policies pertaining to violations of Offenses
Subject to Disciplinary Actions (OSDA), are under the jurisdiction of
the voluntary arbitrator only if these are unresolved in the plant-level
grievance machinery. Petitioner insists that her termination is not an
unresolved grievance as there has been no grievance meeting
between the NUWHRAIN union and the management. The reason for
this, petitioner adds, is that it has been a company practice that
termination cases are not anymore referred to the grievance
machinery but directly to the labor arbiter.
In its comment, private respondent argues that the Labor Arbiter
should have dismissed the illegal dismissal case outright after finding
that it is within the jurisdictional ambit of the grievance procedure.
Moreover, private respondent states that the issue of jurisdiction
may be raised at any time and at any stage of the proceedings even
on appeal, and is not in estoppel by laches as contended by the
petitioner.
For its part, public respondent, through the Office of the Solicitor
General, cited the ruling of this Court in Sanyo Philippines Workers
Union-PSSLU vs. Caizares[15] in dismissing the case for lack of
jurisdiction of the Labor Arbiter.
The legal issue in this case is whether or not the Labor Arbiter has
jurisdiction over the illegal dismissal case.
The respondent Commission, in holding that the Labor Arbiter lacks
jurisdiction to hear the illegal dismissal case, cited as basis therefor
Article 217 of the Labor Code, as amended by Republic Act No. 6715.
It said:
While it is conceded that under Article 217(a), Labor Arbiters shall
have original and exclusive jurisdiction over cases involving
termination disputes, the Supreme Court, in a fairly recent case ruled:
The procedure introduced in RA 6715 of referring certain grievances
originally and exclusively to the grievance machinery, and when not
settled at this level, to a panel of voluntary arbitrators outlined in
CBAs does not only include grievances arising from the interpretation
or implementation of the CBA but applies as well to those arising
from the implementation of company personnel policies. No other
body shall take cognizance of these cases. x x x. (Sanyo vs. Caizares,
211 SCRA 361, 372)[16]
We find that the respondent Commission has erroneously
interpreted the aforequoted portion of our ruling in the case of
Sanyo, as divesting the Labor Arbiter of jurisdiction in a termination
dispute.
Article 217 of the Labor Code gives us the clue as to the jurisdiction
of the Labor Arbiter, to wit:
Article 217. Jurisdiction of Labor Arbiters and the Commission. a)
Except as otherwise provided under this Code the Labor Arbiters shall
39
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.
b) The Commission shall have exclusive appellate jurisdiction over all
cases decided by Labor Arbiters.
c) Cases arising from the interpretation or implementation of
collective bargaining agreements and those arising from the
interpretation or enforcement of company personnel policies shall be
disposed of by the Labor Arbiter by referring the same to the
grievance machinery and voluntary arbitration as may be provided in
said agreements.
As can be seen from the aforequoted Article, termination cases fall
under the original and exclusive jurisdiction of the Labor Arbiter. It
should be noted, however, that in the opening paragraph there
appears the phrase: Except as otherwise provided under this Code x
x x. It is paragraph (c) of the same Article which respondent
Commission has erroneously interpreted as giving the voluntary
arbitrator jurisdiction over the illegal dismissal case.
However, Article 217 (c) should be read in conjunction with Article
261 of the Labor Code which grants to voluntary arbitrators original
and exclusive jurisdiction to hear and decide all unresolved
grievances arising from the interpretation or implementation of the
collective bargaining agreement and those arising from the
interpretation or enforcement of company personnel policies. Note
the phrase unresolved grievances. In the case at bar, the termination
of petitioner is not an unresolved grievance.
The stance of the Solicitor General in the Sanyo case is totally the
reverse of its posture in the case at bar. In Sanyo, the Solicitor General
was of the view that a distinction should be made between a case
involving interpretation or implementation of Collective Bargaining
Agreement or interpretation or enforcement of company personnel
policies, on the one hand and a case involving termination, on the
other hand. It argued that the dismissal of the private respondents
does not involve an interpretation or implementation of a Collective
Bargaining Agreement or interpretation or enforcement of company
personnel policies but involves termination. The Solicitor General
further said that where the dispute is just in the interpretation,
implementation or enforcement stage, it may be referred to the
grievance machinery set up in the Collective Bargaining Agreement
or by voluntary arbitration. Where there was already actual
40
termination, i.e., violation of rights, it is already cognizable by the
Labor Arbiter.[17] We fully agree with the theory of the Solicitor
General in the Sanyo case, which is radically apposite to its position
in this case.
Moreover, the dismissal of petitioner does not fall within the phrase
grievances arising from the interpretation or implementation of
collective bargaining agreement and those arising from the
interpretation or enforcement of company personnel policies, the
jurisdiction of which pertains to the grievance machinery or
thereafter, to a voluntary arbitrator or panel of voluntary arbitrators.
It is to be stressed that under Article 260 of the Labor Code, which
explains the function of the grievance machinery and voluntary
arbitrator, (T)he parties to a Collective 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. Article 260 further provides that the
parties to a CBA shall name or designate their respective
representative to the grievance machinery and if the grievance is
unsettled in that level, it shall automatically be referred to the
voluntary arbitrators designated in advance by the parties to a CBA
of the union and the company. It can thus be deduced that only
disputes involving the union and the company shall be referred to the
grievance machinery or voluntary arbitrators.[18]
In the case at bar, the union does not come into the picture, not
having objected or voiced any dissent to the dismissal of the herein
petitioner. The reason for this, according to petitioner is that the
practice in said Hotel in cases of termination is that the latter cases
are not referred anymore to the grievance committee; and that the
terminated employee who wishes to question the legality of his
termination usually goes to the Labor Arbiter for arbitration, whether
the termination arose from the interpretation or enforcement of the
company personnel policies or otherwise.[19]
As we ruled in Sanyo, Since there has been an actual termination, the
matter falls within the jurisdiction of the Labor Arbiter. The
aforequoted doctrine is applicable foursquare in petitioners case.
The dismissal of the petitioner does not call for the interpretation or
enforcement of company personnel policies but is a termination
dispute which comes under the jurisdiction of the Labor Arbiter.
It should be explained that company personnel policies are guiding
principles stated in broad, long-range terms that express the
philosophy or beliefs of an organizations top authority regarding
personnel matters. They deal with matters affecting efficiency and
well-being of employees and include, among others, the procedure
in the administration of wages, benefits, promotions, transfer and
other personnel movements which are usually not spelled out in the
collective agreement. The usual source of grievances, however, are
the rules and regulations governing disciplinary actions.[20]
The case of Pantranco North Express, Inc. vs. NLRC[21] sheds further
light on the issue of jurisdiction where the Court cited the Sanyo case
and quoted the decision of therein Labor Arbiter Olairez in this
manner:
In our honest opinion we have jurisdiction over the complaint on the
following grounds:
First, this is a complaint of illegal dismissal of which original and
exclusive jurisdiction under Article 217 has been conferred to the
Labor Arbiters. The interpretation of the CBA or enforcement of the
company policy is only corollary to the complaint of illegal dismissal.
Otherwise, an employee who was on AWOL, or who committed
41
offenses contrary to the personnel policies(sic) can no longer file a
case of illegal dismissal because the discharge is premised on the
interpretation or enforcement of the company policies(sic).
Second. Respondent voluntarily submitted the case to the
jurisdiction of this labor tribunal. It adduced arguments to the legality
of its act, whether such act may be retirement and/or dismissal, and
prayed for reliefs on the merits of the case. A litigant cannot pray for
reliefs on the merits and at the same time attacks(sic) the jurisdiction
of the tribunal. A person cannot have ones cake and eat it too. x x x.
As to the second ground, petitioner correctly points out that
respondent NLRC should have ruled that private respondent is
estopped by laches in questioning the jurisdiction of the Labor
Arbiter.
Clearly, estoppel lies. The issue of jurisdiction was mooted by herein
private respondents active participation in the proceedings below. In
Marquez vs. Secretary of Labor,[22] the Court said:
x x x. The active participation of the party against whom the action
was brought, coupled with his failure to object to the jurisdiction of
the court or quasi-judicial body where the action is pending, is
tantamount to an invocation of that jurisdiction and a willingness to
abide by the resolution of the case and will bar said party from later
on impugning the court or bodys jurisdiction.
In the assailed Resolution,[23] respondent NLRC cited La Naval Drug
Corporation vs. Court of Appeals[24] in holding that private
respondent is not in estoppel. Thus,
The operation of the principle of estoppel on the question of
jurisdiction seemingly depends upon whether the lower court
actually had jurisdiction or not. If it had no jurisdiction, but the case
was tried and decided upon the theory that it had jurisdiction, the
parties are not barred, on appeal, from assailing such jurisdiction, for
the same must exist as a matter of law, and may not be conferred by
consent of the parties or by estoppel (5 C.J.S., 861-863). However, if
the lower court had jurisdiction, and the case was heard and decided
upon a given theory, such, for instance, as that the court had no
jurisdiction, the party who induced it to adopt such theory will not be
permitted, on appeal, to assume an inconsistent position that the
lower court had jurisdiction. Here, the principle of estoppel applies.
The rule that jurisdiction is conferred by law, and does not depend
upon the will of the parties, has no bearing thereon. (Underscoring
ours)
Again, the respondent NLRC has erroneously interpreted our ruling in
the La Naval case. Under the said ruling, estoppel lies in this case.
Private respondent is estopped from questioning the jurisdiction of
the Labor Arbiter before the respondent NLRC having actively
participated in the proceedings before the former. At no time before
or during the trial on the merits did private respondent assail the
jurisdiction of the Labor Arbiter. Private respondent took the cue only
from the preliminary statement in the decision of the Labor Arbiter,
which was a mere obiter, and raised the issue of jurisdiction before
the Commission. It was then too late. Estoppel had set in.
Turning now to the merits of the case, We uphold the ruling of the
Labor Arbiter that petitioner was illegally dismissed.
The requisites of a valid dismissal are (1) the dismissal must be for
any of the causes expressed in Article 282 of the Labor Code,[25] and
(2) the employee must be given an opportunity to be heard and to
defend himself.[26] The substantive and procedural laws must be
strictly complied with before a worker can be dismissed from his
employment because what is at stake is not only the employees
position but his livelihood.[27]
42

Petitioners dismissal was grounded on culpable carelessness,
negligence and failure to follow specific instruction(s) or established
procedure(s) under OSDA 1.11; and, having forged or falsified official
document(s) under OSDA 2.01.
Private respondent blames petitioner for failure to follow established
procedure in the hotel on a guests request for long distance calls.
Petitioner, however, explained that the usual or established
procedures are not followed by the operators and hotel employees
when circumstances warrant. For instance, the RLDC forms and the
deposits are brought by the page boy directly to the operators
instead of the cashiers if the latter are busy and cannot attend to the
same. Furthermore, she avers that the telephone operators are not
conscious of the serial numbers in the RLDCs and at times, the used
RLDCs are recycled. Even the page boys do not actually check the
serial numbers of all RLDCs in one batch, except for the first and the
last.
On the charge of taking of the money by petitioner, it is to be noted
that the second P500.00 deposit made by the Japanese guest Ieda
was later discovered to be inserted in the folder for cancelled calls
with deposit and official receipts. Thus, there exists no basis for
personal appropriation by the petitioner of the money involved.
Another reason is the alleged tampering of RLDC No. 862406.[28]
While petitioner and her co-operator Loleng admitted that they
indeed altered the date appearing therein from February 15, 1990 to
February 13, the same was purposely made to reflect the true date
of the transaction without any malice whatsoever on their part.
As pointed out by Labor Arbiter Oswald B. Lorenzo, thus:
The specifics of the grounds relied by respondent hotels dismissal of
complainant are those stated in Annex F of the latters POSITION
PAPER, which is the Notice of Dismissal, notably:
OSDA 2.01 - Forging, falsifying official document(s)
OSDA 1.11 - Culpable negligence or failure to follow specific
instruction(s) or established procedure(s)
On this score, we are persuaded by the complainants arguments that
under OSDA 1.11, infractions of this sort is not without qualifications,
which is, that the alleged culpable carelessness, negligence or failure
to follow instruction(s) or established procedure(s), RESULTING IN
LOSS OR DAMAGE TO COMPANY PROPERTY. From the facts obtaining
in this case, there is no quantum of proof whatsoever, except the
general allegations in respondents POSITION PAPER and other
pleadings that loss or damage to company property resulted from the
charged infraction. To our mind, this is where labor tribunals should
come in and help correct interpretation of company policies which in
the enforcement thereof wreaks havoc to the constitutional
guarantee of security of tenure. Apparently, the exercise of little
flexibility by complainant and co-employees which is predicated on
good faith should not be taken against them and more particularly
against the complainant herein. In this case, to sustain the
generalized charge of respondent hotel under OSDA 1.11 would
unduly be sanctioning the imposition of too harsh a penalty - which
is dismissal.
In the same tenor, the respondents charge under OSDA 1.11 on the
alleged falsification of private document is also with a qualification,
in that the alleged act of falsification must have been done IN SUCH
A WAY AS TO MISLEAD THE USER(S) THEREOF. Again, based on the
facts of the complained act, there appeared no one to have been
43
misled on the change of date from RLDC #862406 FROM 15 TO 13
February 1990.
As a matter of fact, we are in agreement with the jurisprudence cited
by VIRGILIO M. PATAG, the 2nd Asst. City Prosecutor of the City of
Manila, who exculpated complainant MANEJA from the charges of
falsification of private documents and qualified theft under IS No. 90-
11083 and marked Annex H of complainants POSITION PAPER, when
he ruled that an altercation which makes the document speak the
truth cannot be the foundation of a criminal action. As to the charge
of qualified theft, we too are of the finding, like the city prosecutor
above-mentioned that there was no evidence on the part of MANEJA
to have unlawfully taken the P500.00 either from the hotel or from
guest IEDA on 13 February 1990 and moreover, we too, find no
evidence that complainant MANEJA had the intention to profit
thereby nor had misappropriated the P500.00 in question.[29]
Given the factual circumstances of the case, we cannot deduce
dishonesty from the act and omission of petitioner. Our norms of
social justice demand that we credit employees with the
presumption of good faith in the performance of their duties,[30]
especially petitioner who has served private respondent since 1985
up to 1990 without any tinge of dishonesty and was even named
Model Employee for the month of April, 1989.[31]
Petitioner has been charged with a very serious offense - dishonesty.
This can irreparably wreck her life as an employee for no employer
will take to its bosom a dishonest employee. Dismissal is the supreme
penalty that can be meted to an employee and its imposition cannot
be justified where the evidence is ambivalent.[32] It must, therefore,
be based on a clear and not on an ambiguous or ambivalent ground.
Any ambiguity or ambivalence on the ground relied upon by an
employer in terminating the services of an employee denies the latter
his full right to contest its legality. Fairness cannot countenance such
ambiguity or ambivalence.[33]
An employer can terminate the services of an employee only for valid
and just causes which must be supported by clear and convincing
evidence. The employer has the burden of proving that the dismissal
was indeed for a valid and just cause.[34] Failure to do so results in a
finding that the dismissal was unjustified.[35]
Finding that there was no just cause for dismissal of petitioner, we
now determine if the rudiments of due process have been duly
accorded to her.
Well-settled is the dictum that the twin requirements of notice and
hearing constitute the essential elements of due process in the
dismissal of employees. It is a cardinal rule in our jurisdiction that the
employer must furnish the employee with two written notices before
the termination of employment can be effected: (a) the first apprises
the employee of the particular acts or omissions for which his
dismissal is sought; and, (b) the second informs the employee of the
employers decision to dismiss him. The requirement of a hearing, on
the other hand, is complied with as long as there was an opportunity
to be heard, and not necessarily that an actual hearing was
conducted.[36]
In the case at bar, petitioner and her co-operator Loleng were issued
a memorandum on March 7, 1990. On March 11, 1990, they
submitted their written explanation thereto. On March 20, 1990, a
written report was made with a recommendation that the offenses
committed by them were covered by OSDA 1.11 and 2.01. Thereafter,
on March 23, 1990, petitioner was served with a notice of dismissal
for said violations effective April 1, 1990.
44
An examination of the record reveals that no hearing was ever
conducted by private respondent before petitioner was dismissed.
While it may be true that petitioner submitted a written explanation,
no hearing was actually conducted before her employment was
terminated. She was not accorded the opportunity to fully defend
herself.
Consultations or conferences may not be a substitute for the actual
holding of a hearing. Every opportunity and assistance must be
accorded to the employee by the management to enable him to
prepare adequately for his defense, including legal
representation.[37] Considering that petitioner denied having
allegedly taken the second P500.00 deposit of the Japanese guest
which was eventually found; and, having made the alteration of the
date on the second RLDC merely to reflect the true date of the
transaction, these circumstances should have at least warranted a
separate hearing to enable petitioner to fully ventilate her side.
Absent such hearing, petitioners right to due process was clearly
violated.[38]
It bears stressing that a workers employment is property in the
constitutional sense. He cannot be deprived of his work without due
process of law. Substantive due process mandates that an employee
can only be dismissed based on just or authorized causes. Procedural
due process requires further that he can only be dismissed after he
has been given an opportunity to be heard. The import of due process
necessitates the compliance of these two aspects.
Accordingly, we hold that the labor arbiter did not err in awarding full
backwages in view of his finding that petitioner was dismissed
without just cause and without due process.
We ruled in the case of Bustamante vs. NLRC[39] that the amount of
backwages to be awarded to an illegally dismissed employee must be
computed from the time he was dismissed to the time he is actually
reinstated, without deducting the earnings he derived elsewhere
pending the resolution of the case.
Petitioner is likewise entitled to the thirteenth-month pay.
Presidential Decree No. 851, as amended by Memorandum Order No.
28, provides that employees are entitled to the thirteenth-month pay
benefit regardless of their designation and irrespective of the method
by which their wages are paid.[40]
The award of moral and exemplary damages to petitioner is also
warranted where there is lack of due process in effecting the
dismissal.
Where the termination of the services of an employee is attended by
fraud or bad faith on the part of the employer, as when the latter
knowingly made false allegations of a supposed valid cause when
none existed, moral and exemplary damages may be awarded in
favor of the former.[41]
The anti-social and oppressive abuse of its right to investigate and
dismiss its employees constitute a violation of Article 1701 of the
New Civil Code which prohibits acts of oppression by either capital or
labor against the other, and Article 21 on human relations. The grant
of moral damages to the employees by reason of such conduct on the
part of the company is sanctioned by Article 2219, No. 10 of the Civil
Code, which allows recovery of such damages in actions referred to
in Article 21.[42]
The award of attorneys fees amounting to ten percent (10%) of the
total award by the labor arbiter is justified under Article 111 of the
Labor Code.
45
WHEREFORE, premises considered, the petition is GRANTED and the
assailed resolutions of the respondent National Labor Relations
Commission dated June 3, 1994 and October 20, 1995 are hereby
REVERSED AND SET ASIDE. The decision dated May 29, 1992 of the
Labor Arbiter is therefore REINSTATED.
SO ORDERED.
THIRD DIVISION
[G.R. No. 148303. October 17, 2002]
UNION OF NESTLE WORKERS CAGAYAN DE ORO FACTORY (UNWCF
for brevity), represented by its President YURI P. BERTULFO and
officers, namely, DEXTER E. AGUSTIN, DANTE S. SEAREZ, EDDIE P.
OGNIR, JEFFREY C. RELLIQUETE, ENRIQUITO B. BUAGAS, EDWIN P.
SALVAA, RAMIL B. MONSANTO, JERRY A. TABILIRAN, ARNOLD A.
TADLAS, REYQUE A. FACTURA, NAPOLEON S. GALERINA, JR.,
TOLENTINO T. MICABALO and EDDIE O. MACASOCOL, petitioners,
vs. NESTLE PHILPPINES, INC., represented by its President JUAN B.
SANTOS, RUDY P. TRILLANES, Factory Manager, Cagayan de Oro
City Branch and FRANCIS L. LACSON, Cagayan de Oro City Human
Resources Manager, respondents.
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari[1] challenging the
Decision of the Court of Appeals dated December 28, 2000 and its
Resolution dated April 19, 2001 in CA GR-SP No. 56656, Union of
Nestle Workers Cagayan de Oro Factory, et al. vs. Nestle Philippines,
Inc. et al.
On August 1, 1999, Nestle Philippines, Inc. (Nestle) adopted Policy
No. HRM 1.8, otherwise known as the Drug Abuse Policy. Pursuant to
this policy, the management shall conduct simultaneous drug tests
on all employees from different factories and plants. Thus, on August
17, 1999, drug testing commenced at the Lipa City factory, then
followed by the other factories and plants.
However, there was resistance to the policy in the Nestle Cagayan de
Oro factory. Out of 496 employees, only 141 or 28.43% submitted
themselves to drug testing. On August 20, 1999, the Union of Nestle
Workers Cagayan de Oro Factory and its officers, petitioners, wrote
Nestle challenging the implementation of the policy and branding it
as a mere subterfuge to defeat the employees constitutional rights.
Nestle claimed that the policy is in keeping with the governments
thrust to eradicate the proliferation of drug abuse, explaining that
the company has the right: (a) to ensure that its employees are of
sound physical and mental health and (b) to terminate the services of
an employee who refuses to undergo the drug test.
On August 23, 1999, petitioners filed with the Regional Trial Court
(RTC), Branch 40, Cagayan de Oro City, a complaint for injunction with
prayer for the issuance of a temporary restraining order against
Nestle, Rudy P. Trillanes, Factory Manager of the Cagayan de Oro City
Branch, and Francis L. Lacson, Cagayan de Oro City Human Resources
Manager (respondents herein), docketed as Civil Case No. 99-471.
On August 24, 1999, the RTC issued a temporary restraining order
enjoining respondents from proceeding with the drug test.
Forthwith, they filed a motion to dismiss the complaint on the ground
that the RTC has no jurisdiction over the case as it involves a labor
dispute or enforcement of a company personnel policy cognizable by
the Voluntary Arbitrator or Panel of Voluntary Arbitrators. Petitioners
filed their opposition, contending that the RTC has jurisdiction since
the complaint raises purely constitutional and legal issues.
46
On September 8, 1999, the RTC dismissed the complaint for lack of
jurisdiction, thus:
This Court originally is of the honest belief that the issue involved in
the instant case is more constitutional than labor. It was convinced
that the dispute involves violation of employees constitutional rights
to self-incrimination, due process and security of tenure. Hence, the
issuance of the Temporary Restraining Order.
However, based on the pleadings and pronouncements of the
parties, a close scrutiny of the issues would actually reveal that the
main issue boils down to a labor dispute. The company implemented
a new drug abuse policy whereby all its employees should undergo a
drug test under pain of penalty for refusal. The employees who are
the union members questioned the implementation alleging that:
can they be compelled to undergo the drug test even against their
will, which violates their right against self-incrimination? At this
point, the issue seems constitutional. But if we go further and ask the
reason for their refusal to undergo the drug test, the answer is
because the policy was formulated and implemented without proper
consultation with the union members. So that, the issue here boils
down to a labor dispute between an employer and employees.
xxxxxxxxx
Clearly, in the case at bar, the constitutional issue is closely related or
intertwined with the labor issue, so much so that this Court is inclined
to believe that it has no jurisdiction but the NLRC.[2]
Petitioners filed a motion for reconsideration but was denied,
prompting them to file with this Court a petition for certiorari under
Rule 65 of the 1997 Rules of Civil Procedure, as amended. They
alleged that in dismissing their complaint for lack of jurisdiction, the
RTC gravely abused its discretion.
On November 24, 1999, this Court referred the petition to the Court
of Appeals for consideration and adjudication on the merits or any
other action as it may deem appropriate.
On December 28, 2000, the Appellate Court rendered its Decision[3]
dismissing the petition, thus:
Settled is the rule that the remedy against a final order is an appeal,
and not a petition for certiorari under Rule 65 of the 1997 Rules of
Civil Procedure. The party aggrieved does not have the option to
substitute the special civil action of certiorari under Rule 65 for the
remedy of appeal. The existence and availability of the right of appeal
are antithetical to the availment of the special civil action of
certiorari. And while the special civil action of certiorari may be
resorted to even if the remedy of appeal is available, it must be
shown that the appeal is inadequate, slow, insufficient and will not
promptly relieve a party from the injurious effects of the order
complained of, or where the appeal is ineffective.
Inasmuch as only questions of law are raised by petitioners in
assailing the Order of respondent Judge dismissing their complaint
for injunction, the proper remedy, therefore, is appeal to the
Supreme Court by petition for review on certiorari in accordance with
Rule 45 of the 1997 Rules of Civil Procedure. Other than the bare,
stereotyped allegation in the petition that there is no appeal, nor any
plain, speedy, and adequate remedy in the ordinary course of law
available to the petitioner herein whose right has been violated,
petitioners have not justified their resort to Rule 65 of the 1997 Rules
of Civil Procedure.
xxxxxxxxx
47
It is noteworthy that petitioners have not disputed the allegations in
paragraph 28 of private respondents Comment on the petition that
drug testing of the entire workforce of Nestle Cagayan de Oro factory,
including herein petitioners, submitted themselves to the drug test
required by management and was confirmed free from illegal drug
abuse. In view thereof, the instant petition, which prays for an
injunction of the drug test of the Nestle Cagayan de Oro factory
workers, had become moot and academic. The remedy of injunction
could no longer be entertained because the act sought to be
prevented had been consummated.
Petitioners sought reconsideration but to no avail. Hence this petition
for review on certiorari.
Petitioners raise the following issues for our resolution:
I. Whether the Regional Trial Court has jurisdiction over petitioners
suit for injunction; and
II. Whether petitioners resort to certiorari under Rule 65 is in order.
On the first issue, we hold that petitioners insistence that the RTC has
jurisdiction over their complaint since it raises constitutional and
legal issues is sorely misplaced. The fact that the complaint was
denominated as one for injunction does not necessarily mean that
the RTC has jurisdiction. Well-settled is the rule that jurisdiction is
determined by the allegations in the complaint.[4]
The pertinent allegations of petitioners amended complaint read:
xxxxxxxxx
5. Plaintiffs are aggrieved employees of the Nestle Philippines, Inc.
who are subjected to the new policy of the management for
compulsory Drug Test, without their consent and approval;
xxxxxxxxx
8. That the said policy was implemented last August 1, 1999, and the
Union was only informed last August 20, 1999, during a meeting held
on that day, that all employees who are assigned at the CDO Factory
will be compulsorily compelled to undergo drug test, whether they
like it or not, without even informing the Union on this new policy
adopted by the Management and no guidelines was set pertaining to
this drug test policy.
9. That there was no consultation made by the management or even
consultation from the employees of this particular policy, as the
nature of the policy is punitive in character, as refusal to submit
yourself to drug test would mean suspension from work for four (4)
to seven (7) days, for the first refusal to undergo drug test and
dismissal for second refusal to undergo drug test, hence, they were
not afforded due process x x x;
xxxxxxxxx
12. That it is not the question of whether or not the person will
undergo the drug test but it is the manner how the drug test policy is
being implemented by the management which is arbitrary in
character.
xxxxxxxxx
16. That the exercise of management prerogative to implement the
said drug test, even against the will of the employees, is not absolute
but subject to the limitation imposed by law x x x;[5]
48

It is indubitable from the foregoing allegations that petitioners are
not per se questioning whether or not the person will undergo the
drug test or the constitutionality or legality of the Drug Abuse Policy.
They are assailing the manner by which respondents are
implementing the policy. According to them, it is arbitrary in
character because: (1) the employees were not consulted prior to its
implementation; (2) the policy is punitive inasmuch as an employee
who refuses to abide with the policy may be dismissed from the
service; and (3) such implementation is subject to limitations
provided by law which were disregarded by the management.
Is the complaint, on the basis of its allegations, cognizable by the
RTC?
Respondent Nestles Drug Abuse Policy states that (i)llegal drugs and
use of regulated drugs beyond the medically prescribed limits are
prohibited in the workplace. Illegal drug use puts at risk the integrity
of Nestle operations and the safety of our products. It is detrimental
to the health, safety and work-performance of employees and is
harmful to the welfare of families and the surrounding community.[6]
This pronouncement is a guiding principle adopted by Nestle to
safeguard its employees welfare and ensure their efficiency and well-
being. To our minds, this is a company personnel policy. In San Miguel
Corp. vs. NLRC,[7] this Court held:
Company personnel policies are guiding principles stated in broad,
long-range terms that express the philosophy or beliefs of an
organizations top authority regarding personnel matters. They deal
with matter affecting efficiency and well-being of employees and
include, among others, the procedure in the administration of wages,
benefits, promotions, transfer and other personnel movements
which are usually not spelled out in the collective agreement.
Considering that the Drug Abuse Policy is a company personnel
policy, it is the Voluntary Arbitrators or Panel of Voluntary
Arbitrators, not the RTC, which exercises jurisdiction over this case.
Article 261 of the Labor Code, as amended, pertinently provides:
Art. 261. Jurisdiction of Voluntary Arbitrators or Panel of Voluntary
Arbitrators. The Voluntary Arbitrator or panel of Voluntary
Arbitrators shall have original and exclusive jurisdiction to hear and
decide all unresolved grievances arising from the interpretation or
implementation of the Collective Bargaining Agreement and those
arising from the interpretation or enforcement of company
personnel policies x x x. (Emphasis supplied)
With respect to the second issue raised by petitioners, what they
should have interposed is an appeal to the Court of Appeals, not a
petition for certiorari which they initially filed with this Court, since
the assailed RTC order is final.[8] Certiorari is not a substitute for an
appeal.[9] For certiorari to prosper, it is not enough that the trial
court committed grave abuse of discretion amounting to lack or
excess of jurisdiction, as alleged by petitioners. The requirement that
there is no appeal, nor any plain, speedy and adequate remedy in the
ordinary course of law must likewise be satisfied.[10] We must stress
that the remedy of appeal was then available to petitioners, but they
did not resort to it. And while this Court in exceptional instances
allowed a partys availment of certiorari instead of appeal, we find
that no such exception exists here.
WHEREFORE, the instant petition for review on certiorari is DENIED.
The Decision of the Court of Appeals dated December 28, 2000 and
its Resolution dated April 19, 2001 in CA GR-SP No. 56656 are
AFFIRMED.
SO ORDERED.
49

Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 90426 December 15, 1989
SIME DARBY PILIPINAS, INC., petitioners,
vs.
DEPUTY ADMINISTRATOR BUENAVENTURA C. MAGSALIN as
Voluntary Arbitrator and the SIME DARBY EMPLOYEES
ASSOCIATION, respondents.
FELICIANO, J.:
The Petition for certiorari before us assails the award of Voluntary
Arbitrator Buenaventura Magsalin dated 17 August 1989 which
directed petitioner Sime Darby Pilipinas, Inc. (Sime Darby) to pay the
members of private respondent Sime Darby Employees Association
(SDEA) a performance bonus equivalent to seventy-five percent
(75%) of their monthly basic pay for the year 1988-1989.
On 13 June 1989, petitioner Sime Darby and private respondent SDEA
executed a Collective Bargaining Agreement (CBA) providing, among
others, that:
Article X, Section 1. A performance bonus shall be granted, the
amount of which [is] to be determined by the Company depending
on the return of [sic] capital investment as reflected in the annual
financial statement.
On 31 July 1989, the Sime Darby Salaried Employees Association- ALU
(SDSEA-ALU) wrote petitioner demanding the implementation of a
provision Identical to the above contained in their own CBA with
petitioner. Subsequently, petitioner called both respondent SDEA
and SDEA-ALU to a meeting wherein the former explained that it was
unable to grant the performance bonus corresponding to the fiscal
year 1988-1989 on the ground that the workers' performance during
said period did not justify the award of such bonus. On 27 July 1989,
private respondent SDEA filed with the National Conciliation and
Mediation Board (NCMB) an urgent request for preventive
conciliation between private respondent and petitioner.
On 1 August 1989, the parties were called to a conciliation meeting
and in such meeting, both parties agreed to submit their dispute to
voluntary arbitration. Their agreement to arbitrate stated, among
other things, that they were "submitting the issue of performance
bonus to voluntary arbitration" and that "the decision/award of the
voluntary arbitrator shall be respected and implemented by the
parties as final and executory, in accordance with the law." 1
On 14 August 1989, petitioner filed its position paper which aimed to
show that the performance of the members of respondent union
during the year was below the production goals or targets set by Sime
Darby for 1988-1989 and below previous years' levels for which
reason the performance bonus could not be granted. Petitioner there
referred to the following performance indicators: a) number of tires
produced; b) degree of wastage of production materials; and c)
number of pounds of tires produced per man hour. On that same day,
14 August 1989, petitioner manifested before the Voluntary
Arbitrator that it would file a Reply to the union's Position Paper
submitted on 10 August 1989 not later than 18 August 1989.
However, before petitioner could submit its Reply to the union's
Position Paper, the Voluntary Arbitrator on 17 August 1989 issued an
50
award which declared respondent union entitled to a performance
bonus equivalent to 75% of the monthly basic pay of its members. In
that award, the Voluntary Arbitrator held that a reading of the CBA
provision on the performance bonus would show that said provision
was mandatory hence the only issue to be resolved was the amount
of performance bonus. The Voluntary Arbitrator further stated that
petitioner company's financial statements as of 30 June 1988
revealed retained earnings in the amount of P 324,370,372.32. From
the foregoing, the Voluntary Arbitrator concluded that petitioner
company could well afford to give members of respondent union a
substantial performance bonus. The Voluntary Arbitrator also stated
that there was evidence to show that the company has given
performance bonuses to its managerial and non-unionized
employees as well as to monthly paid workers of the year 1988-1989.
Petitioner filed a motion for reconsideration which motion was not
entertained by the Voluntary Arbitrator upon the ground that under
the ruling of this Court in Solidbank v. Bureau of Labor Relations, (G.R.
No. 64926, promulgated 8 October 1984; unpublished) he, the
Voluntary Arbitrator, had automatically lost jurisdiction over the
arbitration case upon the issuance of the award.
In this Petition for Certiorari, petitioner mainly argues that
respondent Voluntary Arbitrator gravely abused his discretion in
holding that the grant of performance bonus was mandatory and that
the only issue before him was the amount of the bonus. It is
contended that since a performance bonus is a "gift" based on the
company's performance, the same is not justified when the
company's performance has been poor. Petitioner claims that during
the fiscal year of 1988-1989, the company performed poorly as
shown by the decline in tire production for the said year as well as
the increase of the rate of wastage of production materials, and also
by the decrease in the number of tires produced per man hour.
Petitioner also argues that even if a performance bonus were
justified, the Voluntary Arbitrator gravely abused his discretion in
giving an award of 75% of the monthly basic rate without any
evidence of the basis used in arriving at such an award. It is insisted
that under the relevant CBA provision, the company determines the
amount of the bonus if the same be justified. Petitioner also alleged
that respondent Arbitrator gravely erred when he based the award
on the company's retained earnings the level of which represents
earnings accumulated during prior years and not merely during the
fiscal year 1988-1989.
On 8 November 1989, the Court temporarily restrained the
enforcement of the Voluntary Arbitrator's award to prevent the
petition at bar becoming moot and academic.
We are not persuaded by petitioner's arguments.
One point needs to be stressed at the outset: the award of a
Voluntary Arbitrator is final and executory after ten (10) calendar
days from receipt of the award by the parties. 2 There was a time
when the award of a Voluntary Arbitrator relating to money claims
amounting to more than P 100,000.00 or forty percent (40%) of the
paid-up capital of the employer (whichever was lower), could be
appealed to the National Labor Relations Commission upon the
grounds of (a) abuse of discretion; or (b) gross incompetence,
presumably of the arbitrator. 3 This is no longer so today although,
of course, certiorari will lie in appropriate cases. A petition for
certiorari under Rule 65 of the Revised Rules of Court will lie only
where a grave abuse of discretion or an act without or in excess of
jurisdiction on the part of the Voluntary Arbitrator is clearly shown.
It must be borne in mind that the writ of certiorari is an extraordinary
remedy and that certiorari jurisdiction is not to be equated with
appellate jurisdiction. In a special civil action of certiorari, the Court
will not engage in a review of the facts found nor even of the law as
interpreted or applied by the Arbitrator unless the supposed errors
51
of fact or of law are so patent and gross and prejudicial as to amount
to a grave abuse of discretion or an excess de pouvoir on the part of
the Arbitrator.4 The Labor Code and its Implementing Rules thus
clearly reflect the important public policy of encouraging recourse to
voluntary arbitration and of shortening the arbitration process by
rendering the arbitral award non- appealable to the NLRC. The result
is that a voluntary arbitral award may be modified and set aside only
upon the same grounds on which a decision of the NLRC itself may be
modified or set aside, by this Court.
Examination of the pleadings in the instant Petition shows that two
(2) principal issues are raised: The first is whether or not the
Voluntary Arbitrator acted with grave abuse of discretion or without
or in excess of jurisdiction in passing upon both the question of
whether or not a performance bonus is to be granted by petitioner
Sime Darby to the private respondents and the further question of
the amount thereof. The second is whether or not the award by the
Arbitrator of a performance bonus amounting to seventy five percent
(75%) of the basic monthly salary of members of private respondent
union itself constituted a grave abuse of discretion or an act without
or in excess of jurisdiction. We consider these issues seriatim
1. In respect of the first issue, petitioner Sime Darby urges that
the Arbitrator gravely abused his discretion in passing upon not only
the question of whether or not a performance bonus is to be granted
but also, in the affirmative case, the matter of the amount thereof.
The position of petitioner, to the extent we can understand it, is that
the Arbitrator was authorized to determine only the question of
whether or not a performance bonus was to be granted, the second
question being reserved for determination by the employer Sime
Darby. We noted earlier that in their agreement to arbitrate, the
parties submitted to the Voluntary Arbitrator "the issue of
performance bonus." The language of the agreement to arbitrate
may be seen to be quite cryptic. There is no indication at all that the
parties to the arbitration agreement regarded "the issue of
performance bonus" as a two-tiered issue, only one tier of which was
being submitted to arbitration. Possibly, Sime Darby's counsel
considered that issue as having dual aspects and intended in his own
mind to submit only one of those aspects to the Arbitrator; if he did,
however, he failed to reflect his thinking and intent in the arbitration
agreement.
It is thus essential to stress that the Voluntary Arbitrator had plenary
jurisdiction and authority to interpret the agreement to arbitrate and
to determine the scope of his own authority subject only, in a proper
case, to the certiorari jurisdiction of this Court. The Arbitrator, as
already indicated, viewed his authority as embracing not merely the
determination of the abstract question of whether or not a
performance bonus was to be granted but also, in the affirmative
case, the amount thereof. The Arbitrator said in his award:
At this juncture, it would not be amiss to emphasize to the parties
that the matter of performance bonus necessarily includes not only
the determination of the existence of the right of the union to this
benefit but also the amount thereof. This conclusion arises from a
perusal of the terms of the submission agreement entered into by
Sime Darby Pilipinas, Inc. and Sime Darby Employees Association
which limited the voluntary arbitration only with regard to
submission of position papers of the parties, disposition and
rendition of the award. Nary (sic) a trace of qualification as to the sole
issue of performance bonus may be gleaned from a review of said
agreement.
With that as a timely reminder, this Arbitrator now proceeds to
resolve the issues herein submitted for resolution. Without doubt,
the Sime Darby Employees Association is entitled to performance
bonus. This conclusion arises from an analysis of the imperative
52
terms of the CBA provision on production bonus, hereinunder
reproduced, to wit:
A performance bonus shall be granted the amount of which to be
determined by the Company depending on the return of capital
investment as reflected in the annual financial statements. 5
(Emphasis supplied)
Analysis of the relevant provisions of the CBA between the parties
and examination of the record of the instant case lead us to the
conclusion that the Arbitrator's reading of the scope of his own
authority must be sustained.
Article X, Section 1 of the CBA is, grammatically speaking, cast in
mandatory terms: "A performance bonus shall be granted ..." The
CBA provision goes on, however, immediately to say that the amount
of the performance bonus "[is] to be determined by the Company."
Thus, notwithstanding the literal or grammatical tenor of Article X,
Section 1, as a practical matter, only the issue relating to the amount
of the bonus to be declared appears important. Not much reflection
is needed to show that the critical issue is the scope of authority of
the company to determine the amount of any bonus to be granted.
If the company's discretionary authority were to be regarded as
unlimited and if the company may declare in any event a merely
nominal bonus, the use of mandatory language in Article X, Section
1, would seem largely illusory and cosmetic in effect. Alternatively,
even if one were to disregard the use of "shall" rather than "may" in
Article X, Section 1, the question of whether or not a performance
bonus is to be granted, still cannot realistically be dissociated from
the intensely practical issue of the amount of the bonus to be
granted. It is noteworthy that petitioner Sime Darby itself did not
spend much time discussing as an abstract question whether or not
the grant of a performance bonus is per se obligatory upon the
company. Petitioner instead focused upon the production
performance of the company's employees as bearing upon the
appropriateness of any amount of bonus. Further, if petitioner Sime
Darby's argument were to be taken seriously, one must conclude that
the parties to the arbitration agreement intended to refer only a
theoretical and practically meaningless issue to the Voluntary
Arbitrator, a conclusion that we find thoroughly unacceptable.
2. We turn then to the issue of whether or not the Voluntary
Arbitrator gravely abused his discretion or acted without or in excess
of jurisdiction in awarding an amount equivalent to seventy-five
percent (75%) of the basic monthly pay of members of respondent
union. Petitioner Sime Darby contends that that award is devoid of
factual basis. We understand this contention to be that the Arbitrator
did not apply the relevant CBA provision.
Once more, we are not persuaded by petitioner's contention.
Article X, Section 1 of the CBA does not in express terms identify
whose performance is to appraised in determining an appropriate
amount to be awarded as performance bonus. The Court considers
that it is the performance of the company as a whole, and not merely
the production or manufacturing performance of its employees,
which is relevant in that determination. The CBA provision refers to
the return on investment of the company (ROI). The return on the
stockholders' investment, as we understand it, relates basically to the
net profits shown by the company and therefore to many more
factors than simply the extent to which production targets were
achieved or the rise and fall of the manufacturing efficiency ratios.
Among those factors would be the cost of production, the quality of
the products, the cost of money, the debt-equity ratio, the cost of
sales, the level of taxes due and payable, the gross revenues realized,
and so forth.
53
We note upon the other hand, that petitioner's counsel failed to
discuss at all before the Voluntary Arbitrator the rate of return on
stockholders' investment achieved by Sime Darby for the year 1988-
1989; as earlier noted, counsel confined his argument and the
evidence submitted by him to the number of tires produced, the
decrease in the rate of wastage of manufacturing materials, and the
productivity of the work force measured in terms of the number of
tires produced per man hour.
The Voluntary Arbitrator, upon the other hand, explicitly considered
the net earnings of petitioner Sime Darby in 1988 (P 100,000,000.00)
and in the first semester of 1989 (P 95,377,507.00) as well as the
increase in the company's retained earnings from P 265,729,826.00
in 1988 to P 324, 370,372.00 as of 30 June 1989. Thus, the Arbitrator
impliedly or indirectly took into account the return on stockholders'
investment realized for the fiscal year 1988-1989. It should also be
noted that the relevant CBA provision does not specify a minimum
rate of return on investment (ROI) which must be realized before any
particular amount of bonus may or should be declared by the
company.
The Voluntary Arbitrator also took into account, again in an indirect
manner, the performance of Sime Darby's employees by referring in
his award to "the total labor cost incurred by the Company":
be paid and granted to all other employees of Sime Darby this year.
6 (Emphasis supplied)
On balance, we believe and so hold that the award of the Voluntary
Arbitrator of a bonus amounting to seventy-five percent (75%) of the
basic monthly salary cannot be said to be merely arbitrary or
capricious or to constitute an excess de pouvoir.
The remaining assertions of petitioner Sime Darby relating to denial
of procedural due process by the Voluntary Arbitrator, consisting of
failure to wait for petitioner's announced Reply (basically reiterative
and amplificatory in nature) to the union's Position Paper and of
alleged failure to consider evidence submitted by petitioner, do not
require extended consideration; they are evidently bereft of merit.
WHEREFORE, the Petition for Certiorari is DISMISSED for lack of
merit. The Temporary Restraining Order issued on 8 November 1989
is hereby LIFTED. This Decision is immediately executory. Costs
against petitioner.
SO ORDERED.

This Arbitrator, however, is well aware that any effort in this regard
must be tempered and balanced as against the need to sustain the
continued viability of Sime Darby Pilipinas, Inc. in accordance with the
constitutional provision which recognizes the 'right of enterprise to
reasonable returns on investment and to expansion and growth.'
Furthermore, any award to be rendered must likewise take into
account the total labor cost incurred by the Company. It should not
merely be confined to those pertaining to the members of the Sime
Darby Employees Association but necessarily include that which shall

54
 SECOND DIVISION
[G.R. No. 159010. November 19, 2004]
NIPPON PAINT EMPLOYEES UNION-OLALIA in behalf of ADONIS
GUANSING, petitioner, vs. COURT OF APPEALS, NIPPON PAINT
PHILS., INC. and HON. VOLUNTARY ARBITRATOR BERNARDINO M.
VOLANTE, respondents.
DECISION
PUNO, J.:
Before us is a Petition for Certiorari under Rule 45 of the Rules of
Court to review the decision of the Court of Appeals in CA-G.R. SP
No.76501 dated 25 April 2003.
Petitioner Nippon Paint Employees Union (NPEU) is a labor union duly
organized under the laws of the Philippines. Respondent Nippon
Paint Phils., Inc. (NPPI) is a corporation duly organized under the laws
of the Philippines engaged in the manufacture and sale of car paint.
The undisputed facts are as follows.
NPEU and NPPI were engaged in collective bargaining
negotiations.[1] These negotiations ended in a deadlock, prompting
NPEU to file a notice of strike with the National Conciliation and
Mediation Board.[2] While the said labor dispute was pending, NPEU
Secretary Adonis Guansing was interviewed by a reporter of the
Philippine Daily Inquirer (PDI).[3] The interview was subsequently
published in the PDI in its issue dated 1 April 2002. Its pertinent
portions state, viz:
Singaporean-owned Nippon Paint controls 65 percent of the
architectural and car paint market nationwide.
Thus, the workers said, there was no reason for the company to claim
in ongoing collective bargaining talks that the company was losing
money.
How is that possible when we supply 32 million liters of the 50 million
liters of car paint used nationwide? We cover 65 percent of the total
market demand, said Adonis Guansing, a chemist and auditor of the
Nippon Paint Labor Union.
xxx
Guansing said that Nippon Paint could well afford to increase wages
because the company made P600 million last year based on its
declaration filed with the Securities and Exchange Commission.
xxx
We had no problem like this when the Japanese controlled Nippon
Paint. It was only in 1997 that the union began facing serious
problems when the Singaporeans took over majority ownership of
the company, Guansing said.
Management claimed the company lost P297 million and there is an
unsold inventory of paint worth P202 million.
Thats the sad part. The management places on us the blame for their
incompetence. The P297 million represents the companys
collectibles while the P202 million was the paint the management has
stored in various warehouses in case our union goes on strike,
Guansing said.[4]
On 2 April 2002, NPPI issued a memorandum to Mr. Guansing,
ordering him to explain why he should not be penalized for violation
of company rules and regulations, which state:
55

16. NON-COMPANY ACTIVITIES
b) Engaging in any activity which
is conflict (sic) with the Companys
interests, either directly or indirectly.
1. Major case 1st offense
DISMISSAL[5]
After the submission of Mr. Guansings reply and unsuccessful efforts
by NPPI to organize a conference between them, the latter issued a
memorandum on 16 May 2002 terminating the formers employment
effective 20 May 2002.[6] Thereafter, Mr. Guansing, represented by
NPEU, filed a complaint for illegal dismissal with the National Labor
Relations Commission. Both parties agreed to submit the dispute to
voluntary arbitration. On 18 December 2002, Voluntary Arbitrator
Bernardino Volante promulgated a decision in favor of NPPI declaring
Mr. Guansings dismissal as legally effected but awarding P40,000.00
to the latter in the name of compassionate justice. NPEU, acting on
behalf of Mr. Guansing, challenged the said decision in the Court of
Appeals by filing a Rule 65 petition for certiorari on 14 April 2003.[7]
The Court of Appeals dismissed NPEUs petition in its decision dated
25 April 2003.[8] Hence, the present petition for certiorari.
NPEU asks this Court to rule on an issue of law whether the Court of
Appeals properly dismissed its petition for certiorari under Rule 65
for being an improper mode of appeal. It is the view of the Court of
Appeals that NPEU should have appealed the voluntary arbitrators
decision by petition for review under Rule 43 instead of Rule 65.
In the case of Luzon Development Bank vs. Association of Luzon
Development Bank Employees,[9] this Court ruled that a voluntary
arbitrator partakes of the nature of a quasi-judicial instrumentality
and is within the ambit of Section 9(3) of the Judiciary Reorganization
Act, as amended, which provides:
(3) Exclusive appellate jurisdiction over all final judgments, decisions,
resolutions, orders or awards of Regional Trial Courts and quasi-
judicial agencies, instrumentalities, boards or commissions, including
the Securities and Exchange Commission, the Employees
Compensation Commission and the Civil Service Commission, except
those falling within the appellate jurisdiction of the Supreme Court in
accordance with the Constitution, the Labor Code of the Philippines
under Presidential Decree No. 442, as amended, the provisions of this
Act, and of subparagraph (1) of the third paragraph and
subparagraph (4) of the fourth paragraph of Section 17 of the
Judiciary Act of 1948.[10]
As such, the decisions of a voluntary arbitrator fall within the
exclusive appellate jurisdiction of the Court of Appeals. Indeed, this
Court took this decision into consideration in approving the 1997
Rules of Civil Procedure, the pertinent provision of which states as
follows:
SECTION 1. Scope. This Rule shall apply to appeals from judgments or
final orders of the Court of Tax Appeals and from awards, judgments,
final orders or resolutions of or authorized by any quasi-judicial
agency in the exercise of its quasi-judicial functions. Among these
agencies are the Civil Service Commission, Central Board of
Assessment Appeals, Securities and Exchange Commission, Office of
the President, Land Registration Authority, Social Security
Commission, Civil Aeronautics Board, Bureau of Patents, Trademarks
and Technology Transfer, National Electrification Administration,
Energy Regulatory Board, National Telecommunications Commission,
Department of Agrarian Reform under Republic Act No. 6657,
Government Service Insurance System, Employees Compensation
Commission, Agricultural Inventions Board, Insurance Commission,
56
Philippine Atomic Energy Commission, Board of Investments,
Construction Industry Arbitration Commission, and voluntary
arbitrators authorized by law.[11]
It is elementary in remedial law that the use of an erroneous mode
of appeal is cause for dismissal of the petition for certiorari[12] and
it has been repeatedly stressed that a petition for certiorari is not a
substitute for a lost appeal.[13] This is due to the nature of a Rule 65
petition for certiorari which lies only where there is no appeal, and
no plain, speedy and adequate remedy in the ordinary course of
law.[14] As previously ruled by this Court:
x x x We have time and again reminded members of the bench and
bar that a special civil action for certiorari under Rule 65 lies only
when "there is no appeal nor plain, speedy and adequate remedy in
the ordinary course of law." Certiorari can not be allowed when a
party to a case fails to appeal a judgment despite the availability of
that remedy, certiorari not being a substitute for lost appeal. The
remedies of appeal and certiorari are mutually exclusive and not
alternative or successive.[15]
The fact that the NPEU used the Rule 65 modality as a substitute for
a lost appeal is made plainly manifest by: a) its filing the said petition
45 days after the expiration of the 15-day reglementary period for
filing a Rule 43 appeal;[16] and b) its petition which makes specious
allegations of grave abuse of discretion but asserts the failure of the
voluntary arbitrator to properly appreciate facts and conclusions of
law.[17]
This salutary rule has been disregarded on occasion by this Court in
instances where valid and compelling circumstances warrant.[18]
However, NPEU has not provided this Court any compelling reason
why it must disregard the mandate of the Rules of Court.
IN VIEW WHEREOF, the decision of the Court of Appeals dated 25
April 2003 is hereby AFFIRMED and the instant Petition DISMISSED.
SO ORDERED.
SECOND DIVISION
[G.R. NO. 149050 : March 25, 2009]
SAMAHAN NG MGA MANGGAGAWA SA HYATT - NUWHRAIN-APL,
Petitioner, v. VOLUNTARY ARBITRATOR FROILAN M. BACUNGAN
and HYATT REGENCY MANILA, Respondents.
DECISION
TINGA, J.:
Before the Court is a Petition for Review on Certiorari, 1 assailing the
twin resolutions of the Court of Appeals in CA-G.R. SP No. 60959. The
Resolution2 dated 16 November 2000 dismissed outright petitioner's
special civil action for certiorari therein on the ground that it was a
wrong remedy while the Resolution3 dated 10 July 2001 denied
petitioner's motion for reconsideration.
The following factual antecedents are matters of record.
In 1995 and 1996, Mario Dacles and Teodoro Valencia respectively
assumed their duties as glass cleaners at Hyatt Regency Manila
(respondent Hyatt), pursuant to the cleaning service contract4
executed between respondent Hyatt and City Service Corporation
(CSC).5 ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
Meanwhile, in April 1998, respondent Hyatt hired Amelia Dalmacio
and Renato Dazo on a casual basis as florist/sales clerk and
57
helper/driver, respectively. After their contracts expired on 30
August 1998, Dalmacio and Dazo continued reporting for work. On
16 September 1998, Dalamcio and Dazo signed another employment
contract with respondent Hyatt.6
During the Labor Management Committee Meeting (LMC), petitioner
Samahan ng mga Manggagawa sa Hyatt-NUWHRAIN-APL (petitioner
union), a legitimate labor organization composed of the rank-and-file
employees of respondent Hyatt, questioned the status as non-regular
employees of Dacles, Valencia, Dalmacio and Dazo (Dacles, et al.).7
On 19 April 1999, petitioner union and respondent Hyatt agreed to
submit the matter for resolution through the grievance machinery as
provided for in their collective bargaining agreement (CBA).
Petitioner union claimed that Dacles, et al. were regular employees
on account of the nature of their functions as well as the length of
their service. On the other hand, respondent Hotel maintained that
Dalmacio and Dazo were mere project employees whose
employments were co-terminus with the existence of the flower
shop outlet and that Dacles and Valencia were employees of CSC, an
independent contractor.
On 16 September 1999, respondent Hyatt dismissed Dacles and
Valencia and disallowed them from reporting to work on the ground
that the service contract between respondent Hyatt and CSC had
been terminated.
Petitioner union and respondent Hyatt were unable to settle the
dispute through the grievance procedure and, thus, agreed to elevate
the issue for voluntary arbitration. The parties selected Dean Froilan
Bacungan as voluntary arbitrator. After the exchange of responsive
pleadings, the case was deemed submitted for resolution.
On 11 January 2000, the voluntary arbitrator rendered a decision, the
dispositive portion of which reads:
WHEREFORE, the Voluntary Arbitrator rules that:
1. Mario Dacles and Teodoro Valencia are not employees of the
Hotel. They are employees of the City Service Corporation.
2. As employees of the Hotel, Amelia Dalmacio and Renato Dazo can
not be legally terminated on September 17, 1999 and November 16,
1999 respectively, but they may be legally terminated anytime the
Hotel closes down the Flower Shop wherein Dalmacio and Dazo work,
or earlier for cause provided by law.
SO ORDERED.8
Petitioner union moved for reconsideration, which was denied in a
Resolution dated 10 July 2000. On 08 September 2000, petitioner
union elevated the matter to the Court of Appeals via a petition for
certiorari .
In the assailed Resolution dated 16 November 2000, the Court of
Appeals dismissed the petition, to wit:
Contrary to Secs. 1, 4 and 6, in relation to Sec. 7, Rule 43 of the 1997
Rules on Civil Procedure, petitioner resorted to the instant special
civil action for certiorari, instead of a Petition for Review; its payment
of the docket fees is short by P10.00; and the petition is not
accompanied by a certified true copy of the motion for
reconsideration of the decision dated January 11, 2000.
If the action were to be treated as a Petition for Review, then it was
filed out of time. On July 20, 2000, petitioner received the resolution
dated July 10, 2000 denying its motion for reconsideration of the
58
assailed decision. Consequently, it had until July 25, 2000, or fifteen
days from notice of denial of the motion for reconsideration, within
which to file a Petition for Review (Sec. 4, Rule 43). However, the
petition was only filed on September 8, 2000, or forty-five days
beyond the reglementary period.
WHEREFORE, the petition is DISMISSED.
SO ORDERED.9
Petitioner sought reconsideration, arguing that the voluntary
arbitrator's decision was rendered under Title VII-A of the Labor Code
and, therefore, is not covered by Rule 43 of the 1997 Rules of Civil
Procedure as provided in Section 2 thereof. On 10 July 2001, the
Court of Appeals rendered a resolution denying the motion for
reconsideration.10
Hence, the instant petition, attributing the following errors to the
Court of Appeals:
I.
THE HONORABLE COURT OF APPEALS COMMITTED GRIEVOUS ERROR
IN RULING THAT THE APPROPRIATE REMEDY FOR ASSAILING THE
DECISION OF THE RESPONDENT VOLUNTARY ARBITRATOR IS AN
APPEAL BY PETITION FOR REVIEW UNDER RULE 43 AND NOT A
PETITION FOR CERTIORARI UNDER RULE 65 OF THE 1997 RULES OF
CIVIL PROCEDURE.
II.
THE HONORABLE COURT OF APPEALS COMMITTED GRIEVOUS ERROR
IN DISMISSING THE PETITION ON THE BASIS OF THE REQUIREMENTS
SET FORTH IN RULE 43 OF THE 1997 RULES OF CIVIL PROCEDURE.11
Petitioner union argues that the proper remedy to assail a decision
of a voluntary arbitrator is a special civil action for certiorari under
Rule 65 of the Rules of Court and not an appeal via a Petition for
Review under Rule 43. Petitioner union's theory is based on the
following ratiocinations: first, the decision of the voluntary arbitrator
is similar to the decisions rendered by the National Labor Relations
Commission (NLRC) and the Secretary of Labor and Employment,
which become final and executory after ten (10) calendar days from
receipt of notice, in that the Labor Code expressly disallows an appeal
from their judgment or final order; second, Section 2 of Rule 43,
which exempts judgments or final orders issued under the Labor
Code from an appeal via Rule 43, should apply with equal force to
decisions of labor voluntary arbitrators.
The petition lacks merit.
The question on the proper recourse to assail a decision of a
voluntary arbitrator has already been settled in Luzon Development
Bank v. Association of Luzon Development Bank Employees,12 where
the Court held that the decision or award of the voluntary arbitrator
or panel of arbitrators should likewise be appealable to the Court of
Appeals, in line with the procedure outlines in Revised Administrative
Circular No. 1-95 (now embodied in Rule 43 of the 1997 Rules of Civil
Procedure), just like those of the quasi-judicial agencies, boards and
commissions enumerated therein, and consistent with the original
purpose to provide a uniform procedure for the appellate review of
adjudications of all quasi-judicial entities.13
Subsequently, in Alcantara, Jr. v. Court of Appeals,14 and Nippon
Paint Employees Union v. Court of Appeals,15 the Court reiterated
the aforequoted ruling. In Alcantara, the Court held that
notwithstanding Section 2 of Rule 43, the ruling in Luzon
Development Bank still stands. The Court explained, thus:
59

The provisions may be new to the Rules of Court but it is far from
being a new law. Section 2, Rules 42 of the 1997 Rules of Civil
Procedure, as presently worded, is nothing more but a reiteration of
the exception to the exclusive appellate jurisdiction of the Court of
Appeals, as provided for in Section 9, Batas Pambansa Blg. 129, as
amended by Republic Act No. 7902:
(3) Exclusive appellate jurisdiction over all final judgments, decisions,
resolutions, orders or awards of Regional Trial Courts and quasi-
judicial agencies, instrumentalities, boards or commissions, including
the Securities and Exchange Commission, the Employees'
Compensation Commission and the Civil Service Commission, except
those falling within the appellate jurisdiction of the Supreme Court in
accordance with the Constitution, the Labor Code of the Philippines
under Presidential Decree No. 442, as amended, the provisions of this
Act and of subparagraph (1) of the third paragraph and subparagraph
(4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.
The Court took into account this exception in Luzon Development
Bank but, nevertheless, held that the decisions of voluntary
arbitrators issued pursuant to the Labor Code do not come within its
ambit x x x16
On some occasions, rules of procedure may be relaxed and on that
basis the Court of Appeals could have treated the petition for
certiorari as a Petition for Review under Rule 43. However, as
correctly pointed out by the Court of Appeals, the petition was filed
beyond the reglementary period for filing a Petition for Review under
Rule 43. It is elementary in remedial law that the use of an erroneous
mode of appeal is a cause for dismissal of the petition for certiorari
and it has been repeatedly stressed that a petition for certiorari is not
a substitute for a lost appeal.17
In any event, the voluntary arbitrator did not commit any reversible
error in ruling that Dacles and Valencia were employees of CSC, an
independent contractor, whose services may be terminated upon the
expiration of the contract for cleaning services between CSC and
respondent Hyatt. There is no dispute that Dacles and Valencia
performed services at respondent Hyatt pursuant to the said
contract. The Court affirms the ruling of the voluntary arbitrator that
Dacles and Valencia cannot be considered as employees of
respondent Hyatt in the absence of evidence to prove that CSC had
been engaged in labor-only contracting.
The Court also affirms the voluntary arbitrator's findings that
Dalmacio and Dazo were project employees, whose employment
may be terminated only upon the closure of the flower shop. Said
findings are in accord with the conditions of the employment
contracts between respondent Hyatt and the two employees.
Well-settled is the rule that findings of fact of administrative agencies
and quasi-judicial bodies which have acquired expertise because
their jurisdiction is confined to specific matters, are generally
accorded not only great respect but even finality. They are binding
upon this Court unless there is a showing of grave abuse of discretion
or where it is clearly shown that they were arrived at arbitrarily or in
utter disregard of the evidence on record.18
WHEREFORE, the instant Petition for Review on Certiorari is DENIED
and the resolutions dated 16 November 2000 and 10 July 2001 of the
Court of Appeals in CA-G.R. SP No. 60959 are AFFIRMED. Costs
against petitioner.
SO ORDERED.
60