ART.
224: EXECUTION OF DECISIONS,
ORDERS OR AWARDS
#51: Danao Development Corp. vs NLRC
[G.R. No. L-40706 & L-40707. February 16, 1978.]
DANAO DEVELOPMENT
CORPORATION, Petitioner, v. NATIONAL
LABOR RELATIONS COMMISSION, JOSUE
DE JOSE, in his capacity as Provincial Sheriff of
Negros Occidental, Negros Occidental Free
Laborers Association (NOFLA-ALU),
FELIZARDO AGRAVANTE; SIMEON
AGRAVANTE; MONICO ALBINA;
ALEJANDRO ALSADO; ANECITO ALSADO;
ANTONIO ALSADO; heirs, successors, and/or
assigns of SIMPLICIO ALSADO; JESUS
ALURAN; SIMPLICIO ALURAN; ANDRES
AMORA; MANUEL AMORA; SERGIO
AMORA; LEOVIGILDO ANACLETO; CESAR
ARANDA; DOMINADOR ARANDA;
BENJAMIN ARTAJO; CIRILO ARTAJO;
ROMAN ARTAJO; SAMUEL ARTAJO;
RODRIGO DE ASIS; ROMEO RARICUATRO;
JORGE PATICAS; MANUEL BAYNOSA;
PACIFICO BENIGNOS; heirs, successors, and/or
assigns of NARCISO BERNACER; TEOFILO
BERNANCILLO; MARIANO BIA-IS;
ROBERTO BI-AY; VICENTE BI-AY; heirs,
successors, and/or assigns of NICOLAS
BORONG; FRANCISCO CABAHUG; FELIPE
CABERTE; SERAFIN CAJUCSON; ANATALIO
CAJUELAN; ARTEMIO CARVELLEDA;
MORETO CARVELLEDA; ALFREDO
CASTILLON; EDUARDO CENTINA; SERAFIN
CHIVA; DOMINGO CUSTODIO; CATALINO
DALOGDOG; BARTOLOME DENSON;
LIBERADO DETECIO; IGMEDIO DIAMA;
FELIZARDO DIAMANTE; HILARION
DOGOMEO; heirs, successors and/or assigns of
VICTORINO DOGOMEO; ROMEO ESCAMOS;
LORENZO FORTUNA; RUFILLO GARCIA;
DOMINGO GEMINO; FLORENCIO GEMINO;
DOMINADOR GEMPESALA; heirs, successors
and/or assigns of ROGELIO GLARAGA;
DOMINADOR GRACIA; BENEDICTO HILAY;
RUFINO INTES; DIOSCORO JAPITAN;
SERGIO JAPITAN; JOSE JUGADORA;
LORENZO JUGADORA; RUPERTO
LACARES; JOSE LADENES; PEDRO
LEDESMA, JR.; JUANITO LEYTE;
VICTORINO LEYTE; DIOSCORO
LIBONGCOGON; FELOMINO LI-UGAN:
ELENO LONGAKIT; PANFILO LUMAPAY;
JOSE MABILOG; HERMINIGILDO
MACAPAS; MACARIO MACAPAS; MOISES
MACAPAS; VICTOR MAGLASANG;
FORTUNATO MAHILUM; JESUS MALAGSIC;
GALO MALUPAY; ROMAN MALUPAY; heirs,
successors, and/or assigns of REYNALDO
MARCELLA; CARLOS PABUAYA; BENITO
PALMA; IGNACIO PALMA; heirs, successors,
and/or assigns of CAYETANO PANLA-AN; heirs,
successors, and/or assigns of FULGENCIO
PANLA-AN; HERMOGENES PATINO;
SALUSTIANO DE LA PEÑA; SERGIO DE LA
PEÑA; heirs, successors, and or assigns of
FELIMON PERFECTO; BALBINO PESANON;
CASIANO PESANON; FEDERICO PESANON;
RICARDO PESANON; NEMESIO RACHO;
PACIANO RACHO; ANGELINO SAGA;
FRUCTUOSO SAGA, JR.; CATALINO SATO;
NICANOR SATO; heirs, successors and/or
assigns of EVANGELISTA SELDORA; EMILIO
SILVA; LEONARDO SISON; heirs, successors
and/or assigns of JOSE TALEON; MANUEL
TALEON; ALBERTO TANIACAO; JOSE
TARDAGUELA; RAMON TARDAGUELA;
ESMERALDO TERANTE; ZOSIMO TIJAMO;
MELITON TOMBAGA; IGNACIO TUEREZ;
JOSE TUVILLA; PEDRO VALDIVIA; heirs,
successors and or assigns of ALBINO
VILLAGORDA; heirs, successors and/or assigns
of EDILBERTO VILLAGORDA; heirs,
successors and or assigns of ANDRES VILLAR;
PLACIDO VISITACION; and JOSE
ZAMORA, Respondents.
Manuel B. Tomacruz for Petitioner.
Seno, Mendoza & Associates for Private
Respondents.
Office of the Solicitor General for respondent
Commission, Et. Al.
SYNOPSIS
The implementation of a portion of a final decision of
the Court of Industrial Relations which awarded
backwages to respondent workers was transferred to
respondent Commission upon the former’s abolition.
Respondent Commission could not readily get a
complete report from the examiner whom it directed
to make a computation of the backwages because of
variant factors which could not be easily ascertained
such as deaths, retirements, wages earned elsewhere
during the layoff, absence of records showing the
exact number of days of work, etc. Meanwhile, a
purported compromise agreement providing for the
procedure to be followed in the determination of
 backwages was executed between petitioner and
counsel for respondent union. Subsequently,
respondent Commission, on motion of respondent
workers, issued a partial writ of execution pursuant to
which respondent sheriff garnished all the bank funds
of petitioner. Petitioner assailed the issuance of the
partial writ of execution contending that the decision
sought to be executed was not yet final.
The Supreme Court held that the usual concept of
finality which makes a judgment executory does not
attach to judgments awarding backwages which, in a
sense, is incomplete until after the definite amounts
of backwages due the respective claimants have been
finally settled. The Court, however, noted that to pass
upon the variant factors relevant in the final
determination of the amounts due each worker would
involve a long and tedious process, so that in final
execution of subject decision it ordered petitioner to
pay backwages to individual claimants at the rate of
P8.00 a day (the rate prevailing at the time of
submission of the case to the trial court) for the
number of days each year, for three years, that in the
normal course before they were dismissed they used
to be paid during season and off-season, with the
corresponding bonuses and other benefits they used
to be entitled to. The Court took no cognizance of the
compromise agreement for lack of proof showing
authority of the signatories to represent the parties
therein, most particularly the individual claimant
workers.
SYLLABUS
1. JUDGMENTS; FINALITY THEREOF;
EXECUTION OF JUDGMENTS ORDERING
REINSTATEMENT AND PAYMENT OF
BACKWAGES. — A judgment of the Court of
Industrial Relations ordering reinstatement and
awarding backwages is capable of immediate
execution after the Supreme Court’s decision
affirming the same had become final, only as regards
reinstatement. The backwages aspect thereof can not
be the object of execution until the respective
amounts due to all the complainants have been duly
ascertained.
2. COMPROMISE AGREEMENTS; SETTLEMENT
OF LABORERS’ MONEY CLAIMS NOT
LEGALLY EFFECTIVE WITHOUT THEIR
PERSONAL CONSENT. — A compromise
agreement of a case involving laborers’ money
claims entered into by their union, association, or
counsel is not legally effective without their personal
and individual consent.
3. BACKWAGES; BASIS OF COMPUTATION. —
The Supreme Court since 1974 has adhered to the
policy of granting backwages on a straight award
basis for a reasonable period, say three years,
regardless of the actual number of years of layoff.
4. ID.; ID.; CASE AT BAR. — The Supreme Court
fixed the amount of backwages at P8.00 a day (the
rate prevailing at the time of the submission of the
case to the trial court) for the number of days each
year, for three years, that in the normal course before
the claimants were dismissed they used to be paid
during season and off-season, with the corresponding
bonuses and other benefits they used to be entitled to.
DECISION
BARREDO, J.:
Petition for certiorari and prohibition impugning the
writ of execution and the garnishment made under it
in Cases Nos. 134-ULP-ILO of the National Labor
Relations Commission entitled Negros Occidental
Free Laborers Association (NOFLA-ALU) Et. Al. v.
Danao Development Corporation, petitioner
contending that the decision being attempted to be
executed is not yet final.
On February 20 ,1974, the defunct Court of Industrial
Relations rendered a resolution en banc in above-
mentioned Cases Nos. 134-ULP-ILO with the
following dispositive portion:jgc:chanrobles.com.ph
"We, therefore, vote for the setting aside of the
Decision of the Trial Court, dated April 11, 1972, in
the above entitled cases, and, consequently, to find
the respondents guilty of the unfair labor practice acts
complained of, with the affirmative relief of
reinstatement of complainants to their former or
substantially equivalent positions, with back wages
from the date of dismissal up to the date when this
case was submitted for decision before the Trial
Court, and the grant of their specific reliefs prayed
for."cralaw virtua1aw library
Said resolution was appealed to the Supreme Court in
G R Nos. L-38407 and L-38408, where it was
affirmed on June 7, 1974.
On October 16, 1974, the Court of Industrial
Relations issued the corresponding writ of execution
for the reinstatement thus ordered of the 119
complainants. Later, an alias writ was issued and
according to the return of the sheriff dated February
21, 1975, he was unable to effect any reinstatement.
Incidentally, in that report, the sheriff stated that of
the 119 supposed complainants, only seventy (70)
were available at the time of service and that fifteen
(15) of the 119 were already dead. The names of the
seventy who were available were listed as
follows:cralawnad
"1. Valdevia, Pedro 24. Intes, Rufino
2. Saga, Fructuoso 25. Artajo, Benjamin
3. Silva, Emilio 26. Libongcogon, Dioscoro
4. Leyte, Victorino 27. Chiva, Serafin
5. Tijamo, Simplicio 28. Cavertet, Felipe
6. Custodio, Domingo 29. Sison, Leonardo
7. Malagsic, Jesus 30. Sato, Catalino
8. Alsado, Aniceto 31. Mahilum, Fortunato
9. Mabilog, Jose 32. Terante, Esmeraldo
10. Pesanon, Casiano 33. Patiño, Hermogenes
11. Cabahug, Francisco 34. Carvellida, Artemio
12. Cajucson, Serafin 35. Macapas, Moises
13. Tardaguela, Joge 36. Aranda, Dominador
14. Tardaguela, Ramon 37. Visitacion, Placido
15. Lumapay, Panfilo 38. Batigas, Jeorge
16. Japitan, Dioscoro 39. Peña, Salustiano dela
17. Artajo, Cirilo 40. Aluran, Jesus
18. Fortuna, Lorenzo 41. Macapas, Herminigildo
19. Malupay, Galo 42. Gempesala, Dominador
20. Peña, Sergio dela 43. Diamante, Felizardo
21. Castillo, Alfredo 44. Centina, Eduardo
22. Pesanon, Ricaredo 45. Jugadora, Jose
23. Laceres, Ruperto 46. Palma, Ignacio
47. Artajo, Roman 59. Japitan, Sergio
48. Gracia, Dominador 60. Baynosa, Manuel
49. Maglasang, Victor 61. Racho, Nemesio
50. Bia-is, Mariano 62. Pesanon, Balbino
51. Dalogdog, Catalino 63. Cemino, Domingo
52. Malupay, Roman 64. Dogomeo, Hilarion
53. Benignos, Pacifico 65. Liugan, Felomino
54. Bernancillo, Teofilo 66. Sato, Nicanor
55. Aranda, Cesar 67. Alsado, Alejandro
56. Leyte, Juanito 68. Artajo, Samuel
57. Diama, Igmedio 69. Bi-ay, Roberto
58. Aluran, Simplicio 70. Amora, Andres"
(page 102, Record.)
When the Court of Industrial Relations was
abolished, the implementation of the portion of that
decision referring to backwages was transferred to the
National Labor Relations Commission, herein
public Respondent. On January 23, 1975, Mr. Aurelio
Cruz, formerly of the Examining Division of the
defunct Court of Industrial Relations was directed by
the Commission to proceed to the premises of
petitioner Danao Development Corporation at
Toboso, Negros Occidental, to make the necessary
computation of the backwages ordered to be paid to
the complainants. On March 14, 1975, Mr. Cruz
submitted a partial report, the significant details of
which are:chanrob1es virtual 1aw library
x x x
"3. The amounts appearing opposite the individual
names of the complainants represent the backwages
for the period during milling season only. The
backwages corresponding to the off-milling season
for the period of the backwages are not included in
this partial report of examiner.
"4. Also, not included in this partial report of
examiner are the earnings elsewhere, if there are any,
of the individual complainants for the period from the
date of dismissal up to March 20, 1972, and the
money value of the rights, benefits and privileges
enjoyed.
"5. The records of the respondent corporation show
that the complainant Macario Macapas was not
dismissed from the service. He continued rendering
his services until he stopped working on December 1,
1970.
"6. In the operation of the sugar central, the monthly
employees work during milling season and also
during the off-milling season. However, there are
daily workers who render their services during the
milling and off-milling season. There are daily
workers who render their services during milling
season but on rotation basis (15/15) during off-
milling season. There are also daily workers who do
not work during off-milling season.
Shown below are the crop years (Milling Season) of
the respondent corporation for the years 1963 to
1973.
CROP YEAR START OF MILLlNG END OF
MILLING
1962-63 Dec. 5, 1962 June 24, 1963
1963-64 Jan. 8, 1964 Sept. 21, 1964
1964-65 Jan. 8, 1965 Aug. 10, 1965
1965-66 Dec. 8, 1965 June 2, 1966
1966-67 Dec. 7, 1966 June 24, 1967
1967-68 Jan. 3, 1968 July 14, 1968
1968-69 Jan. 6, 1969 July 7, 1969
1969-70 Dec. 3, 1969 Sept. 7, 1970
1970-71 Dec. 2, 1970 Nov. 15, 1971
1971-72 Jan. 5, 1972 June 30, 1972
1972-73 Dec. 6, 1972 June 30, 1973
"7. In the determination and computation of the back
wages of the individual complainants for the period,
the increases given to the employees and daily
workers by the respondent sugar central were taken
into consideration. Indicated hereunder are the
increases given by respondent to all the employees
and daily workers during the period covered by the
backwages:chanrob1es virtual 1aw library
DAILY RATES DATES MONTHLY RATES
P 4.00 1963 P —
4.30 Jan. 1964 250.00
5.50 Mar. 16, 1964 255.00
6.00 Apr. 21, 1965 272.50
6.20 Jan. 3, 1968 300.00
8.00 June 17, 1970 395.00
11.00 Sept. 24, 1972 ——
12.10 Sept. 1, 1974 ——
"8. There were complainants who died during the
period covered by the backwages from the dab of
dismissal up to March 20, 1972. Attached herewith
are copies of the death certificates of the dead
complainants. Shown below are the names of the
dead complainants:chanrob1es virtual 1aw library
1. Alsado, Simplicio — Died Nov. 2, 1986 — 40 yrs.
2. Marcella, Reynaldo — Feb. 22, 1966 — 29 yrs.
3. Taleon, Jose — April 20, 1966 — 74 yrs.
4. Burong, Nicolas — April 29, 1966 — 53 yrs.
5. Seldura, Evangelista — Oct. 16, 1966 — 48 yrs.
6. Villar, Andres — March 29, 1967 — 67 yrs.
7. Dogomeo, Victoriano — Sept. 27, 1989 — 61 yrs.
8. Sison, Manuel — Jan. 7, 1970 — 68 yrs.
9. Panla-an, Fulgencio — Aug. 10, 1970 — 61 yrs.
10. Claraga, Rogelio — Nov. 22, 1970 — 30 yrs.
11. Perfecio, Felimon — Feb. 16, 1971 — 69 yrs.
12. Bernacer, Narciso — March 12, 1971 — 61 yrs.
13. Villagorda, Edilberto — Sept. 4, 1971
14. Villagorda, Albino — Jan. 28, 1973
15. Panla-an, Cayetano — May 16, 1973 — 74 yrs.
"9. The management of the respondent sugar central
furnished the undersigned a partial list of names of
the complainants who reached the age of sixty (60)
during the period covered by the backwages.
According to them, the employee is retired from the
service upon reaching the age of sixty (60). Shown
below are the names of the complainants who reach
the age of 60. This particular matter was not taken
into consideration in the competition and is not
included in this partial report of examiner.
NAMES DATE OF BIRTH
1. Alsado, Aniceto July 7, 1907
2. Alsado, Alejandro May 14, 1907
3. Cabahug, Francisco April 2, 1912
4. Dogomeo, Hilario April 15, 1913
5. Gempesala, Dominador Sept. 18, 1912
6. Jugadora, Jose March 19, 1903
7. Liugan, Filomeno Nov. 11, 1906
8. Leyte, Juanito Feb. 14, 1912
9. Maglasang, Victor April 15, 1912
10. Pesanon, Casiano Aug. 10, 1905
11. Peña, Salustiano dela June 5, 1904
12. Sato, Nicanor Jan. 17, 1901
13. Tardaguela, Ramon March 5, 1906
14. Tejano, Zosimo June 5, 1905
15. Visitacion, Placido Oct. 5, 1905
"10. In the determination and computation of the
money value of the backwages of the individual
complainants for the period covered, the procedure
used are as follows:chanrob1es virtual 1aw library
a. The rates and its increases were determined from
the records of respondent;
b. The number of days of the milling season
corresponding to the given rate was determined from
the calendar for years 1963-1972;
c. To arrive at the amount of the backwages, the rates
is multiplied by the number of days during the
milling season for the period.
"Shown below is an illustration of the determination
and computation of the money value of the
backwages:chanrob1es virtual 1aw library
1. Agravante, Felizardo Rate Days Amount Due
June 24/63-Mar. 15/64 P4.60 68 P 312.80
Mar. 18/64-Apr. 20/65 5.50 293 1,611.50
Apr. 21/65-Jan. 2/68 6.00 494 2,964.00
Jan. 3/68-June 16/70 6.20 568 3,521.60
June 17/70-Mar. 20/72 8.00 508 4,064.00
———— Total Amount P12,473.90
========
"11. The total amount of the money value of the
backwages of the 118 individual complainants for the
period from the date of dismissal up to March 20,
1972, the date the case was submitted for decision by
the Trial Court, will amount to P1,449,742.90. This
amount represents the total backwages due during the
milling season only. . . .," (pp. 34-37, Rec.)
Reacting to this report, petitioner filed a motion on
March 19, 1975 asking the respondent Commission
to order Mr. Cruz to proceed to Toboso again to
complete big report. This motion was seemingly
granted, and so Mr. Cruz, after going back to Toboso
and making further inquiries, submitted another
report on April 29, 1975 as
follows:jgc:chanrobles.com.ph
"In compliance with the Order of this Commission,
dated March 21, 1975, directing the undersigned to
proceed to the Office of the respondent Danao
Development Corporation at Bacolod City, in order
to determine and compute the money value of the
backwages of the claimants, this report is hereby
most respectfully submitted:jgc:chanrobles.com.ph
"1. The undersigned has submitted to this
Commission on March 14, 1975, a partial report in
the amount of P1.449,742.90 representing the
backwages of the 119 claimants during the milling
season only. Said report also states, that the
backwages of the claimants during the off-milling
season, the earnings elsewhere, if there are any, and
the money value of the rights, benefits and privileges
were not included therein.
"2. The computation of the money value of the back
wages during off-milling season of the claimants
cannot be submitted in this report of examiner,
because the records for the years 1963 and 1964 were
not available for examination. Management reasoned
out that the payrolls for the years 1963 and 1964 were
brought to Cebu City when there were hearings
conducted in said place. Some of the payrolls were
presented as exhibits in the instant case and the rest
were kept in the bodega of C.I.T. That the location of
the records cannot be pinpointed at the time of the
examination by the undersigned.
"3. Likewise, the earnings elsewhere of the claimants
cannot be submitted and is not included in this report.
According to the management, there were claimants
who have worked elsewhere, and that the gathering
of the data have not been completed by them.
"4. The employees and workers of the respondent are
given mid-year and end-year bonus and they have
been enjoying their vacation and sick leaves. The
daily workers are given 13 days mid-year bonus and
13 days end-year bonus. while the monthly
employees were given one half month mid-year
bonus and one-half month end-year bonus. Shown
below is a representative illustration of the
determination and computation of the money value of
the bonus of the claimants:chanrob1es virtual 1aw
library
Name: — Agravante, Felizardo
Period: —
June 24, 1963 — P4.60
March 16, 1964 — 5.50
April 21, 1965 — 6.00
January 3, 1968 — 6.20
June 17, 1970 — 8.00
Computation:chanrob1es virtual 1aw library
1963 — 4.60 x 26 = P119.60
1964 — 5.50 x 26 = 143.00
1965 — 6.00 x 26 = 156.00
1966 — 6.00 x 26 = 156.00
1967 — 6.00 x 26 = 156.00
1968 — 6.20 x 26 = 161.20
1969 — 6.20 x 26 = 161.20
1970 — 8.00 x 26 = 208.00
1971 — 8.00 x 26 = 208.00
————
Total amount P1469.00
=======
"5. The money value of the mid-year (June) and end-
year (December) bonus of the claimants for the
period from the date of dismissal of the individual
claimants up to March 20, 1972, the date the case was
submitted for decision before the Trial Court, will
amount to P161,347.55. For details, please refer to
Appendix ‘1’ attached in this report." (Pp. 43-45,
Record.)
In the meanwhile, on March 20, 1975, complainants
filed with respondent Commission a motion for
issuance of writ of execution, which was granted,
hence a partial writ of execution dated April 1, 1976
was issued.
Before said partial writ of execution was issued, on
April 14, 1975, a purported compromise agreement
was entered into as follows:jgc:chanrobles.com.ph
"BASIC AGREEMENTS ENTERED BETWEEN
DANAO DEVELOPMENT CORPORATION
REPRESENTED BY ATTYS. FRANCISCO
RELLORAZA, JR. AND REGELIO MENDIOLA
AND NEGROS OCCIDENTAL FREE LABORERS
ASSOCIATION (NOFLA-ALU), REPRESENTED
BY ATTYS. DEMOCRITO T. MENDOZA AND
ZOILO V. DE LA CRUZ, JR.
"KNOW ALL MEN BY THESE
PRESENTS:jgc:chanrobles.com.ph
"This agreement, made this 14th day of April, 1975,
at the City of Manila, Philippines, by and between the
DANAO DEVELOPMENT CORPORATION,
represented by Attys. Francisco Relloraza, Jr. and
Rogelio Mendiola and the NEGROS OCCIDENTAL
FREE LABORERS ASSOCIATION (NOFLA-
ALU)," represented by Attys. Democrito T. Mendoza
and Zoilo V. de la Cruz Jr.,
witnesseth:jgc:chanrobles.com.ph
"That pursuant to the Decision of the National Labor
Relations Commission in Cases Nos. 184-ULP-ILO
and 144-ULP-Iloilo, the parties have agreed as
follows:chanrob1es virtual 1aw library
I. — REINSTATEMENT
It has been agreed that the following shall be the
procedure for the reinstatement of the workers
involved in Cases Nos. 134-ULP Iloilo and 144-ULP-
Iloilo:chanrob1es virtual 1aw library
1. Immediate reinstatement of employees involved
except (a) those who are physically disabled who will
be given benefits which shall be subject to further
negotiations, (b) those who have reached the age of
65 years or over who shall be given benefits which
shall be subject to further negotiation, and (c) those
who have died in the meantime.
II. COMPUTATION OF BACK WAGES
It has been agreed that for the computation of back
wages and other benefits, the company shall appoint
the company accountant, Mr. Lourcente Tigas, and
the union will appoint its own accountant, Mr.
Claudio Y. Tolo, who would work together in the
computation of all benefits in accordance with the
decision of the aforementioned cases, which shall be
done at the earliest possible time. In case of
disagreement between the two, then the issues
involved shall be elevated to the company
representative, Atty. Democrito T. Mendoza. In case
the amount involved would be such as to place the
company in precarious financial situation, it is agreed
that the company and the union representative shall
discuss the matter of payments by schedule.
"IN WITNESS WHEREOF, the parties herein have
caused these agreement to be signed on the date and
place first hereinabove written.
"DANAO DEVELOPMENT NEGROS
OCCIDENTAL FREE
CORPORATION LABORERS ASSOCIATION
By: (NOFLA-ALU)
(SGD.) FRANCISCO RELLORZA, JR.
(SGD.) ROGELIO MENDIOLA.
By:chanrob1es virtual 1aw library
(SGD.) DEMOCRITO T. MENDOZA
(SGD.) ZOILO V. DELA CRUZ, JR."cralaw
virtua1aw library
And because respondent sheriff, acting evidently in
pursuance of the alias writ of execution of April 1,
1975, proceeded to garnish all the bank funds of
petitioner, "paralyzing" allegedly, "its operations,
disabling it from paying not only its officers but,
most of all, its poor and needy employees,
endangering the necessary operation of the central of
the now instant petitioner, thereby sabotaging the
sugar productivity program of President Ferdinand E.
Marcos", petitioner has come to this Court for the
remedies earlier stated. As a matter of prudence and
its appearing to the Court that prima facie the
questioned execution is not exactly in accordance
with existing applicable jurisprudence and approved
practice, We issued a restraining order on May 30,
1975, even as respondents were required to comment
on the petition. By resolution of July 14, 1975, the
"Comments" of respondents were deemed as their
respective answers and We set the case for hearing.
At the hearing on September 8, 1975, the Court
inquired if there was possibility of the parties arriving
at an expeditious procedure of effecting the payment
of the claims of complainants pursuant to the decision
of the Industrial Court of February 20, 1974. After an
exchange of views, the Court issued the following
resolution:jgc:chanrobles.com.ph
"When this case was called for hearing this morning,
Atty. Manuel B. Tomacruz, assisted by Atty.
Francisco Rilloraza, Jr., appeared and argued for the
petitioner while Atty. Januario T. Seno appeared and
argued for the respondents. Thereafter, the Court
Resolved to require the parties to SUBMIT a joint
manifestation within fifteen (15) days from
today."cralaw virtua1aw library
However, nothing came out of the purported
amicable settlement, since Atty. Januario T. Seno,
counsel for respondent association, was able to secure
authority to represent the individual complainants
from no more than fifty-nine (59) of them as reported
by him to the Court in his Manifestation of October
14, 1975.
Worse, the proceedings have been complicated by
allegations of contempt by both parties. To get the
best picture of the actual situation and to enable Us to
evolve the most equitable and expeditious formula to
effect the complete termination of the controversy
between the parties which has been pending for
almost a decade and a half, the Court reset the case
for hearing on January 25, 1978 at which the parties
appeared thru their respective counsels, Atty. Manuel
B. Tomacruz, for the petitioner, Atty. Januario T.
Seno, for the private respondent, and Solicitor Ramon
A. Barcelona, for the public Respondent. After
getting further enlightenment from the facts and
arguments advanced at said hearing, the Court
declared the case and all incidental matters submitted
for decision.
The main issue submitted for Our determination is
whether or not under the circumstances obtaining as
of April 1, 1975, it was legal and proper for
respondent Commission to issue the impugned alias
writ of execution. After mature deliberation, We are
persuaded to resolve as We do resolve the said issue
in the negative.chanrobles.com:cralaw:red
It is readily evident from the very nature of the
Industrial Court’s judgment of February 20, 1974 that
whereas, the portion thereof regarding reinstatement
was capable of immediate execution after the
Supreme Court’s decision affirming the same had
become final, hence the writ of execution of the
Industrial Court of October 16, 1974 was in
accordance with law, it is equally obvious that the
backwages aspect thereof could not be the object of
execution until the respective amounts due to all the
complainants has been duly ascertained in a manner
wherein both parties have been duly heard. By its
very nature, a judgment ordering payment of
backwages does not necessarily contemplate a simple
and straight computation of the corresponding wages
of the prevailing claimants on the basis of the number
of days or months from the date of unlawful
dismissal to the date of reinstatement or the date
fixed by the Court. There are other factors which
must be indispensably looked into also, such as, for
example, whether or not the workers ordered
reinstated have worked elsewhere during the period
of layoff, in order that the wages corresponding to the
number of days they have so worked may be
deducted from the award. Besides, some of them
might have died already or have become retirable.
We hold, therefore, that the usual concept of finality
which makes a judgment executory does not attach to
judgments of the nature herein concerned. In a sense,
such a judgment is incomplete until after the definite
amounts of backwages due the respective claimants
have been finally settled, albeit, as a matter of social
justice and expediency, such determination may be
made individually if feasible, and the execution
carried out as the computation for each worker is
finished, assuming that there would be considerable
delay in the computation of the respective amounts
for the others.
In the case at bar, petitioner aptly points out that
similar circumstances which would vary the amount
of wages to be paid to respondent claimants are
indicated in the very partial report itself of Mr.
Aurelio Cruz which respondents insist should be the
basis of execution. In said partial report, it is plainly
stated that, among others, it does not include (1) "this
earnings elsewhere, if there are any, of the individual
complainants for the period" in issue and (2) the fact
that about fifteen (15) of the complainants had
reached their age of retirement during said period,
even as We note that apparently it reflects
corresponding adjustments of the amounts to be paid
to some fifteen (15) complainants who have died in
the meanwhile. On the other hand, also, Mr. Cruz’
report emphasizes that "in the determination and
computation of the backwages of the individual
complainants for the period, the increases given to
the employees and daily workers by the respondent
sugar central were taken into consideration." This is
quite a controversial point, inasmuch as the judgment
being executed in this case is silent in that respect.
Again, "the backwages corresponding to the off-
milling season for the period of the backwages are
not included in this partial report of examiner",
according to said report. All these relevant factors, as
already stated, affect the possibility or not of
execution.
Petitioner’s position is that until these matters are
properly determined, any writ of execution would be
premature. While such a pose is not totally correct,
since there might be claimants whose cases were
individually clear as not to require further inquiry,
We are of the considered view that since in this
particular case, respondents themselves seem to be
more interested on an over-all settlement, the proper
procedure to be observed here is to pass on all of the
relevant issues raised by petitioner before execution
should issue. But necessarily, these would involve
quite a long and tedious process, what with the
evidence that each party would have to present, even
if the guidelines We set forth in East Asiatic
Company Ltd. v. Court of Industrial Relations, 40
SCRA 521, of mutual openness by both laborers and
management were to be observed.
At this juncture, it must be stated that according to
petitioner, the procedure to be followed in
determining the amount of backwages in this case has
already been agreed upon by the parties in the
compromise agreement quoted earlier in this
decision. On the other hand, respondents contend that
there is no proof whether on the face of that
document or independent thereof of the authority of
the signatories thereto to legally represent the parties
herein, particularly, the individual complainant
workers, who, because what are involved here are
backwages due each of them separately, cannot be
represented by their union or association. We are
more inclined to accept respondents’ proposition. It is
in consonance with the standing rulings of this Court.
1 Indeed, the best way to protect laborers who have
money claims is not to recognize any settlement or
compromise affecting the same without their personal
and individual consent, even when in the litigation
they are represented by any union or association or
counsel. Accordingly, without in any manner casting
any doubt as to the intentions and capacity of union
leaders, but merely to accord to labor the maximum
of protection which the Constitution ordains they
should be given, We rule that the compromise
agreement invoked by petitioner is not legally
effective for the purposes of this case.
It is about time the decision in question were fully
implemented. Fifteen years is a long time not only for
labor but even for management. The hardships and
privations suffered by complainants during all these
years can hardly be imagined. On the other hand,
industrial development and economic growth are
impossible where extended litigations plague labor-
management relations in any sector of the country.
For Us to allow the parties here to continue
protracting their differences can only weaken the
faith of the working classes in Our judiciary’s
capacity to give them justice and equity when they
most need it. Precisely to preserve that nature of
controversies wherein variant factors in determining
the rightful amount of backwages for each individual
will entail another more or less lengthy and
complicated procedure to be added to the years of
litigation on the basic issues, which due to varied and
not easily surmountable factors are often very long
and complicated, the Court has evolved a policy in
such cases to just grant a straight award for a
reasonable period, say three years, regardless of the
actual number of years of lay-off, thereby relieving
the parties from the work, time and expenses needed
to prove circumstances that would otherwise go into
the exact determination of what is due, such as, who
have died and under what circumstances, who would
have been retired, who have worked elsewhere in the
meantime and how much they earned, how many and
what amount of increases would have been due them;
how many days of work were actually possible, and a
number of other details depending on the kind of
business or industry the employer is engaged in. We
enunciated this policy in 1974 and have adhered to it
since then. 2 We believe that it would be best for all
concerned herein to apply the same policy in this
case, with the qualification that instead of fixing the
amount of the backwages to be paid by petitioner on
the basis of the rate of wages in 1963, the year of
dismissal, or at P4.00 a day, it must be at the rate of
P8.00 a day, the prevailing legal rate on March 20,
1972, the date of submission of the case to the trial
court as fixed in the subject judgment.
Before closing, We cannot help but admonish both
parties and their respective counsel that unfortunate
instances like this should be avoided. Awards in
favor of laborers, specially those gained after
extended litigation, must be attended with complete
mutual openness and in the best of faith, to the end
that the most accurate computation of the amount
thereof may be terminated soonest. It is the
inescapable duty of the management to immediately
lay its books open for inspection by the executing
officers and their assistants and to otherwise furnish
them with all pertinent correct information needed for
the purpose. Equally are the laborers under obligation
to reveal without loss of time and in good faith the
facts, of their own peculiar knowledge, which are
relevant to the investigation, such as, inter alia, the
circumstances of other employment during the lay-off
period. Actually, in cases of this nature, the parties
need not wait for formal writs of execution, whether
of the order of reinstatement or the judgment on
backwages. Obedience to and compliance with the
orders of the appropriate authority once final under
the law should be spontaneous and prompt. Only thus
can there be real social justice.
Finally, it bears making it unmistakably clear here
that the beneficiaries in this case are the individual
claimants or complainants themselves. Nothing short
of personal acknowledgments on their part may be
deemed as legal satisfaction of this judgment. The
union to which they belong and their counsel can
only assist them; they cannot decide for them, even as
they are entitled to their corresponding dues and fees
in accordance with the by-laws and the corresponding
contract for services.cralawnad
WHEREFORE, the petition herein is granted and the
alias writ of execution and garnishing in question, as
above indicated, are hereby set aside.
By way of final execution of the aforementioned
judgment of the Court of Industrial Relations in
Cases Nos. 134-ULP-ILO and 144-ULP-ILO,
petitioner is hereby ordered to pay individually the
complainants above referred to backwages at the rate
of P8.00 a day for the number of days each year, for
three years, that in the normal course before they
were dismissed they used to be paid during season
and off-season, with the corresponding bonuses and
other benefits they used to be entitled to.

With this judgment, We deem it unnecessary to pass

on the contempt charges herein which can only give
rise to more animosities and strained relations
between the parties likely to generate further
litigation.

No costs.
#52: Pacific Mills, Inc vs NLRC
G.R. No. 88864 January 17, 1990
PACIFIC MILLS, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS
COMMISSION AND/OR CITY SHERIFF OF
MANILA, respondents.
Apostol and Soriano for petitioner.
Oliver Banayo Gesmundo for private respondents-
intervenors.
GANCAYCO, J.:
The only issue in this petition is whether the
execution of a final judgment of the National Labor
Relations Commission (NLRC) may be stayed in
view of supervening events.
The facts are undisputed. In the case of Pacific
Mills, Inc. vs. National Labor Relations
Commission, et al., G.R. No. 79535, on August 3,
1988 this Court dismissed the petition questioning the
decision of the NLRC on the ground that petitioner
failed to sufficiently show that the NLRC committed
a grave abuse of discretion. The entry of judgment
having been effected, the NLRC in the process of
execution of the said decision of the labor arbiter
made a computation of the award to the private
respondents in the amount of P680,037.30 on April
28, 1989. On May 5, 1989 the NLRC issued a partial
writ of execution for P655,527.30.
On May 9, 1989 petitioner filed a motion to stay
execution/reconsideration citing supervening events
that affect the computation of the award as follows:
1) The computation on separation pay did
not consider the length of service of each
complainant as borne out from the records;
2) The computation did not consider the
wage exemptions granted the petitioner-
respondent company;
3) The computation included payment of
awards to a respondent who had already
been recalled to active duty, one who was
already paid in a case separately filed, and
another who was already paid regardless of
the result of the case docketed G.R. No.
79535;
4) Meanwhile, all the capital assets of the
petitioner have already been attached by
Philippine Cotton Corp. and/or otherwise
foreclosed by the Development Bank of the
Philippines in appropriate proceedings. 1
On June 21, 1989 the NLRC did not stay execution of
judgment and issued an order for immediate
implementation of the partial writ of execution
without further delay.
Hence the herein petition wherein it is alleged that
the National Labor Relations Commission committed
a grave abuse of discretion in issuing the two (2)
questioned orders.
There can be no question that the supervening events
cited by petitioner would certainly affect the
computation of the award in the decision of the
NLRC. It is the duty of the NLRC to consider the
same and inquire into the correctness of the
execution, as such supervening events may affect
such execution. 2
Of course public respondent alleges that in several
conferences had with the petitioner, petitioner did not
raise these objections and that the petition is dilatory.
Whatever it may be, the fact cannot be denied that
such supervening events as the length of service of
the private respondents, the wage exemptions
granted, and payments already made on the award
would certainly affect the computation of the total
award under the decision. Thus, a prompt and
immediate determination of these objections and a
recomputation of the award should be made. A denial
of this opportunity to right a clear error in the
execution of the judgment constitutes a grave abuse
of discretion.
WHEREFORE, the petition is GRANTED. The
questioner orders of the National Labor Relations
Commission dated May 5, 1989 and June 20, 1989
are both set aside. The said Commissioner is directed
to immediately give petitioner its day in court to
present its evidence on the supervening events that
would affect the award and thereafter to immediately
recompute the award for private respondents on the
basis of the judgment which should be promptly
satisfied. No costs.
SO ORDERED.
#53: Sampaguita Garments Corp. vs NLRC
G.R. No. 102406 June 17, 1994
SAMPAGUITA GARMENTS
CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS
COMMISSION (SECOND DIVISION) and
EMILIA B. SANTOS, respondents.
Armando V. Ampil for petitiner.
Emilia E. Andres & Henry Isorena for private
respondent.
CRUZ, J.:
If in a labor case, an employee is absolved of an
offense that led to her dismissal and is ordered
reinstated, will her subsequent conviction in a
criminal prosecution for the same offense affect the
administrative decision?
The offense subject of the two cases is theft, claimed
to have been committed by private respondent Emilia
B. Santos, an employee of petitioner Sampaguita
Garments Corporation.
It was alleged in both cases that on April 14, 1987,
Santos attempted to bring out of the company
premises, without authorization or permission, a
piece of cloth belonging to the petitioner. 1
Sampaguita dismissed her on this ground. She filed a
complaint for illegal dismissal but the labor arbiter
sustained the company. 2 However, his decision was
reversed by the NLRC, which ordered her
reinstatement with back wages from the time of her
illegal suspension until her actual reinstatement. 3
Meantime, the petitioner had also filed a criminal
action against Santos for the same offense in the
Municipal Trial Court of Caloocan City. After trial,
she was found guilty and sentenced to an
indeterminate penalty of 1 month and 1 day
of arresto mayor as minimum to 4 months of arresto
mayor as maximum. 4 This decision was affirmed by
the Regional Trial Court of Caloocan City. 5
In G.R. No. 89323, this Court dismissed the petition
for certiorari against the decision of the NLRC for
lack of a showing that it was tainted with grave abuse
of discretion. 6
In G.R. No. 100929, this Court saw no reversible
error in the decision of the Court of Appeals
sustaining the petitioner’s conviction by the
Municipal Trial Court as affirmed by the Regional
Trial Court. 7
The decisions in both cases became final and
executory and the corresponding entries of judgment
were eventually made.
Subsequently, Santos moved for the execution of the
NLRC decision. The petitioner opposed, invoking her
conviction in the criminal case. However, the NLRC
sustained her on the ground that its decision had been
affirmed by this Court and had long become final and
executory. Sampaguita then came to this Court for
relief.
It is asserted by the petitioner that, in view of the
private respondent’s conviction, the decision of the
NLRC calling for her reinstatement and the payment
to her of P63,908.00 in back wages should not now
be enforced. Otherwise, she would in effect be
undeservedly rewarded when she should instead be
punished for her offense.
On the other hand, the private respondent argues that
the decision of the NLRC is independent of the
criminal case and in any event can no longer be
modified or reversed after having become final and
executory on August 7, 1990.
We hold for the petitioner.
It is true that once a judgment has become final and
executory, it can no longer be disturbed except only
for the correction of clerical errors or where
supervening events render its execution impossible or
unjust. 8 In the latter event, the interested party may
ask the court to modify the judgment to harmonize it
with justice and the facts.9
There is no dispute in the case at bar that the decision
of the respondent NLRC ordering the private
respondent’s reinstatement with back wages had
indeed become final and executory. Even so, we find,
in light of the subsequent developments, that the
NLRC was not correct in sustaining the
implementation of that decision.
In Heirs of Francisco Guballa, Sr. vs. Court of
Appeals, 10 this Court held that "the power of the
NLRC to issue a writ of execution carries with it the
right to look into the correctness of the execution of
the decision and to consider supervening events that
may affect such execution."
The affirmance by the Regional Trial Court and the
Court of Appeals of the private respondent’s
conviction for theft is justification enough for the
NLRC to exercise this authority and suspend the
execution of its decision. Such conviction, which was
also upheld by this Court in G.R. No. 100929, is a
supervening cause that rendered unjust and
inequitable the decision mandating the private
respondent’s reinstatement, and with back wages to
boot.
The Solicitor General agrees that reinstatement is no
longer feasible in view of the subsequent conviction
of the private respondent and the already strained
relationship between her and the petitioner. He
suggests instead the grant of separation pay to the
private respondent.
We disagree. Even this award is not justifiable
because Santos was found guilty of a crime involving
moral turpitude and so is disqualified from this
benefit under the ruling in PLDT v. NLRC. 11 That
case laid down the rule as follows:
We hold that henceforth separation
pay shall be allowed as a measure
of social justice only in those
instances where the employee is
validly dismissed for causes other
than serious misconduct or those
reflecting on his moral character.
Where the reason for the valid
dismissal is, for example, habitual
intoxication or an offense involving
moral turpitude, like theft or illicit
sexual relations with a fellow
worker, the employer may not be
required to give the dismissed
employee separation pay, or
financial assistance, or whatever
other name it is called, on the
ground of social justice.
A contrary rule would, as the
petitioner correctly argues, have the
effect of rewarding rather than
punishing the erring employee for
his offense. And we do not agree
that the punishment is his dismissal
only and that the separation pay has
nothing to do with the wrong he has
committed. Of course it has.
Indeed, if the employee who steals
from the company is granted
separation pay even as he is validly
dismissed, it is not unlikely that he
will commit a similar offense in his
next employment because he thinks
he can expect a like leniency if he
is again found out. This kind of
misplaced compassion is not going
to do labor in general any good as it
will encourage the infiltration of its
ranks by those who do not deserve
the protection and concern of the
Constitution.
The same rationale exists for not enforcing the
respondent Commission’s award of back wages in
favor of the private respondent.
Conformably to Wenphil Corporation v. NLRC 12 and
subsequent
cases, 13 the only award to which the private
respondent may be entitled is for the amount of
P1,000.00, to be paid to her by the petitioner as a
penalty for effecting her dismissal without complying
with the procedural requirements laid down in
Sections 2 and 5 of Rule XIV, Book V, of the
Omnibus Rules Implementing the Labor Code.
The contention that the petition should be dismissed
for lack of the certification on forum-shopping
required under Circular No. 28-91 is not well taken.
The petition was filed on December 5, 1991, before
the circular took effect on January 1, 1992.
The private respondent’s conviction of the crime of
theft of property belonging to the petitioner has
affirmed the existence of a valid ground for her
dismissal and thus removed the justification for the
administrative decision ordering her reinstatement
with back wages. Nevertheless, the petitioner is still
subject to sanction for its failure to accord the private
respondent the right to an administrative investigation
in conformity with the procedural requirements of
due process.
WHEREFORE, the petition is GRANTED and the
order of execution dated April 1, 1991, is SET
ASIDE. The petitioner is instead required to pay the
private respondent an indemnity of P1,000.00 for its
arbitrariness in effecting her dismissal.
SO ORDERED.
2. THE DOLE
a. ART. 225: CONTEMPT POWER OF THE
SECRETARY OF LABOR
#54: Industrial and Transportation Equipment vs
NLRC
[G.R. No. 113592. January 15, 1998]
INDUSTRIAL AND TRANSPORT EQUIPMENT,
INC. and/or ANTONIO
JARINA,petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION
and LEOPOLDO
MEDRANO, respondents.
DECISION
ROMERO, J.:
Petitioner Industrial and Transport Equipment
Inc. (INTECO) seeks to set aside the decision of the
National Labor Relations Commission dated February
23, 1993, affirming the order of the labor arbiter
declaring petitioner guilty of indirect contempt and
ordering it to reinstate private respondent to his former
position with backwages from July 11, 1991 up to his
actual reinstatement, and its resolution denying
petitioners motion for reconsideration.
Respondent Leopoldo Medrano was employed as
a mechanic by INTECO from November 1974 up to
his dismissal in July 1990. On May 31, 1990, he was
granted an indefinite leave of absence, during which
period he was able to secure a temporary job at Porac,
Pampanga as a mechanic. When he reported for work
on June 18, 1990, a supervisor confronted him for
having worked in another firm.Consequently, he was
asked to resign. On July 2, 1990, respondent was not
allowed to enter the companys premises allegedly
because his services had already been terminated.
In a complaint for illegal dismissal against
INTECO, Labor Arbiter Felipe T. Garduque II
rendered a decision dated March 27, 1991, the
dispositive portion of which reads thus:
WHEREFORE, premises considered, respondents
INDUSTRIAL AND TRANSPORT EQUIPMENT
INCORPORATED and/or ANTONIO JARINA are
hereby ordered to reinstate within ten (10) days from
receipt hereof herein complainant Leopoldo C.
Medrano to his former position without backwages,
and to pay him his proportionate 13th month pay for
1990 in the amount of P1,300.00.
Complainants claim for damages including attorneys
fee is hereby denied for lack of merit. (Underscoring
supplied)
The decision became final and executory upon
failure of petitioner to file an appeal within the
reglementary period. Consequently, respondent filed
on May 3, 1991, a motion for the issuance of a writ of
execution, which was accordingly granted.
On August 1, 1991, the proportionate 13th month
pay was fully settled. The aspect of reinstatement,
however, remained unsatisfied in view of the alleged
refusal of petitioner to comply with the said
order.Accordingly, respondent filed on November 11,
1991, a motion to cite petitioner for indirect contempt
and for payment of backwages.
On April 20, 1992, Labor Arbiter Garduque
issued an order finding petitioner guilty of indirect
contempt with a fine of P100.00, and likewise directed
the reinstatement of respondent with backwagesfrom
July 11, 1991, up to his actual reinstatement. On
appeal, said order was affirmed in toto by the NLRC
on February 23, 1993. Hence, this petition.
The petition must be dismissed.
Section 2, Rule X of the New Rules of Procedure
of the NLRC provides that the Commission or any
labor arbiter may cite any person for indirect contempt
upon grounds and in the manner prescribed under
Section 3(b), Rule 71 of the 1997 Rules of Civil
Procedure.
Section 3(b), Rule 71 provides:
Section 3 - Indirect contempt to be punished after
charge and hearing - x x x
a) xxx xxx xxx
b) Disobedience of or resistance to a lawful writ,
process, order, or judgment of a court x x x.
Contempt is defined as a disobedience to the Court
by setting up an opposition to its authority, justice
and dignity. It signifies not only a willful disregard or
disobedience of the courts orders but such conduct as
tends to bring the authority of the court and the
administration of law into disrepute or in some
manner to impede the due administration of
justice. There is no question that disobedience or
resistance to a lawful writ, process, order, judgment
or command of a court or injunction granted by a
court or judge constitutes indirect contempt
punishable under Rule 71 of the Rules of Court.[1]
Petitioner argues that it could not be held guilty of
indirect contempt as it had faithfully complied with
the order when it reinstated Medrano to his former
position on April 15, 1991. Respondent allegedly
abandoned his work after initially reporting on April
15 and 16, 1991.
It must be noted that petitioner received a copy of the
labor arbiters decision only on April 18, 1991. It is,
therefore, clear that Medrano could not have been
reinstated prior to said date as claimed by
petitioner.The Solicitor General, in his comment,
explained clearly the implausibleness of petitioners
assertion.Thus:
If Medrano was actually reinstated on April 15 and
16, 1991, it would be absurd for him to simply walk
away from his job unmindful of the consequences of
his act and considering the sacrifices he had made to
retrieve his post. It should be pointed out that as early
as May 3, 1991, private respondent filed a Motion for
Execution in respect of the Labor Arbiters Decision
which became final and executory on April 28,
1991. His act of seeking the execution of the decision
ordering his reinstatement is absolutely incompatible
with an intention to abandon his job.[2]
the appellate court of jurisdiction to alter the final
judgment, much less to entertain the appeal. In the
recently decided case of Aboitiz Shipping Employees
Association v. Trajano,[5] it was pointed out therein
that, except for correction of clerical errors or the
making of nunc pro tunc entries which cause no
prejudice to any party or where the judgment is void,
after the judgment has become final and executory, the
same can neither be amended nor altered even if the
purpose is to correct a perceived conclusion of fact or
of law. This is true regardless of whether the
modification is to be made by the magistrate that
rendered the judgment, or by the appellate magistrate
that reviewed the same. Indeed, all litigation must
come to an end however unjust the result of error may
appear. Otherwise, litigation would even be more
intolerable than the wrong or injustice it is designed to
correct. (Underscoring supplied)
WHEREFORE, in view of the foregoing, the
instant petition is DISMISSED and the February 23,
1993 decision of respondent National Labor Relations
Commission is AFFIRMED with the modification that
the award of backwages be DELETED. Costs against
petitioner.
SO ORDERED.

Notably, the March 27, 1991 decision of the

labor arbiter, while ordering the reinstatement of
respondent, excluded the award of backwages. On this
point, we rule that the labor arbiter erred in omitting
such award. The law provides that an illegally
dismissed employee is entitled to reinstatement
without loss of seniority rights and other privileges and
to his full backwages, inclusive of allowances, and to
his other benefits or their monetary equivalent
computed from the time his compensation was
withheld from him up to the time of his actual
reinstatement.[3] Having become final and executory,
however, we are constrained to uphold this decision,
albeit deficient, for failure of the respondent himself to
question the inadequacy of the remedy due him.
In Asuncion v. NLRC,[4] the Court ruled that
perfection of an appeal within the statutory or
reglementary period is not only mandatory but also
jurisdictional and failure to do so renders the
questioned decision final and executory as to deprive
#55: Robosa vs NLRC
were rank-and-file employees of respondent Chemo-
Technische Manufacturing, Inc. (CTMI), the
SECOND DIVISION
manufacturer and distributor of Wella products. They
were officers and members of the CTMI Employees
FEDERICO S. ROBOSA, ROLANDO E. PANDY, Union-DFA (union). Respondent Procter and Gamble
G.R. No. 176085
NOEL D. ROXAS, ALEXANDER ANGELES,
Philippines, Inc. (P & GPI) acquired all the interests,
VERONICA GUTIERREZ, FERNANDO EMBAT, and
NANETTE H. PINTO, Present:and goodwill of CTMI during the pendency
franchises
Petitioners,
of the dispute.J., Chairperson,
CARPIO,
BRION,
PEREZ,
- versus - Sometime
SERENO, in the
andfirst semester of 1991, the union filed
REYES,for
a petition JJ.certification election at CTMI. On June

10, 1991, Med-Arbiter Rasidali Abdullah of the Office

NATIONAL LABOR RELATIONS COMMISSION of the Department of Labor and Employment in the
(First Division), CHEMO-TECHNISCHE
MANUFACTURING, INC. and its responsible officials National Promulgated:
Capital Region (DOLE-NCR) granted the
led by FRANKLIN R. DE LUZURIAGA, and PROCTER
petition. The
February DOLE-NCR conducted a consent
8, 2012
& GAMBLE PHILIPPINES, INC.,
Respondents. election on July 5, 1991, but the union failed to garner
x---------------------------------------------------------------
---------------------------x the votes required to be certified as the exclusive
bargaining agent of the company.

DECISION
On July 15, 1991, CTMI, through its President and
BRION, J.:
General Manager Franklin R. de Luzuriaga, issued a
memorandum[4] announcing that effective that day: (1)
all sales territories were demobilized; (2) all vehicles
assigned to sales representatives should be returned to
We resolve the petition for review
the company and would be sold; (3) sales
on certiorari[1] seeking the reversal of the resolutions
representatives would continue to service their
of the Court of Appeals (CA) rendered on February 24,
customers through public transportation and would be
2006[2] and December 14, 2006[3] in CA-G.R. SP No.
given transportation allowance; (4) deliveries of
80436.
customers orders would be undertaken by the
warehouses; and (5) revolving funds for ex-truck
selling held by sales representatives should be
Factual Background
surrendered to the cashier (for Metro Manila) or to the
supervisor (for Visayas and Mindanao), and truck
Federico S. Robosa, Rolando E. Pandy, Noel D.
stocks should immediately be surrendered to the
Roxas, Alexander Angeles, Veronica Gutierrez,
warehouse.
Fernando Embat and Nanette H. Pinto (petitioners)
On the same day, CTMI issued another
memorandum[5] informing the companys sales
representatives and sales drivers of the new system in
the Salon Business Groups selling operations.
The union asked for the withdrawal and deferment of
CTMIs directives, branding them as union busting acts
constituting unfair labor practice. CTMI ignored the
request. Instead, it issued on July 23, 1991 a notice of
termination of employment to the sales drivers, due to
the abolition of the sales driver positions.[6]
On August 1, 1991, the union and its affected
members filed a complaint for illegal dismissal and
unfair labor practice, with a claim for damages, against
CTMI, De Luzuriaga and other CTMI officers. The
union also moved for the issuance of a writ of
preliminary injunction and/or temporary restraining
order (TRO).
The Compulsory Arbitration Proceedings
The labor arbiter handling the case denied the unions
motion for a stay order on the ground that the issues
raised by the petitioners can best be ventilated during
the trial on the merits of the case. This prompted the
union to file on August 16, 1991 with the National
Labor Relations Commission (NLRC), a petition for
the issuance of a preliminary mandatory injunction
and/or TRO.[7]
On August 23, 1991, the NLRC issued a TRO.[8] It
directed CTMI, De Luzuriaga and other company
executives to (1) cease and desist from dismissing any
member of the union and from implementing the July
23, 1991 memorandum terminating the services of the
sales drivers, and to immediately reinstate them if the
dismissals have been effected; (2) cease and desist
from implementing the July 15, 1991 memorandum
grounding the sales personnel; and (3) restore
the status quo ante prior to the formation of the union
and the conduct of the consent election.
Allegedly, the respondents did not comply with the
NLRCs August 23, 1991 resolution. They instead
moved to dissolve the TRO and opposed the unions
petition for preliminary injunction.
On September 12, 1991, the NLRC upgraded the TRO
to a writ of preliminary injunction.[9] The respondents
moved for reconsideration. The union opposed the
motion and urgently moved to cite the responsible
CTMI officers in contempt of court.
On August 25, 1993, the NLRC denied the
respondents motion for reconsideration and directed
Labor Arbiter Cristeta Tamayo to hear the motion for
contempt. In reaction, the respondents questioned the
NLRC orders before this Court through a petition
for certiorari and prohibition with preliminary
injunction. The Court dismissed the petition for being
premature. It also denied the respondents motion for
reconsideration, as well as a second motion for
reconsideration, with finality. This notwithstanding,
the respondents allegedly refused to obey the NLRC
directives. The respondents defiance, according to the
petitioners, resulted in the loss of their employment.
Meanwhile, the NLRC heard the contempt charge.
On October 31, 2000, it issued a
resolution[10] dismissing the charge. It ordered the
labor arbiter to proceed hearing the main case on guilty of contempt for their failure (1) to observe
the merits. strictly the NLRC status quo order; and (2) to reinstate
the dismissed petitioners and to pay them their lost
wages, sales commissions, per diems, allowances and
The petitioners moved for, but failed to
other employee benefits. They also claim that the
secure, a reconsideration from the NLRC on the
NLRC, in effect, overturned this Courts affirmation of
dismissal of the contempt charge. They then sought
the TRO and of the preliminary injunction.
relief from the CA by way of a petition
for certiorari under Rule 65.
The petitioners assail the CAs reliance on the Courts
ruling that a contempt charge partakes of a criminal
The CA Decision
proceeding where an acquittal is not subject to appeal.
They argue that the facts obtaining in the present case
The CA saw no need to dwell on the issues raised by
are different from the facts of the cases where the
the petitioners as the question it deemed appropriate
Courts ruling was made. They further argue that by the
for resolution is whether the NLRCs dismissal of the
nature of this case, the Labor Code and its
contempt charge against the respondents may be the
implementing rules and regulations should apply, but
proper subject of an appeal. It opined that the dismissal
in any event, the appellate court is not prevented from
is not subject to review by an appellate court.
reviewing the factual basis of the acquittal of the
Accordingly, the CA Special Sixth Division dismissed
respondents from the contempt charges.
the petition in its resolution of February 24, 2006.[11]

The petitioners lament that the NLRC, in issuing the

The CA considered the prayer of P & GPI to
challenged resolutions, had unconstitutionally applied
be dropped as party-respondent moot and academic.
the law. They maintain that not only did the NLRC
unconscionably delay the disposition of the case for
The petitioners sought a reconsideration, but
more than twelve (12) years; it also rendered an unjust,
the CA denied the motion in its resolution
unkind and dubious judgment. They bewail that [f]or
of December 14, 2006.[12] Hence, the present Rule 45
some strange reason, the respondent NLRC made a
petition.
queer [somersault] from its earlier rulings which favor
the petitioners.[13]
The Petition

The petitioners charge the CA with grave abuse of The Case for the Respondents

discretion in upholding the NLRC resolutions, despite

the reversible errors the labor tribunal committed in Franklin K. De Luzuriaga

dismissing the contempt charge against the

respondents. They contend that the respondents were
De Luzuriaga filed a Comment[14] on May 17,
2007 and a Memorandum on December 4,
2008,[15] praying for a dismissal of the petition.
De Luzuriaga argues that the CA committed no error
when it dismissed the petition for certiorarisince the
dismissal of the contempt charge against the
respondents amounted to an acquittal where review by
an appellate court will not lie. In any event, he submits,
the respondents were charged with indirect contempt
which may be initiated only in the appropriate regional
trial court, pursuant to Section 12, Rule 71 of the Rules
of Court. He posits that the NLRC has no jurisdiction
over an indirect contempt charge. He thus argues that
the petitioners improperly brought the contempt
charge before the NLRC.
Additionally, De Luzuriaga points out that the petition
raises only questions of facts which, procedurally, is
not allowed in a petition for review on certiorari. Be
this as it may, he submits that pursuant to Philippine
Long Distance Telephone Company, Inc. v.
Tiamson,[16] factual findings of labor officials, who are
deemed to have acquired expertise in matters within
their respective jurisdictions, are generally accorded
not only respect but even finality. He stresses that the
CA committed no reversible error in not reviewing the
NLRCs factual findings.
Further, De Luzuriaga contends that the petitioners
verification and certification against forum shopping
is defective because it was only Robosa and Pandy
who executed the document. There was no indication
that they were authorized by Roxas, Angeles,
Gutierrez, Embat and Pinto to execute the required
verification and certification.
Lastly, De Luzuriaga maintains that the petitioners are
guilty of forum shopping as the reliefs prayed for in
the petition before the CA, as well as in the present
petition, are the same reliefs that the petitioners may
be entitled to in the complaint before the labor
arbiter.[17]
P & GPI
As it did with the CA when it was asked to
comment on the petitioners motion for
reconsideration,[18] P & GPI prays in its
Comment[19] and Memorandum[20] that it be dropped
as a party-respondent, and that it be excused from
further participating in the proceedings. It argues that
inasmuch as the NLRC resolved the contempt charge
on the merits, an appeal from its dismissal through a
petition for certiorari is barred. Especially in its case,
the dismissal of the petition for certiorari is correct
because it was never made a party to the contempt
proceedings and, thus, it was never afforded the
opportunity to be heard. It adds that it is an entity
separate from CTMI. It submits that it cannot be made
to assume any or all of CTMIs liabilities, absent an
agreement to that effect but even if it may be liable,
the present proceedings are not the proper venue to
determine its liability, if any.
On December 16, 2008, the petitioners filed
a Memorandum[21] raising essentially the same issues
and arguments laid down in the petition.
The Courts Ruling
Issues
The parties submissions raise the following issues:
(1) whether the NLRC has contempt powers;
(2) whether the dismissal of a contempt
charge is appealable; and
(3) whether the NLRC committed grave
abuse of discretion in dismissing the
contempt charge against the
respondents.
On the first issue, we stress that under Article
[22]
218 of the Labor Code, the NLRC (and the labor
arbiters) may hold any offending party in contempt,
directly or indirectly, and impose appropriate penalties
in accordance with law. The penalty for direct
contempt consists of either imprisonment or fine, the
degree or amount depends on whether the contempt is
against the Commission or the labor arbiter. The Labor
Code, however, requires the labor arbiter or the
Commission to deal with indirect contempt in the
manner prescribed under Rule 71 of the Rules of
Court.[23]
Rule 71 of the Rules of Court does not require
the labor arbiter or the NLRC to initiate indirect
contempt proceedings before the trial court. This mode
is to be observed only when there is no law granting
them contempt powers.[24] As is clear under Article
218(d) of the Labor Code, the labor arbiter or the
Commission is empowered or has jurisdiction to hold
the offending party or parties in direct or indirect
contempt. The petitioners, therefore, have not
improperly brought the indirect contempt charges
against the respondents before the NLRC.
The second issue pertains to the nature of
contempt proceedings, especially with respect to the
remedy available to the party adjudged to have
committed indirect contempt or has been absolved of
indirect contempt charges. In this regard, Section 11,
Rule 71 of the Rules of Court states that the judgment
or final order of a court in a case of indirect contempt
may be appealed to the proper court as in a criminal
case. This is not the point at issue, however, in this
petition. It is rather the question of whether the
dismissal of a contempt charge, as in the present case,
is appealable. The CA held that the NLRCs
dismissal of the contempt charges against the
respondents amounts to an acquittal in a criminal case
and is not subject to appeal.
The CA ruling is grounded on prevailing
jurisprudence.
In Yasay, Jr. v. Recto,[25] the Court declared:
A distinction is made
between a civil and [a] criminal
contempt. Civil contempt is the
failure to do something ordered by a
court to be done for the benefit of a
party. A criminal contempt is any
conduct directed against the
authority or dignity of the court.[26]
The Court further explained in Remman
Enterprises, Inc. v. Court of Appeals[27] and People v.
Godoy[28] the character of contempt proceedings, thus
The real character of the
proceedings in contempt cases is to
be determined by the relief sought or
by the dominant purpose. The
proceedings are to be regarded as
criminal when the purpose is
 primarily punishment and civil
when the purpose is primarily the NLRC of having gravely abused its discretion and
compensatory or remedial. having committed reversible errors in:
Still further, the Court held in Santiago v.
Anunciacion, Jr.[29] that: (1) setting aside its earlier resolutions and
orders, including the writ of preliminary injunction it
But whether the first or the second, issued, with its dismissal of the petition to cite the
contempt is still a criminal
proceeding in which acquittal, for respondents in contempt of court;
instance, is a bar to a second (2) overturning this Courts resolutions
prosecution. The distinction is for
the purpose only of determining the upholding the TRO and the writ of preliminary
character of punishment to be injunction;
administered.
(3) failing to impose administrative fines upon
the respondents for violation of the TRO and the writ
In the earlier case of The Insurance
of preliminary injunction; and
Commissioner v. Globe Assurance Co., Inc.,[30] the
(4) failing to order the reinstatement of the
Court dismissed the appeal from the ruling of the lower
dismissed petitioners and the payment of their accrued
court denying a petition to punish the respondent
wages and other benefits.
therein from contempt for lack of evidence. The Court
said in that case:
In view of the grave abuse of discretion
It is not the sole reason for
allegation in this case, we deem it necessary to look
dismissing this appeal. In the leading
case of In re Mison, Jr. v. Subido, it into the NLRCs dismissal of the contempt charges
was stressed by Justice J.B.L. Reyes
as ponente, that the contempt against the respondents. As the charges were rooted
proceeding far from being a civil into the respondents alleged non-compliance with the
action is of a criminal nature and of
summary character in which the court NLRC directives contained in the TRO[32] and the writ
exercises but limited jurisdiction. It of preliminary injunction,[33] we first inquire into what
was then explicitly held: Hence, as in
criminal proceedings, an appeal really happened to these directives.
would not lie from the order of
dismissal of, or an exoneration from,
a charge of contempt of court. The assailed NLRC resolution of October 31,
[footnote omitted]
2000[34] gave us the following account on the matter -

Is the NLRCs dismissal of the contempt On the first directive, x x x We find

that there was no violation of the
charges against the respondents beyond review by said order. A perusal of the records
would show that in compliance with
this Court? On this important question, we note that
the temporary restraining order
the petitioners, in assailing the CA main decision, (TRO), respondents reinstated back
to work the sales drivers who
claim that the appellate court committed grave abuse complained of illegal dismissal
of discretion in not ruling on the dismissal by the (Memorandum of Respondents,
page 4).
NLRC of the contempt charges.[31] They also charge
Petitioners allegation that there was
only payroll reinstatement does not
make the respondents guilty of
contempt of court. Even if the
drivers were just in the garage doing
nothing, the same does not make
respondents guilty of contempt nor
does it make them violators of the
injunction order. What is important
is that they were reinstated and
receiving their salaries.
As for petitioners Danilo Real,
Roberto Sedano and Rolando
Manalo, they have resigned from
their jobs and were paid their
separation pay xxx (Exhibits 6, 6-A,
7, 7-A, 8, 8-A, Respondents
Memorandum dated August 12,
1996). The issue of whether they
were illegally dismissed should be
threshed out before the Labor
Arbiter in whose sala the case of
unfair labor practice and illegal
dismissal were (sic) filed. Records
also show that petitioner Antonio
Desquitado during the pendency of
the case executed an affidavit of
desistance asking that he be dropped
as party complainant in as much as
he has already accepted separation
benefits totaling to P63,087.33.
With respect to the second directive
ordering respondents to cease and
desist from implementing the
memoranda dated July 15, 1991
designed to ground sales personnel
who are members of the union,
respondents alleged that they can no
longer be restrained or enjoined and
that the status quo can no longer be
restored, for implementation of the
memorandum was already
consummated or was a fait
accompli. x x x
All sales vehicles were ordered to be
turned over to management and the
same were already sold[.] xxx [I]t
would be hard to undo the sales
transactions, the same being valid
and binding. The memorandum
of July 15, 1991 authorized still all
sales representatives to continue
servicing their customers using
public transportation and a
transportation allowance would be
issued.
xxxx
The third directive of the
Commission is to preserve the status
quo ante between the parties.
Records reveal that WELLA AG
of Germany terminated its
Licensing Agreement with
respondent company
effective December 31,
1991 (Exhibit 11, Respondents
Memorandum).
On January 31, 1992, individual
petitioners together with the other
employees were terminated xxx. In
fact, this event resulted to the
closure of the respondent
company. The manufacturing and
marketing operations ceased. This is
evidenced by the testimony of
Rosalito del Rosario and her
affidavit (Exh. 9, memorandum of
Respondents) as well as Employers
Monthly Report on Employees
Termination/dismissals/suspension
xxx (Exhibits 12-A to 12-F, ibid) as
well as the report that there is a
permanent shutdown/total closure
of all units of operations in the
establishment (Ibid). A letter was
likewise sent to the Department of
Labor and Employment (Exh. 12,
Ibid) in compliance with Article 283
of the Labor Code, serving notice
that it will cease business operations
effective January 31, 1992.
The petitioners strongly dispute the above
account. They maintain that the NLRC failed to
consider the following:
1. CTMI violated the status quo ante order
when it did not restore to their former work
assignments the dismissed sales drivers. They lament
that their being garaged deprived them of benefits, and
they were subjected to ridicule and psychological
abuse. They assail the NLRC for considering the
payroll reinstatement of the drivers as compliance with
its stay order.
They also bewail the NLRCs recognition of
the resignation of Danilo Real, Roberto Sedano,
Rolando Manalo and Antonio Desquitado as they were
just compelled by economic necessity to resign from
their employment. The quitclaims they executed were
contrary to public policy and should not bar them from
claiming the full measure of their rights, including
their counsel who was unduly deprived of his right to
collect attorneys fees.
2. It was error for the NLRC to rule that the
memorandum, grounding the sales drivers, could no
longer be restrained or enjoined because all sales
vehicles were already sold. No substantial evidence
was presented by the respondents to prove their
allegation, but even if there was a valid sale of the
vehicles, it did not relieve the respondents of
responsibility under the stay order.
3. The alleged termination of the licensing
agreement between CTMI and WELLA AG
of Germany, which allegedly resulted in the closure of
CTMIs manufacturing and marketing operations,
occurred after the NLRCs issuance of the injunctive
reliefs. CTMI failed to present substantial evidence to
support its contention that it folded up its operations
when the licensing agreement was terminated. Even
assuming that there was a valid closure of CTMIs
business operations, they should have been paid their
lost wages, allowances, incentives, sales commissions,
per diems and other employee benefits from August
23, 1991 up to the date of the alleged termination of
CTMIs marketing operations.
Did the NLRC commit grave abuse of
discretion in dismissing the contempt charges
against the respondents? An act of a court or tribunal
may only be considered as committed in grave abuse
of discretion when it was performed in a capricious or
whimsical exercise of judgment which is equivalent to
lack of jurisdiction. The abuse of discretion must be so
patent and gross as to amount to an evasion of a
positive duty enjoined by law, or to act at all in
contemplation of law, as where the power is exercised
in an arbitrary and despotic manner by reason of
passion or personal hostility.[35]
The petitioners insist that the respondents
violated the NLRC directives, especially the status
quo ante order, for their failure to reinstate the
dismissed petitioners and to pay them their benefits. In
light of the facts of the case as drawn above, we cannot
see how the status quo anteor the employer-employee
situation before the formation of the union and the
conduct of the consent election can be maintained. As
the NLRC explained, CTMI closed its manufacturing
and marketing operations after the termination of its
licensing agreement with WELLA AG of Germany. In
fact, the closure resulted in the termination of CTMIs
remaining employees on January 31, 1992, aside from
the sales drivers who were earlier dismissed but
reinstated in the payroll, in compliance with the NLRC
injunction. The petitioners termination of
employment, as well as all of their money claims, was
the subject of the illegal dismissal and unfair labor
practice complaint before the labor arbiter. The latter
was ordered by the NLRC on October 31, 2000 to whether the petitioners are entitled to their money
proceed hearing the case.[36] The NLRC thus claims; and whether quitclaims are contrary to law or
subsumed all other issues into the main illegal public policy are issues that should be heard by the
dismissal and unfair labor practice case pending with labor arbiter in the first instance. The NLRC can
the labor arbiter. On this point, the NLRC declared: inquire into them only on appeal after the merits of the
case shall have been adjudicated by the labor arbiter.
Note that when the
injunction order was issued,
WELLA AG of Germany was still The NLRC correctly dismissed the contempt
under licensing agreement with
respondent company. However, the charges against the respondents. The CA likewise
situation has changed when committed no grave abuse of discretion in not
WELLA AG
of Germany terminated its licensing disturbing the NLRC resolution.
agreement with the respondent,
causing the latter to close its
business. In light of the above discussion, we find no
need to dwell into the other issues the parties raised.
Respondents could no
longer be ordered to restore the
status quo as far as the individual
petitioners are concerned as these WHEREFORE, premises considered, we
matters regarding the termination of hereby DENY the petition for lack of merit
the employees are now pending
litigation with the Arbitration and AFFIRM the assailed resolutions of the Court of
Branch of the Commission. To Appeals.
resolve the incident now regarding
the closure of the respondent
company and the matters alleged by
petitioners such as the creations of SO ORDERED.
three (3) new corporations xxx as
successor-corporations are matters
best left to the Labor Arbiter hearing
the merits of the unfair labor
practice and illegal dismissal
cases.[37]

We find no grave abuse of discretion in the

assailed NLRC ruling. It rightly avoided delving into
issues which would clearly be in excess of its
jurisdiction for they are issues involving the merits of
the case which are by law within the original and
exclusive jurisdiction of the labor arbiter.[38] To be
sure, whether payroll reinstatement of some of the
petitioners is proper; whether the resignation of some
of them was compelled by dire economic necessity;
B. ART 226-227;229-233: THE BLR AND THE
NCMB: COMPOSITION, POWERS AND
FUNCTIONS:
#56: THE HERITAGE HOTEL, MANILA VS
NATIONAL UNION OF WORKERS
G.R. No. 178296 January 12, 2011
THE HERITAGE HOTEL MANILA, acting
through its owner, GRAND PLAZA HOTEL
CORPORATION,Petitioner,
vs.
NATIONAL UNION OF WORKERS IN THE
HOTEL, RESTAURANT AND ALLIED
INDUSTRIES-HERITAGE HOTEL MANILA
SUPERVISORS CHAPTER (NUWHRAIN-
HHMSC), Respondent.
DECISION
NACHURA, J.:
Before the Court is a petition for review on certiorari
of the Decision1 of the Court of Appeals (CA) dated
May 30, 2005 and Resolution dated June 4, 2007.
The assailed Decision affirmed the dismissal of a
petition for cancellation of union registration filed by
petitioner, Grand Plaza Hotel Corporation, owner of
Heritage Hotel Manila, against respondent, National
Union of Workers in the Hotel, Restaurant and Allied
Industries-Heritage Hotel Manila Supervisors
Chapter (NUWHRAIN-HHMSC), a labor
organization of the supervisory employees of
Heritage Hotel Manila.
The case stemmed from the following antecedents:
On October 11, 1995, respondent filed with the
Department of Labor and Employment-National
Capital Region (DOLE-NCR) a petition for
certification election.2 The Med-Arbiter granted the
petition on February 14, 1996 and ordered the
holding of a certification election.3 On appeal, the
DOLE Secretary, in a Resolution dated August 15,
1996, affirmed the Med-Arbiter’s order and
remanded the case to the Med-Arbiter for the holding
of a preelection conference on February 26, 1997.
Petitioner filed a motion for reconsideration, but it
was denied on September 23, 1996.
The preelection conference was not held as initially
scheduled; it was held a year later, or on February 20,
1998. Petitioner moved to archive or to dismiss the
petition due to alleged repeated non-appearance of
respondent. The latter agreed to suspend proceedings
until further notice. The preelection conference
resumed on January 29, 2000.
Subsequently, petitioner discovered that respondent
had failed to submit to the Bureau of Labor Relations
(BLR) its annual financial report for several years
and the list of its members since it filed its
registration papers in 1995. Consequently, on May
19, 2000, petitioner filed a Petition for Cancellation
of Registration of respondent, on the ground of the
non-submission of the said documents. Petitioner
prayed that respondent’s Certificate of Creation of
Local/Chapter be cancelled and its name be deleted
from the list of legitimate labor organizations. It
further requested the suspension of the certification
election proceedings.4
On June 1, 2000, petitioner reiterated its request by
filing a Motion to Dismiss or Suspend the
[Certification Election] Proceedings,5 arguing that the
dismissal or suspension of the proceedings is
warranted, considering that the legitimacy of
respondent is seriously being challenged in the
petition for cancellation of registration. Petitioner
maintained that the resolution of the issue of whether
respondent is a legitimate labor organization is
crucial to the issue of whether it may exercise rights
of a legitimate labor organization, which include the
right to be certified as the bargaining agent of the
covered employees.
Nevertheless, the certification election pushed
through on June 23, 2000. Respondent emerged as
the winner.6
On June 28, 2000, petitioner filed a Protest with
Motion to Defer Certification of Election Results and
Winner,7stating that the certification election held on
June 23, 2000 was an exercise in futility because,
once respondent’s registration is cancelled, it would
no longer be entitled to be certified as the exclusive
bargaining agent of the supervisory employees.
Petitioner also claimed that some of respondent’s
members were not qualified to join the union because
they were either confidential employees or
managerial employees. It then prayed that the
certification of the election results and winner be
deferred until the petition for cancellation shall have
been resolved, and that respondent’s members who
held confidential or managerial positions be excluded
from the supervisors’ bargaining unit.
Meanwhile, respondent filed its Answer8 to the
petition for the cancellation of its registration. It
averred that the petition was filed primarily to delay
the conduct of the certification election, the
respondent’s certification as the exclusive bargaining
representative of the supervisory employees, and the
commencement of bargaining negotiations.
Respondent prayed for the dismissal of the petition
for the following reasons: (a) petitioner is estopped
from questioning respondent’s status as a legitimate
labor organization as it had already recognized
respondent as such during the preelection
conferences; (b) petitioner is not the party-in-interest,
as the union members are the ones who would be
disadvantaged by the non-submission of financial
reports; (c) it has already complied with the
reportorial requirements, having submitted its
financial statements for 1996, 1997, 1998, and 1999,
its updated list of officers, and its list of members for
the years 1995, 1996, 1997, 1998, and 1999; (d) the
petition is already moot and academic, considering
that the certification election had already been held,
and the members had manifested their will to be
represented by respondent.
Citing National Union of Bank Employees v.
Minister of Labor, et al.9 and Samahan ng
Manggagawa sa Pacific Plastic v. Hon.
Laguesma,10 the Med-Arbiter held that the pendency
of a petition for cancellation of registration is not a
bar to the holding of a certification election. Thus, in
an Order11 dated January 26, 2001, the Med-Arbiter
dismissed petitioner’s protest, and certified
respondent as the sole and exclusive bargaining agent
of all supervisory employees.
Petitioner subsequently appealed the said Order to the
DOLE Secretary.12 The appeal was later dismissed by
DOLE Secretary Patricia A. Sto. Tomas (DOLE
Secretary Sto. Tomas) in the Resolution of August
21, 2002.13Petitioner moved for reconsideration, but
the motion was also denied.14
In the meantime, Regional Director Alex E. Maraan
(Regional Director Maraan) of DOLE-NCR finally
resolved the petition for cancellation of registration.
While finding that respondent had indeed failed to
file financial reports and the list of its members for
several years, he, nonetheless, denied the petition,
ratiocinating that freedom of association and the
employees’ right to self-organization are more
substantive considerations. He took into account the
fact that respondent won the certification election and
that it had already been certified as the exclusive
bargaining agent of the supervisory employees. In
view of the foregoing, Regional Director Maraan—
while emphasizing that the non-compliance with the
law is not viewed with favor—considered the belated
submission of the annual financial reports and the list
of members as sufficient compliance thereof and
considered them as having been submitted on time.
The dispositive portion of the decision15 dated
December 29, 2001 reads:
WHEREFORE, premises considered, the instant
petition to delist the National Union of Workers in
the Hotel, Restaurant and Allied Industries-Heritage
Hotel Manila Supervisors Chapter from the roll of
legitimate labor organizations is hereby DENIED.
SO ORDERED.16
Aggrieved, petitioner appealed the decision to the
BLR.17 BLR Director Hans Leo Cacdac inhibited
himself from the case because he had been a former
counsel of respondent.
In view of Director Cacdac’s inhibition, DOLE
Secretary Sto. Tomas took cognizance of the appeal.
In a resolution18dated February 21, 2003, she
dismissed the appeal, holding that the constitutionally
guaranteed freedom of association and right of
workers to self-organization outweighed respondent’s
noncompliance with the statutory requirements to
maintain its status as a legitimate labor organization.
Petitioner filed a motion for reconsideration,19 but the
motion was likewise denied in a resolution20 dated
May 30, 2003. DOLE Secretary Sto. Tomas admitted
that it was the BLR which had jurisdiction over the
appeal, but she pointed out that the BLR Director had
voluntarily inhibited himself from the case because
he used to appear as counsel for respondent. In order
to maintain the integrity of the decision and of the
BLR, she therefore accepted the motion to inhibit and
took cognizance of the appeal.
Petitioner filed a petition for certiorari with the CA,
raising the issue of whether the DOLE Secretary
acted with grave abuse of discretion in taking
cognizance of the appeal and affirming the dismissal
of its petition for cancellation of respondent’s
registration.
In a Decision dated May 30, 2005, the CA denied the
petition. The CA opined that the DOLE Secretary
may legally assume jurisdiction over an appeal from
the decision of the Regional Director in the event that
the Director of the BLR inhibits himself from the
case. According to the CA, in the absence of the BLR
Director, there is no person more competent to
resolve the appeal than the DOLE Secretary. The CA
brushed aside the allegation of bias and partiality on
the part of the DOLE Secretary, considering that such
allegation was not supported by any evidence.
The CA also found that the DOLE Secretary did not
commit grave abuse of discretion when she affirmed
the dismissal of the petition for cancellation of
respondent’s registration as a labor organization.
Echoing the DOLE Secretary, the CA held that the
requirements of registration of labor organizations are
an exercise of the overriding police power of the
State, designed for the protection of workers against
potential abuse by the union that recruits them. These
requirements, the CA opined, should not be exploited
to work against the workers’ constitutionally
protected right to self-organization.
Petitioner filed a motion for reconsideration,
invoking this Court’s ruling in Abbott Labs. Phils.,
Inc. v. Abbott Labs. Employees Union,21 which
categorically declared that the DOLE Secretary has
no authority to review the decision of the Regional
Director in a petition for cancellation of union
registration, and Section 4,22 Rule VIII, Book V of
the Omnibus Rules Implementing the Labor Code.
In its Resolution23 dated June 4, 2007, the CA denied
petitioner’s motion, stating that the BLR Director’s
inhibition from the case was a peculiarity not present
in the Abbott case, and that such inhibition justified
the assumption of jurisdiction by the DOLE
Secretary.
In this petition, petitioner argues that:
I.
The Court of Appeals seriously erred in ruling that
the Labor Secretary properly assumed jurisdiction
over Petitioner’s appeal of the Regional Director’s
Decision in the Cancellation Petition x x x.
A. Jurisdiction is conferred only by law. The
Labor Secretary had no jurisdiction to
review the decision of the Regional Director
in a petition for cancellation. Such
jurisdiction is conferred by law to the BLR.
B. The unilateral inhibition by the BLR
Director cannot justify the Labor Secretary’s
exercise of jurisdiction over the Appeal.
C. The Labor Secretary’s assumption of
jurisdiction over the Appeal without notice
violated Petitioner’s right to due process.
II.
The Court of Appeals gravely erred in affirming the
dismissal of the Cancellation Petition despite the
mandatory and unequivocal provisions of the Labor
Code and its Implementing Rules.24
The petition has no merit.
Jurisdiction to review the decision of the Regional
Director lies with the BLR. This is clearly provided
in the Implementing Rules of the Labor Code and
enunciated by the Court in Abbott. But as pointed out
by the CA, the present case involves a peculiar
circumstance that was not present or covered by the
ruling in Abbott. In this case, the BLR Director
inhibited himself from the case because he was a
former counsel of respondent. Who, then, shall
resolve the case in his place?
In Abbott, the appeal from the Regional Director’s
decision was directly filed with the Office of the
DOLE Secretary, and we ruled that the latter has no
appellate jurisdiction. In the instant case, the appeal
was filed by petitioner with the BLR, which,
undisputedly, acquired jurisdiction over the case.
Once jurisdiction is acquired by the court, it remains
with it until the full termination of the case.25
Thus, jurisdiction remained with the BLR despite the
BLR Director’s inhibition. When the DOLE
Secretary resolved the appeal, she merely stepped
into the shoes of the BLR Director and performed a
function that the latter could not himself perform. She
did so pursuant to her power of supervision and
control over the BLR.26
Expounding on the extent of the power of control, the
Court, in Araneta, et al. v. Hon. M. Gatmaitan, et
al.,27pronounced that, if a certain power or authority
is vested by law upon the Department Secretary, then
such power or authority may be exercised directly by
the President, who exercises supervision and control
over the departments. This principle was incorporated
in the Administrative Code of 1987, which defines
"supervision and control" as including the authority
to act directly whenever a specific function is
entrusted by law or regulation to a
subordinate.28 Applying the foregoing to the present
case, it is clear that the DOLE Secretary, as the
person exercising the power of supervision and
control over the BLR, has the authority to directly
exercise the quasi-judicial function entrusted by law
to the BLR Director.
It is true that the power of control and supervision
does not give the Department Secretary unbridled
authority to take over the functions of his or her
subordinate. Such authority is subject to certain
guidelines which are stated in Book IV, Chapter 8,
Section 39(1)(a) of the Administrative Code of
1987.29 However, in the present case, the DOLE
Secretary’s act of taking over the function of the BLR
Director was warranted and necessitated by the
latter’s inhibition from the case and the objective to
"maintain the integrity of the decision, as well as the
Bureau itself."30
Petitioner insists that the BLR Director’s
subordinates should have resolved the appeal, citing
the provision under the Administrative Code of 1987
which states, "in case of the absence or disability of
the head of a bureau or office, his duties shall be
performed by the assistant head." 31 The provision
clearly does not apply considering that the BLR
Director was neither absent nor suffering from any
disability; he remained as head of the BLR. Thus, to
dispel any suspicion of bias, the DOLE Secretary
opted to resolve the appeal herself.
Petitioner was not denied the right to due process
when it was not notified in advance of the BLR
Director’s inhibition and the DOLE Secretary’s
assumption of the case. Well-settled is the rule that
the essence of due process is simply an opportunity to
be heard, or, as applied to administrative proceedings,
an opportunity to explain one’s side or an opportunity
to seek a reconsideration of the action or ruling
complained of.32 Petitioner had the opportunity to
question the BLR Director’s inhibition and the DOLE
Secretary’s taking cognizance of the case when it
filed a motion for reconsideration of the latter’s
decision. It would be well to state that a critical
component of due process is a hearing before an
impartial and disinterested tribunal, for all the
elements of due process, like notice and hearing,
would be meaningless if the ultimate decision would
come from a partial and biased judge.33 It was
precisely to ensure a fair trial that moved the BLR
Director to inhibit himself from the case and the
DOLE Secretary to take over his function.
Petitioner also insists that respondent’s registration as
a legitimate labor union should be cancelled.
Petitioner posits that once it is determined that a
ground enumerated in Article 239 of the Labor Code
is present, cancellation of registration should follow;
it becomes the ministerial duty of the Regional
Director to cancel the registration of the labor
organization, hence, the use of the word "shall."
Petitioner points out that the Regional Director has
admitted in its decision that respondent failed to
submit the required documents for a number of years;
therefore, cancellation of its registration should have
followed as a matter of course.
We are not persuaded.
Articles 238 and 239 of the Labor Code read:
ART. 238. CANCELLATION OF REGISTRATION;
APPEAL
The certificate of registration of any legitimate labor
organization, whether national or local, shall be
canceled by the Bureau if it has reason to believe,
after due hearing, that the said labor organization no
longer meets one or more of the requirements herein
prescribed.34
ART. 239. GROUNDS FOR CANCELLATION OF
UNION REGISTRATION.
The following shall constitute grounds for
cancellation of union registration:
xxxx
(d) Failure to submit the annual financial report to the
Bureau within thirty (30) days after the closing of
every fiscal year and misrepresentation, false entries
or fraud in the preparation of the financial report
itself;
xxxx
(i) Failure to submit list of individual members to the
Bureau once a year or whenever required by the
Bureau.35
These provisions give the Regional Director ample
discretion in dealing with a petition for cancellation
of a union’s registration, particularly, determining
whether the union still meets the requirements
prescribed by law. It is sufficient to give the Regional
Director license to treat the late filing of required
documents as sufficient compliance with the
requirements of the law. After all, the law requires
the labor organization to submit the annual financial
report and list of members in order to verify if it is
still viable and financially sustainable as an
organization so as to protect the employer and
employees from fraudulent or fly-by-night unions.
With the submission of the required documents by
respondent, the purpose of the law has been achieved,
though belatedly.
We cannot ascribe abuse of discretion to the Regional
Director and the DOLE Secretary in denying the
petition for cancellation of respondent’s registration.
The union members and, in fact, all the employees
belonging to the appropriate bargaining unit should
not be deprived of a bargaining agent, merely because
of the negligence of the union officers who were
responsible for the submission of the documents to
the BLR.
Labor authorities should, indeed, act with
circumspection in treating petitions for cancellation
of union registration, lest they be accused of
interfering with union activities. In resolving the
petition, consideration must be taken of the
fundamental rights guaranteed by Article XIII,
Section 3 of the Constitution, i.e., the rights of all
workers to self-organization, collective bargaining
and negotiations, and peaceful concerted activities.
Labor authorities should bear in mind that
registration confers upon a union the status of
legitimacy and the concomitant right and privileges
granted by law to a legitimate labor organization,
particularly the right to participate in or ask for
certification election in a bargaining unit.36 Thus, the
cancellation of a certificate of registration is the
equivalent of snuffing out the life of a labor
organization. For without such registration, it loses -
as a rule - its rights under the Labor Code.37
It is worth mentioning that the Labor Code’s
provisions on cancellation of union registration and
on reportorial requirements have been recently
amended by Republic Act (R.A.) No. 9481, An Act
Strengthening the Workers’ Constitutional Right to
Self-Organization, Amending for the Purpose
Presidential Decree No. 442, As Amended,
Otherwise Known as the Labor Code of the
Philippines, which lapsed into law on May 25, 2007
and became effective on June 14, 2007. The
amendment sought to strengthen the workers’ right to
self-organization and enhance the Philippines’
compliance with its international obligations as
embodied in the International Labour Organization
(ILO) Convention No. 87,38 pertaining to the non-
dissolution of workers’ organizations by
administrative authority.39 Thus, R.A. No. 9481
amended Article 239 to read:
ART. 239. Grounds for Cancellation of Union
Registration.—The following may constitute grounds
for cancellation of union registration:
(a) Misrepresentation, false statement or
fraud in connection with the adoption or
ratification of the constitution and by-laws
or amendments thereto, the minutes of
ratification, and the list of members who
took part in the ratification;
(b) Misrepresentation, false statements or
fraud in connection with the election of
officers, minutes of the election of officers,
and the list of voters;
(c) Voluntary dissolution by the members.
R.A. No. 9481 also inserted in the Labor Code
Article 242-A, which provides:
ART. 242-A. Reportorial Requirements.—The
following are documents required to be submitted to
the Bureau by the legitimate labor organization
concerned:
(a) Its constitution and by-laws, or
amendments thereto, the minutes of
ratification, and the list of members who
took part in the ratification of the
constitution and by-laws within thirty (30)
days from adoption or ratification of the
constitution and by-laws or amendments
thereto;
(b) Its list of officers, minutes of the election
of officers, and list of voters within thirty
(30) days from election;
(c) Its annual financial report within thirty
(30) days after the close of every fiscal year;
and
(d) Its list of members at least once a year or
whenever required by the Bureau.
Failure to comply with the above requirements shall
not be a ground for cancellation of union registration
but shall subject the erring officers or members to
suspension, expulsion from membership, or any
appropriate penalty.
ILO Convention No. 87, which we have ratified in
1953, provides that "workers’ and employers’
organizations shall not be liable to be dissolved or
suspended by administrative authority." The ILO has
expressed the opinion that the cancellation of union
registration by the registrar of labor unions, which in
our case is the BLR, is tantamount to dissolution of
the organization by administrative authority when
such measure would give rise to the loss of legal
personality of the union or loss of advantages
necessary for it to carry out its activities, which is
true in our jurisdiction. Although the ILO has
allowed such measure to be taken, provided that
judicial safeguards are in place, i.e., the right to
appeal to a judicial body, it has nonetheless reminded
its members that dissolution of a union, and
cancellation of registration for that matter, involve
serious consequences for occupational representation.
It has, therefore, deemed it preferable if such actions
were to be taken only as a last resort and after
exhausting other possibilities with less serious effects
on the organization.40
The aforesaid amendments and the ILO’s opinion on
this matter serve to fortify our ruling in this case. We
therefore quote with approval the DOLE Secretary’s
rationale for denying the petition, thus:
It is undisputed that appellee failed to submit its
annual financial reports and list of individual
members in accordance with Article 239 of the Labor
Code. However, the existence of this ground should
not necessarily lead to the cancellation of union
registration. Article 239 recognizes the regulatory
authority of the State to exact compliance with
reporting requirements. Yet there is more at stake in
this case than merely monitoring union activities and
requiring periodic documentation thereof.
The more substantive considerations involve the
constitutionally guaranteed freedom of association
and right of workers to self-organization. Also
involved is the public policy to promote free trade
unionism and collective bargaining as instruments of
industrial peace and democracy.1avvphi1 An overly
stringent interpretation of the statute governing
cancellation of union registration without regard to
surrounding circumstances cannot be allowed.
Otherwise, it would lead to an unconstitutional
application of the statute and emasculation of public
policy objectives. Worse, it can render nugatory the
protection to labor and social justice clauses that
pervades the Constitution and the Labor Code.
Moreover, submission of the required documents is
the duty of the officers of the union. It would be
unreasonable for this Office to order the cancellation
of the union and penalize the entire union
membership on the basis of the negligence of its
officers. In National Union of Bank Employees vs.
Minister of Labor, L-53406, 14 December 1981, 110
SCRA 296, the Supreme Court ruled:
As aptly ruled by respondent Bureau of Labor
Relations Director Noriel: "The rights of workers to
self-organization finds general and specific
constitutional guarantees. x x x Such constitutional
guarantees should not be lightly taken much less
nullified. A healthy respect for the freedom of
association demands that acts imputable to officers or
members be not easily visited with capital
punishments against the association itself."
At any rate, we note that on 19 May 2000, appellee
had submitted its financial statement for the years
1996-1999. With this submission, appellee has
substantially complied with its duty to submit its
financial report for the said period. To rule differently
would be to preclude the union, after having failed to
meet its periodic obligations promptly, from taking
appropriate measures to correct its omissions. For the
record, we do not view with favor appellee’s late
submission. Punctuality on the part of the union and
its officers could have prevented this petition.41
WHEREFORE, premises considered, the Court of
Appeals Decision dated May 30, 2005 and Resolution
dated June 4, 2007 are AFFIRMED.
SO ORDERED.
#57: BARLES VS BITONIO
G.R. No. 120270 June 16, 1999
MANOLITO BARLES, PATRICIO ELOMINA,
and JUAN SAYO, petitioners,
vs.
HON. BENEDICTO ERNESTO BITONIO
Director, Bureau of Labor Relations, JORESTY
OQUENDO, LUIS BERNALES, J. OCENA and
JUANITO RAGASA, respondents.
DAVIDE, JR., C.J.:
This special civil action for certiorari under Rule 65
of the Rules of Court originated from a petition for
audit of union funds filed by petitioners with the
Bureau of Labor and Relations (BLR) and appealed
to the Secretary of the Department of Labor and
Employment (hereafter the Secretary of Labor) who
subsequently endorsed the appeal to the BLR.
Petitioners now assail BLR Resolutions 1 of 25 April
1995 and 14 March 1995 of the BLR upholding the
Bureau's jurisdiction over appeals on decisions
involving the examination of union accounts
endorsed to it by the Secretary of Labor.1âwphi1.nêt
In February 1991, petitioners Manolito Barles,
Patricio Elomina and Juan Sayo were elected
president, treasurer and auditor, respectively, of Ilaw
buklod ng Manggagawa's IBM Local Chapter No. 15
Private respondents Joresty Oquendo and Juanito
Ragasa also ran for the positions of president and
secretary in the same election but they lost to
petitioners.
On 24 June 1992, the new Executive Board passed a
Resolution increasing union dues from P16.00 to
P40.00 a month. This was ratified by the members.
On 3 August 1992, private respondents filed with the
BLR a petition for the immediate audit and
examination of union funds.
Subsequent events were summarized by the BLR as
follows:
On 10 November 1992, this Office
issued an order directing one of its
staff, Ms. Dorisa Geluz, to
"proceed with the conduct of
audit."
The order was appealed to the
Office of the Secretary, with the
appeal being docketed as OS-MA-
A-1-11-93 (BLR-AE No. 8-11-92).
On 8 February 1993, through
Undersecretary Laguesma, the
Office of the Secretary set aside the
order and dismissed the petition on
the ground that it " . . . is a
duplication of the complaint earlier
filed by the [private respondents]
with the Office of the Regional
Director."
On 05 April 1993, upon motion for
reconsideration of the [private
respondents], the Office of the
Secretary reconsidered its 08
February 1993 order. It thus
reinstated the earlier order issued
by this Office on 10 November
1992.
On 13 August 1993, upon motion
of [petitioner], the Office of the
Secretary modified its 08 February
1993 order and ruled that:
While we sustain the Order for
the holding of an account
examination of the union, we
have deemed it proper to take
valid cognizance of the
argument that the Bureau of
Labor and Relations is an
improper venue for the same. To
give substance to
Administrative Order 186
decentralizing line functions, the
matter of the conduct for the
union account examination is
hereby endorsed to the Regional
Office. Let the account
examiner of DOLE Regional
Office No. IV, perform his task.
Wherefore, premises
considered, the motion for
reconsideration is hereby denie.
The Order for the conduct of
union account examination is
affirmed, but modified to the
extent that the same shall be
conducted by DOLE Regional
 Office No. IV through its documents of the union for the
competent personnel. period from July 1989 to July
1992."
Let the records of the case be
forwarded to the Regional On 05 April 1994, [petitioners']
Office for the appropriate employer sent the Regional Office
proceedings therein. a summary of union collections and
remittances from July 1989 to July
Pursuant to this order, the account 1992. On 18 April 1994, the
examiner, Regional Office No. IV Regional Office again sent
initiated the conduct of audit by [petitioner's] employer another
calling for a pre-audit conference. request, this time asking for ". . . a
[Petitioners], however, filed a certification as to the amount other
petition for certiorari with the than union dues deducted from the
Supreme Court docketed as G.R. salaries of union members and as
No. 111671, seeking to annul and (well as) non-union members." On
set aside the order of the Office of 11 May 1994 [petitioners']
the Secretary. In the conference of employer, through Mr. Antonio de
30 September 1993, the audit was las Alas, issued a certification
supposed to have been held in complying with his request.
abeyance "until the petition
for certiorari filed by the On 02 June 1994, the Regional
[petitioners] is resolved." Director issued an order based on
the recommendations of the
Subsequently, the Regional Office account examiner. The pertinent
sent notices to both parties setting portion of the order states:
pre-audit conferences on 26
November 1993, 10 December Since it is
1993, and 23 December 1993. obvious that the
[Petitioners] did not appear in any incumbent
of conferences. On record, the officers do not
formally filed a request dated 03 want this Office
December 1993 to hold in abeyance to conduct the
the pre-audit conference because of examination of
the pendency of their petition the book of
for certiorari with the Supreme account . . ., the
Court. Parenthetically, the Supreme undersigned (the
Court had earlier dismissed the account
petition on 22 November 1993; the examiner) shall
Court would later on dismiss the have the
petition with finality on 24 January certification
1994. furnished to us by
Mr. Antonio De
In the meantime, on 01 December las Alas, Jr., as
1993, the Regional Office sent a basis for the audit
letter to the employer of and no other way
[petitioners] asking for ". . . a except to resolve
certification as to the amount of this case, once
union dues checked-off and other and for all, the
deductions made from the salaries undersigned
of union members" On 28 of recommends the
December 1993, the Regional following:
Office also sent a subpoena duces
tecum to [petitioners], directing 1. That the
them to bring " . . . all the financial incumbent
 officers hold a officers are given
general twenty (20) days
membership from receipt of
meeting and this ORDER to
likewise explain convene a general
the amount of meeting for the
P352,496.00 to purpose of
the general putting into effect
membership and the mandate of
open the book of the ORDER and
accounts to any to make a report
member as well of compliance
as the thereon. 2
complainants and
furnish this In their appeal to the Secretary of Labor, petitioners
Office the asserted that the Regional Director denied them due
minutes of the process, and that the audit was not only barred by
particular prescription but also proscribed by Article 274 of the
meeting. Labor Code in that union accounts cannot be
examined during the sixty-day freedom period or
2. The incumbent within thirty days immediately preceding the date of
officers are given election of union members.
20 days to submit
compliance On 28 October 1994, Undersecretary Bienvenido E.
report of the said Laguesma endorsed the appeal and the entire records
meeting. of the case back to the BLR pursuant to
Administrative Order No. 186 and the Rules of
xxx xxx xxx Procedure on Mediation-Arbitration, both of which
embodied the government's decentralization policy.
This Office finds
the above- In its resolution of 14 March 1995, the BLR found
findings and the appeal unmeritorious, as the Secretary of Labor's
recommendations Order of 13 August 1993 authorizing the Regional
in order, hence it Director to proceed with the audit of union funds and
is hereby our Resolution of 24 January 1994 in G.R. No.
adopted. 111671 establish res judicata. The BLR noted
however, that the "report submitted by the account
WHEREFORE, examiner and adopted by the Regional Director is
the responsible incomplete," and it is "not clear whether the account
officers examiner actually conducted an audit;" thus, the BLR
particularly, the ordered the Regional Office No. IV to conduct a
union president, more exhaustive re-audit. 3
union treasurer
the retired former On 3 April 1995, petitioner moved to strike out or
union treasurer, reconsider the aforesaid resolution challenging the
the former union jurisdiction of the BLR over appeals from orders,
auditor and the resolutions and decisions of the Regional Director on
union are ordered petitions for union accounts examination.
to comply with
foregoing Petitioners' arguments were alter condensed by the
recommendations BLR in its Resolution of 25 April 1995 in this wise:
.. . .
The instant case allegedly is an
Consequently, the internal dispute covered by Article
responsible 241 (p) of the Labor Code. Thus,
 the appellate procedure establish in
Article 259 of the Labor Code and
Section 5, Rule VIII of the
implementing rules should apply.
Accordingly, the decision of the
Regional Director should have been
appealed to the Office of the
Secretary, not to this office.
Respondent further argue that
Republic Act No. 6715 stripped
this office of adjudicatory powers
and transferred the same to the
Office of the Secretary.
Consequently, Administrative
Order No. 186, which was issued
by the Office of the Secretary itself
and which served as basis for it to
endorse the case to this Office,
constitutes an unauthorized
amendment of the law. 4
The BLR, however, denied the motion explaining
that its appellate authority over complaints of union
accounts examinations is explicit under the Rules of
Procedure on Med-Arbitration issued on 10 April
1992. In addition, the BLR has the power to examine
the financial records of the legitimate labor
organizations. This power is either (1) primary,
inherent and expressed under Book IV, Title VII,
Chapter 4, Section 16 of the Administrative Code of
1987 or (2) delegated upon the DOLE Secretary
under Article 274 of the Labor Code, La Tondeña
Workers Union v. Secretary of Labor, and
Administrative Order No. 189 insofar as it is
consistent with the latter case. The BLR also has
original and exclusive authority to hear intra-union
disputes (such as petition to examine union accounts)
under Articles 226 and 241 of the Labor Code. The
BLR added that R.A. No. 6715 never stripped it of its
quasi-adjudicatory powers particularly over internal
union disputes, and Administrative Order No. 186 did
not amend but precisely implemented Article 274 of
the Labor Code.
Before the Court, petitioners now assail the
aforementioned Resolution and reiterate the
arguments adduced in their motion to strike out or
reconsider the 14 March 1995 Resolution of the BLR.
They assert that the BLR Director, in taking
cognizance of the appeal from the Order of the
Regional Director upon the Secretary of Labor's
endorsement, acted with grave abuse of discretion
amounting to lack of jurisdiction or excess in the
exercise thereof because the latter can "neither
delegate nor abdicate his appellate jurisdiction to a
subordinate body or entity" like the BLR. Petitioners
argue that R.A. No. 6715 removed the adjudicatory
functions of the BLR. Hence, Administrative Order
No. 186 and the Rules of Procedure on Mediation
Arbitration which restored said power to the BLR
under the "guise of decentralization policy"
consequently amended Articles 259 and 274 of the
Labor Code in violation of the principle that
administrative law as enunciated by the Court in
the Philippines Apparel Workers Union vs. NLRC.
Petitioners also question the validity and
constitutionality of Administrative Order 186 and the
Rules of Procedure on Mediation Arbitration.
Public respondent through the Solicitor General
insists on its appellate jurisdiction over revisions, etc.
relative to complaints for union accounts
examination. Citing La Tondeña v. Secretary of
Labor, the Solicitor General points that by endorsing
the case to the BLR, the Secretary of Labor, actually
authorized the BLR to act on his behalf. Apart from
any endorsement, the power of the BLR to examine
union accounts is clear under the Administrative
Code and Article 226 of the Labor Code. Moreover,
public respondent asserts that petitioners' reliance on
Article 259 of the Labor Code is misplaced since this
case involves an internal union dispute while the
former is concerned with disputes between unions in
a certification election.
The only issue under consideration is whether the
BLR has jurisdiction to review decision of the DOLE
Regional Director endorsed to it (BLR) by the
Secretary of Labor. No constitutional issue is
involved and the attempt to introduce the same here
is nothing but a ruse to confuse the issues.
We resolve the issue in the affirmative and approve
the BLR ruling on the matter.
Appellate authority over decisions of the Regional
Directors involving examinations of union accounts
is expressly conferred on the BLR under the Rules of
Procedure on Mediation-Arbitration, and we quote:
RULE II
MED-ARBITRATION
Sec. 3. Jurisdiction of the Regional
Director. — The Regional Director
shall exercise original and
exclusive jurisdiction over
application for union registration,
 petitions for cancellation of union
registration and complaints for
examination of union's books of
accounts (emphasis supplied).
Sec. 4. Jurisdiction of the Bureau.
—
xxx xxx xxx
(b) The Bureau shall exercise
appellate jurisdiction over all cases
originating from the Regional
Director involving union
registration or cancellation of
certificates of union registration
and complaints for examination of
union books of accounts (Emphasis
supplied).
The language of the law is categorical. Any
additional explanation on the matter is
superfluous.
It is clear then that the DOLE Secretary has no
appellate jurisdiction over decisions of Regional
Directors involving petitions for examinations of
union accounts. Petitioners arguments that the DOLE
Secretary delegated or even abdicated his appellate
powers deserves scant consideration. He does not
posses such power hence he cannot delegate, much
more, abdicate powers which he does not own. The
fallacy in petitioners' arguments arose from their
equally erroneous proposition that since this case
stemmed from a petition to audit union
funds/accounts — an internal union dispute — the
procedure for appeals outlined in Article 259 5 and
Section 5 of Rule VIII of the Implementing Rules
apply. 6 Under these provisions, it is the DOLE
Secretary who has appellate jurisdiction. Article 259
however governs appeals on petitions for certification
elections. As the Solicitor General correctly assessed,
a certification election is a dispute between unions; it
is not an internal union dispute. Article 259 is clearly
inapplicable.
Section 5 of Rule VIII of the Implementing Rules on
the other hand, admittedly applies to internal union
conflicts, but again it is not apropos to the case at bar
as the relief granted under a complaint averring an
intra-union dispute involves an order for the
cancellation of the registration certificate of the erring
union or the expulsion of the guilty party. 7 The case
at bar originated from a petition for an audit of union
accounts. In La Tondeña Workers Union vs.
Secretary of Labor, 8 the Court classified such a
petition as an intra-union conflict. The obvious relief
that may be granted in a petition for audit as an order
for the examinations of the books of accounts.
Section 5 of Rule VIII of the implementing Rules is
likewise inappropriate.
The DOLE Secretary, however, can properly delegate
to the BLR his visitorial power under Article 274
which includes the power to examine the financial
accounts of legitimate labor organizations. The
provision reads as follows:
Art. 274. Visitorial Power. — The
Secretary of Labor and
Employment or his duly authorized
representative is hereby empowered
to inquire into the financial
activities of legitimate labor
organizations upon the filling of a
complaint under oath and duly
supported by the written consent of
at least twenty (20%) percent of the
total membership of the labor
organization concerned and to
examine their books of accounts
and other records to determine the
compliance or non-compliance with
the law and to prosecute any
violators of the law and the union
constitution and by-law; Provided,
That such inquiry or examination
shall not be conducted during the
sixty (60)-day freedom period nor
within the thirty (30) days
immediately preceding the date of
election of union officers.
While the provision did not explicitly
mention the BLR, and only made a cryptic
reference to the DOLE Secretary's "duly
authorized representative", the latter was
identified by the Court as the BLR in La
Tondeña Workers Union vs. Secretary of
Labor when it ruled that "union accounts
examiners of the Bureau mentioned in Rule
1, Sec. 1 (ff) of "Book V of) the
implementing rules as having the power to
audit the books of accounts of unions are
actually officials of the BLR because the
word "Bureau" is defined in Rule 1, Sec. 1
(b) of the same rules as the Bureau of Labor
Relations." The Court additionally declared
therein that the DOLE Secretary authorized
the BLR to examine union accounts for and
 in his behalf when he endorse the case to the
latter, thus:
[T]he delegation of authority to
union accounts examiners in Rule
1, sec. 1 (ff) is not exclusive. By
indorsing the case to the BLR, the
Secretary of Labor and
Employment must be presumed to
have authorized the BLR to act on
his behalf. . . . . , the Secretary
made two endorsements: first,
when he referred to the BLR the
letter dated July 27, 1989 of Ramon
de la Cruz and Norma Marin
seeking the annulment of the audit
report of the DOLE NCR, and
second, on September 4, 1990
when, instead of acting on the
petition for review of the union, he
endorsed it to the BLR. 9
The DOLE Secretary can also delegate his other
functions and duties pursuant to Section 40, Chapter
8, Book IV of the Administrative Code provided that
the delegation is in writing, indicating the officer or
class of officers or employees to whom the delegation
is made and only insofar as the delegation is
necessary for the latter to implement plans and
programs adequately.
In any case, the endorsement of the DOLE Secretary
is consistent with Article 226 of the Code, thus:
Art. 226. Bureau of Labor
Relations. — The Bureau of Labor
Relations and the Labor Relations
Divisions in the regional offices of
the Department of Labor shall have
original and exclusive authority to
act, at their own initiative or upon
request of either or both parties, on
all inter-union and intra-union
conflicts, . . . . . (emphasis
supplied)
As already held by the Court in La Tondeña Workers
Union vs. Secretary of Labor, intra-union conflicts
such examinations of accounts are under the
jurisdiction of the BLR. However, the Rules of
Procedure on Mediation-Arbitration purposely and
expressly separated or distinguished examinations of
union accounts from the genus of intra-union
conflicts and provided a different procedure for the
resolution of the same. Original jurisdiction over
complaints for examinations of union accounts is
vested on the Regional Director and appellate
jurisdiction over decisions of the former is lodged
with the BLR. This is apparent from Section 3 and 4
of the Med-Arbitration Rules as already mentioned.
Contrast these two sections from Section 2 and
Section 56 of the same rules. Section 2 expressly
vests upon Med-Arbiters original and exclusive
jurisdiction to hear and decide inter alia "all other
inter-union or internal union disputes." Section 5
states that the decisions of the Med-Arbiter shall be
appealable to the DOLE Secretary. These are the
provisions consistent with Section 5 of Rule VIII of
the Implementing Rules of the Labor Code but as
already explained inapplicable to the same at bar.
Without doubt, the rules of Procedure on Mediation-
Arbitration did not amend or supplant substantive law
but implemented and filled in details of procedure left
vacuous or ambiguous by the Labor Code and its
Implementing Rules. Petitioners' reliance on
the Philippine Apparel Workers Union vs.
NLRC, 10 in support of their "amendment theory" is
therefore misplaced. In said case, the Court nullified
the rules issued by the DOLE Secretary supposed to
implement but in effect supplanted P.D. No. 1123.
The Mediation-Arbitration Rules do not suffer from
the same legal infirmity.
Administrative Order No. 189 is a different matter
but completely irrelevant here. True, the DOLE
Secretary ostensibly endorsed the appeal to the BLR
on the basis of said administrative order, but it was
already established herein that the endorsement was
procedurally tenable under the Rules of Procedure on
Med-Arbitration and consistent with the authority of
the BLR to inquire into the financial accounts of
legitimate labor organizations. In other words,
irrespective and independent of any endorsement, it is
the BLR which has jurisdiction over complaints for
examinations of union accounts. It is worth
mentioning at this point that the BLR, independent or
any delegation, can moto propio or upon its own
authority inspect a union's financial status under
Book IV, Title VII, Chapter 4, Section 16 of the
Administrative Code of 1987, Thus:
Sec. 16. Bureau of Labor
Relations — The Bureau of Labor
Relations shall set policies,
standards, and procedures on the
registration and supervision of
ligitimate labor union activities
including denial, cancellation and
revocation of labor union permits.
 It shall also set policies, standards,
and procedure relating to collective
bargaining agreements, and
examination of financial records of
accounts of labor organizations to
determine compliance with relevant
laws. (emphasis supplied)

In sum, the BLR did not exceed its

jurisdiction or committed grave abuse of
discretion in taking cognizance of
petitioners' appeal. At any rate, this Court's
ruling in G.R. No. 111671 dismissing the
petition for certiorari filed by petitioners in
their quest to nullify the 13 August 1993
order of the Office of the DOLE Secretary
requiring the Regional office to proceed
with the audit constitutes res judicata. This
should put an end to this litigation already
prolonged by procedural ploys which this
Court will no longer tolerate. This case
involves a simple matter of auditing union
accounts which should have been conducted
with dispatch eons ago.

WHEREFORE, the instant petition is dismissed for

lack of merit. The resolutions of the Bureau of Labor
Relations promulgated on 25 March 1995 and 14
March 1995 dismissing petitioners' appeal are hereby
affirmed in toto. The Regional Office No. IV of the
Department of Labor and Employment is hereby
ordered to proceed immediately with the audit and
examination of the Ilaw Buklod ng Manggagawa
IBM Local Chapter No. 15.

Cost against petitioners.1âwphi1.nêt

SO ORDERED.
#58: KAPISANAN NG MGA MANGGAGAWANG
PINAGYAKAP VS TRAJANO
G.R. No. L-62306 January 21, 1985
KAPISANAN NG MANGGAGAWANG
PINAGYAKAP (KMP), ISAGANI GUTIERREZ,
FLORENCIA CARREON, JOSE FLORES,
DENNIS ALINEA, ELADIO DE LUNA and
CRISANTO DE VILLA, petitioners,
vs.
THE HONORABLE CRESENCIANO
TRAJANO, DIRECTOR OF THE BUREAU OF
LABOR RELATIONS, CATALINO
SILVESTRE, and CESAR ALFARO, respondents.
Jose C. Espinas for petitioners.
Balagtas P. Ilagan for private respondents.
RELOVA, J.:
Petitioners seek to annul the resolution and order,
dated August 13 and October 19, 1982, respectively,
of public respondent Director Cresenciano B. Trajano
of the Bureau of Labor Relations, Ministry of Labor
and Employment, in BLR Case No. A-0100-82
(RO4-A-LRD-M-9-35-81), entitled: "Catalino
Silvestre, et al., vs. Kapisanan ng Manggagawang
Pinagyakap (KMP) Labor Union and its
Officers" affirming Med-Arbiter Antonio D.
Cabibihan's order dated April 28, 1982, directing the
said Union to hold and conduct, pursuant to its
constitution and by-laws and under the supervision of
the Bureau of Labor Relations, a general membership
meeting, to vote for or against the expulsion or
suspension of the herein petitioner union officers.
Records show that on June 30, 1981 a written request
for accounts examination of the financial status of the
Kapisanan ng Manggagawang Pinagyakap (KMP)
Labor Union (Union for brevity), the existing labor
union at Franklin Baker Company in San Pablo City,
was filed by private respondent Catalino Silvestre
and thirteen (13) other employees, who are also
members of the said Union. Acting on said request,
Union Account Examiner Florencio R. Vicedo of the
Ministry of Labor and Employment conducted the
necessary investigation and, thereafter, submitted a
report, with the following findings:
A. Disallowed expenditures —
P1,278.00, as reflected in the
following breakdown:
1. January 9, 1980 — Excess claim
for refund P1.00
2. March 13, 1980 — Payment for
sound system P90.00
3. March 12, 1980 — Picture
taking, entrance fee in Manila Zoo
with Atty. Delos Santos P75.00
4. March 24, 1980 — Payment for
sound System P90.00
5. July 16, 1980 — Jeep hired
P264.00
6. August 30, 1980 — Partial
payment of traveling expenses
disallowed P68.00
7. October 30, 1980 —
Representation expenses P180.00
8. May 31, 1981 — Payment for
long distance call P10.00
9. May 31, 1981— Payment for
legal expenses P500.00
TOTAL............................................
................. P1,278.00
B. Respondent union officers failed to keep,
maintain and submit for verification the
records of union accounts for the years 1977,
and 1978, 1979, or purposely suppressed the
same;
C. Respondent union officers failed to
maintain segregated disbursement receipts in
accordance with the five (5) segregated union
funds (general fund, educational funds, mutual
aid fund, burial assistance fund and union
building fund) for which they maintained a
distinct and separate bank accounts for each.
D. The Union's constitution and by-laws is not
ratified by the general membership hence,
illegal. (pp. 27-28, Rollo)
Based on the foregoing revelations, private
respondents filed with the Regional Office No. IV-A,
Quezon City, Ministry of Labor and Employment, a
petition docketed as R04-ALRD-M- 9-35-81, for the
expulsion of the union officers on the ground that
they committed gross violation of the Labor Code,
specifically paragraphs (a), (b), (g), (h), (j) and (k) of
Article 242; and, the constitution and by-laws of the
Union, particularly the provisions of Sections 6 and 7
thereof.
In their Answer, the union officers denied the
imputation and argued that the disallowed
expenditures were made in good faith; that the same
conduced to the benefit of the members; and, that
they are willing to reimburse the same from their own
personal funds. They likewise asserted that they
should not be held accountable for the non-
production of the books of accounts of the Union for
the years 1977, 1978 and 1979 because they were not
the officers then and not one of the former officers of
the Union had turned over to them the records in
question. Further, they averred that the non-
ratification of the constitution and by-laws of the
Union and the non-segregation of the Union funds
occurred before they became officers and that they
have already been correcting the same.
On April 28, 1982, Med-Arbiter Antonio D.
Cabibihan ordered the holding of a referendum, to be
conducted under the supervision of the Bureau of
Labor Relations, to decide on the issue of whether to
expel or suspend the union officers from their
respective positions.
Petitioners appealed the said order of Med-Arbiter
Cabibihan to herein public respondent Director
Trajano of the Bureau of Labor Relations, Ministry of
Labor, Manila, claiming that the same is not in
accordance with the facts contained in the records
and is contrary to law. They pointed out that the
disallowed expenditures of P1,278.00 were made in
good faith and not used for the personal benefit of
herein union officers but, instead, contributed to the
benefit of the members. On the alleged failure to
maintain and submitted the books of accounts for the
years 1977, 1978 and 1979, they argued that they
were elected in 1980 only and, therefore, they could
not be made responsible for the omissions of their
predecessors who failed to turn over union records
for the questioned period. Anent their alleged failure
to maintain segregated disbursement receipts in
accordance with the five (5) segregated funds,
petitioners maintained that the same did not result to
any loss of funds and such error in procedure had
already been corrected. They also demonstrated that
there would be a general election on October 4, 1982,
at which time, both the election and the desired
referendum could be undertaken to determine the
membership at minimum expense. They prayed that
the resolution on the issue be held in abeyance.
Private respondents, on the other hand, claimed that
the Med-Arbiter erred in calling a referendum to
decide the issue. They reiterated that the appropriate
action should be the expulsion of the herein union
officers.
On August 13, 1982, public respondent Director
Trajano dismissed both appeals of petitioners and
private respondents and affirmed in toto the order of
Med-Arbiter Cabibihan.
Petitioners filed a Motion for Reconsideration of the
Resolution of August 13, 1982 of Public respondent
Director Trajano, reiterating their arguments in their
appeal and further clarifying that what the Union
Account Officer Florencio R. Vicedo found was that
the amount of P1,278.00 was not supported by
official receipts and therefore should not be allowed
as disbursement from the union funds; and that he did
not say that the amount was converted by them for
their own personal benefit. They, likewise, informed
public respondent Director Trajano that in the general
election held on October 4, 1982, all of them, except
petitioners Ambrocio dela Cruz and Eliseo Celerio,
who ran for the positions of Vice-President and
member of the Board of Directors, respectively, were
elected by the overwhelming majority of the
members, while private respondents Catalino
Silvestre and Cesar Alfaro who also ran for the
position of Auditor, lost. Thereafter, they moved for
the dismissal of the appeal for having been rendered
moot and academic by their re-election.
On October 19, 1982, public respondent Director
Trajano issued the second questioned order denying
petitioners' Motion for Reconsideration.
Hence, this petition which We find meritorious for
the following reasons:
1. If herein union officers (also petitioners) were
guilty of the alleged acts imputed against them, said
public respondent pursuant to Article 242 of the New
Labor Code and in the light of Our ruling in Duyag
vs. Inciong, 98 SCRA 522, should have meted out the
appropriate penalty on them, i.e., to expel them from
the Union, as prayed for, and not call for a
referendum to decide the issue;
2. The alleged falsification and misrepresentation of
herein union officers were not supported by
substantial evidence. The fact that they disbursed the
amount of P1,278.00 from Union funds and later on
was disallowed for failure to attach supporting papers
thereon did not of itself constitute falsification and/or
misrepresentation. The expenditures appeared to have
been made in good faith and the amount spent for the
purpose mentioned in the report, if concurred in or
accepted by the members, are reasonable; and

3. The repudiation of both private respondents to the

highly sensitive position of auditor at the October 4,
1982 election, is a convincing manifestation and
demonstration of the union membership's faith in the
herein officers' leadership on one hand and a clear
condonation of an act they had allegedly committed.

By and large, the holding of the referendum in

question has become moot and academic. This is in
line with Our ruling in Pascual vs. Provincial Board
of Nueva Ecija, 106 Phil. 471, which We quote:

The Court should never remove a

public officer for acts done prior to
his present term of office. To do
otherwise would be to deprive the
people of their right to elect their
officers. When the people have
elected a man to office, it must be
assumed that they did this with
knowledge of his life and character,
and that they disregarded or
forgave Ms faults or misconduct, if
he had been guilty of any. It is not
for the court, by reason of such
faults or misconduct to practically
overrule the will of the people.

ACCORDINGLY, the resolution and order, dated

August 13 and October 19, 1982, respectively, of
public respondent Director Cresenciano B. Trajano of
the Bureau of Labor Relations, Ministry of Labor,
Manila in BLR Case No. A-0100-82 (RO4-A-LRD-
M-9-35-81) are SET ASIDE and, the petition for
expulsion of herein union officers in R04-A-LRD-M-
9-35-81 is hereby DISMISSED for having been
rendered moot and academic by the election of herein
union officers in the general membership
meeting/election held on October 4, 1982.

SO ORDERED.
#58(AGAIN): PLUM FEDERATION OF
INDUSTRIAL AND AGRARIAN WORKERS VS
NORIEL
G.R. No. L-48007 December 15, 1982
PLUM FEDERATION OF INDUSTRIAL AND
AGRARIAN WORKERS, petitioner,
vs.
DIRECTOR CARMELO C. NORIEL, of the
Bureau of Labor Relations; MANILA JOCKEY
CLUB RACE DAY OPERATION EMPLOYEES
LABOR UNION-PTGWO and MANILA
JOCKEY CLUB, INC., respondents.
The Solicitor General for petitioner.
Pedro A. Lopez for respondent MJCRDOELU-
PTGWO.
Armando V. Ampil for respondent Manila Jockey
Club.
DE CASTRO, J.:
Petitioner seeks to set aside the Order and
Resolutions dated May 6, 1977, September 17, 1977
and March 14, 1978 of the Bureau of Labor Relations
for having been issued in excess of jurisdiction and
with grave abuse of discretion. It, likewise, prays for
an order directing respondent director to hold a
certification election so that the employees in the
company can elect a union representative to negotiate
an improved connective bargaining agreement to
replace the agreement which has expired on February
1, 1976.
On May 5, 1976, Plum Federation of Industrial and
Agrarian Workers filed a petition, praying that it be
certified as the sole and exclusive bargaining agent of
the rank-and-file workers of Manila Jockey Club, Inc.
On June 18, 1976, the Manila Jockey Club Race Day
Operation Employees Labor Union-PTGWO filed a
motion to intervene and opposition to said petition
and alleged among other things, that it is the
recognized collective bargaining representative of all
the employees of the company and that it is in the
process of negotiating a modification of the collective
bargaining agreement.
On August 30, 1976, another supplemental motion to
dismiss was filed by intervenor PTGWO, this time
invoking the "No Union Raiding Clause" of the
"Code of Ethics" adopted by the members of the
Trade Union Congress of the Philippines (T.U.C.P.)
wherein both petitioner and intervenor are members,
and claiming that the petition failed to satisfy the
30% requirement of the law. The entire record of the
case was forwarded to the Office of the President of
the T.U.C.P. for the purpose of submitting the matter
to the Congress for decision.
On March 16, 1977, the entire record of the case was
returned by the T.U.C.P. President to the Office of
then Secretary of Labor which in turn transmitted the
same to the Bureau of Labor Relations Office with a
forwarding letter signed by the late Roberto S. Oca in
his capacity as President of the Congress, stating,
among other things, the following: 1
In a National Executive Board
meeting of the Katipunang
Manggagawang Pilipino (TUCP)
held last March 7, 1977 at the
Army & Navy Club, it was duly
approved that the above-captioned
case be referred back to the BLR
and that MJCR-OELU-PTGWO be
declared as the sole and exclusive
bargaining agent, thus dismissing
the petition of PLUM.
On March 22, 1977, the BLR endorsed the case to
Officer-in-Charge Vicente Leodegardo, Jr., of Region
IV for appropriate action.
On May 5, 1977, Atty. Luna C. Piezas, Chief, Med-
Arbiter Section of Region IV, Department of Labor,
promulgated an order 2 dismissing the case pursuant
to the letter of the President of the T.U.C.P.
Petitioner PLUM filed an appeal to the Bureau of
Labor Relations predicated on the ground that TUCP
has no authority in law to grant or deny election
under the Labor Code which mandated the secret
ballot to elect the true union representative.
On September 17, 1977, the Bureau Director issued a
resolution' dismissing the appeal. Pertinent
portions 3 of said resolution read thus:
While it may be true that the facts
of the case may warrant the holding
of a certification election in the
bargaining unit concerned, to
sustain first the decision arrived at
by the National Executive Board of
TUCP appears of indispensable
importance. Contenders in the case
at bar are both members of TUCP.
Undeniably, there are internal rules
including their Code of Ethics to
keep them intact, to govern their
actions and finally to preserve the
Congress. It is therefore, a matter
of utmost necessity that a decision
arrived at by the National
Executive Board be respected and
enforced not only by the members
of the Congress themselves but also
by this Bureau and the Department
if necessity arises,
The appealed order has the letter of
Roberto Oca as its basis. It is
worthy to note that the letter sent
said communication in his capacity
as President of the TUCP and
nothing else. Whether or not he
happens also to be the president of
intervenor union is of no legal
significance since the decision of
the TUCP was handed down by its
National Executive Board and not
by him alone.
Other recourse could have been
taken by appellant. Very much
aware of the Decision of the
National Executive Board on
March 7, 1977, it could have asked
for a reconsideration of the same.
As shown by the records, the first
decision of the National Board was
for the holding of a certification
election. But intervenor asked for a
reconsideration hence the March 7,
decision. Appellant's failure
however could unequivocably be
interpreted as satisfaction of the
Decision. For this Office now, to
sustain appellant's stand and re-
open the case again by giving due
course to the instant appeal is not
only an open manifestation of non-
recognition of the existence of
TUCP but a further obstruction to
the goal of the Department to
establish one-union in one industry;
thus at the end, to attain industrial
peace.
xxx xxx xxx
Petitioner's motion for reconsideration was also
denied by public respondent for being pro-forma,
hence the present recourse by way of a petition for
certiorari and mandamus.
It was asserted by petition that nowhere in the Labor
Code or in the new Constitution has TUCP been
granted any authority to supersede or impair the
holding of a certification election or deny the
majority employees of their right to elect their own
union; that public respondent and the PTGWO acted
without jurisdiction in defiance of the rule of law and
popular democracy, that it, is not within the Code of
Ethics to suppress the employees' freedom to choose
their own union; and that the TUCP, while asserting
itself to be a Labor Center did not call the parties
involved for conference, to submit evidence or to
make a fair judicious and rational evaluation of the
dispute.
The Solicitor General in his manifestation and motion
prayed that he be relieved from filing the required
answer to the instant petition for the reason that he
was unable to sustain respondent bureau director's
questioned orders and resolution. The records of the
case were returned to said public respondent and he
was granted an extension of time within which to
submit his own answer to the petition.
Respondent Noriel in his comment (answer) made it
clear that he is not opposed to the conduct of a
certification election, and in fact he is ready to hold
such election if the case is returned to the jurisdiction
of his office. However, he stressed that the TUCP
Code of Ethics and General Council Resolution No.
76-2 are clear expressions of consent by the signatory
members, including their locals or affiliates, to settle
their disputes among themselves in accordance with
the decision of the National Executive Board and the
decision he made was made pursuant to such an
agreement.
On the other hand, private respondent union
maintained its stand that no certification election
should be held because the petition was not supported
by the written consent of at least 30% of all the
employees in the bargaining unit, and that this
requirement is mandatory.
A letter from the president of respondent union
reveals the present state of affairs of the employees
wherein they are deprived of the benefits of a
collective bargaining agreement, for management
refused to bargain with the union. If this situation
continues, the employees would stand to lose a long-
line of cases that the workers' welfare can be
promoted through the bargaining process.
Certification election is the fairest and most effective
way of determining which labor organization can
truly represent the working force. It is a fundamental
postulate that the win of the maj•rity if given
expression in an honest election with freedom on the
part of the voters to make their choice, is
controlling. 4 Protection to labor and freedom of
peaceful assembly and association are guaranteed by
the Constitution.

As to the issue of whether or not the 30% minimum

subscription requirement was met, it was held that the
Director is still empowered to call for a certification
election provided there was no abuse of discretion.
However, in the case at bar, instead of ordering an
election, respondent Director dismissed the appeal of
PLUM based on the decision of the TUCP, which the
Court considers an impairment of the freedom of the
workers to voice out their choice of the union to
represent them. If there is any doubt as to the
required number having met, there would be no better
way than the holding of a certification election to
ascertain which union really commands the
allegiance of the rank-and-file employees. 5 If the
desired goal is for the execution of a collective
bargaining contract to protect the workers, then
certification election is the most appropriate means to
attain said end.

Since there has been no certification election for the

past three (3) years as well as a certified collective
bargaining agreement which should govern the
economic and working conditions of the workers, a
certification election should immediately be ordered.
This Court had repeatedly made it clear that in labor
controversies, time is of the essence. 6

Accordingly, the questioned order and resolutions

dated May 5, 1977, September 17, 1977 and March
14, 1978 are nullified and set aside. Respondent
Director is hereby ordered to hold a certification
election forthwith. This decision is immediately
executory. No costs.

SO ORDERED.
#59: LITEX EMPLOYEES ASSN VS. EDUVALA
G.R. No. L-41106 September 22, 1977
LITEX EMPLOYEES
ASSOCIATION, petitioner,
vs.
GEORGE A. EDUVALA, in his capacity as
Officer-in-Charge, BUREAU OF LABOR
RELATIONS Departmentof Labor and
FEDERATION OF FREE WORKERS
(F.F.W.), respondents.
Esteban M. Mendoza for petitioner.
F. F. Bonifacio, Jr. for respondent FFW.
Acting Solicitor General Hugo E. Gutierrez, Jr.,
Assistant Solicitor General Reynato S. Puno and
Solicitor Romeo C. de la Cruz for respondent George
A. Eduvala, etc.
FERNANDO, J.:
In this and certiorari and prohibition proceeding,
what is sought to be nullified is an Order of
respondent George A. Eduvala, the then Officer-in-
Charge of the Bureau of Labor Relations, requiring
that a memorandumm election be held among the
members of the Litex Employees Association,
petioner labor union, to ascertain their wishes as to
their wishes as to their affiliation with respondent
Federation of Free Workers. It is the contention of
petitioner Union that there is no statutory
authorization for the holding of such a referendum
election. That is the decisive issue in this
comtroversy. In support of the competence of
respondent public official, Article 226 of the Present
Labor Code is cited. It reads thus: "The Bureau of
Labor Relations and the Labor Relations Division in
the the regional offices of the Labor shall have and
exclusive authority to act, at their own initiation or
upon request of either or both parties, on all inter-
union and intra-union conflicts, and disputes,
grievances of probe arising from or affecting labor-
management relations in all workplaces, whether
natural or non-agricultural, except those arising from
the implementation or interpretation of collective
bargaining agreements which shall be the subject of
grievance Procedure and/or voluntary
arbitration." 1 The comment of the then Acting
Solicitor General, now Associate Justice of the Court
of Appeal, Hugo E. Gutierrez, Jr., treated as the
answer, 2 maintained that the wording of the above
provision sustains the authority thus challenged.
There is considerable persuasiveness to such a view.
It would be an unduly restrictive interpretation them
if a negative answer were Seven to the question
posed. It would be oblivious to the basic end and aim
of the pant Labor Code to confer on the Department
of Labor and its bereaus the competence to pass upon
and decide labor controversies and thus minimize
judicial intervention. There is no legal basis for
nullifying such order.
This later dispute originated from a petition of
respondent Federation of Free Workers filed with the
Bureau of labor Relations against petitioner labor
Union to hold a referendum among the members of
the union for the of determining whether they desired
to be affiliated with such Federation. It was alleged
that a "great majority" of the members of the union
desired such affiliaion, but that its President, a certain
Johnny de Leon, was opposed. The contention of
petitioner Union acting through its counsel was that
only about 700 out of more than 2,200 employees of
the company had manifested their desire to affliate
with the Federation and that a substantial number of
such had since then repudiated their signatures. It
also raised the point that what was sought was a
certification election which was not proper as there
was a certified collective bargaining agreement
between the union and the company. The
Compulsory Arbitrator, after a careful study of the
pleadings, reached the conclusion that the truth of the
matter could best be assertained by a referendum
election. Respondent as Officer-in-Charge of the
Bureau of labor Relations affirmed. Hence this
petition directed to this Court, as a jurisdictional
question is raised.
The petition, as noted at the outset, lacks merit.
1. Article 226 of the New Labor Code cannot be
misread to signify that the authority conferred on the
Secretary of labor and the officials of the Department
is limited in character. On the contrary, even a
cursory reading thereof readily yields the conclusion
that in the interest of industrial peace and for the
promotion of the salutary constitutional objectives of
social justice and protection to labor, the competence
of the governmental entrusted with supervision over
disputes involving employers and employees as well
as "inter-union and intra-union conflicts," is broad
and expensive. Thereby its purpose becomes crystal-
clear. As is quite readily discernible where it
concerns the promotion of social and economy rights,
the active participation in the implementation of the exactitude the wishes of the employees concerned as
codal objective is entrusted to the executive amounting to arbitrary exercise exercise of a power
department. There is no support for any allegation of had been rejected. 5
jurisdictional infirmity, considering that the language
employed is well-nigh inclusive with the stress on its WHEREFORE, the petition for certiorari is
"and exclusive authority to act." If it were otherwise, dismissed. This decision is immediately executory.
its policy might be rendered futile. That is to run
counter to a basic postulate in the canons of statutory
Separate Opinions
interpretation. Learned Hand referred to it as the
proliferation of purpose. As was emphatecally
asserted by Justice Frankfurter: "The generating ANTONIO, J., concurring:
consideration is that legislation is more than
composition. It is an active instrument of government The respondent public officer has sufficient authority,
which, for purposes of interpretation, means that laws under the labor Code, to conduct the referendum
have ends to be achieved. It is in this connection that aforementioned.
Holmes said, 'words are flexible.' Again it was
Holmes, the last judge to give quarter to loose AQUINO, J., concur:
thinking or vague yearning, who said that 'the general
purpose is a more is a more important aid to the Because the instant case was rendered moot by the
meaning than any rule which grammar or formal 1975 petition of FFW for a certification election
logic may lay down.' And it was Holmes who chided among the employees and workers of Lirag Textile
courts for being apt to err by sticking too closely to Mills, Inc. If a certification election will be held, a
the words of a law when those words import a policy referendum is not necessary.
that goes beyond them." 3 What is intended by the
framers of code or statute is not to be frustrated. Even
on the assumption that by some strained or literal
reading of the employed, a doubt can be raised as to
its scope, the 'immitation should not be at war with Separate Opinions
the end sought to be attained. It cannot be denied that
if through an ingenious argumentation, limits may be ANTONIO, J., concurring:
set on a statutory power which should not be there,
there would be a failure to effectuate the statutory The respondent public officer has sufficient authority,
purpose and policy. That kind of approach in under the labor Code, to conduct the referendum
statutory construction has never recommended aforementioned.
itself. 4
AQUINO, J., concur:
2. Nor has petitioner made out a case of grave abuse
of since the matter involved is a dispute as to whether Because the instant case was rendered moot by the
or not the members of petitioner labor union had 1975 petition of FFW for a certification election
decided, contrary to the wishes of its president, to among the employees and workers of Lirag Textile
join respondent Federation. What better way could Mills, Inc. If a certification election will be held, a
there be of ascertaining the truth there than to hold referendum is not necessary.
the referendum election. The guarantee of fairness as
to whether there is accuracy depends on the
impartiality and neutrality of the Bureau of Labor
Relations. There is nothing in petitioner's submission
to indicate that such would not be the case. Under
such circumstances then, petitioner labor union could
not be held to allege that there was an abuse, much
less a grave abuse, of the discretionary authority
vested in such office. It suffices to take note of how
often this Court, after a careful consideration of the
issue involved, had rejected such a contention in
certification cases, analogous, if not similar in
character. Invariably, the imputation that the holding
of an election for the purpose of determining with
#60: VILLAOR VS TRAJANO
G.R. No. L-69188 September 23, 1986
MIGUEL J. VILLAOR and CECILIO V.
BAUTISTA, petitioners,
vs.
HON. CRESENCIANO B. TRAJANO, in his
capacity as Director, Bureau of Labor Relations of
the Ministry of Labor and Employment;
OCTAVIO A. PINEDA, RAFAEL SAMSON,
EDUARDO C. FLORA, MARIO S. SANTOS and
CARLOS BANDALAN, respondents.
Wenceslao C. Laureta for petitioners.
Bernardino Julve for private respondents.
Porter Puguon for public respondent.
PARAS, J.:
This is a petition to review on certiorari the
November 14, 1984 decision of respondent BLR
Director Cresenciano B. Trajano in BLR Case No. A-
182-84, entitled "Miguel J. Villaor, et al., Petitioners
vs. Octavio Pineda, et al., Respondents, and Mario S.
Santos, et al., Intervenors," setting aside the Med-
Arbiters Orders of June 27, 1984 and August 1,
1984.
The Philippine Air Lines Employees' Association
(PALEA) is the bargaining agent of the workers in
the Philippine Air Lines (PAL). The union has a
Board of Directors composed of the president, vice-
president, secretary, treasurer and 17 directors elected
for a term of three (3) years by members in "good
standing" on the last Thursday of February of the
election year. It has also a Commission on Election
(COMELEC) whose members sit for a term of three
(3) years. At present, the COMELEC is composed of
herein respondents Octavio Pineda, as chairman, and
Rafael Samson and Edwardo Flora, as members. The
then incumbent president and vice-president were
herein respondents Mario S. Santos and Carlos
Bandalan, respectively,
On February 17-23, 1984, in Metro Manila and on
February 20, 1984 in Cebu/Mactan area, PALEA
held its election for National Officers. Herein
petitioner Miguel J. Villaor won the election over
respondent Mario S. Santos for the presidency,
Villaor obtaining 1,954 votes to Santos' 1,809 votes,
or a difference of 145 votes. Likewise, herein
petitioner Cecilio V. Bautista won against Carlos V.
Bandalan for the position of vice-president, Bautista
garnering 1,264 votes as against Bandalan's 1,220
votes, or a difference of 44 votes, They were
proclaimed on February 25, 1984.
Subsequently, the defeated candidates-respondent
Mario S. Santos, for president; respondent Carlos V.
Bandalan, for vice-president; and Antonio Josue, for
secretary, filed their election protests with the
PALEA COMELEC within the 30 day reglementary
period, as provided under the Constitution and By-
Laws of the Association, on the grounds that (1) a
number of votes in precincts 1, 4 and 4-A were
segregated and not counted; and (2) a substantial
number of PALEA members in Cebu/Mactan area
were not able to vote on February 20, 1984 by reason
of the voting days having been reduced from two
(February 20-21, 1984) to just one day (February 20,
1984). Respondent Mario S. Santos filed his protest
on March 12, 1984; respondent Carlos Bandalan filed
his protest on February 27, 1984; and Antonio Josue
on March 14, 1984, before PALEA COMELEC
composed of the herein other respondents.
Meanwhile, on March 6, 1984, respondent Mario S.
Santos sent petitioner Miguel J. Villaor a letter, the
body of which reads—
We formally turnover to you
PALEA's CBA proposals in the
ongoing PAL-PALEA CBA
negotiations. Other pertinent
records are either accompanying
these proposals or on file with the
office.
Other PALEA properties, including
the President's car and another
vehicle, shall also be turned over to
you at the appropriate time.
On the CBA negotiation, we would
like to inform you that we are filing
a manifestation with the Director-
Bureau of Labor Relations in order
to withdraw PALEA's declaration
of deadlock. This will give you and
the other officers-elect a free hand
to continue with the PAL-PALEA
CBA negotiation.
 As we have the common objective
of protecting and promoting the
interests of our members, we wish
you all the luck and best of
everything for our members and
our union.
On April 17, 1984, petitioners filed their joint
Comment/Answer to the election protests cases, and
two (2) basic issues were joined, to wit:
1. Whether or not the more than 40
to 47 ballots cast by alleged
qualified PALEA members in
Precincts 1, 4 and 4-A which were
segregated and invalidated actually
resulted in the disenfranchisement
of said PALEA voters; and
2. Whether or not the qualified
PALEA voters in the Cebu/Mactan
areas were deprived of their right to
vote as a result of the sudden
change from the two day traditional
election days in previous years to
just one day.
On the basis of the election protests and the
Comment/Answer thereto, respondent PALEA
COMELEC members, in a letter dated April 25,
1984, informed the parties that the ballot boxes in the
questioned precincts would be opened and their
voters list retrieved on April 25, 1984 at 10:00 in the
morning.
On April 24, 1984, herein petitioners Miguel J.
Villaor and Cecilio V. Bautista, and Ernesto P.
Galang filed a complaint/petition with the Regional
Office of the Ministry of Labor and Employment
(MOLE) against the PALEA COMELEC members,
seeking their disqualification from their positions as
such on the ground of alleged partiality for the
protestants. The Regional Office summoned the
parties to appear before Med-Arbiter Renato D.
Parungao "on the 25th of April at 9:30 a. m."
On April 25, 1984, herein petitioners Miguel J.
Villaor and Cecilio V. Bautista, and respondent
PALEA COMELEC member Edwardo C. Flora
appeared before the Med-Arbiter who issued an
Order "enjoining the respondents from opening the
ballot boxes subject of the controversy." On the same
day, at 10:30 a.m., respondents Octavio Pineda and
Rafael Samson proceeded to open the ballot boxes.
On April 27, 1984, respondents, sitting en
banc, resolved the election protests, the dispositive
portion of which reads-
WHEREFORE, AND IN VIEW
OF ALL THE FOREGOING, THE
PALEA COMELEC HEREBY
RESOLVES, AS IT HEREBY
RESOLVED-
1. To set aside the proclamation
dated February 25, 1984 of Miguel
J. Villaor as PALEA President,
Cecilio V. Bautista as Vice-
President and Ernesto P. Galang as
Secretary;
2. To count the segregated votes of
qualified PALEA members, as
verified, in Precincts 1, 4 and 4-A.
The counting shall be held on May
4, 1984 at 1300 H at the PALEA
COMELEC Office;
3. To hold a special election on
May 4, 1984 from 0500 H to 1700
H, in Cebu/Mactan to allow
PALEA members, not able to vote
on February 20, 1984, to cast their
votes for the positions of President,
Vice-President and Secretary; and
4. To proclaim the winning
candidates for PALEA President
Vice-President and Secretary
immediately after the election,
counting and canvassing of votes as
hereinabove indicated.
SO RESOLVED.
On May 3, 1984, petitioners filed a motion with the
Med-Arbiter to cite COMELEC members for
contempt, to suspend them from office, and to annul
their Resolution of April 27, 1984 "for being issued
without jurisdiction." On the same day, a notice was
issued directing the parties and the petitioners'
counsel to appear for hearing at 1:30 p.m. on May 3
and 4, 1984, On the May 3, 1984 scheduled hearing,
none of the parties appeared, and on the May 4, 1984
scheduled hearing, only the petitioners' counsel
appeared.
In conformity with the Resolution of April 27, 1984,
respondents PALEA COMELEC members counted
the segregated ballots in precincts 1, 4 and 4-A on
May 4, 1984 and likewise held on said date a special
election in Cebu/Mactan area. As a result of the
election of May 4, 1984, Mario S. Santos, Carlos V.
Bandalan and Ernesto Galang, were proclaimed on
May 5, 1984 as the duly elected President, Vice-
President and Secretary respectively by PALEA
COMELEC.
On May 8, 1984, Petitioner Miguel J. Villaor filed a
motion to annul the May 4, 1984 election and the
proclamation of the winners contending that these
were "premature" as no action had yet been taken on
the motion to declare the April 27, 1984 Resolution
void.
On May 31, 1984, the respondents filed their
omnibus answer to the petition and the subsequent
motions filed by the petitioners.
On the same date, May 31, 1984, herein respondents
Mario S. Santos and Carlos V. Bandalan filed their
Notice To Admit Intervention (Record, p. 128) in the
case filed by Villaor, et al. against the PALEA
COMELEC members. The intervention was allowed
when therein petitioners withdrew their opposition
thereto. The intervenors likewise manifested that they
were adopting the position paper filed by the
respondents therein as their own.
On June 5, 1984, petitioners filed a motion for
injunction alleging that Mario S. Santos and "his
cohorts" had inveigled the Board of Directors to
adopt a resolution including Santos in the union panel
and that as a result thereof, the PAL refused to
continue negotiating with the union.
On June 8, 1984, herein respondents Mario S. Santos
and Carlos V. Bandalan filed their answer in
intervention alleging that they were duly proclaimed
officers of the union and the ones recognized by the
Board of Directors.
On the same day, June 8, 1984, the Med-Arbiter
issued a temporary restraining order "enjoining the
respondents and the intervenors to cease and desist
from acting as PALEA President, Vice-President and
Secretary in order to maintain the status quo
prevailing prior to the filing of the instant petition."
The Med-Arbiter furthermore directed them to show
cause why injunction should not be granted in favor
of the petitioners. The intervenors filed an opposition
on June 19, 1984.
On June 27, 1984, the Med-Arbiter issued a writ of
preliminary injunction (Ibid., pp. 116-117) "enjoining
both the respondents and intervenors to cease and
desist from further committing the acts complained of
until the intra-union conflict and all its attendant
incidents are finally resolved." Moreover, the Med-
Arbiter declared that "Miguel J. Villaor remains as
President of the Philippine Airlines Employees'
Association (PALEA) unless ordered otherwise."
The Med-Arbiter, after hearing, issued an Order dated
August 1, 1984, (Ibid, pp. 119-127) the dispositive
portion of which reads-
WHEREFORE, premises
considered the petition is hereby
granted and let an order issue, as it
is hereby issued:
a) Declaring respondents Octavio
Pineda, Rafael Samson and
Edwardo Flora as disqualified from
their office as chairman and
members, respectively, of the
PALEA Commission on Elections
and ordering them to desist from
further performing their functions
as Comelec officers;
b) Declaring as null and void
Resolution dated 27 April 1984,
promulgated ex-parte in complete
violation of Sec. 6, Article XIX of
the PALEA Constitution and By-
laws;
c) Declaring the special election
conducted by the respondents
(PALEA Comelec) on 4 May 1984
as invalid and that the results
thereof, proclaiming Mario S.
Santos, Carlos V. Bandalan, as
President and Vice-President,
respectively, as likewise declared
null and void;
d) The writ of preliminary
injunction dated 27 June 1984,
enjoining intervenors Mario S.
Santos and Carlos V. Bandalan as
President and Vice- President, of
PALEA, but, also from interfering
with the on-going CBA
negotiations between the PAL
Management and PALEA and also
 from interfering in any manner with
the operation of the activities of
PALEA, shall continue to remain
binding and effective until this
intra-union conflict and its
attendant aspects are finally
resolved and terminated, in which
case the said injunctive writ shall
likewise be dissolved.
Therein respondent PALEA COMELEC members
and intervenors Mario S. Santos and Carlos V.
Bandalan appealed the said Order of the Med-Arbiter
to the Bureau of Labor Relations (BLR).
BLR Director Cresenciano B. Trajano, in a decision
dated November 14, 1984, (Ibid., pp. 33-42) set aside
the Med-Arbiter's Orders of June 27, 1984 and
August 1, 1984, and at the same time dismissed the
petition of Miguel J. Villaor and Cecilio V. Bautista
for lack of merit. Hence, the instant petition
(Ibid., pp. 56-115).
The First Division of this Court, in a Resolution dated
January 16, 1985, resolved without giving due course
to the petition to require the respondents to comment
within ten (10) days from notice thereof (Ibid., p.
203).
In compliance with the said Resolution, private
respondents filed their comment (Ibid., pp. 237-247)
on March 18, 1985.
On March 28, 1985, petitioners filed their "Reply" to
the comment filed by the private respondents.
On March 29, 1985, the Solicitor General filed his
comment. In the same, the Solicitor General
concluded that it is his opinion that respondent BLR
Director committed reversible error in setting aside
the Med-Arbiter's Orders, and recommended that the
instant petition be given due course.
Petitioners, in compliance with the Resolution of the
First Division of this Court dated April 22, 1985
(Ibid., p. 273) filed on May 17, 1985 their "Reply" to
the "Comment" filed by the Solicitor General.
Public respondent, in compliance with the June 16,
1985 Resolution of the First Division of this Court,
filed his comment (Ibid., pp. 327-374) on August 8,
1985.
The First Division of this Court, in a Resolution dated
August 26,1985 (lbid., p. 374-a) resolved (a) to give
due course to the petition; and (b) to require the
parties to submit simultaneous memoranda within
thirty (30) days from notice.
Petitioners filed their memorandum (Ibid., pp. 391-
435) on October 28, 1985; Private respondents filed
their memorandum (Ibid., pp. 438-464) on November
5, 1985; and public respondent, in a "Motion" dated
November 19,1985 (Ibid., pp. 462-464), respectfully
moved that the comment he has filed be treated and
considered as memorandum, Said motion was
granted by the First Division of this Court in its
Resolution of January 13,1986 (Ibid.,p. 476).
The sole issue in this case is —
Whether or not the decision of
public respondent Bureau of Labor
Relations Director issued on
November 14, 1984 was
promulgated with grave abuse of
discretion amounting to lack of
jurisdiction.
In his Decision of November 14, 1984 (p. 7, Ibid., p.
39), Public respondent BLR Director Cresenciano B.
Trajano, in reversing Med-Arbiter Renato D.
Parungos ruling disqualifying therein respondents as
members of the PALEA COMELEC stressed that the
Philippine Constitution assures the right of workers
to self-organization and this right implies the freedom
of unions from interference by employers and the
government; that it includes the right of unions to
elect their officers in full freedom and guarantee that
the government refrains from any interference which
would restrict this right or impede its lawful exercise;
and that "It shall be unlawful for any person," Article
247 of the Labor Code states, "to unduly interfere
with employees and workers in their exercise of the
right to self-organization." With the foregoing as his
premise, he opined that the right of self-organization
is impaired when the government dissolves a union
COMELEC and proceeds to resolve an election
protest pending before it.
In this connection, attention is invited to Article 226
of the Labor Code, which reads-
ART. 226. Bureau of Labor
Standards.-The Bureau of labor
Relations and the Labor Code
relations divisions of the regional
offices of the Department of Labor
 (now the Ministry of Labor and
Employment) shall have original
and exclusive authority to act, at
their own initiative or upon request
of either or both parties, on all
inter-union and intra-union
conflicts and all disputes arising
from or affecting labor-
management relations in all
workplaces whether agricultural or
non-agricultural, except those
arising from the implementation of
collective bargaining agreements
which shall be the subject of
grievance procedure and/or
voluntary arbitration.
as supplemented by Policy Instruction No. 6-relating
to the distribution of jurisdiction over labor cases-
xxx xxx xxx
3. The following cases are under
the exclusive original jurisdiction
of the Med-Arbiter Section of the
Regional Office:
xxx xxx xxx
b) Intra-union cases.
From the aforequoted provisions, it is safe to
conclude that the freedom of the unions from
interference from the government presupposes that
there is no inter-union or intra-union conflict. In the
instant case, there is no question that there is an intra-
union conflict.
Public respondent further opined that the COMELEC
should have been allowed to discharge its functions
without prejudice to the right of petitioners to apply
for relief from the Board of Directors, He averred that
under the union constitution, the Board has the power
to remove or discipline, by three-fourths' votes, any
union officer including the president himself or the
members of the COMELEC, and accordingly
concluded that only after the remedy failed could the
petitioners be allowed to bring their case to the Med-
Arbiter. In short, the petitioners should first exhaust
administrative remedies before bringing their case to
the Med-Arbiter.
Anent this opinion of public respondent, petitioners
averred that pursuant to Section 4 of Article VII of
the PALEA Constitution and By-Laws, which reads:
Section 4-As a fact-finding body,
the Chairman and members of the
Board of Inquiry (created by the
President) shall have the sole power
to conduct investigation on
involving an act specified under
Article 18, Section of this
Constitution committed by any
officer, member of the board or
members of the Association and
submit thereto reports and
recommendations based on their
findings to the Board of Directors
who shall have the sole power to
render decisions and impose
penalty to whoever is guilty.
The Board of Inquiry, created by the President, has
the sole power to investigate cases involving acts
committed by any officer, member of the Board or
member of the Association that the power of the
Board to remove or discipline any union officer,
including the President himself or the COMELEC
members cannot be exercised until the Board of
Inquiry submits its report and recommendation based
on their findings on the acts complained of after due
investigation. With this as a premise, petitioners
claim that in their Reply and Opposition dated
September 14, 1984, in connection with the three (3)
consolidated cases before Med-Arbiter Napoleon V.
Fernando, Nos. NLR-LRD-M-6-185-184, NLR-LRD-
M6-156-84 and NLR-LRD-N-6-204-84, they called
attention to the fact that they have exhausted
administrative remedies provided in the PALEA
Charter-On May 17, 1984, PALEA President Miguel
J. Villaor created the Special Board of Inquiry and
appointed Rey Taggueg, as chairman, Ildefonso
Medina and Rodolfo de Guzman, as members,
however, the Board refused to approve the newly
created Special Board of Inquiry for fear that they
themselves may be the first to be subjected to
investigation for the acts complained of in Case No.
NCR-LRD M-6-156-84. This claim of petitioners
was never denied by the private respondents.
Accordingly, there is no question that the Med-
Arbiter rightly exercised jurisdiction over the case.
Section 6 of Article XIX of the PALEA Constitution
provides:
 Sec. 6. In cases where a situation
arises, whereby the losing
candidate does not concede to the
result of the election he may, if he
so desires, submit in writing, his
protest to the Commission on
Election within 30 days after the
proclamation of the winning
candidates and the Commission on
Election, sitting en banc, shall hear
and decide such protest. ...
From the aforequoted provision, as opined by the
Solicitor General, "once a candidate concedes the
election, he is precluded from filing a protest."
Private respondent Mario S. Santos, prior to filing his
election protest, in his letter of March 6, 1984 to
herein petitioner Miguel J. Villaor, had already
unequivocably conceded the position of president to
the latter.
Likewise, from the aforequoted provision, it is
mandatory for the PALEA COMELEC to set the
election protest for appropriate hearing on the issues
raised before it could finally resolve the case. In the
instant case, it is undisputed that the PALEA
COMELEC, without conducting any formal hearing
on the issues raised, on the basis of the pleadings of
the parties, informed the parties in a letter dated April
23, 1984 that the ballot boxes in the questioned
precincts would be opened and their voters' list
retrieved on April 25, 1984 at 10:00 in the morning.
Likewise, on April 27, 1984, the PALEA
COMELEC, without the benefit of formal hearing,
resolved the election protest by setting aside the
proclamation dated February 25, 1984 of Miguel J.
Villaor as PALEA President, Cecilio V. Bautista as
Vice-President, and Ernesto P. Galang as Secretary;
directing the canvassing of the segregated ballots in
precincts 1, 4, and 4-A; and directing the holding of a
special election in Cebu and Mactan on May 4, 1984.
Besides, it appears that respondents Octavio Pineda
and Rafael Samson intentionally disregarded the
summons of Med-Arbiter Renato D. Parungo to
appear before him at 9:00 a.m. on April 25, 1984 so
that they can carry out their plan to open the ballot
boxes. Please note that the herein petitioners alleged
that Med-Arbiter Parungo issued a restraining order
enjoining the respondents, as PALEA COMELEC
members, to refrain from proceeding with their plan
to open the ballot boxes. Said restraining order was
personally served on respondent Edwardo Flora who
immediately called the PALEA office and after
respondent Octavio Pineda was on the phone, Flora
informed him, in the presence of Med-Arbiter
Parungo, about the restraining order served upon
them. Notwithstanding said information, respondents
Pineda and Samson went ahead and opened the ballot
boxes as planned. This allegation of petitioners was
never denied by the respondents. Respondent PALEA
COMELEC members, likewise disregarded Med-
Arbiter Renato D. Parungos notice for them to appear
for hearing at 1:30 p.m. on May 3 and 4, 1984.
The May 4, 1984 special election in Cebu and
Mactan is without factual and legal justification As
aptly observed by the Solicitor General, the same was
resorted to only to accommodate the herein other
private respondents-
There is absolutely no justification
for calling the said May 4, 1984
election. There is no law which
allows "piece meal" elections.
Obviously, such move was resorted
to by the PALEA Comelec to
accommodate defeated candidates
for president and vice-president in
the February 20, 1984 election,
Mario and Carlos Bandalan
(respondent herein), and enable
them to overcome the winning
margin of winning candidates
therein, Villaor and Bautista (herein
petitioners), who won by only 145
and 44 votes, respectively,
It is the contention of the protestants that a great
number of PALEA members were deprived of their
right to vote because it had been the tradition since
1969 to hold election in Cebu and Mactan for two
days; and that the holding of elections for only one
day was done without notice to all PALEA members
in said station. On the other hand, it is the contention
of the petitioners that the change was agreed upon by
all the candidates concerned in a conference held at
SMCD Office, Nichols Field, on February 20, 1982.
On said controversy, while public respondent found
for the protestants, the Solicitor General is for the
petitioners. Be that as it may, it is a fact that the
PALEA COMELEC issued on February 15, 1984 a
bulletin announcing that the elections in that area
would be only on February 20, 1984. Hence, it cannot
be said that the voters therein were not duly notified.
In addition to this, worth mentioning is the comment
of the Solicitor General, which reads:
... Besides, we do not see how these
103 members could have failed to
 know about the one-day election. It
was held within the office
premises, and, surely, they must
have been told of such fact by the
other members who voted in the
election. It would appear that these
193 members simply did not bother
to vote for one reason or another.
And we do not see the necessity of
holding a two-day election in said
areas with only 500 members, and
hold a one day election in Metro
Manila area which has about 4,000
members. That it is the tradition to
hold a two-day election in said
areas is not a valid argument.
Tradition can always be overturned,
as what happened in the instant
case.

The holding of the May 4, 1984 special election,

when its legality is still pending determination by the
Med-Arbiter, therefore, further shows the partiality of
the respondent PALEA COMELEC members.

WHEREFORE, the assailed decision of respondent

BLR Director is hereby SET ASIDE and the Orders
of June 27, 1984 and August 1, 1984 of Med-Arbiter
Renato D. Parungo are hereby REVIVED.

SO ORDERED.
#61: LA TONENA WORKERS UNIION VS SEC.
OF LABOR
G.R. No. 96821 December 9, 1994
LA TONDEÑA WORKERS UNION, petitioner,
vs.
THE HONORABLE SECRETARY OF LABOR
AND EMPLOYMENT, and HON. PURA
FERRER-CALLEJA, in her capacity as Director,
Bureau of Labor Relations, respondents.
Amorito V. Canete for petitioner.
MENDOZA, J.:
This is a petition for certiorari to set aside orders and
the decision of respondent Director of the Bureau of
Labor Relations (BLR) and Secretary of Labor and
Employment in BLR-AE-8-18-89, finding Ramon de
la Cruz and Norma Marin, president and treasurer
respectively of petitioner La Tondeña Worker's
Union (LTWU), accountable for union funds in the
amount of P367,553.00.
Petitioner LTWU is a duly registered labor
organization. For more that thirty years it was
bargaining agent of the rank-and-file workers of La
Tondeña Inc. at its Tondo Plant. On May 31, 1989 it
lost in a certification election to the Ilaw at Buklod ng
Manggagawa (IBM).
It appears that, on March 14, 1989, about 200, out of
1,015 members of petitioner, petitioned the National
Capital Region Office of the Department of Labor
and Employment (hereafter referred to as DOLE-
NCR) for an audit or examination of the funds and
financial records of the union. Accordingly an audit
was ordered and, on April 17, 1989, the acting
auditing examiner of the DOLE-NCR, Nepomuceno
Leaño II, submitted a report finding Ramon de la
Cruz and Norma Marin accountable for P367,553.00
for union dues remitted by La Tondeña Inc. to
LTWU.
De la Cruz and Marin appealed to then DOLE
Secretary Franklin Drilon, complaining that they had
not been heard before the report was made. The case
was indorsed to the respondent Director of the
Bureau of Labor Relations, who, on August 7, 1989,
directed the DOLE-NCR to forward to the BLR the
records of the case.
In her order dated September 29, 1989, the
respondent BLR Director found that indeed De la
Cruz and Marin had not been heard before they were
held liable for union funds. For this reason she set
aside the findings and recommendations of the
DOLE-NCR and ordered another audit/examination
to be conducted. The dispositive portion of her order
stated:
WHEREFORE, premises
considered, the
findings/recommendations of the
National Capital Region contained
in the letter of NCR Director Luna
C. Piezas to Teodoro Monleon, et
al. petitioners, dated 11 May 1989
are hereby set aside.
Accordingly, the Labor Relations
and Reporting Division (LRRD),
this Bureau is hereby directed to
conduct an audit/examination of the
books of accounts and other
financial records of La Tondeña
Workers Union (LTWU) for the
period of 1986 to February 1989.
SO ORDERED.
Petitioner moved for a reconsideration of the order
insofar as it ordered an audit/examination of books of
accounts and financial records. It argued that certain
requirements of Art. 274 of the Labor Code, as
amended by R.A. 6715, must first be complied with
before an audit/examination could be ordered, to wit:
(1) there must be a sworn written complaint, (2) it
must be supported by at least 20% of the total
membership of the union and (3) it must not have
been conducted during the freedom period nor within
the 30 days immediately preceding the date of
election of union officials.
Petitioner's motion was denied by the BLR in a
resolution dated December 1, 1989. Ramon de la
Cruz, Danilo Manrique, Arturo Bautista and Norma
Marin were ordered to submit "all financial records
and related documents of the union for the period
1986 to February 1989 within ten (10) days from
receipt of this order."
The union, through its new president, Danilo
Manrique, again moved for a reconsideration, this
time raising a jurisdictional question: That under Art.
274 of the Labor Code, as amended by Republic Act
No. 6715, the power to order an examination of the
books of accounts and financial activities of a union
is vested in the Secretary of Labor and Employment
or his representative and the BLR can not be
considered the Secretary's representative. In its order
of January 22, 1990, however, the BLR denied
petitioner's motion, even as it reiterated its previous
order of December 1, 1989, with warning that if the
records and documents required were not produced
within five days petitioner would be deemed to have
waived the right to present its evidence.
The union filed a petition for review of the orders of
December 1, 1989 and January 22, 1990 to the DOLE
Secretary. But the BLR proceeded with its
examination, and, as the union officers refused to
comply with its orders, the BLR based the
audit/examination on the certification of the
company. In an order dated July 5, 1990, the BLR
found the union officers personally accountable and
liable for the total amount of P367,553.00, which La
Tondeña Inc. certified it had remitted to LTWU as
union dues.
The Secretary of Labor and Employment did not act
on the petition for review of the union. Instead, he
referred the petition to the BLR which denied the
petition for having become moot and academic. The
dispositive portion of its order, dated November 21,
1990, states:
WHEREFORE, premises
considered, the petition for review
is denied for lack of merit. The
Order of this Bureau dated 5 July
1990 issued in the exercise of its
appellate jurisdiction over
audit/examination case heard
before the Regional Office, this
Department, is hereby affirmed in
toto.
Hence this petition, alleging grave abuse of discretion
by respondent Secretary of Labor and Employment
and Director of the Bureau of Labor Relations.
Petitioner alleges several grounds which raise the
following issues:
1. Whether under the law the power
to examine the books of accounts
of petitioner is vested in the
Secretary of Labor and
Employment or in the Bureau of
Labor Relations.
2. If it is vested in the Secretary of
Labor and Employment, whether
the power was not delegated by
him in this case to the Bureau of
Labor Relations.
3. Whether the examination of
petitioner's books was validly
ordered despite the fact that the
requirements of Art. 274 of the
Labor Code had not been complied
with.
4. Whether the union officers were
properly held accountable for union
funds.
With regard to the first issue, the petitioner cites Art.
274 of the Labor Code and Rule VIII-A of the
implementing rules, in support of its contention that
the BLR had no authority to conduct an examination
of the books of the LTWU and that such authority is
vested solely in the Secretary of Labor or his duly
authorized representative. These provision state:
Art. 274. Visitorial Powers. — The
Secretary of Labor and
Employment or his duly authorized
representative is hereby empowered
to inquire into the financial
activities of legitimate labor
organizations upon the filing of a
complaint under oath and duly
supported by the written consent of
at least twenty (20%) percent of the
total membership of the labor
organization concerned and to
examine their books of accounts
and other records to determine
compliance or non-compliance with
the law and to prosecute any
violations of the law and the union
constitutions and
by-laws; Provided, that such
inquiry or examination shall not be
conducted during the sixty (60) day
freedom period nor within the thirty
(30) days immediately preceding
the date of election of union
officials.
Rule VIII-A
VISITORIAL POWER
 Sec. 1. Exercise of visitorial power.
— The Secretary of Labor and
Employment or his duly authorized
representative shall inquire into the
financial activities of any legitimate
labor organization and examine
their books of accounts and other
records to determine compliance
with the law and the organization,
constitution and by-laws, upon the
filing of a complaint under oath and
duly supported by the written
consent of at least 20% of the total
membership of the labor
organization concerned.
Sec. 2. Period of inquiry or
examination. — No inquiry or
examination of the financial
activities and books of accounts as
well as other records of any
legitimate labor organization
mentioned in the preceding section
shall be conducted during the 60
day freedom period nor within 30
days immediately preceding the
date of election of union officials.
The petitioner argues that although Art. 274
authorizes the Secretary to delegate the examination
of accounts to a representative, the BLR Director
cannot be considered a duly authorized representative
because the power to examine the books of accounts
of a union has already been delegated to union
account officers pursuant to the implementing rules,
Rule 1, sec. 1(ff) which provides:
"Union Accounts Examiners" are
officials of the Bureau or the
Industrial Relations Division in the
Regional Office empowered to
audit books of accounts of the
union.
On the other hand, the public respondents contend
that union accounts examiners are actually officials
of the BLR because the word "Bureau" in sec.
1(ff) refers to the Bureau of Labor Relations. At any
rate, they contend that by endorsing the case to the
BLR, the Secretary of Labor and Employment clearly
designated the BLR to act on his behalf.
Respondent's contention is well taken. The "union
accounts examiners of the Bureau" mentioned in Rule
1, sec. 1(ff) of the implementing rules as having the
power to audit the books of accounts of unions are
actually officials of the BLR because the word
"Bureau" is defined in Rule 1, sec. 1(b) of the same
rules as the Bureau of Labor Relations.
Anyway, the delegation of authority to union
accounts examiners in Rule 1, sec. 1(ff) is not
exclusive. By indorsing the case to the BLR, the
Secretary of Labor and Employment must be
presumed to have authorized the BLR to act on his
behalf. As already stated, the Secretary made two
indorsements: first, when he referred to the BLR the
letter dated July 27, 1989 of Ramon de la Cruz and
Norma Marin seeking the annulment of the audit
report of the DOLE NCR, and second, on September
4, 1990 when, instead of acting on the petition for
review of the union, he indorsed it to the BLR.
Independently of any delegation, the BLR had power
of its own to conduct the examination of accounts in
this case. Book IV, Title VII, Chapter 4, sec. 16 of
the Administrative Code of 1987 provides:
Sec. 16. Bureau of Labor Relations.
— The Bureau of Labor Relations
shall set policies, standards, and
procedures on the registration and
supervision of legitimate labor
union activities including denial,
cancellation and revocation of labor
union permits. It shall also set
policies, standards, and procedure
relating to collective bargaining
agreements, and the examination of
financial records of accounts of
labor organizations to determine
compliance with relevant laws.
The Bureau shall also provide
proper orientation to workers on
their rights and privileges under
existing laws and regulations, and
develop schemes and project for the
improvement of the standards of
living of workers and their families.
The Labor Code, as amended by RA 6715, likewise
authorizes the BLR to decide intra-union disputes.
This includes the examinations of accounts. Thus,
Art. 226 of the Code provides:
Art. 226. Bureau of Labor
Relations. — The Bureau of Labor
Relations and the Labor Relations
Divisions in the regional offices of
 the Department of Labor shall have
original and exclusive authority to
act, at their own initiative or upon
request of either or both parties, on
all
inter-union and intra-union
conflicts, and all disputes,
grievances or problems arising
from or affecting labor-
management relations in all
workplaces whether agricultural or
non-agricultural, except those
arising from the implementation or
interpretation of collective
bargaining agreements which shall
be the subject of grievance
procedure and/or voluntary
arbitration.
The Bureau shall have fifteen (15)
working days to act on labor cases
before it, subject to extension by
agreement of the parties.
Petitioner's contention that the intra-union dispute
mentioned in this provision does not include the
examination of accounts of the union because it
contemplates intra-union conflicts affecting labor-
management relations is untenable. Conflicts
affecting labor-management relations are apart from
intra-union conflicts, as is apparent from the text of
Art. 226.
This brings us to the second question, whether the
examination of accounts in this case is valid
considering that it was not initiated through a sworn
written complaint by at least 20% of the total
membership of the LTWU. As already stated, the
case arose from a letter written by 200, out of a total
membership force of 1,015 of the LTWU. These
represented 19.70% of the total membership of the
union, just a little less than the required number.
The requirements referred to were inserted in Art.
274 by way of an amendment by R.A. 6715 which
took effect on March 21, 1989. On the other hand, the
letter of the union members petitioning for an
examination of the financial records of the union was
made on March 14, 1989, i.e., seven days before the
effectivity of the amendments. At the time the letter
was made, Art. 274 merely provided:
Art. 274. Visitorial power. — The
Secretary of Labor or his duly
authorized representative is hereby
empowered to inquire, from time to
time, into the financial activities of
legitimate labor organizations and
to examine their books of accounts
and other records to determine
compliance or non-compliance with
the law and to prosecute any
violations of the law and the union
constitution and by-laws.
The validity of the request for examination of union
accounts must be determined as of the time of its
filing. Hence we hold that the request of the 200
union members in this case was validly made and
conferred jurisdiction on the DOLE-NCR to conduct
the examination of the books of accounts of the
petitioners.
It is indeed true that, in setting aside the audit report
of the DOLE-NCR, the BLR cited the fact that the
examination of accounts had been made within the
so-called "freedom period." But as the BLR pointed
out in its order dated September 29, 1989, the ban on
examination or audit of union funds within 60 days of
the expiration of the collective bargaining agreement
had been a policy of the Department of Labor and
Employment even before R.A. 6715 took effect.
There is, therefore, nothing inconsistent in holding
that the examination of accounts by the DOLE-NCR
as void for having been conducted within the freedom
period and saying now that since the letter requesting
such an examination was made before the effectivity
of R.A. 6715, the requirements of sworn written
complaint and support of at least 20% of the total
membership of the union do not apply.
The examination subsequently ordered by the BLR,
although made after the effectivity of R.A. 6715, was
validly conducted because it was simply a
continuation of proceedings already began in the
DOLE-NCR. As a matter of fact the petitioners, in
elevating the matter to the Secretary of Labor,
specifically requested that their letter be treated as a
motion for reconsideration or as an appeal from the
audit report of the DOLE-NCR.
Finally, it is claimed that petitioners Ramon de la
Cruz and Norma Marin were denied due process by
the BLR. As already shown, however, they were
given every opportunity to defend themselves,
including a warning that if they persisted in their
refusal to submit the books of accounts of the union
they would be considered to have waived the right to
present their evidence. As they did not heed the
warning, we think the BLR was justified in using, as
basis of its examination, the certification of La
Tondeña, Inc. as to the amount remitted by it to the
LTWU as union dues. This, at any rate, is a factual
matter and the rule is that the findings of facts of
administrative agencies, when supported by
substantial evidence, will not be disturbed.

WHEREFORE, the petition for certiorari is

DISMISSED.

SO ORDERED.
#62: RUGA VS NLRC
G.R. No. L-72654-61 January 22, 1990
ALIPIO R. RUGA, JOSE PARMA, ELADIO
CALDERON, LAURENTE BAUTU, JAIME
BARBIN, NICANOR FRANCISCO, PHILIP
CERVANTES and ELEUTERIO
BARBIN, petitioners,
vs.
NATIONAL LABOR RELATIONS
COMMISSION and DE GUZMAN FISHING
ENTERPRISES and/or ARSENIO DE
GUZMAN, respondents.
J.C. Espinas & Associates for petitioners.
Tomas A. Reyes for private respondent.
FERNAN, C.J.:
The issue to be resolved in the instant case is whether
or not the fishermen-crew members of the trawl
fishing vessel 7/B Sandyman II are employees of its
owner-operator, De Guzman Fishing Enterprises, and
if so, whether or not they were illegally dismissed
from their employment.
Records show that the petitioners were the fishermen-
crew members of 7/B Sandyman II, one of several
fishing vessels owned and operated by private
respondent De Guzman Fishing Enterprises which is
primarily engaged in the fishing business with port
and office at Camaligan, Camarines Sur. Petitioners
rendered service aboard said fishing vessel in various
capacities, as follows: Alipio Ruga and Jose Parma
patron/pilot; Eladio Calderon, chief engineer;
Laurente Bautu, second engineer; Jaime Barbin,
master fisherman; Nicanor Francisco, second
fisherman; Philip Cervantes and Eleuterio Barbin,
fishermen.
For services rendered in the conduct of private
respondent's regular business of "trawl" fishing,
petitioners were paid on percentage commission basis
in cash by one Mrs. Pilar de Guzman, cashier of
private respondent. As agreed upon, they received
thirteen percent (13%) of the proceeds of the sale of
the fish-catch if the total proceeds exceeded the cost
of crude oil consumed during the fishing trip,
otherwise, they received ten percent (10%) of the
total proceeds of the sale. The patron/pilot, chief
engineer and master fisherman received a minimum
income of P350.00 per week while the assistant
engineer, second fisherman, and fisherman-
winchman received a minimum income of P260.00
per week. 1
On September 11, 1983 upon arrival at the fishing
port, petitioners were told by Jorge de Guzman,
president of private respondent, to proceed to the
police station at Camaligan, Camarines Sur, for
investigation on the report that they sold some of
their fish-catch at midsea to the prejudice of private
respondent. Petitioners denied the charge claiming
that the same was a countermove to their having
formed a labor union and becoming members of
Defender of Industrial Agricultural Labor
Organizations and General Workers Union
(DIALOGWU) on September 3, 1983.
During the investigation, no witnesses were presented
to prove the charge against petitioners, and no
criminal charges were formally filed against them.
Notwithstanding, private respondent refused to allow
petitioners to return to the fishing vessel to resume
their work on the same day, September 11, 1983.
On September 22, 1983, petitioners individually filed
their complaints for illegal dismissal and non-
payment of 13th month pay, emergency cost of living
allowance and service incentive pay, with the then
Ministry (now Department) of Labor and
Employment, Regional Arbitration Branch No. V,
Legaspi City, Albay, docketed as Cases Nos. 1449-83
to 1456-83. 2 They uniformly contended that they
were arbitrarily dismissed without being given ample
time to look for a new job.
On October 24, 1983, private respondent, thru its
operations manager, Conrado S. de Guzman,
submitted its position paper denying the employer-
employee relationship between private respondent
and petitioners on the theory that private respondent
and petitioners were engaged in a joint venture. 3
After the parties failed to reach an amicable
settlement, the Labor Arbiter scheduled the case for
joint hearing furnishing the parties with notice and
summons. On December 27, 1983, after two (2)
previously scheduled joint hearings were postponed
due to the absence of private respondent, one of the
petitioners herein, Alipio Ruga, the pilot/captain of
the 7/B Sandyman II, testified, among others, on the
manner the fishing operations were conducted, mode
of payment of compensation for services rendered by
the fishermen-crew members, and the circumstances
leading to their dismissal. 4
On March 31, 1984, after the case was submitted for
resolution, Labor Arbiter Asisclo S. Coralde rendered
a joint decision 5 dismissing all the complaints of
petitioners on a finding that a "joint fishing venture"
and not one of employer-employee relationship
existed between private respondent and petitioners.
From the adverse decision against them, petitioners
appealed to the National Labor Relations
Commission.
On May 30, 1985, the National Labor Relations
Commission promulgated its resolution 6 affirming
the decision of the labor arbiter that a "joint fishing
venture" relationship existed between private
respondent and petitioners.
Hence, the instant petition.
Petitioners assail the ruling of the public respondent
NLRC that what exists between private respondent
and petitioners is a joint venture arrangement and not
an employer-employee relationship. To stress that
there is an employer-employee relationship between
them and private respondent, petitioners invite
attention to the following: that they were directly
hired by private respondent through its general
manager, Arsenio de Guzman, and its operations
manager, Conrado de Guzman; that, except for
Laurente Bautu, they had been employed by private
respondent from 8 to 15 years in various capacities;
that private respondent, through its operations
manager, supervised and controlled the conduct of
their fishing operations as to the fixing of the
schedule of the fishing trips, the direction of the
fishing vessel, the volume or number of tubes of the
fish-catch the time to return to the fishing port, which
were communicated to the patron/pilot by radio
(single side band); that they were not allowed to join
other outfits even the other vessels owned by private
respondent without the permission of the operations
manager; that they were compensated on percentage
commission basis of the gross sales of the fish-catch
which were delivered to them in cash by private
respondent's cashier, Mrs. Pilar de Guzman; and that
they have to follow company policies, rules and
regulations imposed on them by private respondent.
Disputing the finding of public respondent that a
"joint fishing venture" exists between private
respondent and petitioners, petitioners claim that
public respondent exceeded its jurisdiction and/or
abused its discretion when it added facts not
contained in the records when it stated that the pilot-
crew members do not receive compensation from the
boat-owners except their share in the catch produced
by their own efforts; that public respondent ignored
the evidence of petitioners that private respondent
controlled the fishing operations; that public
respondent did not take into account established
jurisprudence that the relationship between the
fishing boat operators and their crew is one of direct
employer and employee.
Aside from seeking the dismissal of the petition on
the ground that the decision of the labor arbiter is
now final and executory for failure of petitioners to
file their appeal with the NLRC within 10 calendar
days from receipt of said decision pursuant to the
doctrine laid down in Vir-Jen Shipping and Marine
Services, Inc. vs. NLRC, 115 SCRA 347 (1982), the
Solicitor General claims that the ruling of public
respondent that a "joint fishing venture" exists
between private respondent and petitioners rests on
the resolution of the Social Security System (SSS) in
a 1968 case, Case No. 708 (De Guzman Fishing
Enterprises vs. SSS), exempting De Guzman Fishing
Enterprises, private respondent herein, from
compulsory coverage of the SSS on the ground that
there is no employer-employee relations between the
boat-owner and the fishermen-crew members
following the doctrine laid down in Pajarillo vs. SSS,
17 SCRA 1014 (1966). In applying to the case at bar
the doctrine in Pajarillo vs. SSS, supra, that there is
no employer-employee relationship between the boat-
owner and the pilot and crew members when the
boat-owner supplies the boat and equipment while
the pilot and crew members contribute the
corresponding labor and the parties get specific
shares in the catch for their respective contribution to
the venture, the Solicitor General pointed out that the
boat-owners in the Pajarillo case, as in the case at
bar, did not control the conduct of the fishing
operations and the pilot and crew members shared in
the catch.
We rule in favor of petitioners.
Fundamental considerations of substantial justice
persuade Us to decide the instant case on the merits
rather than to dismiss it on a mere technicality. In so
doing, we exercise the prerogative accorded to this
Court enunciated in Firestone Filipinas Employees
Association, et al. vs. Firestone Tire and Rubber
Co. of the Philippines, Inc., 61 SCRA 340 (1974),
thus "the well-settled doctrine is that in labor cases
before this Tribunal, no undue sympathy is to be
accorded to any claim of a procedural misstep, the
idea being that its power be exercised according to
justice and equity and substantial merits of the
controversy."
Circumstances peculiar to some extent to fishermen-
crew members of a fishing vessel regularly engaged
in trawl fishing, as in the case of petitioners herein,
who spend one (1) whole week or more 7 in the open
sea performing their job to earn a living to support
their families, convince Us to adopt a more liberal
attitude in applying to petitioners the 10-calendar day
rule in the filing of appeals with the NLRC from the
decision of the labor arbiter.
Records reveal that petitioners were informed of the
labor arbiter's decision of March 31, 1984 only on
July 3,1984 by their non-lawyer representative during
the arbitration proceedings, Jose Dialogo who
received the decision eight (8) days earlier, or on
June 25, 1984. As adverted to earlier, the
circumstances peculiar to petitioners' occupation as
fishermen-crew members, who during the pendency
of the case understandably have to earn a living by
seeking employment elsewhere, impress upon Us that
in the ordinary course of events, the information as to
the adverse decision against them would not reach
them within such time frame as would allow them to
faithfully abide by the 10-calendar day appeal period.
This peculiar circumstance and the fact that their
representative is a non-lawyer provide equitable
justification to conclude that there is substantial
compliance with the ten-calendar day rule of filing of
appeals with the NLRC when petitioners filed on July
10, 1984, or seven (7) days after receipt of the
decision, their appeal with the NLRC through
registered mail.
We have consistently ruled that in determining the
existence of an employer-employee relationship, the
elements that are generally considered are the
following (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employer's power to control the
employee with respect to the means and methods by
which the work is to be accomplished. 8 The
employment relation arises from contract of hire,
express or implied. 9 In the absence of hiring, no
actual employer-employee relation could exist.
From the four (4) elements mentioned, We have
generally relied on the so-called right-of-control
test 10 where the person for whom the services are
performed reserves a right to control not only the end
to be achieved but also the means to be used in
reaching such end. The test calls merely for the
existence of the right to control the manner of doing
the work, not the actual exercise of the right. 11
The case of Pajarillo vs. SSS, supra, invoked by the
public respondent as authority for the ruling that a
"joint fishing venture" existed between private
respondent and petitioners is not applicable in the
instant case. There is neither light of control nor
actual exercise of such right on the part of the boat-
owners in the Pajarillo case, where the Court found
that the pilots therein are not under the order of the
boat-owners as regards their employment; that they
go out to sea not upon directions of the boat-owners,
but upon their own volition as to when, how long and
where to go fishing; that the boat-owners do not in
any way control the crew-members with whom the
former have no relationship whatsoever; that they
simply join every trip for which the pilots allow
them, without any reference to the owners of the
vessel; and that they only share in their own catch
produced by their own efforts.
The aforementioned circumstances obtaining
in Pajarillo case do not exist in the instant case. The
conduct of the fishing operations was undisputably
shown by the testimony of Alipio Ruga, the
patron/pilot of 7/B Sandyman II, to be under the
control and supervision of private respondent's
operations manager. Matters dealing on the fixing of
the schedule of the fishing trip and the time to return
to the fishing port were shown to be the prerogative
of private respondent. 12 While performing the fishing
operations, petitioners received instructions via a
single-side band radio from private respondent's
operations manager who called the patron/pilot in the
morning. They are told to report their activities, their
position, and the number of tubes of fish-catch in one
day. 13 Clearly thus, the conduct of the fishing
operations was monitored by private respondent thru
the patron/pilot of 7/B Sandyman II who is
responsible for disseminating the instructions to the
crew members.
The conclusion of public respondent that there had
been no change in the situation of the parties since
1968 when De Guzman Fishing Enterprises, private
respondent herein, obtained a favorable judgment in
Case No. 708 exempting it from compulsory
coverage of the SSS law is not supported by evidence
on record. It was erroneous for public respondent to
apply the factual situation of the parties in the 1968
case to the instant case in the light of the changes in
the conditions of employment agreed upon by the
private respondent and petitioners as discussed
earlier.
Records show that in the instant case, as
distinguished from the Pajarillo case where the crew
members are under no obligation to remain in the
outfit for any definite period as one can be the crew
member of an outfit for one day and be the member
of the crew of another vessel the next day, the herein
petitioners, on the other hand, were directly hired by
private respondent, through its general manager,
Arsenio de Guzman, and its operations manager,
Conrado de Guzman and have been under the employ
of private respondent for a period of 8-15 years in
various capacities, except for Laurente Bautu who
was hired on August 3, 1983 as assistant engineer.
Petitioner Alipio Ruga was hired on September 29,
1974 as patron/captain of the fishing vessel; Eladio
Calderon started as a mechanic on April 16, 1968
until he was promoted as chief engineer of the fishing
vessel; Jose Parma was employed on September 29,
1974 as assistant engineer; Jaime Barbin started as a
pilot of the motor boat until he was transferred as a
master fisherman to the fishing vessel 7/B Sandyman
II; Philip Cervantes was hired as winchman on
August 1, 1972 while Eleuterio Barbin was hired as
winchman on April 15, 1976.
While tenure or length of employment is not
considered as the test of employment, nevertheless
the hiring of petitioners to perform work which is
necessary or desirable in the usual business or trade
of private respondent for a period of 8-15 years since
1968 qualify them as regular employees within the
meaning of Article 281 of the Labor Code as they
were indeed engaged to perform activities usually
necessary or desirable in the usual fishing business or
occupation of private respondent. 14
Aside from performing activities usually necessary
and desirable in the business of private respondent, it
must be noted that petitioners received compensation
on a percentage commission based on the gross sale
of the fish-catch i.e. 13% of the proceeds of the sale
if the total proceeds exceeded the cost of the crude oil
consumed during the fishing trip, otherwise only 10%
of the proceeds of the sale. Such compensation falls
within the scope and meaning of the term "wage" as
defined under Article 97(f) of the Labor Code, thus:
(f) "Wage" paid to any employee shall mean
the remuneration or earnings, however
designated, capable of being expressed in
terms of money, whether fixed or
ascertained on a time, task, piece or
commission basis, or other method of
calculating the same, which is payable by an
employer to an employee under a written or
unwritten contract of employment for work
done or to be done, or for services rendered
or to be rendered, and included the fair and
reasonable value, as determined by the
Secretary of Labor, of board, lodging, or
other facilities customarily furnished by the
employer to the employee. . . .
The claim of private respondent, which was given
credence by public respondent, that petitioners get
paid in the form of share in the fish-catch which the
patron/pilot as head of the team distributes to his
crew members in accordance with their own
understanding 15 is not supported by recorded
evidence. Except that such claim appears as an
allegation in private respondent's position paper,
there is nothing in the records showing such a sharing
scheme as preferred by private respondent.
Furthermore, the fact that on mere suspicion based on
the reports that petitioners allegedly sold their fish-
catch at midsea without the knowledge and consent
of private respondent, petitioners were unjustifiably
not allowed to board the fishing vessel on September
11, 1983 to resume their activities without giving
them the opportunity to air their side on the
accusation against them unmistakably reveals the
disciplinary power exercised by private respondent
over them and the corresponding sanction imposed in
case of violation of any of its rules and regulations.
The virtual dismissal of petitioners from their
employment was characterized by undue haste when
less extreme measures consistent with the
requirements of due process should have been first
exhausted. In that sense, the dismissal of petitioners
was tainted with illegality.
Even on the assumption that petitioners indeed sold
the fish-catch at midsea the act of private respondent
virtually resulting in their dismissal evidently
contradicts private respondent's theory of "joint
fishing venture" between the parties herein. A joint
venture, including partnership, presupposes generally
a parity of standing between the joint co-venturers or
partners, in which each party has an equal proprietary
interest in the capital or property contributed 16 and
where each party exercises equal lights in the conduct
of the business. 17 It would be inconsistent with the
principle of parity of standing between the joint co-
venturers as regards the conduct of business, if
private respondent would outrightly exclude
petitioners from the conduct of the business without
first resorting to other measures consistent with the
nature of a joint venture undertaking, Instead of
arbitrary unilateral action, private respondent should
have discussed with an open mind the advantages and
disadvantages of petitioners' action with its joint co-
venturers if indeed there is a "joint fishing venture"
between the parties. But this was not done in the
instant case. Petitioners were arbitrarily dismissed
notwithstanding that no criminal complaints were
filed against them. The lame excuse of private
respondent that the non-filing of the criminal
complaints against petitioners was for humanitarian
reasons will not help its cause either.
WHEREFORE, in view of the foregoing, the petition
is GRANTED. The questioned resolution of the
National Labor Relations Commission dated May
30,1985 is hereby REVERSED and SET ASIDE.
Private respondent is ordered to reinstate petitioners
to their former positions or any equivalent positions
with 3-year backwages and other monetary benefits
under the law. No pronouncement as to costs.
SO ORDERED.

We have examined the jurisprudence on the matter

and find the same to be supportive of petitioners'
stand. In Negre vs. WCC 135 SCRA 653 (1985), we
held that fishermen crew members who were
recruited by one master fisherman locally known as
"maestro" in charge of recruiting others to complete
the crew members are considered employees, not
industrial partners, of the boat-owners. In an earlier
case of Abong vs. WCC, 54 SCRA 379 (1973) where
petitioner therein, Dr. Agustin Abong, owner of the
fishing boat, claimed that he was not the employer of
the fishermen crew members because of an alleged
partnership agreement between him, as financier, and
Simplicio Panganiban, as his team leader in charge of
recruiting said fishermen to work for him, we
affirmed the finding of the WCC that there existed an
employer-employee relationship between the boat-
owner and the fishermen crew members not only
because they worked for and in the interest of the
business of the boat-owner but also because they
were subject to the control, supervision and dismissal
of the boat-owner, thru its agent, Simplicio
Panganiban, the alleged "partner" of Dr. Abong; that
while these fishermen crew members were paid in
kind, or by "pakiao basis" still that fact did not alter
the character of their relationship with Dr. Abong as
employees of the latter.

In Philippine Fishing Boat Officers and Engineers

Union vs. Court of Industrial Relations, 112 SCRA
159 (1982), we held that the employer-employee
relationship between the crew members and the
owners of the fishing vessels engaged in deep sea
fishing is merely suspended during the time the
vessels are drydocked or undergoing repairs or being
loaded with the necessary provisions for the next
fishing trip. The said ruling is premised on the
principle that all these activities i.e., drydock, repairs,
loading of necessary provisions, form part of the
regular operation of the company fishing business.
#63: LOYOLA SECURITY AND DETECTIVE
AGENCY VS NLRC
G.R. No. 113287 May 9, 1995
LOYOLA SECURITY AND DETECTIVE
AGENCY and/or RUPERTO ACLE,
JR., petitioners,
vs.
NATIONAL LABOR RELATIONS
COMMISSION, SECOND DIVISION, VICTOR
PRADO, SR. and MATILDE
TUSCANO, respondents.
QUIASON, J.:
This is a petition for certiorari to reverse and set
aside the Decision of the National Labor Relations
Commission (NLRC) dated July 30, 1993 and its
Resolution dated November 18, 1993 in NLRC Case
No. 00-06-02584-88.
I Should the parties arrive at any
Private respondents Victor Prado, Sr. and Matilde
Tuscano filed a complaint against petitioners, the
Loyola Security and Detective Agency and the latter's
general manager, Ruperto Acle, Jr., for illegal
dismissal, illegal deduction underpayment of wages,
non-payment of overtime pay, legal holiday pay,
premium pay for holiday and rest day, and violation
of P.D. No. 851.
In his Decision dated March 30, 1989, the Labor
Arbiter ruled in favor of private respondents (Rollo,
p. 33). The award as computed by the Research and
Information Unit of the Commission for both private
respondents totalled P91,317.93, exclusive of
attorney's fees (Rollo, p. 33).
On appeal, the NLRC affirmed the decision of the
Labor Arbiter.
Private respondents then filed a Motion for Issuance
of a Writ of Execution. However, on October 19,
1990, they filed a Joint Manifestation acknowledging
complete satisfaction of the award.
On November 17, 1992, private respondents again
filed a Motion for the Issuance of an Alias Writ of
Execution for the recovery of the balance of the
award, claiming that they received less than the
award of the Labor Arbiter. The motion was granted.
Petitioners' motion for reconsideration was denied;
hence, this petition.
II
We dismiss the petition for lack of merit.
It is petitioners' belief that the acts of Prado in
entering into a compromise agreement and in
accepting an advance of P5,000.00 from petitioner
Acle constituted a novation of the award adjudged by
the Labor Arbiter (Rollo, pp. 10-11).
The Labor Code of the Philippines does not contain
any provision on compromise agreements or
quitclaims in cases pending before the Labor Arbiter
and the NLRC. However, the New Rules of
Procedure of NLRC in Section 2, Rule V
(Proceedings Before Labor Arbiter) provides that:
xxx xxx xxx
agreement as to the whole or any
part of the dispute, the same shall
be reduced to writing and signed by
the parties and their respective
counsels, if any, before the Labor
Arbiter. The settlement shall be
approved by the Labor Arbiter after
being satisfied that it was
voluntarily entered into by the
parties and after having explained
to them the terms and consequences
thereof.
A compromise agreement entered
into by the parties not in the
presence of the Labor Arbiter
before whom the case is pending
shall be approved by him if, after
confronting the parties, particularly
the complainants, he is satisfied
that they understand the terms and
conditions of the settlement and
that it was entered into freely, and
voluntarily by them and the
agreement is not contrary to law,
morals and public policies.
In the case at bench, the NLRC found that:
 . . . In the case at bar, the
satisfaction of judgment dated
October 19, 1990 was executed by
the complainants without the
assistance of their counsel and
without the approval of the Labor
Arbiter (Sec. 2, Rule V The New
Rules of NLRC). There is also a
great disparity with regards (sic) to
the monetary award . . . (Rollo, pp.
36-37; Emphasis supplied).
WHEREFORE, the petition is DISMISSED and
petitioner company is ORDERED to PAY private
respondents the amount of P48,317.93, in addition to
the partial payment of P43,000.00, to satisfy the
monetary award which has long become final and
executory.
SO ORDERED.

We find no grave abuse of discretion committed by

NLRC inasmuch as its decision is supported by the
records of the case. Thus, we adopt the findings of
NLRC to the effect that the settlement entered into by
the parties was without the assistance of counsel or
approval of the Labor Arbiter. Furthermore, the
amount agreed upon as settlement is a far cry from
that awarded by the Labor Arbiter.

We also note that respondent Prado executed the

compromise agreement not only on his own behalf
but on behalf of respondent Tuscano. There is,
however, no showing that respondent Prado was duly
authorized by respondent Tuscano to waive a part of
the award given her.

Under Article 1878 of the Civil Code of the

Philippines, a special power of attorney is necessary:

xxx xxx xxx

(2) To effect novations which put

an end to obligations already in
existence at the time the agency
was constituted;

(3) To compromise, . . .

(4) To waive any obligation

gratuitously;

xxx xxx xxx

(15) Any other act of strict

dominion.

Hence, being violative of existing law and

jurisprudence, such settlement cannot be given force
and effect.
#64: GALICIA VS NLRC
G.R. No. 119649 July 28, 1997
RICKY GALICIA, ANTHONY GALICIA,
YOVITO GAN, PRIMO VELEZ, ERBIE GAN,
ARTURO ROSAL, ALIPIO GADON,
MAXIMINO PANDO, GINA GAN, RODOLFO
GALICIA, JESSIE GALICIA, JOEL
GREGORIO, CHARLIE GAN, MABINI GUYO,
JELRY MERANO, ARNULFO MESANA,
ROSENDO GUARDIAN, SOCRATES GALOS,
MICHAEL GREGORIO, ROBERTO PALACIO,
ROMEO GALICIA, JOEVIN MELANO,
PASCUALITO ABAT, PEPITO DAVID and
JOVENCIO GREGORIO, petitioners,
vs.
NATIONAL LABOR RELATIONS
COMMISSION (SECOND DIVISION), GLOBE
PAPER MILLS/KENG HUA PAPER
PRODUCTS, INC. and ARMOR INDUSTRIAL
CORPORATION, respondents.
ROMERO, J.:
In the instant petition for certiorari assailing the
Decision and Resolution of the National Labor
Relations Commission in NLRC NCR Case No. 00-
01-0017092, dated November 29, 1994 and March 3,
1995, respectively, the sole issue pertains to the
validity of a compromise agreement and quitclaims
executed by the parties during the pendency of
private respondents' appeal to the respondent
Commission.
On January 8, 1992, ninety-five workers, including
the twenty-five petitioners herein, were assisted by a
labor federation, the National Organization of
Workingmen (NOWM) in their suit against
respondent companies for illegal dismissal,
regularization, underpayment of wages, holiday pay,
premium pay etc. After several complainants
withdrew from the case, the parties filed their
respective position papers. They alleged that Armor
Industrial Corporation, Gibson Contractor Services,
Juner Contractor Services, Libra Manpower Agency
and Anjo Contractor, all "labor-only" contractors,
recruited them and supplied them to Globe Paper
Mills and Keng Hua Paper Products where they
performed activities directly necessary to the
companies' principal business.
On January 15, 1994, Labor Arbiter Ernesto S.
Dinopol rendered his decision declaring the thirty
remaining complainants as regular employees of
Keng Hua Paper Products, Globe Paper Mills and
Armor Industrial Corporation and ordering their
reinstatement. Respondent companies were ordered
to pay backwages from February 15, 1991 up to the
date of actual reinstatement, in the total amount of
P3,223,261.00, with P107,380.00 for each
complainant as of January 15, 1994.
Respondent companies appealed the case to the
NLRC.
On March 1, 1994, the disputed Compromise
Agreement was executed by James Yu, the Manager
and Vice President of Globe Paper Mills and Teofilo
Rafols, the National President of the National
Organization of Workingmen (NOWM) representing
the complainants, when most of the latter were still in
Romblon, their home province. The agreement settled
the case for and in consideration of the total sum of
P300,000.00.
Complainants arrived from Romblon on March 7,
1994. The next day, each of the complainants signed
a Quitclaim and Release which confirmed the
compromise agreement as well as receipt of their
individual share amounting to P12,000.00 each.1 The
standard Quitclaim and Release reads, in part:
Na, pagsaalang-alang sa halagang LABING
DALAWANG LIBONG (P12,000.00)
PESOS bilang kabayaran sa akin ng Globe
Paper Mills Corp./Armor Industrial
Corporation et. al., sa pamamagitan ni Bro.
Teofilo A. Rafols, presidente ng N.O.W.M.
na siyang aking/aming pinagkatiwalaan ang
pakikipag-usap kay G. JAMES YU,
President/General Manager ng nasabing mga
Kompanya tungkol sa pakikipag-ayos o
"amicable settlement," na ang huling ALOK
ng Kompanya ay aking sinang-ayunan, dala
na rin ng aking kahirapan at kawalan ng
pinagkakakitaan sa matagal na panahon;"
(Emphasis supplied.)2
On March 9, 1994, petitioners executed a Sama-
samang Sinumpaang Salaysay where they stated:
4. Na, batid namin na ang naturang halaga
na aming tinanggap (P12,000.00 each) ay
hindi makatarungan at sapat na kabayaran sa
aming mga hinahabol na biyaya sa naturang
mga Kompanya at alinsunod sa desisyon ng
 Labor Arbiter, ngunit, dala ng aming
kahirapan sa buhay, bunga ng aming
matagal nang pagkakatanggal sa aming
trabaho mula pa noong taon 1991 at 1992
ay napag-pasiyahan namin na
pansamantalang kunin/tanggapin ang inalok
na halaga ng Kompanya, ngunit aming
ipagpapatunay ang nasabing usapin/asunto
sa kadahilanan masyado kaming api at hindi
makatarungan ang pagkakatanggap sa aming
trabaho na nagdulot ng labis na kahirapan sa
aming mga mahal sa buhay, sa katunayan,
ang aming kinabubuhay ay sa tulong ng
aming mga malalapit na kamag-anak at mga
kaibigan, at upang lubusang mabigyan ng
katarungan ang aming kalagayan. (Emphasis
added.)3
Private respondents submitted the Compromise
Agreement and Joint Motion to Dismiss before the
respondent Commission which was then considering
the case on appeal from the decision of the Labor
Arbiter. Herein petitioners later filed an Opposition to
the Motion to Dismiss where they demanded the
difference of what they actually received and the
judgment award in their favor.
On November 29, 1994, respondent Commission
rendered its Decision approving the Compromise
Agreement, setting aside the January 15, 1994
decision of the Labor Arbiter and dismissing the
instant case.4 The NLRC held that the complainants
were fully aware of the award in their favor dated
January 15, 1994 when they voluntarily entered into
the compromise agreement on March 1, 1994. They
thus disregarded the judgment award and opted for
the last and sincere offer of respondent Globe Paper
Mills instead of waiting out the appeal filed by
respondents. Respondent NLRC added that it cannot
subscribe to complainants' contention that they signed
the compromise agreement under the compulson of
"dire necessity" and held that position as a mere
afterthought.
Their motion for reconsideration having been denied
on March 3, 1995, the instant petition
for certiorari was filed contesting the decision of the
NLRC.
A compromise agreement is executed by parties who
adjust their difficulties by mutual consent in order to
prevent or to put an end to a lawsuit. Additionally,
each of the parties is motivated by "the hope of
gaining, balanced by the danger of losing." 5 Under
the Labor Code, any compromise settlement
voluntarily agreed upon by the parties with the
assistance of the Bureau of Labor Relations or the
regional office of the Department of Labor and
Employment shall be final and binding upon the
parties.6 Even if contracted without the assistance of
labor officials, compromise agreements between
workers and their employers have been upheld and
considered as valid, accepted and even desirable
means of settling disputes.7
This Court takes cognizance of the low grade for
quitclaims executed by laborers, which are often
frowned upon as being contrary to public policy.8 In
some cases, we have ruled that quitclaims are
ineffective in barring recovery for the full measure of
the worker's rights and that acceptance of benefits
therefrom does not amount to estoppel.9 In Lopez
Sugar Corporation v. Federation of Free Workers,
the Court explained:
Acceptance of those benefits would not
amount to estoppel. The reason is plain.
Employer and employee, obviously do not
stand on the same footing. The employer
drove the employee to the wall. The latter
must have to get hold of money. Because,
out of job, he had to face the harsh
necessities of life. He thus found himself in
no position to resist money proffered. His,
then, is a case of adherence, not of choice.
One thing, sure however, is that petitioners
did not relent their claim. They pressed it.
They are deemed not to have waived any of
their rights.10
In the case of Periquet v. NLRC, we set the guidelines
and current doctrinal policy regarding quitclaims and
waivers, thus:
Not all waivers and quitclaims are invalid as
against public policy. If the agreement was
voluntarily entered into and represents a
reasonable settlement, it is binding on the
parties and may not later be disowned
simply because of a change of mind. It is
only where there is clear proof that the
waiver was wangled from an unsuspecting
or gullible person, or the terms of settlement
are unconscionable on its face, that the law
will step in to annul the questioned
transaction. But where it is shown that the
person making the waiver did so voluntarily,
with full understanding of what he was
doing, and the consideration for the
quitclaim is credible and reasonable, the
 transaction must be recognized as a valid
and binding undertaking.11
Hence, quitclaims where the workers voluntarily
accept a reasonable amount or consideration as
settlement, are deemed valid and cannot be set aside
merely because the parties have subsequently
changed their minds.
For the compromise to be voluntarily entered into,
there must be personal and specific individual
consent.12 In the case at bar, petitioners attempt to
disavow their consent given to Mr. Teofilo Rafols,
president of the National Organization of
Workingmen, by disclaiming any authority accorded
by them to Mr. Rafols to fix and decide the total
amount.13 We find no basis for this allegation apart
from their joint affidavit and unsubstantiated claims
to that effect.
Although their authorization in favor of Mr. Rafols
does not appear to have been recorded in a written
instrument for no such document was submitted to
the Court, at the conference between the parties, they
confirmed the veracity of the compromise agreement
and the quitclaim. Even granting that there may have
been some question regarding the authority granted to
the NOWM President, the same was waived once
petitioners signed the quitclaim evidencing receipt of
their individual shares.
Respondent Commission has ruled that petitioners
authorized NOWM to negotiate with management. It
cannot be said to have committed grave abuse of
discretion in utilizing facts presented during the
conference, for proceedings held thereat do not
constitute privileged communication.
The more relevant inquiry is whether the
consideration for the quitclaims signed by the
workers was reasonable and acceptable. Where it is
shown that the person making the waiver did so
voluntarily and with full understanding of what he
was doing and the consideration of the quitclaim is
credible, the transaction must be recognized as a
valid and binding undertaking.14
We find quite relevant the ruling of the Court in Cruz
v. NLRC15 because the amount accepted by
petitioners herein was very much less that the amount
awarded by the Labor Arbiter in his January 15, 1994
decision. The consideration for the quitclaim, a
measly P12,000.00 per worker and the total sum of
P300,000, are inordinately low and exceedingly
unreasonable relative to the P107,380.00 per worker
and total P3,223,261.00 awarded by the Arbiter.
Palpably inequitable, the quitclaim cannot be
considered an obstacle to the pursuit of their
legitimate claims.16
Petitioners never accepted as full compensation the
meagre amount they received when they signed the
quitclaim and release. In the Sinumpaang
Salaysay they executed the next day, they expressly
declared their awareness that the amount they
received was unjust and insufficient to answer for
their just claims and the award given by the Labor
Arbiter, but due to destitution caused by their
protracted unemployment, they decided to accept the
P12,000.00 in the meantime.17 The Court also
recognizes "dire necessity" of laborers as ample
justification to accept even sufficient sums of money
from their employers. We are not unaware that in
some cases, such asOlaybar v. NLRC, this ground
was deemed unacceptable in refuting the agreement
in question. The main difference, however, lies in the
existence of a voluntary acceptance of the agreement
and the reasonable consideration for it, making the
agreement intrinsically valid and binding, thus
rendering the "dire necessity" excuse immaterial and
irrelevant.
Worth noting is the Solicitor General's opinion in
favor of granting the petition. The OSG concluded
that "(w)hile petitioners may not have been 'tricked'
into accepting the P12,000.00, to repeat, the
undisputed and concurrent circumstances of dire
necessity and unconscionability obtaining in the case
at bar constitute more than sufficient ground to
invalidate the compromise
agreement."18
WHEREFORE, the instant petition is hereby
GRANTED. The assailed resolution and decision of
respondent Commission are hereby SET ASIDE. The
case is REMANDED to the Commission for
expeditious resolution on the merits.
SO ORDERED.
#65: GOLDEN DONUTS, INC. VS NLRC
G.R. Nos. 113666-68 January 19, 2000
GOLDEN DONUTS, INC. and LEOPOLDO
PRIETO, petitioners,
vs.
NATIONAL LABOR RELATIONS
COMMISSION, AGAPITO MACANDOG,
LEONISA M. HONTIVEROS, ROSITA D.
TAMARGO, LUCITA TEGIO and ALMA
MAGTARAYO, respondents.
PARDO, J.:
The petition at bar is actually one
for certiorari1 impugning the resolution2 of the
National Labor Relations Commission (NLRC),
which modified the Labor Arbiter's decision and
ordered petitioner to reinstate complainants
(respondents) to their former positions without loss of
seniority rights and back wages limited to three (3)
years from dismissal up to time of reinstatement and
to pay respondents Rosita Tamargo, Lucita Tegio,
Alma Magtarayo, and Leonisa Hontiveros each
separation pay of P4,000.00; to pay complainant
Agapito Macandog separation pay of P4,000.00,
unpaid salary of P1,000.00; thirteenth month pay of
P1,329.25 and attorney's fee of ten (10%) per cent of
the total amount due; and the order3 denying
reconsideration of the aforementioned resolution.
Private respondents Macandog, Hontiveros,
Tamargo, Tegio and Magtarayo, were employees of
petitioner Golden Donuts, Inc., and were the
complainants in three consolidated cases filed in
September 1990 with the Labor Arbiter.
The facts are aptly summarized in the Labor Arbiter's
decision dated January 29, 1993, as follows:
Complainants were members of the
Kapisanan ng Manggagawa sa Dunkin
Donut-CFW (KMDD-CFW, for short)
whose collective bargaining agreement with
the corporation expired on November 16,
1989. During the freedom period, or on
October 17, 1989, respondents through its
Human Resources and Industrial Relations
Manager informed the President of the
Union that the initial CBA negotiation was
on October 26, 1989 and, at the same time,
requested for the confirmation of the people
who shall be the regular members of the
union panel in order to avoid any
misunderstanding. At which date however,
despite the absence of Leopoldo Prieto, Jr.,
the management representative, and the
President of the Union, both panels were
able to agree on the rules regarding the
negotiation, including the time, date and
number of days the panels had to meet. On
November 7, 1989 (sic) CBA negotiations,
the management panel arrived late, or at
1:35 P.M. which was thirty five minutes
late, thus prompting the union panel to
walkout. Despite the management request to
go back and proceed with the agenda, the
union simply ignored the same. A day after,
or on November 8, 1989, the management
addressed a letter of apology to the union
and requested that the CBA negotiation be
resumed on November 9, 15 and 17, 1989
which was discredited in the following wise:
November 9, 1989
The Management CBA Negotiating Panel Golden
Donuts, Inc.
Attention: Ms. Gertrudes P. Bangalan
HRIR Manager
We are in receipt of your letter expressing your
sincere apology for the incident that happened last
Nov. 7, 1989 at AIT.
Truly, it is our interest to come up with a peaceful
negotiation, as we had displayed during our previews
meetings. From punctuality even up to the manner of
discussion we had shown our concern and sincere
interest that we could finish our CBA as soon as
possible smoothly and peacefully.
However, as we go on with the process, we observed
that you are taking our CBA negotiation for granted,
not considering it as one of your priorities.
However further, we would like to inform you that
our final decision is to declare the
negotiation DEADLOCK (sic).
Thus, we regret to inform you that we could not
attent (sic) to your scheduled meeting this afternoon.
Sincerely yours,
 Florante M. Vicedo
KMDD President
Came November 15 and 17, but the union panel did
not show up despite the management letters advising
the former about the CBA meetings. Again, on
November 20, 1989 management sent a letter
informing the union regarding the resumption of the
negotiation, but the same turned out fruitless. Finally,
despite management's open letter of admonition
under date of November 23, 1989, the union struck
on December 18, 1989.
On the ground that the strike was illegal because (a) it
was started without the union having first exercised
the ritht (sic) to collective bargaining in violation of
Article 264 (a) of the Labor Code; (b) the strikers
barricaded the company premises, barring ingress to
and egress from the premises, which resulted to the
trapping of officers and employees; (c) the strikers,
on December 19, 1989, overturned the company's
Isuzu Kc-20 Van with Plate No. 506 and, thereafter,
smashed its windshield, headlights and sidemirrors;
(d) the strikers brandished broken bottles of Coca-
Cola and effectively prevented Ernesto de Castillo,
the traffic dispatcher, and his driver, Narciso Urjal,
from making any move to pacify the mob; and (e) the
strike was affected without any strike vote for the
purpose and without the approval of the majority of
the membership, and for not having reported the
same to the Ministry (now Department) of Labor and
Employment; a Complaint with Prayer for
Preliminary Injunction was filed by Golden Donuts,
Inc. on January 9, 1990, seeking the following relief
(sic): a) to declare the strike illegal and to dismiss all
officers of the union and members who participated
in the commission of illegal acts; b) to pay petitioner
actual damages as may be proven, the sum of Five
Hundred Thousand (P500,000.00) Pesos and Three
Hundred Thousand (P300,000.00) Pesos,
respectively, as moral and exemplary damages, plus
attorney's fees. After KMU's Atty. Pontenciano
Flores was retained as counsel by the union and
strikers, and sensing the gravity of the penalties
attendant to the strike resorted to, including the
financial award that may be due the Golden Donuts,
Inc. and civil liabilities that may be awarded
thereafter, said counsel pleaded for a comprome (sic).
Hence, on July 16, 1990, a compromise agreement
was entered into by the KMDD-CFW and Golden
Donuts, Inc. whereby:
4.4. The parties agree to withdraw/dismiss
with prejudice any and all cases, whether
criminal, civil or labor filed against each
other and agree to execute affidavit of
desistance and/or Motion to Dismiss to
ensure the dismissal of these cases.
5. Upon execution of this Agreement, the
parties undertake not to file any other
charges/complaints against each other as this
act constitutes a general waiver or
release/quitclaim by them (sic).
apart from the separation pay said strikers, 262 in all,
should receive from the corporation, the variable
amounts of which are stated in the list of workers
attached to the agreement. Out of the said 262
striking force, only the five (5) aforenamed
complainants disagree (sic) and did not receive the
amount due, arguing that the compromise agreement
was entered into by their counsel and the President of
the Union without their individual consent and/or
authority and that the same was not approved nor
ratified by the majority of the union membership.
Hence, these complaints which were filed on the
dates mentioned earlier.4
On January 29, 1993, the Labor Arbiter
rendered a decision upholding the dismissal
of private respondents and ruling that they
were bound by the compromise agreement
entered into by the union with petitioners.
The dispositive portion of the decision
states:
WHEREFORE, in conformity with the opinion above
expressed, judgment is hereby rendered ordering the
Golden Donuts, Inc.:
1. To pay complainants Rosita D. Tamargo,
Lucita N. Tegio, Alma Magtarayo and
Lenisa Hontiveros each the sum of Four
Thousand Five Hundred (P4,500.00) Pesos
as separation pay;
2. To pay complainant Agapito Macandog
the following amounts:
a. Four Thousand Five Hundred
(P4,500.00) Pesos as separation
pay;
b. One Thousand (P1,000.00) Pesos
as unpaid salary;
c. One Thousand Three Hundred
Twenty-Nine and Twenty Five
 (P1,329.25) Centavos as balance of
his thirteenth month pay:
3. To pay complainants' counsel ten percent
(10%) of the total amount due them as
attorney's fees.
SO ORDERED.5
In due time, private respondents interposed
an appeal to the NLRC, claiming that the
union had no authority to waive or
compromise their individual rights and that
they were not bound by the compromise
agreement entered into by the union with
petitioners.
On October 29, 1993, the NLRC issued a
resolution which disposed of the case as
follows:
WHEREFORE, the decision of the Labor Arbiter is
hereby accordingly modified and a new one entered
ordering respondent to reinstate complainants to their
former positions without loss of seniority rights and
back-wages limited to three years from the time of
their dismissal up to the time of reinstatement.
Furthermore, respondent is hereby ordered as follows
: separation pay in exchange for the dismissal of the
1. To pay complainants Rosita D. Tamargo,
Lucita N. Tegio, Alma Magtarayo and
Leonisa Hontiveros each the sum of Four
Thousand Five Hundred (P4,500.00) Pesos
as separation pay;
2. To pay complainant Agapito Macandog
the following amounts:
a. Four Thousand Five Hundred
(P4,500.00) Pesos as separation
pay;
b. On Thousand (P1,000.00) Pesos
as unpaid salary;
c. One Thousand Three Hundred
Twenty-Nine and Twenty-Five
(P1.329.25) Centavos as balance of
his thirteenth month pay.
3. To pay complainant's counsel ten percent
(10%) of the total amount due them as
attorney's fees.6
On January 31, 1994, the NLRC denied petitioners'
motion for reconsideration of the resolution, for lack
of an assignment of "palpable" or "patent" errors.7
Hence, this petition.8
The questions presented in the petition are: (1)
whether or waive not a union may compromise or
waive the rights to security of tenure and money
claims of its minority members, without the latter's
consent, and (2) whether or not the compromise
agreement entered into by the union with petitioner
company, which has not been consented to nor
ratified by respondents minority members has the
effect of res judicata upon them.
As a consequence of a negative ruling on the
foregoing issues, there arises the issue of whether
private respondents are entitled to monetary benefits
subject of their individual complaints.
The petition is anchored on the argument that a
preponderant majority of the union members, that is,
257 out of 262 members, having agreed to a
compromise settlement whereby they shall be paid
criminal and unfair labor practice cases filed by
petitioners against them, the union is authorized to
waive and compromise even the claims of those who
did not consent to the terms of such compromise
agreement. In other words, petitioners claim that the
compromise agreement is binding on union members
including those who did not consent thereto, such as
private respondents.
We find the petition without merit.
First, even if a clear majority of the union members
agreed to a settlement with the employer, the union
has no authority to compromise the individual claims
of members who did not consent to such settlement.
Rule 138 Section 23 of the 1964 Revised Rules of
Court requires a special authority before an attorney
may compromise his client's litigation. "The authority
to compromise cannot lightly be presumed and
should be duly established by evidence."9
In the case at bar, minority union members did not
authorize the union to compromise their individual
claims. Absent a showing of the union's special
authority to compromise the individual claims of
private respondents for reinstatement and back
wages, there is no valid waiver of the aforesaid
rights. As private respondents did not authorize the
union to represent them not bound by the terms
thereof.10
Second, whether minority union members who did
not consent to a compromise agreement are bound by
the majority decision approving a compromise
settlement has been resolved in the negative.11
In La Campana, we explicitly declared:
Money claims due to laborers cannot be the
object of settlement or compromise effected
by a union or counsel without the specific
individual consent of each laborer
concerned. The beneficiaries are the
individual complainants themselves. The
union to which they belong can only assist
them but cannot decide for them.12
The case of La Campana was re-affirmed in the
General Rubber case as follows:
In the instant case, there is no dispute that
private respondent has not ratified the
Return-to-Work Agreement. It follows, and
we so hold, that private respondents cannot
be held bound by the Return-to-Work
Agreement. The waiver of money claims,
which in this case were accrued money
claims, by workers and employees must be
regarded as a personal right, that is, a right
that must be personally exercised. For a
waiver thereof to be legally effective, the
individual consent or ratification of the
workers or employees involved must be
shown. Neither the officers nor the majority
or the union had any authority to waive the
accrued rights pertaining to the dissenting
minority members, even under a collective
bargaining agreement which provided for a
"union shop". The same considerations of
public policy which impelled the Court to
reach the conclusion it did in La Campana,
are equally compelling in the present case.
The members of the union need the
protective shield of this doctrine not
only vis-à-vis their employer but also, at
times, vis-à-vis the management of their own
union, and at other times even against their
own imprudence or impecuniousness.13
We have consistently ruled that "a compromise is
governed by the basic principle that the obligations
arising therefrom have the force of law between the
parties."14
Consequently, private respondents may pursue their
individual claims against petitioners before the Labor
Arbiter.
The judgment of the Labor Arbiter based on the
compromise agreement in question does not have the
effect of res judicata upon private respondents who
did not agree thereto.
"A compromise, once approved by final orders of the
court has the force of res judicata between the parties
and should not be disturbed except for vices of
consent or forgery."15 A compromise is basically a
contract perfected by mere consent. "Consent is
manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to
constitute the contract."16 A compromise agreement is
not valid when a party in the case has not signed the
same or when someone signs for and in behalf of
such party without authority to do so.17
In SMI Fish Industries, Inc. vs. NLRC,18 this Court
declared that where the compromise agreement was
signed by only three of the five respondents, the non-
signatories cannot be bound by that amicable
settlement. This is so as a compromise agreement is a
contract and cannot affect third persons who are not
parties to it.19
Private respondents were not parties to the
compromise agreement. Hence, the judgment
approving such agreement cannot have the effect
of res judicata upon them since the requirement of
identity of parties20 is not satisfied. A judgment upon
a compromise agreement has all the force and effect
of any other judgment, hence conclusive only upon
parties thereto and their privies.21
Viewed in light of the foregoing legal principles, the
conclusion is inescapable that private respondents are
not bound by the compromise agreement entered into
by the union without their consent. They have not
waived their right to security of tenure nor can they
be barred from entitlement of their individual claims.
Since the Labor Arbiter found no evidence showing
that private respondents committed any illegal act
during the strike, petitioners' failure to reinstate them
after the settlement of the strike amounts to illegal
dismissal, entitling them to the twin reliefs of
reinstatement and back wages.22

"The burden is on the employer to prove that the

termination was after due process, and for a valid or
authorized cause.23 For the two requisites in our
jurisdiction to constitute a valid dismissal are: (a) the
existence of a cause expressly stated in Article 282 of
the Labor Code; and (b) the observance of due
process, including the opportunity given the
employee to be heard and defend himself."24

However, the separation pay must be deleted, as

private respondents are entitled to reinstatement and
back wages and there is no showing of strained
relations as would prevent their reinstatement.25

WHEREFORE, the Court DISMISSES the petition

and AFFIRMS the NLRC resolution dated October
29, 1993 and the order dated January 31, 1994, in
NLRC NCR Case Nos. 00-08-04180-90, 00-09-
04807-90, and 00-09-04840-90, with modification
deleting the award of separation pay to private
respondents.1âwphi1.nêt

No costs.

SO ORDERED.
#66: MAGBANUA VS UY
[G.R. No. 161003. May 6, 2005]
FELIPE O. MAGBANUA, CARLOS DE LA
CRUZ, REMY ARNAIZ, BILLY
ARNAIZ, ROLLY ARNAIZ, DOMINGO
SALARDA, JULIO CAHILIG and
NICANOR LABUEN, petitioners,
vs. RIZALINO UY, respondent.
DECISION
PANGANIBAN, J.:
Rights may be waived through a compromise
agreement, notwithstanding a final judgment that has
already settled the rights of the contracting parties. To
be binding, the compromise must be shown to have
been voluntarily, freely and intelligently executed by
the parties, who had full knowledge of the judgment.
Furthermore, it must not be contrary to law, morals,
good customs and public policy.
The Case
Before us is a Petition for Review[1] under Rule
45 of the Rules of Court, assailing the May 31, 2000
Decision[2] and the October 30, 2003 Resolution[3] of
the Court of Appeals (CA) in CA-GR SP No. 53581.
The challenged Decision disposed as follows:
WHEREFORE, having found that public respondent
NLRC committed grave abuse of discretion, the
Court hereby SETS ASIDE the two assailed
Resolutions and REINSTATES the order of the
Labor Arbiter dated February 27, 1998.[4]
The assailed Resolution denied reconsideration.
The Facts
The CA relates the facts in this wise:
As a final consequence of the final and executory
decision of the Supreme Court in Rizalino P. Uy v.
National Labor Relations Commission, et. al. (GR
No. 117983, September 6, 1996) which affirmed with
modification the decision of the NLRC in NLRC
Case No. V-0427-93, hearings were conducted [in the
National Labor Relations Commission Sub-Regional
Arbitration Branch in Iloilo City] to determine the
amount of wage differentials due the eight (8)
complainants therein, now [petitioners]. As
computed, the award amounted to P1,487,312.69 x x
x.
On February 3, 1997, [petitioners] filed a Motion for
Issuance of Writ of Execution.
On May 19, 1997, [respondent] Rizalino Uy filed a
Manifestation requesting that the cases be terminated
and closed, stating that the judgment award as
computed had been complied with to the satisfaction
of [petitioners]. Said Manifestation was also signed
by the eight (8) [petitioners]. Together with the
Manifestation is a Joint Affidavit dated May 5, 1997
of [petitioners], attesting to the receipt of payment
from [respondent] and waiving all other benefits due
them in connection with their complaint.
xxxxxxxxx
On June 3, 1997, [petitioners] filed an Urgent Motion
for Issuance of Writ of Execution wherein they
confirmed that each of them received P40,000 from
[respondent] on May 2, 1997.
On June 9, 1997, [respondent] opposed the motion on
the ground that the judgment award had been fully
satisfied. In their Reply, [petitioners] claimed that
they received only partial payments of the judgment
award.
xxxxxxxxx
On October 20, 1997, six (6) of the eight (8)
[petitioners] filed a Manifestation requesting that the
cases be considered closed and terminated as they are
already satisfied of what they have received (a total
of P320,000) from [respondent]. Together with said
Manifestation is a Joint Affidavit in the local dialect,
dated October 20, 1997, of the six (6) [petitioners]
attesting that they have no more collectible amount
from [respondent] and if there is any, they are
abandoning and waiving the same.
On February 27, 1998, the Labor Arbiter issued an
order denying the motion for issuance of writ of
execution and [considered] the cases closed and
terminated x x x.
On appeal, the [National Labor Relations
Commission (hereinafter NLRC)] reversed the Labor
Arbiter and directed the immediate issuance of a writ
of execution, holding that a final and executory
judgment can no longer be altered and that quitclaims
and releases are normally frowned upon as contrary
to public policy.[5]
Ruling of the Court of Appeals
The CA held that compromise agreements may
be entered into even after a final judgment.[6] Thus,
petitioners validly released respondent from any
claims, upon the voluntary execution of a waiver
pursuant to the compromise agreement.[7]
The appellate court denied petitioners motion for
reconsideration for having been filed out of time. [8]
Hence, this Petition.[9]
The Issues
Petitioners raise the following issues for our
consideration:
1. Whether or not the final and executory
judgment of the Supreme Court could be
subject to compromise settlement;
2. Whether or not the petitioners affidavit
waiving their awards in [the] labor case
executed without the assistance of their counsel
and labor arbiter is valid;
3. Whether or not the ignorance of the
jurisprudence by the Court of Appeals and its
erroneous counting of the period to file [a]
motion for reconsideration constitute a denial of
the petitioners right to due process.[10]
The Courts Ruling
The Petition has no merit.
First Issue:
Validity of the Compromise Agreement
A compromise agreement is a contract whereby
the parties make reciprocal concessions in order to
resolve their differences and thus avoid or put an end
to a lawsuit.[11] They adjust their difficulties in the
manner they have agreed upon, disregarding the
possible gain in litigation and keeping in mind that
such gain is balanced by the danger of
losing.[12] Verily, the compromise may be either
extrajudicial (to prevent litigation) or judicial (to end a
litigation).[13]
A compromise must not be contrary to law,
morals, good customs and public policy; and must
have been freely and intelligently executed by and
between the parties.[14] To have the force of law
between the parties,[15] it must comply with the
requisites and principles of contracts.[16] Upon the
parties, it has the effect and the authority of res
judicata, once entered into.[17]
When a compromise agreement is given judicial
approval, it becomes more than a contract binding
upon the parties. Having been sanctioned by the court,
it is entered as a determination of a controversy and
has the force and effect of a judgment.[18] It is
immediately executory and not appealable, except for
vices of consent or forgery.[19] The nonfulfillment of
its terms and conditions justifies the issuance of a writ
of execution; in such an instance, execution becomes
a ministerial duty of the court.[20]
Following these basic principles, apparently
unnecessary is a compromise agreement after final
judgment has been entered. Indeed, once the case is
terminated by final judgment, the rights of the parties
are settled. There are no more disputes that can be
compromised.
Compromise Agreements
after Final Judgment
The Court is tasked, however, to determine
the legality of a compromise agreement after final
judgment, not the prudence of entering into one.
Petitioners vehemently argue that a compromise of a
final judgment is invalid under Article 2040 of the
Civil Code, which we quote:[21]
Art. 2040. If after a litigation has been decided by a
final judgment, a compromise should be agreed upon,
either or both parties being unaware of the existence
of the final judgment, the compromise may
be rescinded.
Ignorance of a judgment which may be revoked or set
aside is not a valid ground for attacking a
compromise. (Bold types supplied)
The first paragraph of Article 2040 refers to a
scenario in which either or both of the parties
are unaware of a courts final judgment at the time they
agree on a compromise. In this case, the law allows
either of them to rescind the compromise agreement.
It is evident from the quoted paragraph that such an
agreement is not prohibited or void or voidable.
Instead, a remedy to impugn the contract, which is an
action for rescission, is declared available.[22] The law
allows a party to rescind a compromise agreement,
because it could have been entered into in ignorance of
the fact that there was already a final judgment.
Knowledge of a decisions finality may affect the
resolve to enter into a compromise agreement.
The second paragraph, though irrelevant to the
present case, refers to the instance when the courts
decision is still appealable or otherwise subject to
modification. Under this paragraph, ignorance of the
decision is not a ground to rescind a compromise
agreement, because the parties are still unsure of the
final outcome of the case at this time.
Petitioners argument, therefore, fails to convince.
Article 2040 of the Civil Code does not refer to the
validity of a compromise agreement entered into after
final judgment. Moreover, an important requisite,
which is lack of knowledge of the final judgment, is
wanting in the present case.
Supported by Case Law
The issue involving the validity of a compromise
agreement notwithstanding a final judgment is not
novel. Jesalva v. Bautista[23] upheld a compromise
agreement that covered cases pending trial, on appeal,
and with final judgment.[24] The Court noted that
Article 2040 impliedly allowed such agreements; there
was no limitation as to when these should be entered
into.[25] Palanca v. Court of Industrial
Relations[26] sustained a compromise agreement,
notwithstanding a final judgment in which only the
amount of back wages was left to be determined. The
Court found no evidence of fraud or of any showing
that the agreement was contrary to law, morals, good
customs, public order, or public policy.[27]
Gatchalian v. Arlegui[28] upheld the right to
compromise prior to the execution of a final judgment.
The Court ruled that the final judgment had been
novated and superseded by a compromise
agreement.[29] Also, Northern Lines, Inc. v. Court of
Tax Appeals[30] recognized the right to compromise
final and executory judgments, as long as such right
was exercised by the proper party litigants.[31]
Rovero v. Amparo,[32] which petitioners cited, did
not set any precedent that all compromise agreements
after final judgment were invalid. In that case, the
customs commissioner imposed a fine on an importer,
based on the appraised value of the goods illegally
brought to the country. The latters appeal, which
eventually reached this Court, was denied. Despite a
final judgment, the customs commissioner still
reappraised the value of the goods and effectively
reduced the amount of fine. Holding that he had no
authority to compromise a final judgment, the Court
explained:
It is argued that the parties to a case may enter into a
compromise about even a final judgment rendered by
a court, and it is contended x x x that the reappraisal
ordered by the Commissioner of Customs and
sanctioned by the Department of Finance was
authorized by Section 1369 of the [Revised
Administrative Code]. The contention may be
correct as regards private parties who are the
owners of the property subject-matter of the
litigation, and who are therefore free to do with
what they own or what is awarded to them, as
they please, even to the extent of renouncing the
award, or condoning the obligation imposed by
the judgment on the adverse party. Not so,
however, in the present case. Here, the Commissioner
of Customs is not a private party and is not the owner
of the money involved in the fine based on the
original appraisal. He is a mere agent of the
Government and acts as a trustee of the money or
property in his hands or coming thereto by virtue of a
favorable judgment. Unless expressly authorized by
his principal or by law, he is not authorized to accept
anything different from or anything less than what is
adjudicated in favor of the Government.[33] (Bold
types supplied)
Compliance with the
Rule on Contracts
There is no justification to disallow a
compromise agreement, solely because it was entered
into after final judgment. The validity of the agreement
is determined by compliance with the requisites and
principles of contracts, not by when it was entered into.
As provided by the law on contracts, a valid
compromise must have the following elements: (1) the
consent of the parties to the compromise, (2) an object
certain that is the subject matter of the compromise,
and (3) the cause of the obligation that is
established.[34]
In the present factual milieu, compliance with the
elements of a valid contract is not in issue. Petitioners
do not challenge the factual finding that they entered
into a compromise agreement with respondent. There
are no allegations of vitiated consent. Neither was
there any proof that the agreement was defective or
could be characterized as
rescissible,[35] voidable,[36] unenforceable,[37] or
void.[38]Instead, petitioners base their argument on the
sole fact that the agreement was executed despite a
final judgment, which the Court had previously ruled
to be allowed by law.
Petitioners voluntarily entered into the
compromise agreement, as shown by the following
facts: (1) they signed respondents Manifestation (filed
with the labor arbiter) that the judgment award had
been satisfied;[39] (2) they executed a Joint Affidavit
dated May 5, 1997, attesting to the receipt of payment
and the waiver of all other benefits due them;[40] and
(3) 6 of the 8 petitioners filed a Manifestation with the
labor arbiter on October 20, 1997, requesting that the
cases be terminated because of their receipt of
payment in full satisfaction of their claims.[41] These
circumstances also reveal that respondent has already
complied with its obligation pursuant to the
compromise agreement. Having already benefited
from the agreement, estoppel bars petitioners from
challenging it.
Advantages of Compromise
A reciprocal concession inherent in a
compromise agreement assures benefits for the
contracting parties. For the defeated litigant, obvious
is the advantage of a compromise after final judgment.
Liability arising from the judgment may be reduced.
As to the prevailing party, a compromise agreement
assures receipt of payment. Litigants are sometimes
deprived of their winnings because of unscrupulous
mechanisms meant to delay or evade the execution of
a final judgment.
The advantages of a compromise agreement
appear to be recognized by the NLRC in its Rules of
Procedure. As part of the proceedings in executing a
final judgment, litigants are required to attend a pre-
execution conference to thresh out matters relevant to
the execution.[42] In the conference, any agreement that
would settle the final judgment in a particular manner
is necessarily a compromise.
Novation of an Obligation
The principle of novation supports the validity of
a compromise after final judgment. Novation, a mode
of extinguishing an obligation,[43] is done by changing
the object or principal condition of an obligation,
substituting the person of the debtor, or surrogating a
third person in the exercise of the rights of the
creditor.[44]
For an obligation to be extinguished by another,
the law requires either of these two conditions: (1) the
substitution is unequivocally declared, or (2) the old
and the new obligations are incompatible on every
point.[45] A compromise of a final judgment operates
as a novation of the judgment obligation, upon
compliance with either requisite.[46] In the present
case, the incompatibility of the final judgment with the
compromise agreement is evident, because the latter
was precisely entered into to supersede the former.
Second Issue:
Validity of the Waiver
Having ruled on the validity of the compromise
agreement in the present suit, the Court now turns its
attention to the waiver of claims or quitclaim executed
by petitioners. The subject waiver was their
concession when they entered into the agreement.
They allege, however, that the absence of their counsel
and the labor arbiter when they executed the waiver
invalidates the document.
Not Determinative
of the Waivers Validity
The presence or the absence of counsel when a
waiver is executed does not determine its validity.
There is no law requiring the presence of a counsel to
validate a waiver. The test is whether it was executed
voluntarily, freely and intelligently; and whether the
consideration for it was credible and
reasonable.[47] Where there is clear proof that a waiver
was wangled from an unsuspecting or a gullible
person, the law must step in to annul such
transaction.[48] In the present case, petitioners failed to
present any evidence to show that their consent had
been vitiated.
The law is silent with regard to the procedure for
approving a waiver after a case has been
terminated.[49] Relevant, however, is this reference to
the NLRCs New Rules of Procedure:
Should the parties arrive at any agreement as to the
whole or any part of the dispute, the same shall be
reduced to writing and signed by the parties and their
respective counsel, or authorized representative, if
any,[50] before the Labor Arbiter.
professional employment of petitioners lawyer when
they facilitated the waivers.[54] The present action is
not the proper forum in which to raise any charge of
professional misconduct. More important, petitioners
failed to present any supporting evidence.
The third issue, which refers to the timely filing
of petitioners Motion for Reconsideration filed with
the CA, will no longer be discussed because this
Courts decision has resolved the case on the merits.
WHEREFORE, the Petition is DENIED and the
assailed Decision AFFIRMED. Costs against
petitioners.
SO ORDERED.

The settlement shall be approved by the Labor

Arbiter after being satisfied that it was voluntarily
entered into by the parties and after having explained
to them the terms and consequences thereof.

A compromise agreement entered into by the parties

not in the presence of the Labor Arbiter before whom
the case is pending shall be approved by him, if after
confronting the parties, particularly the complainants,
he is satisfied that they understand the terms and
conditions of the settlement and that it was entered
into freely and voluntarily by them and the agreement
is not contrary to law, morals, and public policy. [51]

This provision refers to proceedings in a

mandatory/conciliation conference during the initial
stage of the litigation. Such provision should be made
applicable to the proceedings in the pre-execution
conference, for which the procedure for approving a
waiver after final judgment is not stated. There is no
reason to make a distinction between the proceedings
in mandatory/conciliation and those in pre-execution
conferences.
The labor arbiters absence when the waivers
were executed was remedied upon compliance with
the above procedure. The Court observes that the
arbiter made searching questions during the pre-
execution conference to ascertain whether petitioners
had voluntarily and freely executed the
waivers.[52]Likewise, there was evidence that they
made an intelligent choice, considering that the
contents of the written waivers had been explained to
them.[53] The labor arbiters absence when those
waivers were executed does not, therefore, invalidate
them.
The Court declines to rule on the allegation that
respondents counsels encroached upon the
#67: MINDORO LUMBER AND HARDWARE VS
BACAY union president Eduardo Bacay, filed a Complaint
MINDORO LUMBER G.R. No. 158753
against Mindoro Lumber before the Region IV Office
AND HARDWARE,
Petitioner, of the Department of Labor and Employment (DOLE)
Present:
for
P non-payment of overtime pay, legal holiday pay,
UNO, J., Chairman,*
- versus - AUSTRIA-MARTINEZ,** CALLEJO, 13th month pay, non-payment/underpayment of
SR.,
minimum wage and allowances. The case was
TINGA, and
C
docketed as LSED-RO400-9807-CI-001.[2] Pursuant
HICO-NAZARIO, JJ.
to the said complaint, the DOLE conducted an
EDUARDO D. BACAY, ELMER
LANOT, NICANOR MANLISES, JR., inspection on July 10, 1998 under Inspection
FREDERICK MAJABA, RODEL Authority No. RO400-9807-CI-005. It was thereafter
OBANDO, ROMAN ISINSAO,
ELMAR MONTON, JUANITO determined that Mindoro Lumber committed several
OSINSAO, CARMELO OLOYA,
ROBERTO SUMO, ROLANDO violations, to wit:
CASIANO, NICASIO LUZ,
LEODEGARIO SAGANG, RUDY 1. Underpayment of wages;
ENTERIA, ELMAR LIM, RAFAEL 2. Non-payment of Regular
OBANDO, CRISPIN MANAO, JR., Holiday pay;
LINO LAQUI, ESMAR LOTO, SR., 3. Non-payment of 5-days service
LYRINE MAGSICO, MARITES Promulgated: incentive leave pay;
OBANDO, EMMALEN VILLANUEVA, 4. Record Keeping - Payrolls/dtr
MARILOU LIM, MARISSA MOTOL, were not available at the time of
ALLEN MOGOL, CARMENCITA inspection and also production
NAPOLITANO, ROLANDO GAMILLA, June 8, records;
2005
ELMER LACSON, REYNALDO
MAJABA and FAUSTINO SEO,
Respondents.
CALLEJO, SR., J.: 5. Non-submission of the
[following]:
a. labor component
b. annual medical report
This is a petition for review c. annual acc./illness
on certiorari under Rule 45 of the Rules of Civil exposure data report
d. safety committee
Procedure assailing the November 22, 2002 organization
6. Non-coverage of SSS to affected
Decision[1] of the Court of Appeals (CA) in CA-G.R. employees.[3]
SP No. 66727, as well as its June 12, 2003 Resolution.

Meanwhile, on August 9, 1998, the private

The facts are as follows:
The private respondents are employees of petitioner
Mindoro Lumber and Hardware (Mindoro Lumber).
On July 1, 1998, the private respondents, through then
respondents executed several Affidavits (Sinumpaang
Salaysay),[4] declaring therein that since they each
started working on July 1, 1995, they were made to
work for seven days a week starting 7:00 a.m. until
5:00 p.m., with lunch break from 11:30 a.m. to 1:00
It appears, however, that based on an affidavit
p.m. They further declared that their wages were
executed by Eduardo Bacay, he had resigned from
below the rates prescribed by the applicable wage
Mindoro Lumber as of June 6, 1998.[8] Relative
orders, and that they were not paid overtime pay,
thereto, he had also filed a complaint for Unfair Labor
holiday pay or premium pay. The private respondents
Practice and Illegal Dismissal, docketed as NLRC
stated that the total amount each of them were entitled
Case No. RAB-IV-7-10167-98-ORM. However, on
to, aside from what they were actually receiving by
September 2, 1998, Bacay executed an
way of salary and other emoluments, ranged
Affidavit[9] declaring that he was no longer interested
fromP6,744.20 to P242,626.90. They further averred
in pursuing the said case and that he had voluntarily
that their wages were made compliant with the
resigned from Mindoro Lumber. By virtue of Bacays
prevailing regional minimum wages starting July 16,
affidavit, Labor Arbiter Nieves V. De Castro issued an
1998, and for the first time, payroll and daily time
Order dismissing NLRC Case No. RAB-IV-7-10167-
records were being kept.
98-ORM.[10]

The counsel for the private respondents then

Meanwhile, Elmer Lanot was elected as the new union
filed a Manifestation before the Regional Office of the
president.
DOLE, praying that an order be issued directing

Mindoro Lumber to pay the amounts due to them as On June 27, 1999, the private respondents executed
reflected in their respective Sinumpaang a Sama-Samang Salaysay (Joint Affidavit), declaring
[5]
Salaysay totaling P3,577,276.10. therein that before Bacay resigned from Mindoro

Lumber, he persuaded them to execute the Sama-

samang Salaysay

On September 2, 1998, the private respondents sa Pag-uurong ng Sakdal, in exchange for receiving

executed a Sama-samang Salaysay sa Pag-uurong ng the amount of P6,000.00 each. Such amount, however,

Sakdal (Joint Affidavit of Withdrawal was grossly disproportionate to their entitlement under

of Complaint),[6] declaring therein that by virtue of the the law; hence, they were withdrawing the said Sama-

amount each of them received (which amount was samang Salaysay sa Pag-uurong ng Sakdal, and were

either P3,000.00 or P6,000.00 per employee), they authorizing Lanot to pursue their claim against

were withdrawing their claim against Mindoro Mindoro Lumber.[11] Pursuant thereto, Lanot filed a

Lumber in Case No. LSED-RO400-9807-CI-001. motion before the Regional Office of the DOLE,

Pursuant thereto, their counsel filed a motion to praying that the employees be paid the amounts due to

dismiss.[7]
 However, in the case at bar,
each of them, and that the Sama-samang Salaysay sa the Sama-samang Salaysay sa Pag-
uurong ng Sakdal attests that the
Pag-uurong ng Sakdal be declared null and void.[12]
complainant-workers who signed
the said documents (sic) each
On November 4, 1999, Regional Director Alex E. received the amount of P3,000.00
to P6,000.00. This is far from the
Maraan issued an Order[13] dismissing Case No. computation of the supposed claims
stated in their Sinumpaang Salaysay
LSED-RO400-9807-CI-001, and declared that ranging from P53,672.60 to as much
as P104,359.60 each complainant.
the Sama-samang Salaysay executed by the
The fact that the amount given in
employees of Mindoro Lumber was valid. exchange for the waiver is very
much less than the amount claimed
renders the waiver null and void. By
The private respondents then filed an appeal before the reason of public policy, quitclaims
are ineffective to bar recovery for
Office of the Secretary of Labor, questioning the the full measure of the workers right
propriety of the November 4, 1999 Order of the (Republic Planters Bank vs. NLRC,
et. al., G.R. No. 117460, January 6,
Regional Director. 1997).

Further, the Supreme Court

On March 27, 2001, Labor Secretary Patricia A. Sto.
Tomas issued an Order[14] granting the appeal, and
ordered the entire records of the case remanded to the
Regional Office for further proceedings, without
in the case of Rolando Malinao and
Eduardo Malinao vs. NLRC, et al.,
G.R. No. 119492, November 24,
1999, citing Peftok Integrated
Services, Inc. vs. NLRC, 293 SCRA
507, held:

prejudice to the deduction of whatever amount It is

decisively clear
received by the complainant workers. The Secretary of that they (guards)
Labor declared as follows: affixed their
signatures to
subject waivers
and/or quitclaims
The only issue to be for fear that they
resolved in the case at bar is whether would not be paid
or not the Sama-samang Salaysay sa their salaries on
Pag-uurong ng Sakdal is valid and pay day or worse,
binding. still, their
services would be
Doctrinally, a compromise terminated if they
agreement is binding upon the did not sign those
parties if it is not contrary to law, papers. In short,
morals, good customs, public order there was no
and public policy. If the agreement voluntariness in
was voluntarily entered into the execution of
and represents a reasonable the quitclaims or
settlement, it is binding upon waivers in
parties and may not later be question. It
disowned simply because there was should be borne
a change of mind. in mind that in
this jurisdiction,
quitclaims,
 waivers or
releases are Mindoro Lumber forthwith filed a motion for the
looked upon with
issuance of a temporary restraining order and writ of
disfavor.
Necessitous men preliminary injunction. On January 21, 2002, the CA
are not free men.
They are issued a temporary restraining order.[18]
commonly
frowned upon as
contrary to public On November 22, 2002, the CA rendered its decision
policy and
dismissing the petition. A motion for reconsideration
ineffective to bar
claims for the full proved futile.
measure of the
workers legal
rights. (Emphasis Hence, this petition.
supplied).[15]
Mindoro Lumber, now as the petitioner, raises the

Mindoro Lumber moved to have the Order of the following lone error:
THE HONORABLE
Secretary of Labor reconsidered, but the same was COURT OF APPEALS
COMMITTED GRAVE AND
denied on July 24, 2001.[16] SERIOUS REVERSIBLE ERROR
IN FINDING THAT THE
HONORABLE SECRETARY OF
Mindoro Lumber forthwith elevated the matter to the LABOR AND EMPLOYMENT
CA by way of a petition for certiorari under Rule 65 DID NOT COMMIT GRAVE
ABUSE OF DISCRETION IN
of the Rules of Court, arguing that the Sama-samang ISSUING HER ASSAILED TWIN
ORDERS OF MARCH 27, 2001
Salaysay sa Pag-uurong ng Sakdal was valid and AND JULY 24, 2001.[19]
binding,

and was in the nature of a compromise agreement

executed pursuant to the provisions of Article 227 of

the Labor Code. Mindoro Lumber stressed that the The threshold issues raised in this petition are (a)

same was voluntarily executed by its employees. whether or not the Sama-samang Salaysay sa Pag-

uurong ng Sakdal constitutes a valid compromise

Meanwhile, on December 21, 2001, Regional Director
agreement as defined under Article 227 of the Labor
Ricardo S. Martinez, Sr. issued a Writ of
Code of the Philippines, as amended; and (b) whether
Execution[17] seeking to enforce the March 27, 2001
or not the acknowledgment of the respondents that
and July 24, 2001 Orders of the Secretary of Labor. In
they each received the amount of either P3,000.00
the said writ, the Regional Director commanded the
or P6,000.00 embodied in the
Deputy Sheriff to proceed to Mindoro Lumber and
said Salaysay constitutes a valid quitclaim.
require the latter to pay an aggregate amount

of P3,191,663.20 to the complaining employees.

 settlement was obtained through
Anent the first issue, the petitioner posits that fraud, misrepresentation, or
coercion.
the Sama-samang Salaysay sa Pag-uurong ng
Sakdal meets the requirements of Article 227 of the

Labor Code on compromise agreements. The The assistance of the BLR or the regional office of the

petitioner emphasized that the Sama-samang DOLE in the execution of a compromise settlement is

Salaysay was voluntarily executed by the private a basic requirement;[20] without it, there can be no

respondents and involves a mutual act of the parties: valid compromise settlement. In this case, the

on the part of the petitioner, by granting the amounts petitioner admits that the purported compromise

paid, and on the part of the private respondents, in settlement was executed by the private respondents

agreeing to withdraw their claim with the view of without such required assistance. The closest form of

achieving industrial peace in the workplace. assistance adverted to by the petitioner in this case was

that of Bacays counsel when the latter appeared before

The petitioner points out that while the Sama-samang
the Office of the Regional Director to file the
Salaysay sa Pag-uurong ng Sakdal was executed
following: the Sama-samang Salaysay sa Pag-uurong
without the assistance of the Bureau of Labor
ng Sakdal executed by the private respondents;
Relations (BLR) or the DOLE Regional Office, the
a Sinumpaang Salaysay executed by Bacay
November 4, 1999 Order of the Regional Director in
withdrawing the complaint; and the Motion to
Case No. LSED-RO400-9807-CI-001 nonetheless
Dismiss. Such assistance, however, is not the
shows that when Eduardo Bacay appeared before the
assistance required by Article 227. As such, the Sama-
said office, he was assisted by counsel.
samang Salaysay sa Pag-uurong ng Sakdal executed

by the respondents cannot qualify as a valid

The petitioners pose is bereft of merit.
compromise settlement.

Article 227 of the Labor Code, as amended, provides: Anent the second issue, the petitioner points out that
Art. 227. Compromise
Agreements.― Any compromise the settlement embodied in the said Sama-samang
settlement, including those
involving labor standard laws, Salaysay sa Pag-uurong ng Sakdal should be
voluntarily agreed upon by the
respected as the law between it and its employees. The
parties with the assistance of the
Bureau or the regional office of the petitioner even stressed that while quitclaims are
Department of Labor, shall be final
and binding upon the parties. The commonly frowned upon, not all waivers and
National Labor Relations
Commission or any court shall not quitclaims are invalid as against public policy.
assume jurisdiction over issues
The petitioner is correct in saying that there are
involved therein except in case of
non-compliance thereof or if there legitimate waivers that represent a voluntary and
is prima facie evidence that the
 Leodegario P6,000.00 P88,387.60
reasonable settlement of a workers claim which should Sagang
Rudy P6,000.00 P6,744.20
be respected by the courts as the law between the
Enteria
parties.[21] Indeed, not all quitclaims are per se invalid Elmar Lim P6,000.00 P73,690.60
Rafael P3,000.00 P14,380.60
or against public policy, except (1) where there is clear Obando
Crispin P3,000.00 P20,380.60
proof that the waiver was wangled from an Manao, Jr.
Lino Laqui P3,000.00 P14,380.60
unsuspecting or gullible person, or (2) where the terms
Esmar P3,000.00 P20,380.60
of settlement are unconscionable on their faces; in Loto, Sr.
Lyrine P6,000.00 P242,626.90
these cases, the law will step in to annul the Magsico
Marites P6,000.00 P222,400.00
questionable transactions.[22] Such quitclaims are Obando
regarded as ineffective to bar the workers from Emmalen P6,000.00 P242,626.90
Villanueva
claiming the full measure of their legal rights.[23] Marilou P6,000.00 P222,721.90
Lim
Marissa P6,000.00 P242,626.90
In this case, however, it cannot be argued that there is Motol
Allen P6,000.00 P242,626.90
no gross disparity between the amount actually Mogol
received by each private respondent as compared to Carmencita P6,000.00 P242,626.90
Napolitano
the amount owing him or her, as shown in the Rolando P3,000.00 P21,164.60
Gamilla
following list: Elmer P3,000.00 P29,164.60
Lacson
Amount Amount Reynaldo P6,000.00 P97,118.60
received[24] due[25] Majaba
Faustino P3,000.00 (no
Elmer P6,000.00 P75,345.60 Seo information)
Lanot
Nicanor P6,000.00 P97,118.60
Manlises,
Jr.
Frederick P6,000.00 P97,118.60 The foregoing clearly illustrates that the private
Majaba
Rodel P6,000.00 P104,359.60 respondents individual claims, ranging
Obando from P6,744.20 to P242,626.90, are grossly
Roman P6,000.00 P97,118.60
Isinsao disproportionate to what each of them actually
Elmar P6,000.00 P88,387.60
Monton received under the Sama-samang Salaysay sa Pag-
Juanito P6,000.00 P97,118.60
Osinsao uurong ng Sakdal. The amount of the settlement is
Carmelo P6,000.00 P82,535.60 indubitably unconscionable; hence, ineffective to bar
Oloya
Roberto P6,000.00 P75,345.60 the workers from claiming the full measure of their
Sumo
Rolando P6,000.00 P75,345.60 legal rights.
Casiano
Nicasio P6,000.00 P53,672.60
Luz
IN LIGHT OF ALL THE FOREGOING, the

petition is DISMISSED for lack of merit. Case No.

LSED-RO400-9807-CI-001 is

hereby REMANDED to the Region IV Office of the

Department of Labor and Employment for appropriate

proceedings.

SO ORDERED.
#68: EDI-STAFF BUILDERS INTERNATIONAL
INC. VS NLRC
G.R. No. 145587 October 26, 2007
EDI-STAFFBUILDERS INTERNATIONAL,
INC., petitioner,
vs.
NATIONAL LABOR RELATIONS
COMMISSION and ELEAZAR S.
GRAN, respondents.
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari1 seeks to set
aside the October 18, 2000 Decision2 of the Court of
Appeals (CA) in CA-G.R. SP No. 56120 which
affirmed the January 15, 1999 Decision3 and
September 30, 1999 Resolution4 rendered by the
National Labor Relations Commission (NLRC)
(Third Division) in POEA ADJ (L) 94-06-2194,
ordering Expertise Search International (ESI), EDI-
Staffbuilders International, Inc. (EDI), and Omar
Ahmed Ali Bin Bechr Est. (OAB) jointly and
severally to pay Eleazar S. Gran (Gran) the amount of
USD 16,150.00 as unpaid salaries.
The Facts
Petitioner EDI is a corporation engaged in
recruitment and placement of Overseas Filipino
Workers (OFWs).5 ESI is another recruitment agency
which collaborated with EDI to process the
documentation and deployment of private respondent
to Saudi Arabia.
Private respondent Gran was an OFW recruited by
EDI, and deployed by ESI to work for OAB, in
Riyadh, Kingdom of Saudi Arabia.6
It appears that OAB asked EDI through its October 3,
1993 letter for curricula vitae of qualified applicants
for the position of "Computer Specialist." 7 In a
facsimile transmission dated November 29, 1993,
OAB informed EDI that, from the
applicants' curricula vitae submitted to it for
evaluation, it selected Gran for the position of
"Computer Specialist." The faxed letter also stated
that if Gran agrees to the terms and conditions of
employment contained in it, one of which was a
monthly salary of SR (Saudi Riyal) 2,250.00 (USD
600.00), EDI may arrange for Gran's immediate
dispatch.8
After accepting OAB's offer of employment, Gran
signed an employment contract9 that granted him a
monthly salary of USD 850.00 for a period of two
years. Gran was then deployed to Riyadh, Kingdom
of Saudi Arabia on February 7, 1994.
Upon arrival in Riyadh, Gran questioned the
discrepancy in his monthly salary—his employment
contract stated USD 850.00; while his Philippine
Overseas Employment Agency (POEA) Information
Sheet indicated USD 600.00 only. However, through
the assistance of the EDI office in Riyadh, OAB
agreed to pay Gran USD 850.00 a month.10
After Gran had been working for about five months
for OAB, his employment was terminated through
OAB's July 9, 1994 letter,11 on the following
grounds:
1. Non-compliance to contract requirements
by the recruitment agency primarily on your
salary and contract duration.
2. Non-compliance to pre-qualification
requirements by the recruitment agency[,]
vide OAB letter ref. F-5751-93, dated
October 3, 1993.12
3. Insubordination or disobedience to Top
Management Order and/or instructions (non-
submittal of daily activity reports despite
several instructions).
On July 11, 1994, Gran received from OAB the total
amount of SR 2,948.00 representing his final pay,
and on the same day, he executed a
Declaration13 releasing OAB from any financial
obligation or otherwise, towards him.
After his arrival in the Philippines, Gran instituted a
complaint, on July 21, 1994, against ESI/EDI, OAB,
Country Bankers Insurance Corporation, and Western
Guaranty Corporation with the NLRC, National
Capital Region, Quezon City, which was docketed as
POEA ADJ (L) 94-06-2194 for underpayment of
wages/salaries and illegal dismissal.
The Ruling of the Labor Arbiter
In his February 10, 1998 Decision,14 Labor Arbiter
Manuel R. Caday, to whom Gran's case was assigned,
ruled that there was neither underpayment nor illegal
dismissal.
The Labor Arbiter reasoned that there was no
underpayment of salaries since according to the
POEA-Overseas Contract Worker (OCW)
Information Sheet, Gran's monthly salary was USD
600.00, and in his Confirmation of Appointment as
Computer Specialist, his monthly basic salary was
fixed at SR 2,500.00, which was equivalent to USD
600.00.
Arbiter Caday also cited the Declaration executed by
Gran, to justify that Gran had no claim for unpaid
salaries or wages against OAB.
With regard to the issue of illegal dismissal, the
Labor Arbiter found that Gran failed to refute EDI's
allegations; namely, (1) that Gran did not submit a
single activity report of his daily activity as dictated
by company policy; (2) that he was not qualified for
the job as computer specialist due to his insufficient
knowledge in programming and lack of knowledge in
ACAD system; (3) that Gran refused to follow
management's instruction for him to gain more
knowledge of the job to prove his worth as computer
specialist; (4) that Gran's employment contract had
never been substituted; (5) and that Gran was paid a
monthly salary of USD 850.00, and USD 350.00
monthly as food allowance.
Accordingly, the Labor Arbiter decided that Gran
was validly dismissed from his work due to
insubordination, disobedience, and his failure to
submit daily activity reports.
Thus, on February 10, 1998, Arbiter Caday dismissed
Gran's complaint for lack of merit.
Dissatisfied, Gran filed an Appeal15 on April 6, 1998
with the NLRC, Third Division. However, it appears
from the records that Gran failed to furnish EDI with
a copy of his Appeal Memorandum.
The Ruling of the NLRC
The NLRC held that EDI's seemingly harmless
transfer of Gran's contract to ESI is actually
"reprocessing," which is a prohibited transaction
under Article 34 (b) of the Labor Code. This scheme
constituted misrepresentation through the conspiracy
between EDI and ESI in misleading Gran and even
POEA of the actual terms and conditions of the
OFW's employment. In addition, it was found that
Gran did not commit any act that constituted a legal
ground for dismissal. The alleged non-compliance
with contractual stipulations relating to Gran's salary
and contract duration, and the absence of pre-
qualification requirements cannot be attributed to
Gran but to EDI, which dealt directly with OAB. In
addition, the charge of insubordination was not
substantiated, and Gran was not even afforded the
required notice and investigation on his alleged
offenses.
Thus, the NLRC reversed the Labor Arbiter's
Decision and rendered a new one, the dispositive
portion of which reads:
WHEREFORE, the assailed decision is SET
ASIDE. Respondents Expertise Search
International, Inc., EDI Staffbuilders Int'l.,
Inc. and Omar Ahmed Ali Bin Bechr Est.
(OAB) are hereby ordered jointly and
severally liable to pay the complainant
Eleazar Gran the Philippine peso equivalent
at the time of actual payment of SIXTEEN
THOUSAND ONE HUNDRED FIFTY US
DOLLARS (US$16,150.00) representing his
salaries for the unexpired portion of his
contract.
SO ORDERED.16
Gran then filed a Motion for Execution of
Judgment17 on March 29, 1999 with the NLRC and
petitioner receiving a copy of this motion on the same
date.18
To prevent the execution, petitioner filed an
Opposition19 to Gran's motion arguing that the Writ
of Execution cannot issue because it was not notified
of the appellate proceedings before the NLRC and
was not given a copy of the memorandum of appeal
nor any opportunity to participate in the appeal.
Seeing that the NLRC did not act on Gran's motion
after EDI had filed its Opposition, petitioner filed, on
August 26, 1999, a Motion for Reconsideration of the
NLRC Decision after receiving a copy of the
Decision on August 16, 1999.20
The NLRC then issued a Resolution21 denying
petitioner's Motion for Reconsideration, ratiocinating
that the issues and arguments raised in the motion
"had already been amply discussed, considered, and
ruled upon" in the Decision, and that there was "no
cogent reason or patent or palpable error that warrant
any disturbance thereof."
Unconvinced of the NLRC's reasoning, EDI filed a
Petition for Certiorari before the CA. Petitioner
claimed in its petition that the NLRC committed
grave abuse of discretion in giving due course to the
appeal despite Gran's failure to perfect the appeal.
Finally, the CA held that the Declaration signed by
Gran did not bar him from demanding benefits to
which he was entitled. The appellate court found that
the Declaration was in the form of a quitclaim, and as
such is frowned upon as contrary to public policy
especially where the monetary consideration given in
the Declaration was very much less than what he was
legally entitled to—his backwages amounting to USD
16,150.00.

The Ruling of the Court of Appeals As a result of these findings, on October 18, 2000,
the appellate court denied the petition to set aside the
The CA subsequently ruled on the procedural and NLRC Decision.
substantive issues of EDI's petition.
Hence, this instant petition is before the Court.
On the procedural issue, the appellate court held that
"Gran's failure to furnish a copy of his appeal The Issues
memorandum [to EDI was] a mere formal lapse, an
excusable neglect and not a jurisdictional defect Petitioner raises the following issues for our
which would justify the dismissal of his consideration:
appeal."22 The court also held that petitioner EDI
failed to prove that private respondent was terminated I. WHETHER THE FAILURE OF GRAN
for a valid cause and in accordance with due process; TO FURNISH A COPY OF HIS APPEAL
and that Gran's Declaration releasing OAB from any MEMORANDUM TO PETITIONER EDI
monetary obligation had no force and effect. The WOULD CONSTITUTE A
appellate court ratiocinated that EDI had the burden JURISDICTIONAL DEFECT AND A
of proving Gran's incompetence; however, other than DEPRIVATION OF PETITIONER EDI'S
the termination letter, no evidence was presented to RIGHT TO DUE PROCESS AS WOULD
show how and why Gran was considered to be JUSTIFY THE DISMISSAL OF GRAN'S
incompetent. The court held that since the law APPEAL.
requires the recruitment agencies to subject OFWs to
trade tests before deployment, Gran must have been
II. WHETHER PETITIONER EDI HAS
competent and qualified; otherwise, he would not ESTABLISHED BY WAY OF
have been hired and deployed abroad. SUBSTANTIAL EVIDENCE THAT
GRAN'S TERMINATION WAS
As for the charge of insubordination and JUSTIFIABLE BY REASON OF
disobedience due to Gran's failure to submit a "Daily INCOMPETENCE. COROLLARY
Activity Report," the appellate court found that EDI HERETO, WHETHER THE PRIETO VS.
failed to show that the submission of the "Daily NLRC RULING, AS APPLIED BY THE
Activity Report" was a part of Gran's duty or the COURT OF APPEALS, IS APPLICABLE
company's policy. The court also held that even if IN THE INSTANT CASE.
Gran was guilty of insubordination, he should have
just been suspended or reprimanded, but not
III. WHETHER PETITIONER HAS
dismissed. ESTABLISHED BY WAY OF
SUBSTANTIAL EVIDENCE THAT
The CA also held that Gran was not afforded due GRAN'S TERMINATION WAS
process, given that OAB did not abide by the twin JUSTIFIABLE BY REASON OF
notice requirement. The court found that Gran was INSUBORDINATION AND
terminated on the same day he received the DISOBEDIENCE.
termination letter, without having been apprised of
the bases of his dismissal or afforded an opportunity
IV. WHETHER GRAN WAS AFFORDED
to explain his side.
DUE PROCESS PRIOR TO
TERMINATION.
 V. WHETHER GRAN IS ENTITLED TO
BACKWAGES FOR THE UNEXPIRED
PORTION OF HIS CONTRACT.23
The Court's Ruling
The petition lacks merit except with respect to Gran's
failure to furnish EDI with his Appeal Memorandum
filed with the NLRC.
First Issue: NLRC's Duty is to Require
Respondent to Provide Petitioner a Copy of the
Appeal
Petitioner EDI claims that Gran's failure to furnish it
a copy of the Appeal Memorandum constitutes a
jurisdictional defect and a deprivation of due process
that would warrant a rejection of the appeal.
This position is devoid of merit.
In a catena of cases, it was ruled that failure of
appellant to furnish a copy of the appeal to the
adverse party is not fatal to the appeal.
In Estrada v. National Labor Relations
Commission,24 this Court set aside the order of the
NLRC which dismissed an appeal on the sole ground
that the appellant did not furnish the appellee a
memorandum of appeal contrary to the requirements
of Article 223 of the New Labor Code and Section 9,
Rule XIII of its Implementing Rules and Regulations.
Also, in J.D. Magpayo Customs Brokerage Corp. v.
NLRC, the order of dismissal of an appeal to the
NLRC based on the ground that "there is no showing
whatsoever that a copy of the appeal was served by
the appellant on the appellee"25was annulled. The
Court ratiocinated as follows:
The failure to give a copy of the appeal to
the adverse party was a mere formal lapse,
an excusable neglect. Time and again We
have acted on petitions to review decisions
of the Court of Appeals even in the absence
of proof of service of a copy thereof to the
Court of Appeals as required by Section 1 of
Rule 45, Rules of Court. We act on the
petitions and simply require the
petitioners to comply with the
rule.26 (Emphasis supplied.)
The J.D. Magpayo ruling was reiterated in Carnation
Philippines Employees Labor Union-FFW v.
National Labor Relations
Commission,27 Pagdonsalan v. NLRC,28 and
in Sunrise Manning Agency, Inc. v. NLRC.29
Thus, the doctrine that evolved from these cases is
that failure to furnish the adverse party with a copy of
the appeal is treated only as a formal lapse, an
excusable neglect, and hence, not a jurisdictional
defect. Accordingly, in such a situation, the appeal
should not be dismissed; however, it should not be
given due course either. As enunciated in J.D.
Magpayo, the duty that is imposed on the NLRC,
in such a case, is to require the appellant to
comply with the rule that the opposing party
should be provided with a copy of the appeal
memorandum.
While Gran's failure to furnish EDI with a copy of the
Appeal Memorandum is excusable, the abject failure
of the NLRC to order Gran to furnish EDI with the
Appeal Memorandum constitutes grave abuse of
discretion.
The records reveal that the NLRC discovered that
Gran failed to furnish EDI a copy of the Appeal
Memorandum. The NLRC then ordered Gran to
present proof of service. In compliance with the
order, Gran submitted a copy of Camp Crame Post
Office's list of mail/parcels sent on April 7,
1998.30 The post office's list shows that private
respondent Gran sent two pieces of mail on the same
date: one addressed to a certain Dan O. de Guzman of
Legaspi Village, Makati; and the other appears to be
addressed to Neil B. Garcia (or Gran),31 of Ermita,
Manila—both of whom are not connected with
petitioner.
This mailing list, however, is not a conclusive proof
that EDI indeed received a copy of the Appeal
Memorandum.
Sec. 5 of the NLRC Rules of Procedure (1990)
provides for the proof and completeness of service in
proceedings before the NLRC:
Section 5.32 Proof and completeness of
service.—The return is prima facie proof of
the facts indicated therein. Service by
registered mail is complete upon receipt
by the addressee or his agent; but if the
addressee fails to claim his mail from the
post office within five (5) days from the date
of first notice of the postmaster, service shall
take effect after such time. (Emphasis
supplied.)
Hence, if the service is done through registered mail,
it is only deemed complete when the addressee or his
agent received the mail or after five (5) days from the
date of first notice of the postmaster. However, the
NLRC Rules do not state what would constitute
proper proof of service.
Sec. 13, Rule 13 of the Rules of Court, provides for
proofs of service:
Section 13. Proof of service.—Proof of
personal service shall consist of a written
admission of the party served or the official
return of the server, or the affidavit of the
party serving, containing a full statement of
the date, place and manner of service. If the
service is by ordinary mail, proof thereof
shall consist of an affidavit of the person
mailing of facts showing compliance with
section 7 of this Rule. If service is made by
registered mail, proof shall be made by
such affidavit and registry receipt issued
by the mailing office. The registry return
card shall be filed immediately upon its
receipt by the sender, or in lieu thereof
the unclaimed letter together with the
certified or sworn copy of the notice given
by the postmaster to the
addressee (emphasis supplied).
Based on the foregoing provision, it is obvious that
the list submitted by Gran is not conclusive proof that
he had served a copy of his appeal memorandum to
EDI, nor is it conclusive proof that EDI received its
copy of the Appeal Memorandum. He should have
submitted an affidavit proving that he mailed the
Appeal Memorandum together with the registry
receipt issued by the post office; afterwards, Gran
should have immediately filed the registry return
card.
Hence, after seeing that Gran failed to attach the
proof of service, the NLRC should not have simply
accepted the post office's list of mail and parcels sent;
but it should have required Gran to properly
furnish the opposing parties with copies of his
Appeal Memorandum as prescribed in J.D.
Magpayo and the other cases. The NLRC should
not have proceeded with the adjudication of the case,
as this constitutes grave abuse of discretion.
The glaring failure of NLRC to ensure that Gran
should have furnished petitioner EDI a copy of the
Appeal Memorandum before rendering judgment
reversing the dismissal of Gran's complaint
constitutes an evasion of the pertinent NLRC Rules
and established jurisprudence. Worse, this failure
deprived EDI of procedural due process guaranteed
by the Constitution which can serve as basis for the
nullification of proceedings in the appeal before the
NLRC. One can only surmise the shock and dismay
that OAB, EDI, and ESI experienced when they
thought that the dismissal of Gran's complaint
became final, only to receive a copy of Gran's Motion
for Execution of Judgment which also informed them
that Gran had obtained a favorable NLRC Decision.
This is not level playing field and absolutely unfair
and discriminatory against the employer and the job
recruiters. The rights of the employers to procedural
due process cannot be cavalierly disregarded for they
too have rights assured under the Constitution.
However, instead of annulling the dispositions of the
NLRC and remanding the case for further
proceedings we will resolve the petition based on the
records before us to avoid a protracted litigation. 33
The second and third issues have a common matter—
whether there was just cause for Gran's dismissal—
hence, they will be discussed jointly.
Second and Third Issues: Whether Gran's
dismissal is justifiable by reason of incompetence,
insubordination, and disobedience
In cases involving OFWs, the rights and obligations
among and between the OFW, the local
recruiter/agent, and the foreign employer/principal
are governed by the employment contract. A contract
freely entered into is considered law between the
parties; and hence, should be respected. In
formulating the contract, the parties may establish
such stipulations, clauses, terms and conditions as
they may deem convenient, provided they are not
contrary to law, morals, good customs, public order,
or public policy.34
In the present case, the employment contract signed
by Gran specifically states that Saudi Labor Laws
will govern matters not provided for in the contract
(e.g. specific causes for termination, termination
procedures, etc.). Being the law intended by the
parties (lex loci intentiones) to apply to the contract,
Saudi Labor Laws should govern all matters relating
to the termination of the employment of Gran.
In international law, the party who wants to have a
foreign law applied to a dispute or case has the
burden of proving the foreign law. The foreign law is
treated as a question of fact to be properly pleaded
and proved as the judge or labor arbiter cannot take
judicial notice of a foreign law. He is presumed to
know only domestic or forum law.35
Unfortunately for petitioner, it did not prove the
pertinent Saudi laws on the matter; thus, the
International Law doctrine of presumed-identity
approach or processual presumption comes into
play.36 Where a foreign law is not pleaded or, even if
pleaded, is not proved, the presumption is that foreign
law is the same as ours.37 Thus, we apply Philippine
labor laws in determining the issues presented before
us.
Petitioner EDI claims that it had proven that Gran
was legally dismissed due to incompetence and
insubordination or disobedience.
This claim has no merit.
In illegal dismissal cases, it has been established by
Philippine law and jurisprudence that the employer
should prove that the dismissal of employees or
personnel is legal and just.
Section 33 of Article 277 of the Labor Code38 states
that:
ART. 277. MISCELLANEOUS PROVISIONS39
(b) Subject to the constitutional right of
workers to security of tenure and their right
to be protected against dismissal except for a
just and authorized cause and without
prejudice to the requirement of notice under
Article 283 of this Code, the employer shall
furnish the worker whose employment is
sought to be terminated a written notice
containing a statement of the causes for
termination and shall afford the latter ample
opportunity to be heard and to defend
himself with the assistance of his
representative if he so desires in accordance
with company rules and regulations
promulgated pursuant to guidelines set by
the Department of Labor and Employment.
Any decision taken by the employer shall be
without prejudice to the right of the workers
to contest the validity or legality of his
dismissal by filing a complaint with the
regional branch of the National Labor
Relations Commission. The burden of
proving that the termination was for a
valid or authorized cause shall rest on the
employer. x x x
In many cases, it has been held that in termination
disputes or illegal dismissal cases, the employer has
the burden of proving that the dismissal is for just and
valid causes; and failure to do so would necessarily
mean that the dismissal was not justified and
therefore illegal.40 Taking into account the character
of the charges and the penalty meted to an employee,
the employer is bound to adduce clear, accurate,
consistent, and convincing evidence to prove that the
dismissal is valid and legal.41 This is consistent with
the principle of security of tenure as guaranteed by
the Constitution and reinforced by Article 277 (b) of
the Labor Code of the Philippines.42
In the instant case, petitioner claims that private
respondent Gran was validly dismissed for just cause,
due to incompetence and insubordination or
disobedience. To prove its allegations, EDI submitted
two letters as evidence. The first is the July 9, 1994
termination letter,43 addressed to Gran, from Andrea
E. Nicolaou, Managing Director of OAB. The second
is an unsigned April 11, 1995 letter44 from OAB
addressed to EDI and ESI, which outlined the reasons
why OAB had terminated Gran's employment.
Petitioner claims that Gran was incompetent for the
Computer Specialist position because he had
"insufficient knowledge in programming and zero
knowledge of [the] ACAD system."45 Petitioner also
claims that Gran was justifiably dismissed due to
insubordination or disobedience because he
continually failed to submit the required "Daily
Activity Reports."46However, other than the
abovementioned letters, no other evidence was
presented to show how and why Gran was considered
incompetent, insubordinate, or disobedient. Petitioner
EDI had clearly failed to overcome the burden of
proving that Gran was validly dismissed.
Petitioner's imputation of incompetence on private
respondent due to his "insufficient knowledge in
programming and zero knowledge of the ACAD
system" based only on the above mentioned letters,
without any other evidence, cannot be given
credence.
An allegation of incompetence should have a factual
foundation. Incompetence may be shown by
weighing it against a standard, benchmark, or
criterion. However, EDI failed to establish any such
bases to show how petitioner found Gran
incompetent.
In addition, the elements that must concur for the
charge of insubordination or willful disobedience to
prosper were not present.
In Micro Sales Operation Network v. NLRC, we held
that:
For willful disobedience to be a valid cause
for dismissal, the following twin elements
must concur: (1) the employee's assailed
conduct must have been willful, that is,
characterized by a wrongful and perverse
attitude; and (2) the order violated must have
been reasonable, lawful, made known to the
employee and must pertain to the duties
which he had been engaged to discharge.47
EDI failed to discharge the burden of proving Gran's
insubordination or willful disobedience. As indicated
by the second requirement provided for in Micro
Sales Operation Network, in order to justify willful
disobedience, we must determine whether the order
violated by the employee is reasonable, lawful, made
known to the employee, and pertains to the duties
which he had been engaged to discharge. In the case
at bar, petitioner failed to show that the order of the
company which was violated—the submission of
"Daily Activity Reports"—was part of Gran's duties
as a Computer Specialist. Before the Labor Arbiter,
EDI should have provided a copy of the company
policy, Gran's job description, or any other document
that would show that the "Daily Activity Reports"
were required for submission by the employees, more
particularly by a Computer Specialist.
Even though EDI and/or ESI were merely the local
employment or recruitment agencies and not the
foreign employer, they should have adduced
additional evidence to convincingly show that Gran's
employment was validly and legally terminated. The
burden devolves not only upon the foreign-based
employer but also on the employment or recruitment
agency for the latter is not only an agent of the
former, but is also solidarily liable with the foreign
principal for any claims or liabilities arising from the
dismissal of the worker.48
Thus, petitioner failed to prove that Gran was
justifiably dismissed due to incompetence,
insubordination, or willful disobedience.
Petitioner also raised the issue that Prieto v.
NLRC,49 as used by the CA in its Decision, is not
applicable to the present case.
In Prieto, this Court ruled that "[i]t is presumed that
before their deployment, the petitioners were
subjected to trade tests required by law to be
conducted by the recruiting agency to insure
employment of only technically qualified workers for
the foreign principal."50 The CA, using the ruling in
the said case, ruled that Gran must have passed the
test; otherwise, he would not have been hired.
Therefore, EDI was at fault when it deployed Gran
who was allegedly "incompetent" for the job.
According to petitioner, the Prieto ruling is not
applicable because in the case at hand, Gran
misrepresented himself in his curriculum vitae as a
Computer Specialist; thus, he was not qualified for
the job for which he was hired.
We disagree.
The CA is correct in applying Prieto. The purpose of
the required trade test is to weed out incompetent
applicants from the pool of available workers. It is
supposed to reveal applicants with false educational
backgrounds, and expose bogus qualifications. Since
EDI deployed Gran to Riyadh, it can be presumed
that Gran had passed the required trade test and that
Gran is qualified for the job. Even if there was no
objective trade test done by EDI, it was still EDI's
responsibility to subject Gran to a trade test; and its
failure to do so only weakened its position but should
not in any way prejudice Gran. In any case, the issue
is rendered moot and academic because Gran's
incompetency is unproved.
Fourth Issue: Gran was not Afforded Due Process
As discussed earlier, in the absence of proof of Saudi
laws, Philippine Labor laws and regulations shall
govern the relationship between Gran and EDI. Thus,
our laws and rules on the requisites of due process
relating to termination of employment shall apply.
Petitioner EDI claims that private respondent Gran
was afforded due process, since he was allowed to
work and improve his capabilities for five months
prior to his termination.51 EDI also claims that the
requirements of due process, as enunciated in Santos,
Jr. v. NLRC,52 and Malaya Shipping Services, Inc. v.
NLRC,53 cited by the CA in its Decision, were
properly observed in the present case.
This position is untenable.
In Agabon v. NLRC,54 this Court held that:
 Procedurally, (1) if the dismissal is based on
a just cause under Article 282, the employer
must give the employee two written notices
and a hearing or opportunity to be heard if
requested by the employee before
terminating the employment: a notice
specifying the grounds for which dismissal
is sought a hearing or an opportunity to be
heard and after hearing or opportunity to be
heard, a notice of the decision to dismiss;
and (2) if the dismissal is based on
authorized causes under Articles 283 and
284, the employer must give the employee
and the Department of Labor and
Employment written notices 30 days prior to
the effectivity of his separation.
Under the twin notice requirement, the employees
must be given two (2) notices before their
employment could be terminated: (1) a first notice to
apprise the employees of their fault, and (2) a second
notice to communicate to the employees that their
employment is being terminated. In between the first
and second notice, the employees should be given a
hearing or opportunity to defend themselves
personally or by counsel of their choice.55
A careful examination of the records revealed that,
indeed, OAB's manner of dismissing Gran fell short
of the two notice requirement. While it furnished
Gran the written notice informing him of his
dismissal, it failed to furnish Gran the written notice
apprising him of the charges against him, as
prescribed by the Labor Code.56 Consequently, he
was denied the opportunity to respond to said notice.
In addition, OAB did not schedule a hearing or
conference with Gran to defend himself and adduce
evidence in support of his defenses. Moreover, the
July 9, 1994 termination letter was effective on the
same day. This shows that OAB had already
condemned Gran to dismissal, even before Gran was
furnished the termination letter. It should also be
pointed out that OAB failed to give Gran the chance
to be heard and to defend himself with the assistance
of a representative in accordance with Article 277 of
the Labor Code. Clearly, there was no intention to
provide Gran with due process. Summing up, Gran
was notified and his employment arbitrarily
terminated on the same day, through the same letter,
and for unjustified grounds. Obviously, Gran was
not afforded due process.
Pursuant to the doctrine laid down in Agabon,57 an
employer is liable to pay nominal damages as
indemnity for violating the employee's right to
statutory due process. Since OAB was in breach of
the due process requirements under the Labor Code
and its regulations, OAB, ESI, and EDI, jointly and
solidarily, are liable to Gran in the amount of PhP
30,000.00 as indemnity.
Fifth and Last Issue: Gran is Entitled to
Backwages
We reiterate the rule that with regard to employees
hired for a fixed period of employment, in cases
arising before the effectivity of R.A. No.
804258 (Migrant Workers and Overseas Filipinos Act)
on August 25, 1995, that when the contract is for a
fixed term and the employees are dismissed without
just cause, they are entitled to the payment of their
salaries corresponding to the unexpired portion of
their contract.59 On the other hand, for cases arising
after the effectivity of R.A. No. 8042, when the
termination of employment is without just, valid or
authorized cause as defined by law or contract, the
worker shall be entitled to the full reimbursement of
his placement fee with interest of twelve percent
(12%) per annum, plus his salaries for the unexpired
portion of his employment contract or for three (3)
months for every year of the unexpired term
whichever is less.60
In the present case, the employment contract provides
that the employment contract shall be valid for a
period of two (2) years from the date the employee
starts to work with the employer.61 Gran arrived in
Riyadh, Saudi Arabia and started to work on
February 7, 1994;62 hence, his employment contract
is until February 7, 1996. Since he was illegally
dismissed on July 9, 1994, before the effectivity of
R.A. No. 8042, he is therefore entitled to backwages
corresponding to the unexpired portion of his
contract, which was equivalent to USD 16,150.
Petitioner EDI questions the legality of the award of
backwages and mainly relies on the Declaration
which is claimed to have been freely and voluntarily
executed by Gran. The relevant portions of the
Declaration are as follows:
I, ELEAZAR GRAN (COMPUTER
SPECIALIST) AFTER RECEIVING MY
FINAL SETTLEMENT ON THIS DATE
THE AMOUNT OF:
S.R. 2,948.00 (SAUDI RIYALS TWO
THOUSAND NINE
 HUNDRED FORTY EIGHT ONLY)
REPRESENTING COMPLETE PAYMENT
(COMPENSATION) FOR THE SERVICES
I RENDERED TO OAB
ESTABLISHMENT.
I HEREBY DECLARE THAT OAB EST.
HAS NO FINANCIAL OBLIGATION IN
MY FAVOUR AFTER RECEIVING THE
ABOVE MENTIONED AMOUNT IN
CASH.
I STATE FURTHER THAT OAB EST.
HAS NO OBLIGATION TOWARDS ME
IN WHATEVER FORM.
I ATTEST TO THE TRUTHFULNESS OF
THIS STATEMENT BY AFFIXING MY
SIGNATURE VOLUNTARILY.
SIGNED.
ELEAZAR GRAN
Courts must undertake a meticulous and rigorous
review of quitclaims or waivers, more particularly
those executed by employees. This requirement was
clearly articulated by Chief Justice Artemio V.
Panganiban in Land and Housing Development
Corporation v. Esquillo:
Quitclaims, releases and other waivers of
benefits granted by laws or contracts in
favor of workers should be strictly
scrutinized to protect the weak and the
disadvantaged. The waivers should be
carefully examined, in regard not only to
the words and terms used, but also the
factual circumstances under which they
have been executed.63 (Emphasis supplied.)
This Court had also outlined in Land and Housing
Development Corporation, citing Periquet v.
NLRC,64 the parameters for valid compromise
agreements, waivers, and quitclaims:
Not all waivers and quitclaims are invalid as
against public policy. If the agreement was
voluntarily entered into and represents a
reasonable settlement, it is binding on the
parties and may not later be disowned
simply because of a change of mind. It is
only where there is clear proof that the
waiver was wangled from an unsuspecting
or gullible person, or the terms of settlement
are unconscionable on its face, that the law
will step in to annul the questionable
transaction. But where it is shown that
the person making the waiver did so
voluntarily, with full understanding of
what he was doing, and the consideration
for the quitclaim is credible and
reasonable, the transaction must be
recognized as a valid and binding
undertaking. (Emphasis supplied.)
Is the waiver and quitclaim labeled a Declaration
valid? It is not.
The Court finds the waiver and quitclaim null and
void for the following reasons:
1. The salary paid to Gran upon his termination, in
the amount of SR 2,948.00, is unreasonably low. As
correctly pointed out by the court a quo, the payment
of SR 2,948.00 is even lower than his monthly salary
of SR 3,190.00 (USD 850.00). In addition, it is also
very much less than the USD 16,150.00 which is the
amount Gran is legally entitled to get from petitioner
EDI as backwages.
2. The Declaration reveals that the payment of SR
2,948.00 is actually the payment for Gran's salary for
the services he rendered to OAB as Computer
Specialist. If the Declaration is a quitclaim, then the
consideration should be much much more than the
monthly salary of SR 3,190.00 (USD 850.00)—
although possibly less than the estimated Gran's
salaries for the remaining duration of his contract and
other benefits as employee of OAB. A quitclaim will
understandably be lower than the sum total of the
amounts and benefits that can possibly be awarded to
employees or to be earned for the remainder of the
contract period since it is a compromise where the
employees will have to forfeit a certain portion of the
amounts they are claiming in exchange for the early
payment of a compromise amount. The court may
however step in when such amount is unconscionably
low or unreasonable although the employee
voluntarily agreed to it. In the case of the
Declaration, the amount is unreasonably small
compared to the future wages of Gran.
3. The factual circumstances surrounding the
execution of the Declaration would show that Gran
did not voluntarily and freely execute the document.
Consider the following chronology of events:
 a. On July 9, 1994, Gran received a copy of
his letter of termination;
b. On July 10, 1994, Gran was instructed to
depart Saudi Arabia and required to pay his
plane ticket;65
c. On July 11, 1994, he signed the
Declaration;
d. On July 12, 1994, Gran departed from
Riyadh, Saudi Arabia; and
e. On July 21, 1994, Gran filed the
Complaint before the NLRC.
The foregoing events readily reveal that Gran was
"forced" to sign the Declaration and constrained to
receive the amount of SR 2,948.00 even if it was
against his will—since he was told on July 10, 1994
to leave Riyadh on July 12, 1994. He had no other
choice but to sign the Declaration as he needed the
amount of SR 2,948.00 for the payment of his ticket.
He could have entertained some apprehensions as to
the status of his stay or safety in Saudi Arabia if he
would not sign the quitclaim.
4. The court a quo is correct in its finding that the
Declaration is a contract of adhesion which should be
construed against the employer, OAB. An adhesion
contract is contrary to public policy as it leaves the
weaker party—the employee—in a "take-it-or-leave-
it" situation. Certainly, the employer is being unjust
to the employee as there is no meaningful choice on
the part of the employee while the terms are
unreasonably favorable to the employer.66
Thus, the Declaration purporting to be a quitclaim
and waiver is unenforceable under Philippine laws in
the absence of proof of the applicable law of Saudi
Arabia.
In order to prevent disputes on the validity and
enforceability of quitclaims and waivers of
employees under Philippine laws, said agreements
should contain the following:
1. A fixed amount as full and final compromise
settlement;
2. The benefits of the employees if possible with the
corresponding amounts, which the employees are
giving up in consideration of the fixed compromise
amount;
3. A statement that the employer has clearly
explained to the employee in English, Filipino, or in
the dialect known to the employees—that by signing
the waiver or quitclaim, they are forfeiting or
relinquishing their right to receive the benefits which
are due them under the law; and
4. A statement that the employees signed and
executed the document voluntarily, and had fully
understood the contents of the document and that
their consent was freely given without any threat,
violence, duress, intimidation, or undue influence
exerted on their person.
It is advisable that the stipulations be made in
English and Tagalog or in the dialect known to the
employee. There should be two (2) witnesses to the
execution of the quitclaim who must also sign the
quitclaim. The document should be subscribed and
sworn to under oath preferably before any
administering official of the Department of Labor and
Employment or its regional office, the Bureau of
Labor Relations, the NLRC or a labor attaché in a
foreign country. Such official shall assist the parties
regarding the execution of the quitclaim and
waiver.67 This compromise settlement becomes final
and binding under Article 227 of the Labor Code
which provides that:
[A]ny compromise settlement voluntarily
agreed upon with the assistance of the
Bureau of Labor Relations or the regional
office of the DOLE, shall be final and
binding upon the parties and the NLRC or
any court "shall not assume jurisdiction over
issues involved therein except in case of
non-compliance thereof or if there is prima
facieevidence that the settlement was
obtained through fraud, misrepresentation,
or coercion.
It is made clear that the foregoing rules on quitclaim
or waiver shall apply only to labor contracts of OFWs
in the absence of proof of the laws of the foreign
country agreed upon to govern said contracts.
Otherwise, the foreign laws shall apply.
WHEREFORE, the petition is DENIED. The
October 18, 2000 Decision in CA-G.R. SP No. 56120
of the Court of Appeals affirming the January 15,
1999 Decision and September 30, 1999 Resolution of
the NLRC
is AFFIRMED with the MODIFICATION that
petitioner EDI-Staffbuilders International, Inc. shall
pay the amount of PhP 30,000.00 to respondent Gran
as nominal damages for non-compliance with
statutory due process.

No costs.

SO ORDERED.
#69: ARELLANO VS POWERTECH CORP
G.R. No. 150861 January 22, 2008
AL ARELLANO, SOLOMON BRITANICO,
VALERIANO MENDOZA, JOSE PERPETUA,
REY PAMINIANO, FREDDIE JIMENA, JOEL
UBANA, ALEX MABANTA, ALEXANDER
ANTONIO, JERRY NACAYTUNA, ELIZER
DELFIN, FRANCISCO CORPUZ, ALEX
GARIDO, DANTE DIMAANO, NARCISO
ALBAY, MAXIMO GAGARIN, APOLLO
CAYABYAB, RONALD GESTIADA, SERGIO
ESPERANZA, ROMEO CARPIO and
RODRIGO ORDINIZA, petitioners,
vs.
POWERTECH CORPORATION, WILLIE
CABOBOS and COURT OF APPEALS (Former
Special Ninth Division), respondents.
DECISION
REYES, R.T., J.:
FOCUS of this case is the validity of a quitclaim
based on a broad special power of attorney affecting
the rights of twenty-two (22) employees.
This is a petition for review on certiorari assailing
the Decision1 of the Court of Appeals (CA) which
annulled the Resolution2 of the National Labor
Relations Commission (NLRC) voiding the quitclaim
and release executed by petitioners’ attorney-in-fact
in favor of their employer, private respondent
Powertech Corporation (Powertech).
The Antecedents
The case stems from a complaint for illegal dismissal
and other money claims filed by the Nagkakaisang
Manggagawa Ng Powertech Corporation in behalf of
its 52 individual members and non-union members
against their employer, Powertech. The case was
dismissed as to twenty-seven (27) employees by
virtue of duly executed affidavits of repudiation and
quitclaim. The case proceeded with respect to the
remaining twenty-five (25) employees, petitioners in
this case.
On June 25, 1999, Labor Arbiter Renell Joseph R.
Dela Cruz rendered a Decision3 declaring illegal the
termination of twenty (20) of petitioners and granting
their monetary claims in the total amount
of P2,538,728.84.
Powertech appealed to the NLRC. During its
pendency, Carlos Gestiada, for himself and on behalf
of other petitioners, executed a quitclaim, release and
waiver4 in favor of Powertech in consideration of the
amount of P150,000.00. Earlier, Gestiada was
appointed by his co-petitioners as their attorney-in-
fact. The appointment was evidenced by a special
power of attorney dated October 8, 1999.5 The
compromise amount was paid to Gestiada by check.
Relying on the quitclaim and release, Powertech filed
a motion for the withdrawal of the appeal and cash
bond. The NLRC granted6 the motion, dismissed the
appeal and ordered the release of the cash bond.
The P150,000.00 check, however, bounced due to a
stop payment order of Powertech.7
Aggrieved, petitioners moved to nullify the release
and quitclaim for lack of consideration. In a
Resolution dated February 29, 2000, the NLRC
declared the quitclaim, release and waiver void for
lack of consideration, reinstated the appeal and
ordered Powertech to post a cash or surety bond for
the monetary judgment less the amount it had
previously posted.8
On March 15, 2000, Gestiada terminated the services
of their counsel, Atty. Evangelista and, instead,
retained Atty. Manuel Luis Felipe of the Public
Attorney’s Office.9
A day later, Powertech paid P150,000.00 to Gestiada
purportedly as compromise amount for all of
petitioners. That same day, Gestiada, through Atty.
Felipe, and Powertech filed a joint motion to
dismiss10 with the NLRC based on the compromise
agreement. Atty. Evangelista opposed11 the motion,
alleging that the compromise agreement is
unconscionable, that he was illegally terminated as
counsel for the other petitioners without their
consent, and that the P150,000.00 was received by
Gestiada as payment solely for his backwages and
other monetary claims.
NLRC Resolution
On July 31, 2000, the NLRC issued a
resolution12 denying the joint motion to dismiss,
disposing as follows:
WHEREFORE, in view of the foregoing
the Joint Motion to Dismiss filed on March
 17, 2000 is hereby DENIED for lack of
merit.
Respondents’ Omnibus
Motion/Manifestation is
hereby DENIED for lack of merit and
respondents appeal filed on August 9, 1999
is hereby DISMISSED for failure to perfect
the same.
SO ORDERED.13
In denying the joint motion to dismiss, the NLRC
held that the P150,000.00 received by Gestiada did
not cover the monetary claim of petitioners against
Powertech. The NLRC stated:
Evidence show that there was no voluntary
severance of attorney-client relationship
between Gestiada representing the other
complainants and Atty. Evangelista. Thus, in
a letter to Atty. Evangelista Gestiada wrote:
"Tungkol naman po sa pagtanggal
sa inyo bilang abogado iyan po ay
isang suwestiyon ni Ginoong Ver
Sarmiento at isang kondisyon para
ibigay nila ang kabayaran ng aking
backwages at karagdagang sahod.
Pasensiya na po at kung ako ay
maluwag babayaran ko kayo sa
inyong serbisyo. Totoong walang
pahintulot ang aking mga kasama
sa pagtanggal ko sa inyo pero
pangsariling desisyon ko po iyon
para sa aking kapakanan."
The other complainants in this case have
never indicated any objection to the
continued appearance of Atty. Evangelista.
Hence, it must be presumed that Atty.
Evangelista’s appearance is with the consent
of all the complainants herein.
On the Joint Motion to Dismiss in their
opposition, the other complainants
represented by Atty. Evangelista argued that
Gestiada received the PhP150,000.00
referred to in the Quitclaim and Release as
payment and for his backwages. It is further
argued that Gestiada had never intervened in
the payment of awards due the other
complainants in this case. Thus, as admitted
by Gestiada in the same letter addressed to
Atty. Evangelista:
"Nais ko pong ipaalam sa inyo na
ang kinuha kong pera sa Powertech
Corporation sa halagang
PhP150,000.00 ay bilang
kabayaran sa aking backwages na
iginawad sa Desisyon ni Kagalang-
galang Labor Arbiter Joseph
Rennel dela Cruz. Kung
kukuwentahin kulang pa po yon
dahil may babayaran pa ang
kumpanya na karagdagang sahod o
reinstatement salaries mula po
lumabas ang Desisyon na ako ay
pabalikin sa aking trabaho, hindi
po ako pinabalik ng kompanya. x x
x
x x x Hindi ko naman po
pinakialaman ang kabayaran para
sa aking mga kasamahan."
Gestiada’s admission that he received the
amount of PhP150,000.00 only as payment
for his backwages and that the same has no
reference to the claim of the other
complainants in this case is bolstered further
by the fact that the Quitclaim and Release
attached to the instant Joint Motion to
Dismiss was signed only by Gestiada and
that the other complainants never took part
in the execution thereof. A waiver of money
claims must be regarded as a personal right;
hence, the protective rule that for a
compromise dealing with their judgment to
be validly entered into there must be
personal and specific individual consent
given by the workers (Galicia v. NLRC, 276
SCRA 381; Republic v. NLRC, 744 SCRA
564; General Rubber v. Onion, 169 SCRA
808).
In any case granting in gratia argumenti that
Gestiada had the authority to enter into a
compromise agreement in behalf of the other
complainants, the Quitclaim and Release
cannot be recognized as a valid and binding
undertaking as the consideration therefore
(PhP150,000.00) as opposed to the total
monetary award in the amount equivalent to
PhP2,538,728.84 is clearly unconscionable
and is thus void for being contrary to public
policy.14
For failure of Powertech to post the required cash or
surety bond, the NLRC ruled that the Labor Arbiter
decision had attained finality, to wit:
Thus, settled records show that on June 8,
2000, (illegible), through counsel, received a
copy of Our Resolution dated May 24, 2000
directing herein respondents to post a cash
or surety bond within ten (10) days from
receipt thereof.
An appeal is neither a natural right nor is it a
part of the due process but is purely a
statutory privilege and may be exercised
only in the manner prescribed by and in
accordance with the provisions of law (Acda
v. Minister of Labor, 119 SCRA 306).
Whoever would avail of it must strictly
comply with (illegible) particularly as these
are clearly spelled in the rules
([illegible] Industry v. NLRC, G.R. No.
94754 [May 11, 1993]). Considering that the
Joint Motion to Dismiss remains unacted
upon at the time respondents received a copy
of Our Resolution dated May 24, 2000
respondents in accordance with said
Resolution and with Article 223 Labor Code
and with Section 6, Rule VI, NLRC New
Rules of Procedure should have posted a
cash or surety bond. Hence, failing to do so
the appealed Decision is deemed final and
executory (Acda v. Minister of Labor,
supra).15
Undaunted, Powertech elevated the matter to the CA
via petition for certiorari under Rule 65 of the 1997
Rules of Civil Procedure.
CA Disposition
On June 20, 2001, the CA rendered a decision in
favor of Powertech. The dispositive portion of the
decision reads:
WHEREFORE, premises considered, the
petition is GIVEN DUE COURSE and is
hereby GRANTED. The Resolution of the
National Labor Relations Commission dated
July 31, 2000 declaring the Quitclaim and
Release void ab initio and denying the Joint
Motion to Dismiss and dismissing the appeal
of the petitioners is ANNULLED and SET
ASIDE. No pronouncement as to costs.
SO ORDERED.16
The CA upheld the validity of the compromise
agreement between petitioners and Powertech in the
following tenor:
The public respondent’s act of dismissing
the appeal and declaring the compromise
agreement void is a grave abuse of
discretion. Apparently, the National Labor
Relations Commission has already lost
jurisdiction over the case because the appeal
was already considered withdrawn and the
cash bond was released through its
Resolution dated January 10, 1999. It is
noted that said resolution withdrawing the
appeal has become final and executory since
the same has not been the subject of a
motion for reconsideration. In the case at
bench, the private respondents sought a
reconsideration of the January 10, 1999
resolution because of the non-compliance of
the terms and conditions of the agreement by
the petitioners or their failure to pay the
consideration. Thus, for all intents and
purposes, the appeal was considered
withdrawn and there could therefore be no
legal basis for public respondent to dismiss
the same. Neither should the petitioners be
required to post any cash or surety bond for
the simple reason that there is no more
appeal to speak of. Similarly stated, the case
having been amicably settled for which a
resolution was issued, ipso facto, the filing
of a bond is no longer warranted.
Anent the public respondent’s act of
declaring the compromise agreement void,
the same is likewise a grave abuse of
discretion amounting to lack or excess of
jurisdiction. Fundamental is the rule that a
compromise agreement entered into in good
faith by workers and their employer to
resolve a pending controversy is valid and
binding on the agreeing parties. The
National Labor Relations Commission shall
not assume jurisdiction over issues involved
in the compromise agreement except 1) in
case of non-compliance thereof, or 2) if
there is prima facie evidence that the
settlement was obtained through fraud,
misrepresentation or coercion. In the first
instance, the Civil Code of the Philippines
affords the prevailing party legal remedies in
case of non-compliance of the terms and
conditions of the compromise agreement.
Article 2041 thereof provides that should a
party fail or refuse to comply with the terms
of a compromise or amicable settlement, the
other party could either a) enforce the
compromise by a writ of execution, or b)
regard it as rescinded and so insist upon his
original demand.
The public respondent, in taking cognizance
therefore of the motion for reconsideration
by the complainants seeking to declare the
compromise agreement void on the ground
of non-payment, and consequently,
declaring the same as being contrary to law
pursuant to its Resolution dated February 29,
2000, acted in excess of jurisdiction since
the procedure for acquiring jurisdiction over
the case was not properly observed. Indeed,
the proper remedy of the aggrieved party is
not to file a motion for reconsideration on
the ground of non-payment but to have the
compromise agreement enforced by means
of a writ of execution. Any violation of the
terms thereof would entitle the aggrieved
party to an execution of the judgment. In the
case of Paredes v. Court of Appeals, the
Supreme Court held that if the terms of the
settlement are violated, execution is the
proper remedy.
By and large, when the NLRC made a
pronouncement that the compromise
agreement is valid and that the appeal has
been withdrawn, the same became the law
between the parties. Enshrined is the
doctrine that compromise agreements
voluntarily agreed upon shall be final and
binding upon the parties. Hence, judgment
in consonance with a compromise agreement
is consequently rendered in accordance
therewith and the parties are enjoined to
comply with, abide by, its terms and
conditions. Settlements of this kind are not
only recognized to be proper agreements but
so encouraged as well. x x x
xxxx
Suffice it to say that the Supreme Court has
consistently held that a compromise
agreement, once approved by final orders of
the court has the force of res
judicata between the parties and should not
be disturbed except for vices of consent or
forgery. Since a compromise has upon the
parties and their successors-in-interest the
effect of res judicata, it can only be
rescinded on the ground of vitiated consent
and this is true even if the compromise turns
out to be unsatisfactory to either of the
parties. In the instant case, there is no
evidence to show that the agreement was
entered into by means of fraud, accident,
mistake, or excusable negligence or that the
agreement was forged. The compromise
agreement was voluntarily entered into,
since the complainants signified their
individual consent to the same by
authorizing Carlos Gestiada through a
special power of attorney to act for and in
their behalf. Moreover, their very own
lawyer Atty. Jose Evangelista acted as their
witness in that agreement and affixed his
signature thereon. On top of this, the said
document was subscribed and sworn before
Labor Arbiter Dela Cruz.
Accordingly, the findings of the NLRC, that
the execution of the second compromise
agreement is null and void since the
consideration of P150,000 was merely a
payment for Carlos Gestiada’s backwages
without reference to the claims of the other
complainants, becomes moot and academic.
Parenthetically, its findings declaring valid
the authority of Atty. Evangelista in filing
the Opposition to the Joint Motion to
Dismiss questioning the reasonableness of
the consideration of the settlement
agreement is also futile. In short, the issue as
the validity of the compromise agreement
and the authority of Atty. Evangelista has
been rendered moot and academic by the
fact of payment of the consideration of the
settlement.17
Petitioners moved to reconsider the CA decision but
their motion was denied.18 Hence, the present
recourse.
Issues
Petitioners impute to the CA "grave abuse of
discretion,"19 contending that –
I
PUBLIC RESPONDENT COURT OF
APPEALS COMMITTED GRAVE ABUSE
 OF DISCRETION AMOUNTING TO
LACK OR EXCESS OF
JURISDICTION IN RULING THAT THE
NATIONAL LABOR RELATIONS
COMMISSION HAD ALREADY LOST
JURISDICTION WHEN IT DISMISSED
THE APPEAL OF PRIVATE
RESPONDENTS.
II
PUBLIC RESPONDENT COURT OF
APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO
LACK OR IN EXCESS OF
JURISDICTION IN RULING THAT THE
NATIONAL LABOR RELATIONS
COMMISSION COMMITTED GRAVE
ABUSE OF DISCRETION IN
DECLARING VOID THE COMPROMISE
AGREEMENT.
III
PUBLIC RESPONDENT COURT OF
APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO
LACK OR EXCESS OF
JURISDICTION IN ASSUMING
JURISDICTION OVER THE PRESENT
PETITION CONSIDERING THAT
PRIVATE RESPONDENTS FAILED TO
PERFECT THEIR APPEAL WITH THE
NATIONAL LABOR RELATIONS
COMMISSION. (Underscoring supplied)
Our Ruling
The meat of the petition is found in the second
contention. We shall deal with it ahead of the two
others which can be merged into one.
The P150,000 was paid to Gestiada solely as
payment for his backwages,
not those of petitioners; there is evident collusion
between
Powertech and Gestiada, hence, the compromise
agreement is void.
Petitioners assert that the P150,000.00 paid to
Gestiada was payment solely for himself. As proof,
they rely on the letter written in Filipino by Gestiada
to Atty. Evangelista dated March 23, 2000.20 Right at
the opening sentence, Gestiada stated that "ang
kinuha kong pera sa Powertech Corporation na
halagang P150,000.00 ay bilang kabayaran sa
aking backwages na iginawad sa desisyon ni
Kagalang-galang Labor Arbiter Joseph Rennel Dela
Cruz." (the money I got from Powertech in the sum
of P150,000.00 was for payment of my backwages
awarded under the decision of the Labor Arbiter.) In
the penultimate sentence, Gestiada further clarified
that "hindi ko naman po pinakialaman ang
kabayaran para sa aking mga kasamahan." (I did not
deal with the payment for my companions.) The letter
reads:
Ginoong Atty. Jose Evangelista
Suite 1009, 1010 Bldg., A. Mabini Street
Ermita, Manila, Metro Manila
Sir:
Nais ko pong ipaalam sa inyo na ang kinuha
kong pera sa Powertech Corporation na
halagang P150,000.00 ay bilang kabayaran
sa aking backwages na iginawad sa desisyon
ni Kagalang-galang Labor Arbiter Joseph
Rennel Dela Cruz. Kung kukuwentahin
kulang pa po yon dahil may babayaran pa
ang kompanya na karagdagang sahod o
reinstatement salaries dahil mula po lumabas
ang Desisyon na ako ay pabalikin sa aking
trabaho, hindi po ako pinabalik ng
kompanya. Kahit kulang, napilitan po akong
tanggapin ang alok ng kompanya dahil sa
tindi ng pangangailangan ng aking pamilya
lalo na mula ng ako ay natanggal hanggang
ngayon walang tumanggap na ibang
kompanya para ako ay makapagtrabaho.
Tungkol po naman sa pagtanggal sa inyo
bilang abogado, iyan po ay isang suwestiyon
ni Ginoong Ver Sarmiento at isang
kondisyon para ibigay nila ang kabayaran ng
aking backwages at karagdagang sahod.
Pasensiya na po at kung ako ay maluwag
babayaran ko kayo sa inyong serbisyo.
Totoong walang pahintulot ang aking mga
kasama sa pagtanggal ko sa inyo, pero
pangsariling desisyon ko po iyon para sa
aking kapakanan. Hindi ko naman po
pinakialaman ang kabayaran para sa aking
mga kasamahan.
Kung di po kayo napadalahan ng summons o
notice ng NLRC sa komperensiya noong
Marso 14, 2000 at Marso 15, 2000, hindi ko
 po alam iyon. Pasensiya na po at maraming
salamat sa iyong pangunawa.
(Underscoring supplied)
Powertech, on the other hand, argues that
the P150,000.00 was given to Gestiada as
compromise amount for all the petitioners. It relies on
the release and quitclaim signed by Gestiada
indicating that he signed "for himself and attorney-in-
fact of all complainants." It is pointed out that
Gestiada was given a special power of attorney to
negotiate with Powertech on behalf of petitioners.
The pertinent portions of the said special power of
attorney21authorize Gestiada to perform the following
acts for petitioners:
1. TO REPRESENT us in the case entitled
"Nagkakaisa Manggagawa ng Powertech
Corporation, et al. v. Power Corporation, et
al.," NLRC NCR No. 02-01876-98 NCR-04-
03148-98;
2. TO ENTER into amicable settlement and
compromise agreement under terms and
conditions he may deem just and reasonable;
3. TO RECEIVE, COLLECT, ENCASH,
DEPOSIT and WITHDRAW, in trust, cash,
checks, bills, negotiable instruments and
properties representing awards based on
judgments and/or compromise agreement or
voluntary tender of payment by reason of the
aforementioned case;
4. TO SIGN AND EXECUTE compromise
agreement, receipts, vouchers, waiver,
quitclaims, and other papers and documents
pertaining to the foregoing authority.22
The quitclaim, release and waiver23 signed by
Gestiada reads:
COMES NOW the undersigned
complainant(s)/petitioner(s) in the above-entitled
case(s) before this office respectfully manifest:
That for and in consideration of the sum of
ONE HUNDRED FIFTY THOUSAND
PESOS (P150,000.00) to (sic) paid by
Powertech Corporation in settlement of
my/our claims as complainants in the case
receipt of which is hereby acknowledged to
my/our complete and full satisfaction. I/we
hereby release and discharge the said
Powertech Corporation and its officer(s)
from any/all by way of unpaid wages,
separation pay, overtime pay, differential
pay or 13th months pay, bonuses,
allowances, fringe benefits, SL/VL/SIL,
medical benefits, and claims for illegal
dismissal reinstatement, backwages,
attorney’s fees, or otherwise as may be due
me/us in connection with my past
employment with said establishment and its
office.
IN VIEW WHEREOF, I/We have hereunto
set my/our hand(s) this 16th day of March,
2000 in the City of Quezon City,
Philippines.
(Sgd.)
CARLOS G. GESTIADA
Complainant
For himself and Attorney-
In-Fact of all Complainants24
If reliance is placed solely on the quitclaim release
and waiver executed by Gestiada and the special
power of attorney, it would be an inevitable
conclusion that the P150,000.00 compromise covered
the claims of petitioners, not merely that of Gestiada.
That is apparent from the waiver and the special
power of attorney. There is much to be said, however,
of the circumstances in the execution and the
payment of the amount which lead Us to conclude
that the P150,000.00 was given to Gestiada solely as
payment for his backwages and other monetary
claims.
First, the P150,000 compromise is rather measly
when taken in light of the more than P2.5 million
judgment on appeal to the NLRC. Petitioners already
won on the arbiter level P2.5 million pesos. It is
highly improbable that they would suddenly agree to
accept P150,000 as compromise for the P2.5 million.
That translates to a paltry sum of P6,000.00 each for
petitioners. From this amount will still be deducted
attorneys fees and other litigation expenses. In effect,
petitioners agreed to waive more than 94% of what
they expect to receive from Powertech. We note that
the compromise is a mere 6% of the contingent sum
that may be received by petitioners. This minuscule
amount is certainly questionable because, to Our
mind, it does not represent a true and fair amount
which a reasonable agent may bargain for his
principal.
We contrast the monetary judgment to
the P150,000.00 received by Gestiada, which appears
to be his share in the P2.5 million based on the
calculation of the NLRC.25 We find no plausible
reason to disbelieve his claim that the sum represents
payment solely of his backwages.
In Galicia v. National Labor Relations Commission
(Second Division),26 this Court invalidated a
compromise agreement which entitled a worker to
receive P12,000 in lieu of a monetary judgment
of P108,000 for being palpably inequitable, to wit:
The more relevant inquiry is whether the
consideration for the quitclaims signed by
the workers was reasonable and acceptable.
Where it is shown that the person making
the waiver did so voluntarily and with full
understanding of what he was doing and the
consideration of the quitclaim is credible,
the transaction must be recognized as a valid
and binding undertaking. Here, the amount
accepted by petitioners was very much less
than the amount awarded by the Labor
Arbiter. The consideration for the quitclaim,
a measly P12,000.00 per worker and the
total sum of P300,000.00 are inordinately
low and exceedingly unreasonable relative
to the P107,380.00 per worker and
total P3,223,261.00 awarded by the Arbiter.
Palpably inequitable, the quitclaim cannot
be considered an obstacle to the pursuit of
their legitimate claims. Petitioners never
accepted as full compensation the meager
amount they received when they signed the
quitclaim and release. In the Sinumpaang
Salaysay they executed the next day, they
expressly declared their awareness that the
amount they received was unjust and
insufficient to answer for their just claims
and the award given by the Labor Arbiter,
but due to destitution caused by their
protracted unemployment, they decided to
accept the P12,000.00 in the meantime. The
Court also recognizes "dire necessity" of
laborers as ample justification to accept even
insufficient sums of money from their
employers.
xxxx
Worth noting is the Solicitor General’s
opinion in favor of granting the petition. The
OSG concluded that "(w)hile petitioners
may not have been ‘tricked’ into accepting
the P12,000.00, to repeat, the undisputed
and concurrent circumstances of dire
necessity and unconscionability obtaining in
the case at bar constitute more than
sufficient ground to invalidate the
compromise agreement." (Underscoring
supplied)
Second, even granting for the mere sake of argument
that the P150,000 was a fair and reasonable
compromise for all, petitioners failed to receive a
single centavo from the compromise. This
conclusively indicates that Gestiada received
the P150,000 in payment of his backwages and no
other.
Third, We give credence to the admission of
Gestiada that he received the P150,000.00 as
payment for his own backwages. In his letter to Atty.
Evangelista, Gestiada said that he was pressured by
Powertech to sign the waiver and quitclaim for
petitioners in order to receive his share in the P2.5
million judgment. Having no stable job after his
dismissal, Gestiada had no other choice but to breach
his fiduciary obligation to petitioners. He succumbed
to the pressure of Powertech in signing the waiver,
release and quitclaim in exchange for
the P150,000.00. In short, he colluded with
Powertech to the detriment of petitioners.
Powertech knew that Gestiada had plenary authority
to act for petitioners in the labor case. It had prior
dealings with him. It also knew that Gestiada was
authorized to negotiate for any amount "he may deem
just and reasonable" and to sign waivers and
quitclaims on behalf of petitioners. Powertech
obviously used that knowledge, capitalized on the
vulnerable position of Gestiada in entering into the
agreement and took advantage of the situation to the
disadvantage of petitioners.
Fourth, the events that led to the execution of the
compromise agreement show that Powertech was
negotiating in bad faith. More importantly, they show
that Powertech colluded with Gestiada to defraud
petitioners of their share of the P2.5 million Labor
Arbiter judgment.
Evidently, Powertech never intended to pay
the P150,000 compromise agreement. It was minded
to do so only after the NLRC declared the
compromise void and reinstated the P2.5 million
judgment of the Labor Arbiter. It cannot escape Our
notice that Powertech even ordered a stop payment
for the P150,000.00 check issued to Gestiada without
any sufficient reason. Worse, it was recalcitrant in
making good the check despite due demand.
To Our mind, what prompted Powertech to agree to
pay the P150,000.00 was the NLRC order voiding the
compromise agreement and reinstating the Labor
Arbiter P2.5 million judgment. By then, Powertech
was faced with the possibility of paying P2.5 million
to petitioners. It was also required by law to post a
surety bond for the same amount in order to perfect
its appeal with the NLRC.
Armed with the NLRC order, petitioners were bent
on pursuing their appeal. Powertech panicked. It
negotiated with Gestiada offering him P150,000.00 in
exchange for a waiver and quitclaim for himself and
for petitioners. Powertech knew that Gestiada was
authorized by petitioners to negotiate for "any sum he
may deem just and reasonable" and to sign quitclaims
and waivers for them. Jobless and having no regular
income, Gestiada succumbed to the pressure. He
connived with Powertech and agreed to receive
the P150,000.00 for himself in exchange for signing a
quitclaim and waiver in the name of petitioners.
To give effect to the collusion, Gestiada had to get rid
of Atty. Evangelista, who had previously succeeded
in nullifying the compromise agreement. He fired
Atty. Evangelista without cause basing his dismissal
on his plenary authority as agent of petitioners. He
then procured the services of another lawyer, Atty.
Felipe. We find it striking that Gestiada was not
authorized under the special power of attorney to
terminate or retain another counsel for petitioners in
the labor dispute. The special power of attorney
merely authorized Gestiada to negotiate with
Powertech, nothing more.
In his letter, Gestiada admitted that the dismissal of
Atty. Evangelista was upon the prodding of Virtue
Sarmiento, personnel manager of Powertech.
Powertech imposed the dismissal of Atty. Evangelista
as a condition before Gestiada may receive the
amount. A day after firing Atty. Evangelista,
Gestiada received the P150,000.00. That same day,
Gestiada, represented by Atty. Felipe, and Powertech
filed a joint motion to dismiss with the NLRC.
All these circumstances indicate that the P150,000.00
was received by Gestiada solely as payment for his
backwages and not a whit of a settlement for the
monetary claim of petitioners.
In line with Our conclusion that Powertech colluded
with Gestiada, the CA gravely erred in upholding the
compromise agreement. The appellate court decision
was premised on the compromise agreement being
entered into by Powertech and Gestiada in good faith.
It is now clear that there is ample evidence indicating
that Powertech was negotiating in bad faith and,
worse, it colluded with Gestiada in shortchanging,
nay, fraudulently depriving petitioners of their just
share in the award.
Collusion is a species of fraud.27 Article 227 of the
Labor Code empowers the NLRC to void a
compromise agreement for fraud, thus:
Any compromise settlement, including those
involving labor standard laws, voluntarily
agreed upon by the parties with the
assistance of the Bureau or the regional
office of the Department of Labor, shall be
final and binding upon the parties. The
National Labor Relations Commission or
any court shall not assume jurisdiction over
issues involved therein except in case of
non-compliance thereof or if there is prima
facie evidence that the settlement was
obtained through fraud, misrepresentation,
or coercion.28 (Underscoring supplied)
In fine, We find that the CA erred in upholding the
compromise agreement between Powertech and
Gestiada. The NLRC justifiably declared the
compromise agreement as void.
Posting of surety bond is mandatory and
jurisdictional.
Failure to post surety bond rendered the
Labor Arbiter decision final and executory.
Addressing petitioners’ third contention on the failure
of Powertech to post a surety bond, We agree with
the NLRC resolution dismissing its appeal. Said the
NLRC on this point:
An appeal is neither a natural right nor is it
part of due process but purely a statutory
privilege and may be exercised only in the
manner and in accordance with the
provisions of law (Acda v. Minister of
 Labor, 119 SCRA 306). x x x Considering
that the Joint motion to Dismiss remains
unacted upon at the time respondents
received a copy of Our Resolution dated
May 24, 2000, respondents, in accordance
with said Resolution and with Article 223
Labor Code and with Section 6, Rule VI,
NLRC New Rules of Procedure should have
posted a cash and surety bond. Hence failing
to do so the appealed Decision is deemed
final and executory (Acda v. Minister of
Labor, supra).
The posting of a surety bond is mandatory and
jurisdictional. This is well settled. In Viron Garments
Manufacturing Co., Inc. v. National Labor Relations
Commission,29 this Court held:
The intention of the lawmakers to make the
bond an indispensable requisite for the
perfection of an appeal by the employer, is
clearly limned (sic) in the provision that an
appeal by the employer may be perfected
"only upon the posting of a cash or surety
bond." The word "only"; makes it perfectly
clear, that the lawmakers intended the
posting of a cash or surety bond by the
employer to be the exclusive means by
which an employer's appeal may be
perfected.
The word "may" refers to the perfection of
an appeal as optional on the part of the
defeated party, but not to the posting of an
appeal bond, if he desires to appeal.
The meaning and the intention of the
legislature in enacting a statute must be
determined from the language employed,
and where there is no ambiguity in the
words, there is no room for construction
(Provincial Board of Cebu v. Presiding
Judge of Cebu, Court of First Instance,
Branch IV, 171 SCRA 1).
The requirement that the employer post a
cash or surety bond to perfect its/his appeal
is apparently intended to assure the workers
that if they prevail in the case, they will
receive the money judgment in their favor
upon the dismissal of the employer's appeal.
It was intended to discourage employers
from using an appeal to delay, or even
evade, their obligation to satisfy their
employees’ just and lawful claims.
The "undertakings" which the petitioners
signed, binding themselves to answer and
pay the judgment or award would not assure
satisfaction of the monetary awards if they
(the judgment debtors) became insolvent
during the pendency of the appeal.
(Underscoring supplied)
This rule was affirmed in Quiambao v. National
Labor Relations Commission,30 thus:
x x x Petitioner is right that the filing of a
supersedeas bond is indispensable to the
perfection of an appeal in cases which, like
the present one, involve monetary awards
and that because Central Cement failed to
comply with this requirement, the decision
of the Labor Arbiter, finding Central Cement
guilty of the illegal dismissal of petitioner,
became final and executory. Art. 223
expressly provides that "In case of a
judgment involving a monetary award, an
appeal by the employer may be perfected
only upon the posting of a cash or surety
bond issued by a reputable bonding
company duly accredited by the commission
in the amount equivalent to the monetary
award in the judgment appealed from."
In the recent case of Mary Abigail’s Food Service,
Inc. v. Court of Appeals,31 this Court again reiterated:
A mere notice of appeal without complying
with the other requisites aforestated shall not
stop the running of the period for perfecting
an appeal.
Clear it is from the above that an appeal to
the NLRC from any decision, award or order
of the Labor Arbiter must have to be made
within ten (10) calendar days from receipt of
such decision, award or order with proof of
payment of the required appeal bond
accompanied by a memorandum of appeal.
And where, as here, the decision of the
Labor Arbiter involves a monetary award,
the appeal is deemed perfected only upon
the posting of a cash or surety bond also
within ten (10) calendar days from receipt of
such decision in an amount equivalent to the
monetary award.
The posting of a cash or surety bond is a
requirement sine qua non for the perfection
of an appeal from the labor arbiter’s
 monetary award. Notably, the perfection of
an appeal within the period and in the
manner prescribed by law is jurisdictional
and non-compliance with the requirements
therefore is fatal and has the effect of
rendering the judgment sought to be
appealed final and executory. Such
requirement cannot be trifled with.
Considering that Powertech failed to post the
required bond, its appeal was not deemed perfected
and the Labor Arbiter decision is now final and
executory. In the similar case of Aquino v. National
Labor Relations Commission,32this Court held:
We agree with the Solicitor General that the
provisions of Article 223 of the Labor Code,
as amended by R.A. No. 6715, requiring the
posting of cash or surety bond in appeals
from decisions of Labor Arbiter granting
monetary awards, are self-executing and do
not need any administrative rules to
implement them. The appeal made by
private respondent, not having been
perfected on time for failure to file the
appeal bond, the decision of the Labor
Arbiter became final and executory.
Given the foregoing ruling, We find it unnecessary to
tackle petitioners’ contention that the NLRC had lost
jurisdiction over the case when it dismissed
Powertech’s appeal. It has become inconsequential,
the crucial issue having been resolved in their favor.
Final Note
As a final note, We rebuke Powertech’s unscrupulous
and despicable act of using an apparently valid
compromise agreement to evade payment of its legal
obligation to petitioners. We will not allow
employers to make a mockery of our legal system by
using legal means to perpetrate fraud. This should
serve as a warning to parties in labor cases to
endeavor to achieve a just and equitable resolution of
their disputes and to enter into compromise
agreements in good faith.
Further, there would have been no opportunity for
collusion between Powertech and Gestiada without
the blanket authority given by petitioners to Gestiada
in the special power of attorney. This should serve as
a caveat to principals, particularly to laborers in labor
disputes, to be wary of giving too broad an authority
to their agents. The powers of the agent may be
circumscribed either (a) by putting a clause in the
special power of attorney providing a minimum
amount upon which the agent may compromise on
behalf of the principal or (b) by providing that some
acts of the agent are conditional and subject to the
approval of the principal.
These conditions may impose additional burden on
the negotiating parties. But it will better protect them
since the agent will only be authorized to settle for an
amount predictably acceptable to the principal, and
the third party will have full knowledge of the terms
and conditions the principal would not disown or
disclaim.
Hindi sana nagkaroon ng pagkakataong
magsabwatan ang Powertech at si Gestiada kung
walang malawak na pahintulot na ibinigay ang
petitioners sa kanya. Ito ay dapat magsilbing babala
para mag-ingat ang mga prinsipal, lalo na ang mga
manggagawa sa usaping pang-obrero. Ang
ibinibigay na kapangyarihan o special power of
attorney sa kinatawan ay maaaring lagyan ng
hangganan na magtatakda (a) ng pinakamababang
halaga na maaaring pagkasunduan, o (b) ang ilang
gagawin ng ahente ay may mga kondisyon na dapat
pagtibayin ng prinsipal.
Ang mga kondisyong ito ay maaaring magbigay ng
karagdagang abala sa magkabilang panig. Subalit
higit silang protektado sapagkat ang ahente ay
pahihintulutan lamang na pumayag sa halagang
katanggap-tanggap sa prinsipal, at ang ikatlong
panig naman ay magkakaroon ng buong
pagkaunawa sa mga kondisyon na hindi
tatanggihan o itatatwa ng prinsipal.
WHEREFORE, the petition is GRANTED. The
Decision of the Court of Appeals
is REVERSED and SET ASIDE. The Resolution of
the NLRC dated July 31, 2000 is REINSTATED.
SO ORDERED.
#70: GOODRICH MFG. VS ATIVO
assigned as machine or maintenance operators for the
GOODRICH G.R. No. 188002
MANUFACTURING different sections of the company. Sometime in the
CORPORATION & MR. Present:
NILO CHUA GOY, latter part of 2004, on account of lingering financial
Petitioners, PUNO, C.J., constraints, Goodrich gave all its employees the option
Chairperson,
CARPIO to voluntarily resign from the company. Several
- versus - MORALES, employees, including respondents, decided to avail of
LEONARDO-DE
CASTRO, the voluntary resignation option. On December 29,
BERSAMIN, and
2004, respondents were paid their separation
VILLARAMA,
JR., JJ. pay.[6] On January 3, 2005, respondents executed their
EMERLINA ATIVO,
LOVITO SEBUANO, respective waivers and quitclaims.[7]
MICHAEL FERNANDEZ, Promulgated:
JUNIFER CASAS,
ROLANDO ISLA, ELISEO February 1, 2010 The following day, January 4, 2005, some of
DEL ROSARIO, MARK Goodrichs former employees, including herein
JON MARTIN, EDISON
GAMIDO, WARRY respondents, filed complaints against Goodrich for
BALINTON, ROBERT
illegal dismissal with prayer for payment of their full
RAGO and ROBERTO
MENDOZA, monetary benefits before the NLRC. Despite several
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - conferences, no amicable settlement was reached by
- - - - - - - - - - - - - -x the parties.

DECISION
On November 22, 2005, Labor Arbiter Florentino R.
VILLARAMA, JR., J.:
Darlucio rendered a Decision declaring that there was
no illegal dismissal but held that petitioners were still
This petition for review on certiorari assails the liable to the respondents for their unpaid emergency
[1]
Decision dated November 28, 2008 and cost of living allowance (ECOLA), 13th month pay,
[2]
Resolution dated May 20, 2009 of the Court of and service incentive leave (SIL) pay. The Labor
Appeals in CA-G.R. SP No. 103078. The appellate Arbiter likewise found the separation pay paid by
court set aside the February 21, Goodrich to be insufficient. The dispositive portion of
[3] [4]
2007 Decision and January 29, 2008 Resolution of the Labor Arbiters decision reads:
the National Labor Relations Commission (NLRC), WHEREFORE, premises
considered, judgment is hereby
and reinstated the November 22, 2005Decision[5] of rendered ordering respondents
the Labor Arbiter. Goodrich Manufacturing Corp. to
pay the complainants the following:

The facts follow. SEP. PAY

Names
Respondents are former employees of petitioner [Emerlina] Ativo 26,000.00
Warry Balinton 6,500.00
Goodrich Manufacturing Corporation (Goodrich)
 Jennifer Casas 19,500.00 monetary
19,429.58
claims 3,736.46
are hereby
16,312.40 58,978.44 20,04
Michael 19,500.00 dismissed.
19,429.58 3,736.46 16,312.40 58,978.44 29,012.76 29,965.68
Fernandez
Rolando 13,000.00 19,429.58 3,736.46 Respondents
16,312.40 58,978.44 counterclaim
18,225.92 is40,752.52
also
Isla dismissed for lack of merit.
Mark Jon 19,500.00 19,429.58 3,736.46 16,312.40 1,937.50 [9]16,312.40
SO ORDERED. 27,946.60 20,533.96 7,412.64
Martin
Lovito 19,500.00 19,429.58 3,736.46 16,312.40 58,978.44 20,342.62 38,635.82
Sebuano Respondents moved for reconsideration, but the same
Eliseo del 19,500.00 19,429.58 3,736.46 16,312.40 58,978.44 23,810.00 35,168.44
Rosario was denied for lack of merit,[10]prompting them to
Edison 16,250.00 19,429.58 3,736.46 16,312.40
elevate 55,728.44
the matter 13,125.00
to the Court 42,603.44
of Appeals. [11]
Gamido
178,750.00 195,016.25 37,503.13 165,679.80 576,949.18 213,598.07
Total On November 28, 2008, the appellate 365,351.11
court rendered
Award
its decision in favor of the respondents. The pertinent
All other claims are dismissed for lack of merit. portion of the decision reads:

SO ORDERED.[8] The record is devoid of any

Dissatisfied, both parties appealed to the NLRC.
On February 21, 2007, the NLRC reversed and set
aside the Labor Arbiters decision. In disposing the
issue, the NLRC explained:
Going over the complainants deeds
of waiver and quitclaim, We are
convinced [that] the considerations
they received are not unreasonable,
vis--vis the awards granted [to]
them in the assailed Decision.
Notably, the awards even include
the 13th month pays for 2002 and
2003 which, by respondents proof
(Rollo 219 to 233) appear already
paid. We also noted that
complainants are not shown to have
signed the deeds of waiver and
quitclaim involuntarily, without
understanding the implication and
consequences thereof. x x x.
Respondents counterclaim is
denied. There is no showing that
complainants prosecuted their
complaint in bad faith.
WHEREFORE, premises
considered, the Decision appealed
from is hereby REVERSED and
SET ASIDE and complainants
indication that the petitioners were
coerced into resigning from the
company. On the contrary, the
record supports the view that the
petitioners chose to resign without
any element of coercion attending
their option. The quitclaim they
executed in favor of the company
amounts to a valid and binding
compromise agreement. To allow
petitioners to repudiate the same
will be to countenance unjust
enrichment on their part. The court
will not permit such a situation.
xxxx
However, We defer to the findings
of the [L]abor [A]rbiter that
petitioners are entitled to their
unpaid thirteenth month pay,
ECOLA and service incentive leave
pay (SIL) at the amounts computed
by the [L]abor [A]rbiter. These are
benefits to which petitioners are
entitled by statute, and which
private respondent[s] failed to
disprove.
WHEREFORE, the questioned
Decision and Resolution of
respondent National Labor
Relations Commission (NLRC),
Second Division, dated February 21,
2007 and January 29, 2008,
 respectively, are hereby SET
ASIDE and the Decision of Labor
Arbiter Florentino Darlucio, dated
November 22, 2005, [is]
REINSTATED.
SO ORDERED.[12]
Petitioners are now before this Court raising the same
issues: whether the release, waiver and quitclaim
signed by respondents are valid and binding; and
whether respondents may still receive the deficiency
amounts due them.
Petitioners contend that to allow respondents to
recover their monetary claims would render nugatory
the legal consequences of a valid quitclaim. They
further argue that waivers and quitclaims, by their very
nature, set aside all the other claims which the
employee may be entitled to by the stroke of a pen.[13]
Petitioners argument is meritorious.
It is true that the law looks with disfavor on quitclaims
and releases by employees who have been inveigled or
pressured into signing them by unscrupulous
employers seeking to evade their legal responsibilities
and frustrate just claims of employees.[14] In certain
cases, however, the Court has given effect to
quitclaims executed by employees if the employer is
able to prove the following requisites, to wit: (1) the
employee executes a deed of quitclaim voluntarily; (2)
there is no fraud or deceit on the part of any of the
parties; (3) the consideration of the quitclaim is
credible and reasonable; and (4) the contract is not
contrary to law, public order, public policy, morals or
good customs, or prejudicial to a third person with a
[15]
right recognized by law.
Our pronouncement in Periquet v. National Labor
Relations Commission[16] on this matter cannot be
more explicit:
Not all waivers and quitclaims are invalid
as against public policy. If the agreement
was voluntarily entered into and
represents a reasonable settlement, it is
binding on the parties and may not later
be disowned simply because of a change
of mind. It is only where there is clear
proof that the waiver was wangled from
an unsuspecting or gullible person, or the
terms of settlement are unconscionable on
its face, that the law will step in to annul
the questionable transaction. But where it
is shown that the person making the
waiver did so voluntarily, with full
understanding of what he was doing, and
the consideration for the quitclaim is
credible and reasonable, the transaction
must be recognized as a valid and binding
undertaking.[17]
In the case at bar, both the Labor Arbiter and the
NLRC ruled that respondents executed the quitclaims
absent any coercion from the petitioners following
their voluntary resignation from the company.[18]
In their Comment[19] dated October 1, 2009,
respondents themselves admitted that they were not
coerced to sign the quitclaims.[20] They, however,
maintain that two (2) reasons moved them to sign the
said documents: first, they believed Goodrich was
terminating its business on account of financial
hardship; and second, they thought petitioners will pay
them the full amount of their
compensation.[21] Respondents insist that they were
deceived into signing the quitclaims when they learned
that they were not paid their full monetary benefits and
after discovering that the company did not really close
shop, but instead only assumed a different company
name.[22]
We are not persuaded. expected from those that were received may, therefore,
be considered as a fair and reasonable bargain on the
First, the contents of the quitclaim documents that part of both parties.
have been signed by the respondents are simple, clear
and unequivocal.[23] The records of the case are bereft WHEREFORE, the petition is GRANTED. The
of any substantial evidence to show that respondents assailed Court of Appeals Decision dated November
did not know that they were relinquishing their right 28, 2008 and Resolution dated May 20, 2009 in CA-
short of what they had expected to receive and contrary G.R. SP No. 103078 are
to what they have so declared. Put differently, at the hereby REVERSED and SET ASIDE. Accordingly,
time they were signing their quitclaims, respondents the NLRC Decision dated February 21,
honestly believed that the amounts received by them 2007 is REINSTATED.
were fair and reasonable settlements of the amounts
which they would have received had they refused to SO ORDERED.
voluntarily resign from the said company.

Second, respondents claim that they were deceived

because petitioners did not really terminate their
business since Mr. Chua Goy had set up another
company with the same line of business as Goodrich.
Such contention, however, was not proven during the
hearing before the Labor Arbiter and the NLRC.
Hence, such claim is based only on respondents
surmises and speculations which, unfortunately, can
never be used as a valid and legal ground to repudiate
respondents quitclaims.

And third, the considerations received by the

respondents from Goodrich do not appear to be grossly
inadequate vis--vis what they should receive in full. As
correctly pointed out by the NLRC, the total awards
computed by the Labor Arbiter will definitely even be
lesser after deducting the 13th month pay for the years
2002 and 2003, which have already been received by
the respondents prior to the filing of their complaints,
but which the Labor Arbiter still included in his
computation. The difference between the amounts
#71: ASSOCIATED TRADE UNION VS NORIEL
G.R. No. L-48367 January 16, 1979
ASSOCIATED TRADE UNIONS-ATU (ATU-
KILUSAN), petitioner,
vs.
HON. CARMELO C. NORIEL, in his capacity as
Director of THE BUREAU OF LABOR
RELATIONS, DEPARTMENT OF LABOR,
FEDERATION OF FREE WORKERS
(SYNTHETIC MARKETING AND
INDUSTRIAL CORPORATION CHAPTER),
AND SYNTHETIC MARKETING AND
INDUSTRIAL CORPORATION, respondents.
Quintin B. Muning for petitioner.
Romeo P. Torres for respondent Federation, etc.
Simeon D. Canlas for respondent Corporation.
Solicitor General Estelito P. Mendoza, Assistant
Solicitor General Reynato S. Puno and Solicitor
Jesus V. Diaz for Public respondent.
FERNANDO J.:
Apparent mindful of the state of the law on the
subject, petitioner Union, in this certiorari
proceeding, took pains in a rather eleborate pleading
to justify its claim that there was a denial of
procedural due process when respondent Director of
the Bureau of Labor Relations affirmed the actuation
of a Med-Arbiter ordering a certification election. 1Its
labored effort, as will be shown, was none too
successful. It did try to impress on this Court that the
Med-Arbiter was quite arbitrary in granting
respondent Union's plea for a certification election
alleging that there was neither "prior inquiry nor
investigation of whatever kind. 2 There was nothing
in the order of such official, annexed to its petition,
that would support such a contention. 3 Moreover, its
main reliance was the operation of a contract-bar rule,
but unfortunately for petitioner, the Med-Arbiter
ascertained that petitioner Union, without waiting for
the expiration of the existing contract, and with the
end in view of avoiding a certification election, was
able to persuade management to renew it. 4 It ought
not to have been suprised therefore, when respondent
Director affirmed the order for the holding of a
certification election on appeal and at the same time
decertified the new collective bargaining contract
which was tainted by pre-maturity and, therefore, not
entitled to respect.
The Comment of the public respondent, filed by
Solicitor General Estelito P. Mendoza, 5 objectively
clarified the relevant facts in the following manner:
"On September 13, 1977, the local chapter of the
Federation of Free Workers (Synthetic Marketing and
Industrial Corporation Chapter) filed a petition for
certification election among the regular rank-and-file
employees of the Synthetic Marketing and Industrial
Corporation. The petition alleged, among others, that
it commands the great majority of the rank-and-file
employees of the bargaining unit, and that more than
30 % of the total work force supported its petition,
attaching the signatures of said union members. The
petition admitted the existence of another union in the
establishment, the Associated Trade Unions (ATU-
KILUSAN) and the existence of a CBA to expire on
October 31, 1977. It was further alleged that there has
been no certification election in the company for the
last twelve months preceding the filing of the
petition. Both the Company and the Associated Trade
Unions opposed the petition on the ground that it is
contract-barred by virtue of the existence of a duly
registered CBA with the BLR entered into between
the parties on May 10, 1977. Petitioning union, on the
other hand, assailed the validity of the said CBA on
the ground that the same had been executed five (5)
months and twenty-one (21) days prior to the
expiration of the old CBA which was supposed to
expired October 31, 1977 and was not ratified by the
members of the bargaining unit. On January 9, 1977,
the Med-Arbiter assigned to the case issued an Order
calling for a certification election * * *. From the
aforesaid Order of the Med-Arbiter, the Associated
Trade Unions (ATU-KILUSAN) appealed to the
Bureau of Labor Relations. In a resolution dated May
29, 1978, BLR Director Carmelo C. Noriel affirmed
the Order of the Med-Arbiter calling for an election,
at the same time setting aside its certification of the
CBA concluded between the Synthetic Marketing and
Industrial Corporation and the Associated Trade
Unions ***. Not satisfied with the Trade Unions
(ATU-KILUSAN) filed the instant petition for last-
mentioned resolution of the BLR Director, the
Associated review with prayer for preliminary
injunction. 6
The lack of merit of this petition is thus quite
manifest. It calls for dismissal.
1. It is true that where the challenged order of labor
officials could be shown to be tainted by unfairness
or arbitrariness, whether in the procedural or was certified after the instant petition for certification
substantive sense, a due process question arises. had been filed by herein respondent union, and its
Clearly, then, the corrective power of this tribunal to certification was conditioned upon the fact that there
assure that an administrative agency adheres to such was no pending petition for certification election with
cardinal primary right 7comes into play. It is equally the Bureau of Labor Relations * * *. In the second
undeniable that this Court has never allowed itself to place, the new CBA which was to expire on October
be a party to any scheme, however ingeniously 31, 1977. Hence, said new CBA was not yet in
devised, to thwart the clear intendment of the New existence when the instant petition for certification
Labor Code 8 to facilitate the holding of a election was filed on September 13, 1977. Said new
certification election, the democratic means to CBA was to become effective on November 1, 1977
ascertain in a manner definitive and certain which after the old CBA expires on October 31, 1977, and
labor organization will be chosen to represent the this, if no representation issue had arisen in the
workers in a collective bargaining unit. It is quite meantime, which is not the case. Clearly, therefore,
futile then for petitioner Union to hope that this the contract-bar rule does not apply to the case at bar.
Tribunal, contrary to a long line of decisions 9 notable Finally it is undubitably clear from the facts
for their unanimity, would now gratify an aspiration heretofore unfolded that management and petitioner
devoid of legitimacy. It ought to have been cautioned herein proceeded with such indecent haste in
likewise by a realization that the matter sought to be renewing their CBA way ahead of the 'sixty-day
litigated as to the requisite number of signatures freedom period' in their obvious desire to frustrate the
being factual, its chances of having a determination will of the rank-and-file employees in selecting their
by the administrative agency concerned were less collective bargaining representative. To countenance
than minimal. 10 the actuation of the company and the petitioner herein
would be violative of the employees' constitutional
2. The point was likewise made that the contract-bar right to self-organization. 11
rule would preclude a certification election. That was
to ignore the decertification of the collective WHEREFORE, the instant petition is dismissed for
bargaining agreement which was hastily and lack of merit. The temporary restraining order issued
prematurely entered into precisely for the purpose of by resolution of this Court of August 7, 1978 is
avoiding the holding of the certification election. This hereby lifted and declared to be of no force and
aspect of the case was extensively gone into in the effect. The certification election should be conducted
Comment of Solicitor General Mendoza. Thus: "The as soon as possible. No costs.
only issue to be determined in the instant case is
whether or not the renewed CB forged between the
respondent company and petitioner union constitutes
a bar to the holding of a certification election. The
record shows that the old CBA of petitioner ATU-
KILUSAN with respondent Synthetic Marketing and
Industrial Corporation was to expire on October 31,
1977. However, 5 months and 21 days before its
expiry date, or on May 10, 1977, ATU-KILUSAN
renewed the same with the consent and collaboration
of management. The renewed CBA was then
submitted to the Bureau of Labor Relations for
certification on July 8, 1977, or approximately 3
months prior to the expiration of the outgoing CBA.
In the meantime, on September 13, 1977 (48 days
before the expiration of the old CBA on October 31,
1977), a petition for certification election was filed
by respondent union, the Federation of Free Workers.
Meanwhile, the renewed CBA between petitioner
ATU-KILUSAN and respondent company was
certified on October 3, 1977 or twenty-eight days
before their old CBA was to expire. From the
foregoing facts, it is quite obvious that the renewed
CBA cannot substitute a bar to the instant petition for
certification election. In the first place, the said CBA
#72: TOYOTA MOTORS PHILS. LABOR UNION
VS TOYOTA MOTORS PHIL. CORP
G.R. No. 135806 August 8, 2002
TOYOTA MOTORS PHILIPPINES
CORPORATION LABOR UNION, petitioner,
vs.
TOYOTA MOTOR PHILIPPINES
CORPORATION EMPLOYEES AND
WORKERS UNION, TOYOTA MOTOR
PHILIPPINES CORPORATION, and THE
SECRETARY OF LABOR AND
EMPLOYMENT, respondents.
BELLOSILLO, J.:
This is a petition for certiorari under Rule 65 of the
Rules of Court, as amended, seeking to set aside the
Resolution of 5 June 1998 and the Order of 10
August 1998 both issued by respondent Secretary of
Labor and Employment in OS-A-5-58-98 (NCR-OD-
M-9704-0311) which affirmed the decision of the
Med-Arbiter dated 24 February 1998. The assailed
decision dismissed both the Petition for Certification
Election filed by respondent Toyota Motor
Philippines Corp. Employees and Workers Union
(TMPCEWU) and the Petition-in-Intervention filed
by petitioner Toyota Motor Philippines Corp. Labor
Union (TMPCLU).1âwphi1.nêt
On 24 April 1997 respondent TMPCEWU filed
a Petition for Certification Election before the Med-
Arbitration Unit of the DOLE-National Capital
Region (DOLE-NCR) seeking to represent the rank-
and-file employees of the manufacturing division
from Levels 1 to 4 of Toyota Motor Philippines Corp.
(TMPC).
On 13 May 1997, while the case was pending
hearing, petitioner TMPCLU claiming to be the
legitimate labor organization, filed a Motion to
Intervene with Opposition to the Certification
Election praying that it be allowed to intervene and,
thereafter, the petition by TMPCEWU be denied for
lack of merit. It claimed that the petition was
premature due to an earlier resolution by the
Secretary of Labor ordering the conduct of a
certification election among the rank-and-file
employees of TMPC represented by petitioner which
was the subject of certiorari proceedings before the
Supreme Court and still awaiting final resolution at
the time; and, that the collective bargaining unit
which respondent TMPCEWU sought to represent
violated the "single or employer" unit policy since it
excluded the rank-and-file employees in the other
divisions and departments in respondent TMPC.1
In its motion petitioner TMPCLU outlined the
antecedent events prior to the TMPCEWU's filing of
its Petition for Certification Election on 24 April
1997 thus -
1. On 26 November 1992 it (TMPCLU)
filed a petition for certification election
before Med-Arbiter Paterno D. Adap,
docketed as NCR-OD-M-9211-053;
2. On 8 March 1993 Med-Arbiter Adap
dismissed TMPCLU's petition on the ground
that the labor organization's membership
was composed of supervisory and rank-and-
file employees in violation of Art. 245 of the
Labor Code, and that at the time of the filing
of its petition, TMCPLU had not even
acquired legal personality yet;
3. On appeal, the Secretary of Labor, in a
Resolution dated 9 November 1993 signed
by Undersecretary Bienvenido E. Laguesma,
set aside the Med-Arbiter's Order and
directed the holding of a certification
election among the regular rank-and-file
employees of TMPC. In setting aside the
assailed order, the Office of the Secretary
argued that:
Contrary to the allegation of herein
respondent-appellee, petitioner-
appellant was already a legitimate
labor organization at the time of the
filing of the petition on 26
November 1992. Records show that
on 24 November 1992 or two (2)
days before the filing of the said
petition, it was issued a certificate
of registration.
4. Acting on TMPC's motion for
reconsideration the Secretary of Labor set
aside his earlier resolution and ordered the
remand of the case to the Med-Arbiter
concluding that the issues raised by TMPC
both on appeal and its motion for
reconsideration were factual issues requiring
further hearing and production of evidence;
5. Pursuant to the order above-mentioned,
the Med-Arbiter on 28 September 1994
 dismissed TMPCLU's petition for
certification election for failure of petitioner
to acquire legal personality at the time of the
filing of the said petition;
6. The motion for reconsideration filed by
TMPCLU before the Secretary of Labor,
which was treated as an appeal from the
order of the Med-Arbiter dated 28
September 1994, was granted and the said
order was set aside. In lieu thereof, a new
order was issued giving due course to the
petition and directing the conduct of a
certification election among the rank-and-
file employees of TMPC;
7. The Secretary of Labor, in his order dated
14 July 1995, denied for lack of merit the
motion for reconsideration filed by TMPC;
8. On 20 April 1996 the Secretary of Labor
issued a new resolution directing the
conduct of a certification election among the
rank-and-file employees of TMPC; and
9. TMPC lodged a special civil action for
certiorari before the Supreme Court assailing
the 20 April 1996 Resolution of the
Secretary of Labor; and on 19 February
1997, the Supreme Court2 set aside the
assailed Resolution of the Secretary of
Labor and reinstated the Order of the Med-
Arbiter dated 28 September 1994. In its
decision, the Supreme Court ruled that since
TMPCLU's membership list contained the
names of at least twenty-seven (27)
supervisory employees in Level Five
positions, "the union could not, prior to
purging itself of its supervisory employee
members, attain the status of a legitimate
labor organization. Not being one, it cannot
possess the requisite personality to file a
petition for certification election."
At the time respondent TMPCEWU filed its Petition
for Certification Election on 24 April 1997 the
decision of the Supreme Court had not ripened into a
final and executory judgment. Thus petitioner
invoked as among the grounds for opposition thereto
in its Motion to Intervene with Opposition to the
Petition for Certification Election that the "pending
proceeding before the Supreme Court may be said to
be a pre-judicial question which should be resolved
first before the instant petition can prosper." 3
TMPC also filed a similar comment on 9 June 1997.
Hence, on 2 July 1997, the Med-Arbiter ordered the
provisional dismissal of TMPCEWU's Petition for
Certification Election pending a final ruling by the
Supreme Court on the Petition for Certification
Election.
On 3 June 1997 the decision of the Supreme Court
dated 19 February 1997 became final and executory.
In view of respondent TMPCEWU's revival of
its Petition for Certification Election, petitioner also
filed on 30 October 1997 its Petition-in-
Intervention4 alleging that (a) it was representing only
the rank-and-file employees; (b) it enjoys the support
of the regular rank-and-file workers at large in
TMPC, an unorganized establishment, and not only
among the rank-and-file employees in the
manufacturing division thereof; (c) while respondent
TMPCEWU professed itself as a legitimate labor
organization, there was serious doubt on such claim
inasmuch as there was a pending petition for the
cancellation of its certification of registration on the
ground of fraud; (d) respondent TMPCEWU's
representation of the rank-and-file employees, Levels
1 to 4, within the manufacturing division only to the
exclusion of those in the other departments and
divisions violated the "single or employer" unit
policy; and, (e) the establishment of the proposed
bargaining unit in the manufacturing division
composed of employees from Levels 1 to 4, should
respondent's petition be allowed, would induce the
proliferation of unions in a single employer.5
On 24 February 1998 the Med-Arbiter rendered a
decision dismissing for lack of merit
TMPCEWU's Petition for Certification Election,
since it failed to include all rank-and-file employees
from Levels 1 to 4 in other departments of TMPC in
violation of the "one-union in one-company" policy
and likewise dismissing TMPCLU's Petition-in-
Intervention for lack of legal personality.6 Anent the
issue on whether TMPCLU has the legal personality
to file the Petition-in-Intervention, the Med-Arbiter
explained thus -
The uncontroverted fact in this case is that at
the time intervenor TMPCLU filed its
application for registration and subsequently
thereafter was issued a certificate of
registration on November 24, 1992 (Annex
"A," Intervenor's petition-in-intervention),
its union membership is (sic) composed of
supervisory and rank-and-file employees.
 From this we could infer that the registration
certificate issued by the Department of
Labor and Employment is void ab
initio because at the time of the issuance the
constitution of intervenor union TMPCLU is
(sic) a mixture of supervisory and rank-and-
file employees as per finding of fact of Med-
Arbiter Paterno Adap in his Order dated
March 8, 1993 (Annex "A," respondent's
Answer to Petition-in-Intervention).
On 14 March 1998, dissatisfied with the unfavorable
decision, petitioner appealed to the Secretary of
Labor contending that contrary to the finding of the
Med-Arbiter it had the legal personality to intervene
in the certification election proceedings as shown by
its Certificate of Registration No. NCR-UR-11-996-
92.
In a Resolution dated 5 June 1998, the Secretary of
Labor justified his affirmance of the Med-Arbiter's
decision in this wise -7
On the first ground raised on appeal, it is
true that the employer is a mere by-stander
during the conduct of a certification election.
Prior to the election, however, the employer
is not precluded from ascertaining the
legitimacy of the union in order that it can
be assured that the union it will be dealing
with is a duly registered labor organization
which legally represents the bargaining unit
sought to be represented. There is therefore
no error in allowing the employer to
question the status of appellant as in the case
at bar.
On the second issue, it had earlier been
finally ruled by the Supreme Court (G.R. No
121084) involving herein employer and
appellant that since the bargaining unit of
the rank-in-file which TMPCLU is seeking
to represent is a mixture of supervisory
employees which is prohibited under Article
245 of the Labor Code, as amended, the
union prior to purging itself of supervisory
employees-members, had not attained the
status of a legitimate labor organization.
Appellant now simply asserts that it has
purged its membership of supervisory
employees and therefore is now a legitimate
labor organization of the rank-and-file
employees. Appellant has not however
shown that it registered anew because
admittedly some of its officers are
supervisory employees. The need to register
anew is necessary and the purging by itself
of its officers who are holding supervisory
position is imperative. One of the
requirements for registration is the
submission of the list of officers. Under the
circumstances obtaining, appellant has not
as yet attained the status of a legitimate
labor organization. It has therefore no legal
authority to oppose the instant petition.
On 10 August 1998 the Secretary issued an Order
denying petitioner's motion for reconsideration;
hence, petitioner now comes to us assailing the
aforementioned Resolution and Order of the
Secretary of Labor arguing that -
First. At the time it filed its Petition-in-
Intervention on 30 October 1997 it was clothed with
legal personality as a bona fide labor union.
Petitioner contended that when it filed the Motion to
Intervene with Opposition to the Petition for
Certification Election filed by TMPCEWU and
its Petition-in-Intervention, it did have a Certificate
of Registration No. NCR-UR-1199692 which was
based on its compliance with the requisites for union
registration. Hence, it had the legal personality when
it filed the Petition-in-Intervention and had all the
rights as well as obligations of a legitimate labor
organization. There was therefore no necessity for
petitioner to register anew when it was already a
registered labor organization.
Second. The Med-Arbiter had no authority to declare
that petitioner's certificate of registration was void ab
initio in a certification election proceeding; neither
was the representation proceedings before the Med-
Arbiter the appropriate remedy to ventilate such
issue.
To buttress its stance, petitioner drew attention to the
fact that the Implementing Rules of the Labor Code of
the Philippines, particularly Book V, Rule 1, Sec. 1
(kk) thereof, and the Med-Arbiter's authority were
limited to hearing, conciliating, mediating and
deciding representation cases, internal union and
intra-union disputes. Considering that the case before
the Med-Arbiter was a Petition for Certification
Election by respondent TMPCEWU, the only task of
the Med-Arbiter was to determine the employees'
choice of their bargaining representative, and nothing
more.
Third. The Supreme Court in Toyota Motor
Philippines v. Toyota Motor Corporation Philippines
Labor Union and Secretary of Labor,8 limited the
finding of petitioner's lack of personality only to the
time when it filed its Petition for Certification
Election.
In this regard, petitioner decries the decision of the
Secretary of Labor affirming that of the Med-Arbiter
on the basis of the ruling in the aforecited case. It
must be stressed, according to petitioner, that
contrary to the interpretation given by the Med-
Arbiter as affirmed by the Secretary of Labor, the
Supreme Court's ruling that it did not have legal
personality was limited to the time when it filed
its Petition for Certification Election on 26
November 1992. Neither did the Supreme Court, in
that case, rule on the validity of the certificate of
registration.
More importantly, according to petitioner, it was
erroneous for the Secretary to assume that inasmuch
as petitioner failed to purge itself of its supervisory
employee-members when it filed its previous Petition
for Certification Electionon 26 November 1992, it
could not have possessed the appropriate legal
personality when it filed its Petition-in-
Intervention on 30 October 1997. The truth of the
matter is that with the purging completed, absent any
finding of the Supreme Court or any other court or
tribunal declaring the invalidity of the certificate of
registration, petitioner possessed the legal personality
when it filed its Petition-in-Intervention.
This Court is called upon to resolve the issue of
whether petitioner had legal personality on 30
October 1997 when it filed its Petition-in-
Intervention. Corollary thereto, should petitioner
register anew despite its alleged purging of the
supervisory employee-members as directed by this
Court in Toyota Motor Philippines Corporation v.
Toyota Motor Philippines Corporation Labor
Union9 and the issuance in its favor of a certificate of
registration after it was found to have violated Art.
245 of the Labor Code?
To find solution to the question in the instant case,
we need only refer to the earlier case of Toyota Motor
Philippines Corporation v. Toyota Motor Philippines
Corporation Labor Union and the Secretary of Labor
and Employment,10which sprang from a Petition for
Certification Election filed by TMPCLU among the
rank-and-file employees of TMPC. On 8 March
1993, however, its petition was dismissed by the
Med-Arbiter for the reason that the labor
organization's membership was composed of
supervisory and rank-and-file employee-members.
On appeal, the Secretary of Labor remanded the case
to the Med-Arbiter upon his finding that factual
issues remained unresolved. Pursuant to the order of
the Secretary of Labor, the Med-Arbiter, in his
decision dated 28 September 1994, dismissed
TMPCLU's Petition for Certification Election on the
basis of the following factual findings:
(T)he (in)controvertible fact is that petitioner
could not have been issued its Certificate of
Registration on November 24, 1992 when it
applied for registration only on November
23, 1992 as shown by the official receipt of
payment of filing fee. As Enrique Nalus,
Chief LEO, this office, would attest in his
letter dated September 8, 1994 addressed to
Mr. Porfirio T. Reyes, Industrial Relations
Officer of Respondent company, in response
to a query posed by the latter, "it is unlikely
that an application for registration is
approved on the date that it is filed or the
day thereafter as the processing course had
to pass through routing, screening, and
assignment, evaluation, review and
initialing, and approval/disapproval
procedure, among others, that a 30-day
period is provided for under the Labor Code
for this purpose, let alone opposition thereto
by interested parties which must be also
given due course."
Another evidence which petitioner presented is the
"Union Registration 1992 Logbook of IRD" and the
entry date 25 November 1992 as allegedly the date of
the release of its registration certificate. On the other
hand, respondent company presented a certified true
copy of an entry on page 265 of the Union
Registration Logbook showing the pertinent facts
about petitioner but which did not show that
petitioner's registration was issued on or before 26
November 1992.
The Med-Arbiter also found that TMPCLU had not
acquired legal personality for the reason that its
composition, being a mixture of supervisory and
rank-and-file employees, was in direct violation of
Art. 245 of the Labor Code.11
Although there is a divergence of factual backdrops
between Toyota Motor Philippines Corporation v.
Toyota Motor Philippines Corporation Labor Union
and the Secretary of Labor and Employment12 and the
instant petition in the sense that in the former the
filing of a Petition for Certification Election by
petitioner gave rise to the controversy while the
present case arose from the filing of a Petition-in-
Intervention, the bottom-line issue in both cases
nonetheless involves the legitimacy of petitioner
TMPCLU to file petitions.
We recall that in the first Toyota case, although there
was no categorical pronouncement on the validity of
petitioner's certificate of registration considering that
we deemed it entirely irrelevant in the light of the
finding that petitioner was not entirely a rank-and-file
labor organization, we sustained however in the same
decision the entire factual findings of the Med-
Arbiter when we observed -
The foregoing discussion, therefore, renders
entirely irrelevant the technical issue raised
as to whether or not respondent union was in
possession of the status of a legitimate labor
organization at the time of filing, when, as
petitioner vigorously claims, the former was
still at the stage of processing of its
application for recognition as a legitimate
labor organization. The union's composition
being in violation of the Labor Code's
prohibition of unions composed of
supervisory and rank-and-file employees, it
could not possess the requisite personality to
file for recognition as a legitimate labor
organization. In any case, the factual issue,
albeit ignored by the public respondent’s
assailed Resolution, was adequately
threshed out in the Med-Arbiter’s September
28, 1994 Order (underscoring supplied).
In effect therefore, we already impressed our stamp
of approval on the factual findings of the Med-
Arbiter in his 28 September 1994 decision, i.e., that
petitioner had no valid certificate of registration and
therefore no legal personality to file the Petition for
Certification Election and in the absence of any
attempt on its part to rectify the legal infirmity,
likewise the disputed Petition-in-Intervention.
It is thus fatuous on petitioner's part to resurrect the
issue of legitimacy in the instant case
notwithstanding our earlier ruling sustaining the
factual findings of the Med-Arbiter.
We cannot also accede to petitioner's submission that
the issuance of a certificate of registration in its favor
is an adequate and unassailable proof that it possesses
the requisite legal personality to file a Petition for
Certification Election. Not necessarily. As we
emphasized in Progressive Development Corp. -
Pizza Hut v. Laguesma,13 if a labor organization’s
application for registration is vitiated by falsification
and serious irregularities, a labor organization should
be denied recognition as a legitimate labor
organization. And if a certificate of registration has
been issued, the propriety of its registration could be
assailed directly through cancellation of registration
proceedings in accordance with Arts. 238 and 239 of
the Labor Code, or indirectly, by challenging its
petition for the issuance of an order for certification
election. We believe the procedural requirements to
impugn the registration by petitioner were more than
adequately complied with as shown in the 1997 case
of Toyota Motor Philippines Corporation v. Toyota
Motor Philippines Corporation Labor Union.14
There is no reason to belabor the primordial
importance of strictly complying with the registration
requirements of the Labor Code. As we have
explained in a long line of cases, the activities of
labor organizations, associations and unions are
impressed with public interest, hence, must be
protected.
WHEREFORE the petition is DISMISSED for lack
of merit. Accordingly, the assailed Resolution dated 5
June 1998 and Order dated 10 August 1998 of the
Secretary of Labor and Employment affirming the
decision of the Med-Arbiter dated 24 February 1998
which dismissed both the Petition for Certification
Election filed by respondent Toyota Motor
Philippines Corp. Employees and Workers Union
(TMPCEWU) and the Petition-in-Intervention of
petitioner Toyota Motor Philippines Corp. Labor
Union (TMPCLU) are AFFIRMED.1âwphi1.nêt
SO ORDERED.
#73: SAN MIGUEL FOODS INC. VS SAN
purpose of collective bargaining. The Court also
MIGUEL CORP. SUPERVISORS AND EXEMPT
UNION declared that the employees belonging to the three
SAN MIGUEL FOODS, G.R. No. 146206 different plants of San Miguel Corporation Magnolia
INCORPORATED,
Petitioner, Present: Poultry Products Plants in Cabuyao, San Fernando,
and Otis, having community or mutuality of interests,
CARPIO,* J.,
VELASCO, J., constitute a single bargaining unit. They perform work
Chairperson, of the same nature, receive the same wages and
-versus- PERALTA,
compensation, and most importantly, share a common
ABAD, and
SERENO,**JJ. stake in concerted activities. It was immaterial that the
three plants have different locations as they did not
SAN MIGUEL
CORPORATION Promulgated: impede the operations of a single bargaining
SUPERVISORS and representative.[2]
EXEMPT UNION,
Respondent. August 1, 2011 Pursuant to the Court's decision in G.R. No. 110399,
x--------------------------------------------------------------- the Department of Labor and Employment National
------------------x
Capital Region (DOLE-NCR) conducted pre-election
conferences.[3] However, there was a discrepancy in
DECISION the list of eligible voters, i.e., petitioner submitted a
list of 23 employees for the San Fernando plant and 33
PERALTA, J.: for the Cabuyao plant, while respondent listed 60 and
82, respectively.[4]
The issues in the present case, relating to the inclusion
of employees in supervisor levels 3 and 4 and the On August 31, 1998, Med-Arbiter Agatha
exempt employees in the proposed bargaining unit, Ann L. Daquigan issued an Order[5] directing Election
thereby allowing their participation in the certification Officer Cynthia Tolentino to proceed with the conduct
election; the application of the community or of certification election in accordance with Section 2,
mutuality of interests test; and the determination of the Rule XII of Department Order No. 9.
employees who belong to the category of confidential
employees, are not novel. On September 30, 1998, a certification election was
In G.R. No. 110399, entitled San Miguel conducted and it yielded the following results,[6] thus:
Corporation Supervisors and Exempt Union v.
Cabuyao San Fernando Total
Laguesma,[1] the Court held that even if they handle
Plant Plant
confidential data regarding technical and internal Yes 23 23 46
business operations, supervisory employees 3 and 4 No 0 0 0
Spoiled 2 0 2
and the exempt employees of petitioner San Miguel
Segregated 41 35 76
Foods, Inc. (SMFI) are not to be considered Total Votes
confidential employees, because the same do not Cast 66 58 124
pertain to labor relations, particularly, negotiation and
settlement of grievances. Consequently, they were
allowed to form an appropriate bargaining unit for the
On the date of the election, September 30, 1998,
petitioner filed the Omnibus Objections and Challenge
to Voters,[7] questioning the eligibility to vote by some
of its employees on the grounds that some employees
do not belong to the bargaining unit which respondent
seeks to represent or that there is no existence of
employer-employee relationship
petitioner.Specifically, it argued that certain
employees should not be allowed to vote as they
are: (1) confidential employees; (2) employees
assigned to the live chicken operations, which are not
covered by the bargaining unit; (3) employees whose
job grade is level 4, but are performing managerial
work and scheduled to be promoted; (4) employees
who belong to the Barrio Ugong plant; (5) non-SMFI
employees; and (6) employees who are members of
other unions.
On October 21, 1998, the Med-Arbiter issued
an Order directing respondent to submit proof showing
that the employees in the submitted list are covered by
the original petition for certification election and
belong to the bargaining unit it seeks to represent and,
likewise, directing petitioner to substantiate the
allegations contained in its Omnibus Objections and
Challenge to Voters.[8]
In compliance thereto, respondent averred that (1) the
bargaining unit contemplated in the original petition is
the Poultry Division of San Miguel Corporation, now
known as San Miguel Foods, Inc.; (2) it covered the
operations in Calamba, Laguna, Cavite, and Batangas
and its home base is either in Cabuyao, Laguna or San
Fernando, Pampanga; and (3) it submitted individual
and separate declarations of the employees whose
[9]
votes were challenged in the election.
Adding the results to the number of votes canvassed
during the September 30, 1998 certification election,
the final tally showed that: number of eligible voters
149; number of valid votes cast 121; number of spoiled
ballots - 3; total number of votes cast 124, with 118
(i.e., 46 + 72 = 118 ) Yes votes and 3 No votes.[10]
The Med-Arbiter issued the
Resolution[11] dated February 17, 1999 directing the
parties to appear before the Election Officer of the
with Labor Relations Division on March 9, 1999, 10:00
a.m., for the opening of the segregated
ballots. Thereafter, on April 12, 1999, the segregated
ballots were opened, showing that out of the 76
segregated
votes, 72 were cast for Yes and 3 for No, with one
spoiled ballot.[12]
Based on the results, the Med-Arbiter issued the
Order[13] dated April 13, 1999, stating that since the
Yes vote received 97% of the valid votes cast,
respondent is certified to be the exclusive bargaining
agent of the supervisors and exempt employees of
petitioner's Magnolia Poultry Products Plants in
Cabuyao, San Fernando, and Otis.
On appeal, the then Acting DOLE Undersecretary, in
the Resolution[14] dated July 30, 1999, in OS-A-2-70-
91 (NCR-OD-M-9010-017), affirmed the Order dated
April 13, 1999, with modification that George C.
Matias, Alma Maria M. Lozano, Joannabel T. Delos
Reyes, and Marilyn G. Pajaron be excluded from the
bargaining unit which respondent seeks to
represent.She opined that the challenged voters should
be excluded from the bargaining unit, because Matias
and Lozano are members of Magnolia Poultry
Processing Plants Monthly Employees Union, while
Delos Reyes and Pajaron are employees of San Miguel
Corporation, which is a separate and distinct entity
from petitioner.
Petitioners Partial Motion for
[15]
Reconsideration dated August 14, 1999 was denied
by the then Acting DOLE Undersecretary in the WHETHER THIS PETITION IS A
REHASH OR A RESURRECTION
Order[16] dated August 27, 1999. OF THE ISSUES RAISED IN G.R.
NO. 110399, AS ARGUED BY
In the Decision[17] dated April 28, 2000, in PRIVATE RESPONDENT.
CA-G.R. SP No. 55510, entitled San Miguel Foods,
Inc. v. The Honorable Office of the Secretary of Labor, Petitioner contends that with the Court's
Bureau of Labor Relations, and San Miguel ruling in G.R. No. 110399[20] identifying the specific
Corporation Supervisors and Exempt Union, the Court employees who can participate in the certification
of Appeals (CA) affirmed with modification the election, i.e., the supervisors (levels 1 to 4) and exempt
Resolution dated July 30, 1999 of the DOLE employees of San Miguel Poultry Products Plants in
Undersecretary, stating that those holding the Cabuyao, San Fernando, and Otis, the CA erred in
positions of Human Resource Assistant and Personnel expanding the scope of the bargaining unit so as to
Assistant are excluded from the bargaining unit. include employees who do not belong to or who are
Petitioners Motion for Partial not based in its Cabuyao or San Fernando plants. It
Reconsideration[18] dated May 23, 2000 was denied by also alleges that the employees of the Cabuyao, San
the CA in the Resolution[19] dated November 28, 2000. Fernando, and Otis plants of petitioners predecessor,
San Miguel Corporation, as stated in G.R. No. 110399,
Hence, petitioner filed this present petition were engaged in dressed chicken processing, i.e.,
raising the following issues: handling and packaging of chicken meat, while the
new bargaining unit, as defined by the CA in the
I. present case, includes employees engaged in live
WHETHER THE COURT OF
chicken operations, i.e., those who breed chicks and
APPEALS DEPARTED FROM
JURISPRUDENCE WHEN IT grow chickens.
EXPANDED THE SCOPE OF
THE BARGAINING UNIT Respondent counters that petitioners
DEFINED BY THIS COURT'S
RULING IN G.R. NO. 110399. proposed exclusion of certain employees from the
bargaining unit was a rehashed issue which was
II. already settled in G.R. No. 110399. It maintains that
WHETHER THE COURT OF the issue of union membership coverage should no
APPEALS DEPARTED FROM
longer be raised as a certification election already took
JURISPRUDENCE -
SPECIFICALLY, THIS COURT'S place on September 30, 1998, wherein respondent won
DEFINITION OF A with 97% votes.
CONFIDENTIAL EMPLOYEE -
WHEN IT RULED FOR THE
INCLUSION OF THE PAYROLL Petitioners contentions are erroneous. In G.R.
MASTER POSITION IN THE No. 110399, the Court explained that the employees of
BARGAINING UNIT. San Miguel Corporation Magnolia Poultry Products
Plants of Cabuyao, San Fernando, and Otis constitute
III. a single bargaining unit, which is not contrary to the
one-company, one-union policy. An appropriate
bargaining unit is defined as a group of employees of
a given employer, comprised of all or less than all of
the entire body of employees, which the collective
interest of all the employees, consistent with equity to
the employer, indicate to be best suited to serve the
reciprocal rights and duties of the parties under the
[21]
collective bargaining provisions of the law.
In National Association of Free Trade
Unions v. Mainit Lumber Development Company
Workers Union United Lumber and General Workers
of the Phils,[22] the Court, taking into account the
community or mutuality of interests test, ordered the
formation of a single bargaining unit consisting of the
Sawmill Division in Butuan City and the Logging
Division in Zapanta Valley, Kitcharao, Agusan [Del]
Norte of the Mainit Lumber Development
Company. It held that while the existence of a
bargaining history is a factor that may be reckoned
with in determining the appropriate bargaining unit,
the same is not decisive or conclusive. Other factors
must be considered. The test of grouping is
community or mutuality of interest. This is so because
the basic test of an asserted bargaining units
acceptability is whether or not it is fundamentally the
combination which will best assure to all employees
the exercise of their collective bargaining
rights.[23] Certainly, there is a mutuality of interest
among the employees of the Sawmill Division and the
Logging Division. Their functions mesh with one
another. One group needs the other in the same way
that the company needs them both. There may be
differences as to the nature of their individual
assignments, but the distinctions are not enough to
[24]
warrant the formation of a separate bargaining unit.
Thus, applying the ruling to the present case,
the Court affirms the finding of the CA that there
should be only one bargaining unit for
the employees in Cabuyao, San Fernando, and
Otis[25] of Magnolia Poultry Products Plant involved in
dressed chicken processing and Magnolia Poultry
Farms engaged in live chicken operations. Certain
factors, such as specific line of work, working
conditions, location of work, mode of compensation,
and other relevant conditions do not affect or impede
their commonality of interest. Although they seem
separate and distinct from each other, the specific tasks
of each division are actually interrelated and there
exists mutuality of interests which warrants the
formation of a single bargaining unit.
Petitioner asserts that the CA erred in not
excluding the position of Payroll Master in the
definition of a confidential employee and, thus, prays
that the said position and all other positions with
access to salary and compensation data be excluded
from the bargaining unit.
This argument must fail. Confidential
employees are defined as those who (1) assist or act in
a confidential capacity, in regard (2) to persons who
formulate, determine, and effectuate management
policies in the field of labor relations.[26] The two
criteria are cumulative, and both must be met if an
employee is to be considered a confidential
employee - that is, the confidential relationship must
exist between the employee and his supervisor, and the
supervisor must handle the prescribed responsibilities
relating to labor relations. The exclusion from
bargaining units of employees who, in the normal
course of their duties, become aware of management
policies relating to labor relations is a principal
objective sought to be accomplished by the
confidential employee rule.[27]
A confidential employee is one entrusted
with confidence on delicate, or with the custody,
handling or care and protection of the employers act as a spy or spies of either party to a collective
[28]
property. Confidential employees, such as bargaining agreement.[33]
accounting personnel, should be excluded from the
bargaining unit, as their access to confidential In this regard, the CA correctly ruled that the
information may become the source of undue positions of Human Resource Assistant and Personnel
[29]
advantage. However, such fact does not apply to the Assistant belong to the category of confidential
position of Payroll Master and the whole gamut of employees and, hence, are excluded from the
employees who, as perceived by petitioner, has access bargaining unit, considering their respective positions
to salary and compensation data. The CA correctly and job descriptions. As Human
[34]
held that the position of Payroll Master does not Resource Assistant, the scope of ones
involve dealing with confidential labor relations work necessarily involves labor relations, recruitment
information in the course of the performance of his and selection of employees, access to employees'
functions. Since the nature of his work does not pertain personal files and compensation package, and human
to company rules and regulations and confidential resource management. As regards a Personnel
[35]
labor relations, it follows that he cannot be excluded Assistant, one's work includes the recording of
from the subject bargaining unit. minutes for management during collective bargaining
negotiations, assistance to management during
[30]
Corollarily, although Article 245 of the grievance meetings and administrative investigations,
Labor Code limits the ineligibility to join, form and and securing legal advice for labor issues from the
assist any labor organization to managerial employees, petitioners team of lawyers, and implementation of
jurisprudence has extended this prohibition to company programs. Therefore, in the discharge of
confidential employees or those who by reason of their their functions, both gain access to vital labor relations
positions or nature of work are required to assist or information which outrightly disqualifies them from
act in a fiduciary manner to managerial employees union membership.
and, hence, are likewise privy to sensitive and highly The proceedings for certification election
[31]
confidential records. Confidential employees are are quasi-judicial in nature and, therefore, decisions
thus excluded from the rank-and-file bargaining rendered in such proceedings can attain
unit. The rationale for their separate category and finality.[36] Applying the doctrine of res judicata, the
disqualification to join any labor organization is issue in the
similar to the inhibition for managerial employees,
because if allowed to be affiliated with a union, the present case pertaining to the coverage of the
latter might not be assured of their loyalty in view of employees who would constitute the bargaining unit is
evident conflict of interests and the union can also now a foregone conclusion.
become company-denominated with the presence of
managerial employees in the union It bears stressing that a certification election
membership.[32] Having access to confidential is the sole concern of the workers; hence, an employer
information, confidential employees may also become lacks the personality to dispute the same. The general
the source of undue advantage. Said employees may rule is that an employer has no standing to question the
process of certification election, since this is the sole
concern of the workers.[37] Law and policy demand
that employers take a strict, hands-off stance in
certification elections. The bargaining representative
of employees should be chosen free from any
extraneous influence of management. A labor
bargaining representative, to be effective, must owe its
loyalty to the employees alone and to no other.[38] The
only exception is where the employer itself has to file
the petition pursuant to Article 258[39] of the Labor
Code because of a request to bargain collectively.[40]

With the foregoing disquisition, the Court

writes finis to the issues raised so as to forestall future
suits of similar nature.

WHEREFORE, the petition is DENIED. The

Decision dated April 28, 2000 and Resolution dated
November 28, 2000 of the Court of Appeals, in CA-
G.R. SP No. 55510, which affirmed with modification
the Resolutions dated July 30, 1999 and August 27,
1999 of the Secretary of Labor, are AFFIRMED.

SO ORDERED.
#74: SAMAHANG MANGGAGAWA NG PACIFIC
MILLS VS NORIEL
G.R. No. L-56588 January 17, 1985
SAMAHANG MANGGAGAWA NG PACIFIC
MILLS, INC., petitioner,
vs.
HON. CARMELO C. NORIEL, as OFFICER-IN-
CHARGE, BUREAU OF LABOR
RELATIONS, respondent.
ABAD SANTOS, J.:
This is about a certification election among the
workers in Pacific Mills, Inc.
In a certification election held on September 27,
1977, among the workers in Pacific Mills, Inc., the
Philippine Association of Free Labor Unions
(PAFLU) won over the Confederation of Citizens
Labor Unions (CCLU). Out of 451 votes which were
cast PAFLU obtained 254.
CCLU contested the certification of PAFLU as the
workers bargaining agent with Pacific Mill Inc. The
contest did not succeed at the administrative level nor
before this Court. (Confederation of Citizens Labor
Unions, et al vs. Noriel et al., L-46933, June 30,
1980, 98 SCRA 474.)
While the CCLU-PAFLU case was pending, 347
members in the same bargaining unit disaffiliated
from PAFLU and organized the Samahang
Manggagawa Ng Pacific Mills, Inc., the petitioner
herein. The union was registered with the Ministry of
Labor and Employment (MOLE) on February 26,
1980.
On August 6, 1980, the petitioner filed with MOLE a
request that a certification election be held among the
workers in Pacific Mills, Inc. It claimed that it
commanded the majority of the workers in the
corporation; that there had been no certification
election for more than 12 months and no existing
collective bargaining agreement (CBA); and that
more than 30% of the bargaining unit had given their
consent thereto.
The company objected to the petitioner's request for a
certification election. It alleged that there was a
pending certification case between CCLU and
PAFLU in the Supreme Court. In point of fact, the
case had been dismissed on June 30, 1980, as above
stated or more than a month before the request was
filed. In fact also, CCLU had filed a motion to
dismiss on March 7, 1980, alleging, inter alia, lack of
interest.
CCLU and PAFLU were given an opportunity to be
heard. PAFLU filed a motion to dismiss or deny the
certification election. It pointed to this Court's
decision in L-46933, supra. CCLU kept quiet.
On October 20, 1980, Med-Arbiter Willie E.
Rodriguez, dismissed the petition for certification
election. He cited the decision of this Court in favor
of PAFLU.
The petitioner appealed to the public respondent
herein who sustained the Mid-Arbiter's decision. In
dismissing the appeal the public respondent
said, inter alia, that:
While recognizing the existence of
disaffiliation of former members of
PAFLU, tills fact should not be
considered as the sole factor to
induce this Office to disregard the
historical propensity of selecting
PAFLU as the current bargaining
agent, and order outrightly another
certification election to determine
which union now commands a
majority following. To have a
contrary view would be to threaten
democratic industrial stability as it
tends to open doors for unions
composed of members splitting
from the majority union, whenever
personal whims and caprices arise
under the cloak of being an
exercise of their constitutional right
to self organization. (Rollo, p. 34.)
The issue at hand is whether or not the public
respondent committed a grave abuse of discretion in
deciding against the petitioner. An affirmative answer
is implicit insofar as the petitioner is concerned. The
Solicitor General is in agreement with the petitioner.
(Rollo, p. 65.) Pacific Mills, Inc. which was later
impleaded is for "giving due course to the instant
petition and ordering the public respondent to
conduct a certification election among the regular
rank-and-file within the bargaining unit of Pacific
Mills, Inc." (Rollo, p. 143.) Only the public
respondent, Director Carmelo C. Noriel, is for the
dismissal of the petition. (Rollo, p. 124.)

With both the employer and the majority of the rank-

and-file workers in agreement that a certification
election should be held, so be it. In this connection it
is worthwhile to note the following:

The last certification election was held on September

26, 1977. There is no existing CBA. The petition for
a certification election has the written consent of
more than 30% of the members of the bargaining
unit. In the light of these facts, Art. 258 of the New
Labor Code makes it mandatory for the Bureau of
Labor Relations to conduct a certification election.
See also Federation of Free Workers vs. Noriel, L-
47182-83, Oct. 30, 1973, 86 SCRA 132.)

WHEREFORE, the petition is granted; the decision

of the public respondent is hereby set aside and he is
ordered to conduct a certification election among the
rank-and-file workers of Pacific Mills, Inc. No costs.

SO ORDERED.
#75: LIBERTY FLOUR MILLS EMPLOYEES CS
LIBERTY FLOUR MILLS INC PHILIPPINE
LABOR ALLIANCE
G.R. No. 58768-70 December 29, 1989
LIBERTY FLOUR MILLS EMPLOYEES,
ANTONIO EVARISTO and POLICARPIO
BIASCAN, petitioners,
vs.
LIBERTY FLOUR MILLS, INC. PHILIPPINE
LABOR ALLIANCE COUNCIL (PLAC) and
NATIONAL LABOR RELATIONS
COMMISSION, (NLRC), respondents.
Julius A. Magno for petitioners.
De Leon, Diokno & Associates for respondent Liberty
Flour Mills, Inc.
CRUZ, J.:
In this petition for certiorari, the resolution of the
public respondent dated August 3, 1978, is faulted
for: (a) affirming the decision of the labor arbiter
dismissing the employees' claim for emergency
allowance for lack of jurisdiction; and (b) modifying
the said decision by disallowing the award of back
wages to petitioners Policarpio Biascan and Antonio
Evaristo.
The basic facts are as follows:
On February 6, 1974, respondent Philippine Labor
Alliance Council (PLAC) and respondent Liberty
Flour Mills, Inc. entered into a three-year collective
bargaining agreement effective January 1, 1974,
providing for a daily wage increase of P2.00 for
1974, Pl.00 for 1975 and another Pl.00 for 1976. The
agreement contained a compliance clause, which will
be explained later in this opinion. Additionally, the
parties agreed to establish a union shop by imposing
"membership in good standing for the duration of the
CBA as a condition for continued employment" of
workers. 1
On October 18, 1974, PLAC filed a complaint against
the respondent company for non-payment of the
emergency cost of living allowance under P.D. No.
525. 2 A similar complaint was filed on March 4,
1975, this time by the petitioners, who apparently
were already veering away from PLAC.3
On March 20, 1975, petitioners Evaristo and Biascan,
after organizing a union caged the Federation of
National Democratic Labor Unions, filed with the
Bureau of Labor Relations a petition for certification
election among the rank-and-file employees of the
respondent company 4 PLAC then expelled the two
for disloyalty and demanded their dismissal by the
respondent company, which complied on May 20,
1975.5
The objection of Evaristo and Biascan to their
termination were certified for compulsory arbitration
and assigned to Labor Arbiter Apolinario N.
Lomabao, Jr. Meanwhile, the claims for emergency
allowance were referred for voluntary arbitration to
Edmundo Cabal, who eventually dismissed the same
on the ground that the allowances were already
absorbed by the wage increases. This latter case was
ultimately also certified for compulsory arbitration
and consolidated with the termination case being
heard by Lomabao. His decision was, on appeal, dealt
with by the NLRC as above stated, 6 and the motion
for reconsideration was denied on August 26, 1981. 7
At the outset, we note that the petitioners are taking
an ambivalent position concerning the CBA
concluded in 1974. While claiming that this was
entered into in bad faith and to forestall the payment
of the emergency allowances expected to be decreed,
they nonetheless invoke the same agreement to
support their contention that their complaint for
emergency allowances was invalidly referred to
voluntary arbitrator Cabal rather than Froilan M.
Bacungan.
We find there was no such violation as the choice of
the voluntary arbitrator was not limited to Bacungan
although he was probably the first preference.
Moreover, the petitioners are estopped from raising
this objection now because they did not seasonably
interpose it and instead willingly submitted to Cabal's
jurisdiction when he undertook to hear their
complaint.
In sustaining Labor Arbiter Lomabao, the NLRC
agreed that the decision of voluntary Arbiter Cabal
was final and unappealable under Article 262-A of
the Labor Code and so could no longer be reviewed
by it. True enough. However, it is equally true that
the same decision is not binding on this Court, as we
held in Oceanic Bic Division (FFW) v. Romero 8 and
reiterated in Mantrade/FMMC Division Employees
and Workers Union v. Bacungan. 9 The rule as
announced in these cases is reflected in the following
statements:
 In spite of statutory provisions
making "final" the decision of
certain administrative agencies, we
have taken cognizance of petitions
questioning these decisions where
want of jurisdiction, grave abuse of
discretion, violation of due process,
denial of substantial justice, or
erroneous interpretation of the law
were brought to our attention.
xxx xxx xxx
A voluntary arbitrator by the nature
of her functions acts in a quasi-
judicial capacity. There is no
reason why her decisions involving
interpretation of law should be
beyond this Court's review.
Administrative officials are
presumed to act in accordance with
law and yet we do not hesitate to
pass upon their work where a
question of law is involved or
where a showing of abuse of
authority or discretion in their
official acts is properly raised in
petitions for certiorari.
Accordingly, the validity of the voluntary arbiter's
finding that the emergency allowance sought by the
petitioners are already absorbed in the stipulated
wage increases will now be examined by the Court
itself.
The position of the company is that the emergency
allowance required by P.D. No. 525 is already
covered by the wage increases prescribed in the said
CBA. Furthermore, pursuant to its Article VIII, such
allowances also include all other statutory minimum
wage increases that might be decreed during the
lifetime of the said agreement.
That agreement provided in Section 2 thereof as
follows:
Section 2. The wage increase in the
amounts and during the period
above set forth shall, in the event of
any statutory increase of the
minimum wage, either as allowance
or as basic wage, during the life of
this Agreement, be considered
compliance and payment of such
required statutory increase as far as
it will go and under no
circumstances will it be cumulative
nor duplication to the differential
amount involved consequent to
such statutory wage increase.
The Court holds that such allowances are indeed
absorbed by the wage increases required under the
agreement. This is because Section 6 of the
Interpretative Bulletin on LOI No. 174 specifically
provides:
Sec. 6. Allowances under LOI. — -All
allowances, bonuses, wage adjustments and
other benefits given by employers to their
employees shall be treated by the
Department of Labor as in substantial
compliance with the minimum standards set
forth in LOI No. 174 if:
(a) they conform with at least the minimum
allowances scales specified in the
immediately preceding Section; and
(b) they are given in response to the appeal
of the President in his speech on 4 January
1974, or to countervail the quantum jump in
the cost of living as a result of the energy
crisis starting in November 1973, or
pursuant to Presidential Decree No. 390;
Provided, That the payment is retroactive to
18 February 1974 or earlier.
The allowances and other benefits
may be granted unilaterally by the
employer or through collective
bargaining, and may be paid at the
same time as the regular wages of
the employees.
Allowances and other benefits
which are not given in substantial
compliance with the LOI as
interpreted herein shall not be
treated by the Department of Labor
as emergency allowances in the
contemplation of the LOI unless
otherwise shown by sufficient
proof. Thus, without such proof,
escalation clauses in collective
bargaining agreements concluded
before the appeal of the President
providing for automatic or periodic
wage increases shall not be
 considered allowances for purposes
of the LOI. (Emphasis supplied.)
The "immediately preceding section" referred to
above states:
SEC. 5. Determination of Amount of Allowances. —
In determining the amount of allowances that should
be given by employers to meet the recommended
minimum standards, the LOI has classified employers
into three general categories. As an implementation
policy, the Department of Labor shall consider as
sufficient compliance with the scales of allowances
recommended by the LOI if the following monthly
allowances are given by employers:
(a) P50.00 or higher where the
authorized capital stock of the
corporation, or the total assets in the
case of other undertakings, exceeds
P 1 million;
(b) P 30.00 or higher where the
authorized capital stock of the
corporation, or the total assets in the
case of other undertakings, is not
less than P100,000.00 but not more
than P1million; and
(c) P15.00 or higher where the
authorized capital stock or total
assets, as the case may be, is less
than P100,000.00.
It is not denied that the company falls under
paragraph (a), as it has a capitalization of more than P
l million, 10 and so must pay a minimum allowance of
P50.00 a month. This amount is clearly covered by
the increases prescribed in the CBA, which required a
monthly increase (on the basis of 30 days) of P60.00
for 1974, to be increased by P30.00 in 1975 (to
P90.00) and another P 30.00 in 1976 (to P120.00).
The first increase in 1974 was already above the
minimum allowance of P50.00, which was exceeded
even more with the increases of Pl.00 for each of the
next two years.
Even if the basis used were 26 days a month
(excluding Sundays), the conclusion would remain
unchanged as the raise in wage would be P52.00 for
1974, which amount was increased to P78.00 in 1975
and to P104.00 in 1976.
But the petitioners contend that the wage increases
were the result of negotiation undertaken long before
the promulgation of P.D. No. 525 and so should not
be considered part of the emergency allowance
decreed. In support of this contention, they cite
Section 15 of the Rules implementing P.D. No. 525,
providing as follows:
Nothing herein shall prevent the
employer and his employees, from
entering into any agreement with
terms more favorable to the
employees than those provided
herein, or be construed to sanction
the diminution of any benefits
granted to the employees under
existing laws, agreements, and
voluntary practice.
Obviously, this section should not be read in isolation
but must be related to the other sections above-
quoted, to give effect to the intent and spirit of the
decree. The meaning of the section simply is that any
benefit over and above the prescribed allowances
may still be agreed upon by the employees and the
employer or, if already granted, may no longer be
withdrawn or diminished.
The petitioners also maintain that the above-quoted
Section 2 of CBA is invalid because it constitutes a
waiver by the laborers of future benefits that may be
granted them by law. They contend this cannot be
done because it is contrary to public policy.
While the principle is correct, the application is not,
for there are no benefits being waived under the
provision. The benefits are already included in the
wage increases. It is the law itself that considers these
increases, under the conditions prescribed in LOI No.
174, as equivalent to, or in lieu of, the emergency
allowance granted by P.D. No. 525.
In fact, the company agreed to grant the emergency
allowance even before the obligation was imposed by
the government. What the petitioners claim they are
being made to waive is the additional P50.00
allowance but the truth is that they are not entitled to
this because they are already enjoying the stipulated
increases. There is no waiver of these increases.
Moreover, Section 2 provides that the wage increase
shall be considered payment of any statutory increase
of the minimum wage "as far as it will go," which
means that any amount not covered by such wage
increase will have to be made good by the company.
In short, the difference between the stipulated wage
increase and the statutory minimum wage will have
to be paid by the company notwithstanding and,
indeed, pursuant to the said article. There is no
waiver as to this.
Curiously, Article 2 was produced verbatim in the
collective bargaining agreement concluded by the
petitioners with the company in 1977 after PLAC had
been replaced by the new labor union formed by
petitioners Evaristo and Biascan. 11 It is difficult to
understand the petitioners' position when they blow
hot and cold like this.
Coming now to the second issue, we find that it must
also be resolved against the petitioners.
Evaristo and Biascan claim they were illegally
dismissed for organizing another labor union opposed
to PLAC, which they describe as a company union.
Arguing that they were only exercising the right to
self organization as guaranteed by the Constitution,
they insist they are entitled to the back wages which
the NLRC disallowed while affirming their
reinstatement.
In its challenged decision, the public respondent held
that in demanding the dismissal of Evaristo and
Biascan, PLAC had acted prematurely because the
1974 CBA providing for union shop and pursuant to
which the two petitioners were dismissed had not yet
been certified. 12 The implication is that it was not yet
in effect and so could not be the basis of the action
taken against the two petitioners. This conclusion is
erroneous. It disregards the ruling of this Court
in Tanduay Distillery Labor Union v. NLRC, 13 were
we held:
The fact, therefore, that the Bureau
of Labor Relations (BLR) failed to
certify or act on TDLU's request for
certification of the CBA in question
is of no moment to the resolution of
the issues presented in this case.
The BLR itself found in its order of
July 8, 1982, that the (un)certified
CBA was duly filed and submitted
on October 29, 1980, to last until
June 30, 1982 is certifiable for
having complied with all the
requirements for certification.
(Emphasis supplied.)
The CBA concluded in 1974 was certifiable and was
in fact certified on April 11, 1975, It bears stressing
that Evaristo and Biascan were dismissed only on
May 20, 1975, more than a month after the said
certification.
The correct view is that expressed by Commissioner
Cecilio P. Seno in his concurring and dissenting
opinion, 14 viz.:
I cannot however subscribe to the
majority view that the 'dismissal of
complainants Biascan and Evaristo,
... was, to say the least, a premature
action on the part of the
respondents because at the time
they were expelled by PLAC the
contract containing the union
security clause upon which the
action was based was yet to be
certified and the representation
status of the contracting union was
still in question.
Evidence on record show that after
the cancellation of the registration
certificate of the Federation of
Democratic Labor Unions, no other
union contested the exclusive
representation of the Philippine
Labor Alliance Council (PLAC),
consequently, there was no more
legal impediment that stood on the
way as to the validity and
enforceability of the provisions of
the collective bargaining agreement
entered into by and between
respondent corporation and
respondent union. The certification
of the collective bargaining
agreement by the Bureau of Labor
Relations is not required to put a
stamp of validity to such contract.
Once it is duly entered into and
signed by the parties, a collective
bargaining agreement becomes
effective as between the parties
regardless of whether or not the
same has been certified by the
BLR.
To be fair, it must be mentioned that in the
certification election held at the Liberty Flour Mills,
Inc. on December 27, 1976, the Ilaw at Buklod ng
Manggagawa, with which the union organized by
Biascan and Evaristo was affiliated, won
overwhelmingly with 441 votes as against the 5 votes
cast for PLAC. 15 However, this does not excuse the
fact that the two disaffiliated from PLAC as early as
March 1975 and thus rendered themselves subject to
dismissal under the union shop clause in the CBA.

The petitioners say that the reinstatement issue of

Evaristo and Biascan has become academic because
the former has been readmitted and the latter has
chosen to await the resolution of this case. However,
they still insist on the payment of their back wages on
the ground that their dismissal was illegal. This claim
must be denied for the reasons already given. The
union shop clause was validly enforced against them
and justified the termination of their services.

It is the policy of the State to promote unionism to

enable the workers to negotiate with management on
the same level and with more persuasiveness than if
they were to individually and independently bargain
for the improvement of their respective conditions.
To this end, the Constitution guarantees to them the
rights "to self-organization, collective bargaining and
negotiations and peaceful concerted actions including
the right to strike in accordance with law." There is
no question that these purposes could be thwarted if
every worker were to choose to go his own separate
way instead of joining his co-employees in planning
collective action and presenting a united front when
they sit down to bargain with their employers. It is
for this reason that the law has sanctioned stipulations
for the union shop and the closed shop as a means of
encouraging the workers to join and support the labor
union of their own choice as their representative in
the negotiation of their demands and the protection of
their interest vis-a-vis the employer.

The Court would have preferred to resolve this case

in favor of the petitioners, but the law and the facts
are against them. For all the concern of the State, for
the well-being of the worker, we must at all times
conform to the requirements of the law as long as
such law has not been shown to be violative of the
Constitution. No such violation has been shown here.

WHEREFORE, the petition is DISMISSED, without

any pronouncement as to costs. It is so ordered.
#76 Brillo vs Buklatan
G.R. No. L-2213 October 14, 1950
ESPIRIDION M. BRILLO, plaintiff -appellant,
vs.
PEDRO BUKLATAN, ET AL., defendants-
appellees.
Jorge B. Delgado for appellant.
Pastor Salazar, Marcelino R. Veloso, Antonio V.
Benedicto and Antonio Montilla for appellees.
MORAN, C.J.:
This is an appeal taken by plaintiff from an order
dismissing his complaint on motion of the
defendants.
The complaint contains four causes of action. In the
first, plaintiff, as President of the Leyte United
Workers, seeks to recover from several defendants,
the amounts of money which the latter, in their
respective capacities as chief foreman and foreman,
have been collecting from several groups of laborers,
as their contribution to the funds of Leyte United
Workers. The motion to dismiss against the first
cause of action is based upon the ground that the
Leyte United Workers, being a duly registered Labor
Union under Commonwealth Act No. 213, has
capacity to sue, and therefore, the action should have
been brought in its name. Plaintiff-appellant admits
that the Leyte United Workers has juridical capacity
to sue. If this is so, then the action should be brought
in its own name, and not in the name of its president,
under Rule 3, section 2.
Furthermore, the first cause of action is composed of
separate claims against several defendants of
different amounts each of which is not more than
P2,000 and falls under the jurisdiction of the justice
of the peace court under section 88 of Republic Act
No. 296. The several claims do not seem to arise
from the same transaction or series of transactions
and there seem to be no questions of law or of fact
common to all the defendants as may warrant their
joinder under Rule 3, section 6. Therefore, if new
complaints are to be filed in the name of the real
party in interest they should be filed in the justice of
the peace court.lawphil.net
The second cause of action is directed against the
International Trust Corporation and Pacific Copra
Export Company which are alleged to have entered
into a contract with the Leyte United Workers
whereby they agreed to increase by 20 per cent the
wages of their laborers who were members of the
Leyte United Workers and they failed to fulfill the
terms of such agreement. It appears, however, that
the Leyte United Workers has already applied with
the Court of Industrial Relations for increase of
wages of their laborers working with the two
defendant corporations, and it abandoned the
supposed agreement regarding the increase of 20 per
cent after the two defendant corporations denied
having entered into such agreement, and instead it
claimed a general increase of 50 per cent which the
Court of Industrial Relations refused to grant. Under
such circumstances, the Leyte United Workers cannot
now be allowed to press upon the supposed
agreement of 20 per cent increase which was
abandoned in the Court of Industrial Relations which
is the court with the jurisdiction over that subject
matter.
The third cause of action is for certiorari against the
Secretary of Labor for having granted licenses to new
unions, namely, the Leyte Stevedoring and Terminal
Dock Workers Union and the Visayan Workers
Union, the registration of which is alleged to be
detrimental to Leyte United Workers. It is alleged
that the new labor unions were organized by old
members of the Leyte United Workers, with the aid
of the employers, and the result may be the death of
the Leyte United Workers. It is maintained that the
action of the Secretary of Labor in approving the
application of the said new labor unions constitutes
an excess of jurisdiction and grave abuse of
discretion.
The petition for certiorari does not lie because the
Secretary of Labor did not exercise judicial function.
Furthermore, there is no allegation that the new labor
unions have the purpose of undermining or
destroying the constituted Government or of violating
any law or laws of the Philippines, and therefore,
they cannot be denied registration and permission to
operate under section 2, of Commonwealth Act No.
213. (Umali vs. Lovina, 47 Off. Gaz., 6196; 86 Phil.,
313.)
The fourth claim alleged in the complaint is a petition
for declaratory relief involving practically the same
questions raised in the third cause of action.
For all the foregoing, the order of dismissal appealed
from is affirmed, the costs to be paid by appellant.
#77 Vassar Industries Emp. Vs Liberty Cotton Mills.
G.R. No. L-46562 March 31, 1978
VASSAR INDUSTRIES EMPLOYEES UNION
(VIEU), petitioner,
vs.
HON. FRANCISCO L. ESTRELLA; as Acting
Director of the Bureau of Labor Relations,
ASSOCIATED LABOR UNIONS (ALU), and
VASSAR INDUSTRIES, INC., respondents.
Jose C. Espinas for petitioner.
Abraham B. Drapiza for respondent Unions.
Maria de la Paz Singson, for respondent Vassar
Industries, Inc.
Acting Solicitor General Vicente V. Mendoza,
Assistant Solicitor General Reynato S. Puno and
Solicitor Ramon A. Barcelona for respondent The
Hon. Francisco L. Estrella, etc.
FERNANDO, J.:
There appears to be as yet a failure to grasp the scope
and amplitude of the constitutional right to freedom
of association. 1 That seems to be the only
explanation but certainly not the justification, for the
refusal of respondent Francisco L. Estrella, then the
Acting Director of the Bureau of Labor Relations, to
register petitioner Vassar Industries Employees
Union. 2 His communication to that effect is worded
thus: "We are hereby returning the application for
registration of the [Vassar Industries Employees
Union] together with all the accompanying
documents with the information that the application
is denied on the ground that there is already a
registered collective bargaining agent in the
company." 3 Petitioners prayed that a restraining
order be issued, and, after hearing, that its application
for registration be given due course. Accordingly, in
a resolution dated August 29, 1977, this Court issued
such restraining order and required comment from
the respondents. The comment of the then Acting
Solicitor General Vicente V. Mendoza, 4 after setting
forth the pertinent facts, submitted this conclusion;
"From the aforestated undisputed facts, it is the
considered opinion of this representation that the
actuation of the then Acting [Bureau of Labor
Relations] Director cannot be sustained for the
following reasons: a) the ground for the denial of the
registration of petitioner union is the existence of a
registered collective bargaining agent, but this is
erroneous since the CBA expired on May 15, 1977,
and the records do not show that [the Associated
Labor Union] has been certified anew.
b) Besides, the registration of a labor union is not
solely for the purpose of qualifying the union as the
exclusive collective bargaining agent since it is
entitled to other rights and prerogatives as
enumerated in Art. 243 of the Labor Code. c) As long
as an applicant union complies with all of the legal
requirements for registration, it becomes the BIR's
ministerial duty to so register the union. d) No
hearing, whatsoever, was conducted to ascertain the
existence of a collective bargaining agent, thus
depriving petitioner union of its day in court." 5 His
recommendation is "that the case be ordered
remanded to the BLR for the registration of the
petitioner union." 6 The other private respondents also
submitted their comments but failed to meet squarely
the issue of the failure to comply with the
constitutional mandate of freedom of association. It is
thus obvious that the petition is impressed with
merit.
There is no dispute on the facts. There was in
existence a collective bargaining agreement between
private respondents Associated Labor Unions and
Vassar Industries, Inc. which expired on May 15,
1977. Prior to such date, 111 of a total number of 150
employees of such firm disaffiliated from the former
labor organization and formed their own union.
Thereafter, they filed an application for registration
of their union with the Bureau of Labor Relations,
complying with an the requirements of both the
Labor Code and its implementing regulations. While
such application was pending, petitioner Union filed
a petition for certification as bargaining agent for the
rank-and-file employees of the company. The Med-
Arbiter, on May 24, 1977, denied their plea on the
ground that the union was not duly registered with
the Department of Labor. Then came a motion for
reconsideration praying that the dismissal be set aside
until action be taken on its pending application for
registration. On July 5, 1977, respondent Estrella,
then Acting Director of the Bureau of Labor
Relations, denied, as previously noted, the
application for registration "on the ground that there
is a registered collective bargaining agent in the
company." Hence this petition. It should also be
noted that there is this submission in the comment of
the then Acting Solicitor General Vicente V.
Mendoza: "It may not be amiss to mention herein that
before filing the instant comment, prior consultation
was made with Director Carmelo C. Noriel of the
Bureau of Labor Relations, and he shares our view on
the matter leaving it to the undersigned to make the
appropriate recommendation in the premises to this
Honorable Court." 7
The petition, to repeat, is impressed with merit.
certiorari lies.
1. In U.E. Automotive Employees and Workers Union
v. Noriel, 8 reference was made to the fact that a
notable feature of our Constitution is that "freedom of
association is explicitly ordained; it is not merely
derivative, peripheral or penumbral, as is the case in
the United States. It can trace its origin to the
Malolos Constitution." 9 An earlier
decision, Federacion Obrera v. Noriel, 10 sets forth
the scope and amplitude of such right: "Clearly, what
is at stake is the constitutional right to freedom of
association on the part of employees. Petitioner labor
union was in the past apparently able to enlist the
allegiance of the working force in the Anglo-
American Tobacco Corporation. Thereafter, a number
of such individuals joined private respondent labor
union. That is a matter clearly left to their sole
uncontrolled judgment. There is this excerpt
from Pan American World Airways, Inc. v. Pan
American Employees Association: "There is both a
constitutional and statutory recognition that laborers
have the right to form unions to take care of their
interests vis-a-viz their employees. Their freedom to
form organizations would be rendered nugatory if
they could not choose their own leaders to speak on
their behalf and to bargain for them." It cannot be
otherwise, for the freedom to choose which labor
organization to join is an aspect of the constitutional
mandate of protection to labor. Prior to the Industrial
Peace Act, there was a statute setting for the
guidelines for the registration of labor unions. As
implied in Manila Hotel Co. v. Court of Industrial
Relations, it was enacted pursuant to what is ordained
in the Constitution. Thus, in Umali v. Lovina, it was
held that mandamus lies to compel the registration of
a labor organization. There is this apt summary of
what is signified in Philippine Land-Air-Sea Labor
Union v. Court of Industrial Relations, "to allow a
labor union to organize itself and acquire a
personality distinct and separate from its members
and to serve as an instrumentality to conclude
collective bargaining agreements ... ." It is no
coincidence that in the first decision of this Court
citing the Industrial Peace Act, Pambujan United
Mine Workers v. Samar Mining Company, the role of
a labor union as the agency for the expression of the
collective will affecting its members both present and
prospective, was stressed. That statute certainly was
much more emphatic as to the vital aspect of such a
right as expressly set forth in the policy of the law.
What is more, there is in such enactment this
categorical provision on the right of employees to
self-organization: "Employees shall have the right to
self-organization and to form, join or assist labor
organizations of their own choosing for the purpose
of collective bargaining through representatives of
their own choosing and to engage in concerted
activities for the purpose of collective bargaining and
other mutual aid or protection." The new Labor Code
is equally explicit on the matter. Thus: "The State
shall assure the rights of workers to self-organization,
collective bargaining, security of tenure and just and
humane conditions of work." 11
2. Equally so, whatever question may arise from the
disaffiliation was set at rest by a recent decision of
this Court in Philippine Labor Alliance Council v.
Bureau of Labor Relations. 12 Thus: "It is
indisputable that the present controversy would not
have arisen if there were no mass disaffiliation from
petitioning union. Such a phenomenon is nothing new
in the Philippine labor movement. Nor is it open to
any legal objection. It is implicit in the freedom of
association explicitly ordained by the Constitution.
There is then the incontrovertible right of any
individual to join an organization of his choice. That
option belongs to him. A workingman is not to be
denied that liberty. He may be, as a matter of fact,
more in need of it the institution of collective
bargaining as an aspect of industrial democracy is to
succeed. No obstacle that may possibly thwart the
desirable objective of militancy in labor's struggle for
better terms and conditions is then to be placed on his
way. Once the fact of disaffiliation has been
demonstrated beyond doubt, as in this case, a
certification election is the most expeditious way of
determining which labor organization is to be the
exclusive bargaining representative. It is as simple as
that." 13
3. The only novel feature of this case then is the fact
that, as noted in the comment of private respondent
Associated Labor Unions, there was subsequently
entered into a collective bargaining agreement with
the other private respondent Vassar Industries, Inc.
on September 26, 1977, allegedly containing
"substantial benefits for the employees, which
contract (CBA) was approved and ratified by the
majority of the general membership or employees of
the Vassar Industries, Inc. ... ." 14 It is on that basis
that a dismissal of the petition is sought. It may be
stated at the outset that while such collective
bargaining agreement was entered into during the
pendency of a restraining order issued by this Court
as far back as August 29, 1977, it may be argued that
there is no technical violation as the restraining order
sought by petitioner labor union was limited to
preventing the two private respondents "from
continuing to check-off the petitioner's members who
disaffiliated from the ALU of union dues and other
assessments, until further orders from this Honorable
Court ... 15 Nonetheless, it is quite obvious that when
the two parties entered into such a collective
bargaining agreement, such a move was motivated by
the desire to impart a moot and academic aspect to
this petition. It should not therefore elicit the
approval of this Court, especially so as upon the
expiration oil the collective contract, it is made "the
duty of both parties to keep the status quo and to
continue in full force and effect the terms and
conditions of the existing agreement during the sixty-
day period and/or until a new agreement is reached
by the parties." 16 With a pending petition for
certification, any such agreement entered into by
management with a labor organization is fraught with
the risk that such a labor union may not be chosen
thereafter as the collective bargaining representative.
That is the situation that is confronted by private
respondents. Any other view would render nugatory
the clear statutory policy to favor certification
election as the means of ascertaining a true
expression of the will of the workers as to which
labor organization would represent them. 17
agreement, which it engineered and entered into on
September 26, 1977, has much more favorable terms
for the workers of private respondent Vassar
Industries, then it should continue in full force and
effect until the appropriate bargaining representative
is chosen and negotiations for a new collective
bargaining agreement thereafter concluded. This is
one way of assuring that both the social justice, 22 and
the protection to labor provisions 23 would be
effectively implemented without sanctioning an
attempt to frustrate the exercise of this Court's
jurisdiction in a pending case.
WHEREFORE, the writ of certiorari is granted and
the Bureau of Labor Relations ordered to conduct at
the earliest practicable date of a certification election
with petitioner labor union, Vassar Industries Labor
Union, and private respondent labor union,
Associated Labor Unions, participating therein to
determine the exclusive bargaining representative of
the workers employed in Vassar Industries, Inc. This
decision is immediately executory.

4. Now for the appropriate remedy. The prayer in the

petition is limited to ordering respondent official to
give due course to petitioner's application for
registration. 18 As this is a certiorari proceeding,
equitable in character, this Court is empowered to
grant the relief adequate and suitable under the
circumstances so that justice in all its fullness could
be achieved. There is this affirmation in the comment
of the then Acting Solicitor General Vicente V.
Mendoza as counsel for respondent Estrella: "As long
as an applicant union complies with all of the legal
requirements for registration, it becomes the BLR's
ministerial duty to so register the union." 19 It suffices
then to order that petitioner Union be registered, there
being no legal obstacle to such a step and the duty of
the Bureau of Labor Relations being clear. Then there
is this ruling in Philippine Labor Alliance Council v.
Bureau of Labor Relations 20 that calls for application
that "once the fact of disaffiliation has been
demonstrated beyond doubt, as in this case, a
certification election is the most expeditious way of
determining which labor organization is to be the
exclusive bargaining representative." 21 In the
meanwhile, if as contended by private respondent
labor union the interim collective bargaining
#78 Adamson and Adamson vs CIR
G.R. No. L-35120 January 31, 1984
ADAMSON & ADAMSON, INC., petitioner,
vs.
THE COURT OF INDUSTRIAL RELATIONS
and ADAMSON & ADAMSON SUPERVISORY
UNION (FFW), respondents.
Sycip, Salazar, Luna & Feliciano for petitioner.
Jaime D. Lauron for respondents.
GUTIERREZ, JR., J.:
Adamson and Adamson, Inc., filed this petition to set
aside orders of the respondent Court of Industrial
Relations (CIR) holding that the Adamson and
Adamson, Inc. supervisory Union (FFW) can legally
represent supervisors of the petitioner corporation
notwithstanding the affiliation of the lank and file
union of the same company with the same labor
federation, the Federation of Free Workers.
The Adamson and Adamson, Inc. Supervisory Union
(FFW) informed the petitioner about its having
organized on the same date that the Adamson and
Adamson, Inc. Salesmen Association (FFW) advised
the petitioner that the rank and file salesmen had
formed their own union.
The CIR dismissed the petition in CIR Case No.
3267-MC entitled "In the Matter of Representation of
the Supervisory Employees of Adamson and
Adamson, Inc., Petitioner " thus prompting the filing
of this petition for review on certiorari.
Subsequently and during the pendency of the present
petition, the rank and file employees formed their
own union, naming it Adamson and Adamson
Independent Workers (FFW).
The petitioner made a lone assignment of error, to
wit:
THE RESPONDENT COURT OF INDUSTRIAL
RELATIONS ERRED IN SUSTAINING THE
ELIGIBILITY OF THE RESPONDENT UNION TO
REPRESENT THE PETITIONER'S
SUPERVISORY EMPLOYEES NOT-
WITHSTANDING THE AFFILIATION OF THE
SAID UNION WITH THE SAME NATIONAL
FEDERATION WITH WHICH THE UNIONS OF
NON-SUPERVISORS IN THE PETITIONER
COMPANY ARE ALSO AFFILIATED.
The petitioner argues that the affiliation of the
respondent union of supervisors, the salesmen's
association, and the Adamson and Adamson
independent Workers Union of rank and file
personnel with the same national federation (FFW)
violates Section 3 of the Industrial Peace Act, as
amended, because — (1) it results in the indirect
affiliation Of supervisors and rank-and-file
employees with one labor organization; (2) since
respondent union and the unions of non-supervisors
in the same company are governed by the same
constitution and by-laws of the national federation, in
practical effect, there is but one union; and (3) it
would result in the respondent union's losing its
independence because it becomes the alter ego of the
federation.
The petitioner also submits that should affiliation be
allowed, this would violate the requirement of
separateness of bar units under Section 12 of the Act
because only one union will in fact represent both
supervisors and rank-and-file employees of the
petitioner.
The respondents on the other hand argue that the
supervisory employees of an employer may validly
join an organization of the rank-and-file employees
so long as the said rank and file employees are not
under their supervision. They submit that Adamson
and Adamson Supervisory Union (FFW) is not
composed of sales supervisors and, therefore, the
salesmen of the company are not under the
supervision of the supervisory employees forming the
union. Respondents also argue that even if the
salesmen of the petitioner company are under the
supervision of the members of the supervisory union,
the prohibition would not apply because the salesmen
and the supervisory employees of the company have
their separate and distinct labor organizations, and, as
a matter of fact, their respective unions sent separate
proposal for collective bargaining agreements. They
contend that their respective labor organizations, not
the FFW, will represent their members in the
negotiations as well as in the signing of their
respective contracts. Respondents further argue that
the Federation of Free Workers has, as its affiliates,
supervisory as well as rank-and-file employees, and
should both the supervisory and the rank-and-file
employees of a certain employer who have separate
certificates of registration affiliate with the same
federation, the prohibition does not apply as the
federation is not the organization of the supervisory
employees contemplated in the law.
The issue presented involves the correct
interpretation of Section 3 of Republic Act No. 875,
the Industrial Peace Act, as amended, which states:
Employees shall have the right to self-organization
and to form join or assist labor organizations of their
own choosing for the purpose 6f collective
bargaining through representatives of their own and
to engage in concerted activities for the purpose of
collective bargaining and other mutual aid or
protection. Individuals employed as supervisors shall
not be eligible for membership in a labor organization
of employees under their supervision but may form
separate organizations of their own.
The right of employees to self-organization and to
form, join or assist labor organizations of their own
choosing for the purpose of collective bargaining and
to engage in concerted activities for mutual aid or
protection is a fundamental right of labor that derives
its existence from the Constitution. It is recognized
and implemented through the abovecited Section 3 of
the Industrial Peace Act as amended.
In interpreting the protection to labor and social
justice provisions of the Constitution and the labor
laws or rules and regulations implementing the
constitutional mandates, we have always adopted the
liberal approach which favors the exercise of labor
rights.
In deciding this case, we start with the recognized
rule that the right of supervisory employees to
organize under the Industrial Peace Act carries
certain restrictions but the right itself may not be
denied or unduly abridged. The supervisory
employees of an employer cannot join any labor
organization of employees under their supervision but
may validly form a separate organization of their
own. As stated in Caltex Filipino Managers and
Supervisors Association v. Court of Industrial
Relations (47 SCRA 112), it would be to attach
unorthodoxy to, not to say an emasculation of, the
concept of law if managers as such were precluded
from organization. Thus, if Republic Act 875, in its
Section 3, recognizes the right of supervisors to form
a separate organization of their own, albeit they
cannot be members of a labor organization of
employees under their supervision, that authority of
supervisors to form a separate labor union carries
with it the right to bargain collectively with the
employer. (Government Service Insurance System v.
Government Service Insurance System Supervisors'
Union, 68 SCRA 418).
The specific issue before us is whether or not a
supervisor's union may affiliate with a federation
with which unions of rank and-file employees of the
same employer are also affiliated. We find without
merit the contentions of petitioner that if affilation
will be allowed, only one union will in fact represent
both supervisors and rank-and-file employees of the
petitioner; that there would be an indirect affiliation
of supervisors and rank-and-file employees with one
labor organization; that there would be emerging of
two bargaining units ; and that the respondent union
will loose its independence because it becomes an
alter ego of the federation.
In Elisco-Elirol Labor Union (NAFLU) v. Noriel (80
SCRA 681) and Liberty Cotton Mills Workers Union
v. Liberty Cotton Mills, Inc. (66 SCRA 512), we held
:
xxx xxx xxx
... the court expressly cited and
affirmed the basic principle that
'(T)he locals are separate and
distinct units primarily designed to
secure and maintain the equality of
bargaining power between the
employer and their employee-
member in the economic struggle
for the fruits of the joint productive
effort of labor and capital; and the
association of the locals into the
national union (as PAFLU) was in
the furtherance of the same
end. These association are
concensual entities capable of
entering into such legal relations
with their members. The essential
purpose was the affiliation of the
local unions into a common
enterprise to increase by collective
action the common bargaining
power in respect of the terms and
conditions of labor. Yet the locals
remained the basic units of
association; free to serve their own
and the common-interest of all,
subject to the restraints imposed
by the Constitution and By-laws of
the Association; and free also to
 renounce the affiliation for mutual
welfare upon the terms laid down
in the agreement which brought it
into existence.

We agree with the Court of Industrial Relations when

it ruled that:

xxx xxx xxx

The confusion seems to have

stemmed from the prefix of FFW
after the name of the local unions in
the registration of both.
Nonetheless, the inclusion of FWW
in the registration is merely to
stress that they are its affiliates at
the time of registrations. It does not
mean that said local unions cannot
stand on their own Neither can it be
construed that their personalities
are so merged with the mother
federation that for one difference or
another they cannot pursue their
own ways, independently of the
federation. This is borne by the fact
that FFW, like other federation is a
legitimate labor organization
separate and distinct from its locals
and affiliates and to construe the
registration certificates of the
aforecited unions, along the line of
the Company's argument. would tie
up any affiliates to the shoe string
of the federation. ...

The Adamson and Adamson Supervisory Union and

the Adamson and Adamson, Inc., Salesmen
Association (FFW), have their own respective
constitutions and by-laws. They are separately and
independently registered of each other. Both sent
their separate proposals for collective bar agreements
with their employer. There could be no employer
influence on rank-and-file organizational activities
nor their could be any rank and file influence on the
supervisory function of the supervisors because of the
representation sought to be proscribed.

WHEREFORE, the instant petition is DISMISSED

for lack of merit. The questioned order and the
resolution en bancof the respondent Court of
Industrial Relations are AFFIRMED.

SO ORDERED.
#79 Democratic Labor Labor Assoc. vs Cebu
Stevedoring
G. R. No. L-10321, February 28, 1958 ]
DEMOCRATIC LABOR ASSOCIATION,
PETITIONER, VS. CEBU STEVEDORING
COMPANY, INC. ET AL., RESPONDENTS.
DECISION
BAUTISTA ANGELO, J.:
The Cebu stevedores Association, a legitimate labor
union with Registration Permit No. 357, filed on
March 8, 1954 with the Court of Industrial Relations
a petition for certification election for the purpose of
determining the collective bargaining unit that should
represent the employees and laborers of the cebu
stevedoring Co., Inc. The latter was made party
respondent as the employer. In the process, three
other labor unions intervened, to wit; the Democratic
Labor Association, the Cebu Trade Union, and the
Katubsanan sa Mamumuo, who also asserted their
right to take part in the certification election.
As the parties could not agree on the union that
should be designated as the appropriate collective
bargaining agency, hearings were held and evidence
adduced not only on what should be the proper
bargaining unit but also on the membership of each
labor organization. Thereafter, Judge Jose S.
Bautiata, who has been designated to receive the
evidence, issued an order declaring the Democratic
labor Association as the collective bargaining agency
for all the regular and permanent workers of
respondent company considering that it has more
employees belonging to this class than the other
unions. He found that the Cebu stevedores
Association has more casual laborers affiliated with it
but that it is not a union registered under the
provisions of the law and so it cannot take part in the
certification election. He also found that the
Katubsanan Sa Mamumuo is no longer interested in
the election and that Judging from the attitude of its
president it can be implied that it has waived its
claim, in favor of the Cebu Stevedores Association.
Consequently, Judge Bautiata ordered that an election
be conducted by the Department of Labor among the
casual laborers whose names appear on pages 1 and
3-24 of Exhibit 4-respondent designating as the only
labor organizations that may be voted in said election
the Democratic labor Association and the Cebu Trade
Union, two legitimate labor organizations registered
in accordance with law.
Dissatisfied with this order, respondent Cebu
Stevedoring Co., Inc., as well as the Cebu Stevedores
Association and the Katubsanan sa Mamumuo, filed
each a motion
for reconsideration disputing the finding of the trial
judge that there should be two collective bargaining
units thafe would represent two sets of workers baaed
on their terms of employment, as well as the finding
that the two labor unions above-mentioned are
ineligible to take part or be voted for in the
certification elsetion. These motions having been
submitted to the court en bane, a split vote resulted, 3
voting in favor of revoking the order and two in favor
of upholding it. In other words, Judge Juan L. lenting,
with Judges Arsenio I. Martinez and Bienvenldo Tan
concurring, with the dissent of Judge Jose S. Bautista,
concurred in by Judge Jimenez Yanson, issued a
resolution setting aside the order aforesaid and
containing the following dispositive part: (1)
declaring that the appropriate collective bargaining
unit is the employer's unit, embracing all the
employees and workers therein involved; and (2)
ordering the holding of an election wherein the four
labor unions should take part, namely, the Cebu
Stevedores Association, Democratic labor
Association, Katubsanan Sa Mamumuo and Cebu
Trade Union. Hence the present petition for review.
The facts as found by the trial court are: The Cebu
Stevedoring Co., Inc. is a corporation engaged
principally in stevedoring work consisting of loading
and unloading of cargoes to and from the foreign
ocean-going vessels that dock in the port of Cebu
and, secondarily, in the lighterage business consisting
of hauling and storing copper, gypsum, oil products
and other merchandise to and from the port of Cebu
and neighboring islands and provinces. In the
operation of these two kinds of business, the
company employs two sets of workers, namely, the
regular and permanent on one hand, and the daily or
casual on the other. The first set of laborers work
continuously and are paid either semi-annually,
monthly or weekly, are given annual bonuses, sick
leave ani vacation leave for cvery year of service, and
are given overtime compensation for overtime work
ranging from 25% to 50%. The casual laborers are
the stevedores who work solely on the loading and
unloading of cargoes, are paid daily, are laid off from
time to time, and work as they please depending on
the arrival of foreign vessels in the port of Cebu.
They do not enjoy any vacation or sick leave, bat
when they work overtime, they are paid 100%
additional compensation. Considering these factors
and following American precedents, the trial court
deemed it proper that two separate bargaining units
be certified, namely, one consisting of the regular and
permanent employees ana the other consisting of the
casual laborers or stevedores of the employer.
In this connection, the trial court also found that the
Democratic Labor Association had a majority of the
regular and permanent employees among its members
because, of a total of 211 workers of that class, 128
thereof are affiliated with said union. And so, the trial
court deemed it proper to certify said union as the
appropriate bargaining unit for regular and permanent
employees, the trial court also found that the Cebu
Stevedores Association has among its members more
casual laborers or stevedores than the other unions
but because it is not registered as required by law, it
cannot be certified as the collective bargaining unit of
a aid. class of laborers. The trial court finally found
thet the Katubanan Sa Mamumuo was no longer
interested in taking part in the election because its
president and counsel, Jose Muana, made it known
tto t he was giving the claim of that union in favor of
the cebu Stevedores Association. It is for this reason
that the trial court only considered the Democratic
Labor Association and the Cebu Trade Union as the
only ones qualified to take part In the clection of the
bargaining unit for casual la- borers or stevedores.
Some of these facts however were found by the court
en banc to be incorrect because they are contrary to
the evidence. Thus, the evidence is not clear whether
the Democratic Labor Union has among its members
more regular and permnont employees than the other
labor uniors which doubt, according to the court en
bane, should be resolved in favor of holding a
certification election, "It is not also correct that the
Cebu Stevedores Association Is not a registered labor
union for the record shows that this union was
formally registered under Commonwealth Act No.
813 but that such registration expired on January 31,
1955. Later, however, its permit was renewed and
Certificate of Registration No. 1477-IP was issued on
September 7, 1955. It is therefore a legitimate labor
organization entitled to take part in the certification
election. With regard to the finding that Katubsanan
Sa Mamuinuo waived its claim in favor of the Cebu
Stevedores Association, the court en banc also found
that the same is not borne out by the evidence and
concluded that that union is entitled to take part in the
certification clection.
The issue now to be determined is: Considering that
there are two sets of employees or laborers working
in respondent company, one regular and permanent
and the other casual or temporary, is it proper and,
convenient that there should be onc collective
bargaining unit for each, aa held by the trial court, or
only one collective bargaining unit for all the workers
and employees of said respondent company
regardless of their terms of employment, as held by
the court en banc?
In determining the appropriate collective bargaining
unit in the present case, the court en banc took Into
account the fact that as early as March 4, 1947 a
collective bargaining agreement was enforced
between the petitioning, union and respondent
company and that such agreement was substituted by
another on November 1, 3950, which was renewed
for another two years on November 1, 1952. An
examination of the contract executed on November 1,
1950 reveals, according to said court, that it covers
"laborers on daily wage, officers and members of the
crew of launches, tugboats, barges, and lighters" or,
in short, all the working force employed in
respondent company. There is therefore a collective
bargaining history to reckon with according to which
all the employees of the company have always
belonged to only one collective bargaining unit, and
considering that that collective bargaining; agreement
haa stabilized or at least has contributed to the
stabilization of labor relations between the company
and its employees from 1947 to 1952, no reason is
seen why suoh historical precedent should not control
the present case.
While it may be true that a collective bareaining
agreement has for sometime existed between the
petitioning union and respondent company and the
same has served the purpose for whleh it has been
concluded, it does not follow that the same situation
should continue even if there are supervening factors
tha t press for a different treatment or other cogent
reasons that would justify a different course in the
determination of the appropriate collections
bargaining agency. While the existence of a
bargaining history is a factor that may bo reckoned
with in determining the appropriate bargaining unit,
the same is not decisive nor conclusive. There are
other factors that aisy be considered depending upon
the circumstances of each case. One of them is the
fact that since the conclusion of said collective
bargaining agreement there have arisen several other
labor unions composed of employees and laborers of
the same company whose relations have become so
diverse and conflicting that a re-evaluation of the
labor relations has become imperative in order that
they may not be jeopardized. This moment has come
when the petitioning union brought the matter to
court for oefctifieation election and the situation with
which the court was confronted was: there wore four
labor unions composed of employees and laborers
working in the same company with diverse and
conflicting interest and there was no collective
bargaining agency to represent them. Hence the need
for certification election. And the crucial issue is how
to determine the proper collective bargaining unit and
what unit would be appropriate to be the collective
bargaining agency. This is now the crux in the
present ease.
This issue is novel in this jurisdiction. No other case
has arisen before involving a similar issue and which
may serve as a guide for the detersiination of the
controversy. However, American precedents on the
matter abound and to them we should resort
considering that our present Magna Carta has been
patterned after the American law on the subject.
Under these precedents, there are various factors
which must be satisfied and considered in
determining the proper constituency of bargaining
unit. No one particular factor is itself decisive of the
determination. The weight accorded to any particular
factor varies in accordance with the particular
question or questions that may arise in a given case.
What are these factors? Rothenberg mentions a good
number, but the most pertinent to our caae are: (1)
will of employees (Globe Doctrine); (2) affinity and
unity of employees' interest, such as substantial
similarity of work and duties, or similarity of
compensation and working conditions; (3) prior
collective bargaining history; and (4) employment
status, such as temporary, seasonal and probationary
employees (Rothenberg on labor Relations, pp. 488-
510). A brief discussion of the nature of each of these
factors becomes necessary.
By reason of the modern complexity of both
employer and union structure, it frequently becomes
difficult to determine from the evidence alone whioh
of several claimant groups form a proper bargaining
unit. It then becomes necessary to give consideration
to the express will or desire of the employees. This
practice of considering; the employees' will has been,
designated as the Globe doctrine. This doctrine arose
in a case where there were four contending labor
groups, three claiming to be the proper bargaining
units for employees coming within each of their three
separate categories of work, and the fourth claiming
the right to be designated as the bargaining unit for
all employees on a plant-wide basis. The National
labor Relations Board, finding that each of the
competing units have an equally valid basis for their
respective claims, decided to hold a series of
clections, not for the purpose of allowing the group
receiving an overall majority of votes to represent all
employees, but for the specific purpose of permitting
the employees in each of the several categories of
work to select the group which each chose as a
bargaining unit (p. 483, Idem.).
The second factor is perhaps one of the most
conclusive in determining the proper bargaining unit.
Inasmuch, as the basic test of a bargaining unit's
acceptability is whether it will best assure to all
employees the exercise of their collective bargaining
rights, industrial experience indicates that the most
efficacious bargaining unit is one which is comprised
of constituents enjoying a community of interest and
economic or occupational unity. This community of
interest is reflected in groups having substantial
similarity of worlc and duties or similarity of
compensation and working conditions (pp. 490-494,
Idem,),
Another important factor is the precedent history of
collective bargaining between the proposed
bargaining unit and the employer. When this
precedent exists, it may be assumed that the court
will not disturb the composition of a consolidated
bargaining unit which has an established existence
and has, in its past dealings with the employer,
demonstrated its service to the collective bargaining
purposes of the act. However, where the
circumstances have been so altered or where the
reciprocal relationship of the employer and the
bargaining unit has been so changed that the past
mutual experience in collective bargaining cannot be
reasonably said to establish a reliable guide to the
present constituency of the bargaining unit, then prior
collective bargaining history cannot be considered a
factor in the determination. In such an event, the
determination must be made entirely upon the basis
of existing facts and with due consideration to all of
the remaining factors (pp. 496-498, Idem.)
The status of employment is another important factor
in the determination of which employees shall be
included or excluded from a proposed bargaining
unit. There are certain positions and categories of
work which, by their very nature, place the
employees in a position wherein a eonflict of duties
and interest exists. There are several categories of
employment which have so far received the special
attention of congress, the courts and the board,
among them supervisory employees, confidential
employees, guards and plant policemen and
temporary, seasonal and probationary employees.
With respect to suck employees, there frequently
arises the question of the right to include or exclude
them from bargaining units composed of pemanent
employees. It was hold that employees hired on a
brief, caaual or day to day basis or for a short,
definite term, and who have no reasonable basis for
continued or renewed employment for any
appreciable substantial time, are considered to have
no such mutuality of interest with permanent
employees as to justify their interest in a bargaining
unit composed of such permanent oaployees (pp.
500- 511, Idem.).
An enlightening appraisal of the problem of defining
an appropriate bargaining unit is given in the 10th
Annual Report of the National labor Relations Board
wherein it is emphasized that the factors which said
board may consider and weigh in fixing appropriate
units are: tho history, extent and type of organization
of employees; the history of their collective
bargaining; the history, extent and type of
organization of employees in other plants of the same
employer, or other employers in the same industry;
the skill, wages, work, and working conditions of the
employees; the desires of the employees; the
eligibility of the employees for membership in the
union or unions involved; and the relationship
between the unit or units proposed and the employer's
organization, management, and operation. In said
report, it is likewise emphasized that the basic test in
determining the appropriate bargaining unit is that a
unit, to be appropriate, must effect a grouping of
employees who have substantial, mutual interests in
wages, hours, working conditions and other subjects
of olleetive bargaining (Smith, Labor Law, 316-317
;Francisco, labor Laws, 162).
We have therefore seen that the mere existence of a
prior collective bargaining history is not a decisive
factor in the determination of a collective bargaining
agency. Where the circamstances had been so altered
or where the reciprocal relationship of the employer
and the particular bargaining unit has been so
changed that the past mutual experience cannot be
considered as a reliable guide to the present
determination of the bargaining unit, then prior
collective bargaining history should be brushed aside
and only the prevailing facts and factors should
control the determination. We have also seen that an
important factor to consider is the employment status
of the workers and employees to be affected by the
collective bargaining agency. The positions or
categories of work to which, they belong ahould also
be considered. This rule requires that temporary,
seasonal or probational employees bc grouped as one
category and bc treated separately from psrinanent
employees. The test of the grouping is ccmiaunity or
mutuality of interest. And this is so because ffthe
basic test of an asserted bargaining unit's
acceptability is whether or not it is fundamentslly the
combination which will best assure to all employees
the exercise of their collective bargaining rights"
(Rothenberg on Labor Relations, 490).
We therefore find that the conclusion reached by the
trial court to the effect that two separate bargaining
units should be formed in dealing with the respondent
company, namely, one consisting of regular and
permanent employees, and the other consisting of
casual laborers or stevedores, is correct, it being
supported by precedents on the matter. We also find
correct the finding that the Democratic Labor
Association, having among its members more regular
and permanent employees, should be designated as
the collective bargaining unit for this group. Certain
facts, however, found by the trial court should be
corrected: The Cebu Stevedores Association is now a
legitimate labor union, its permit having been
renewed and should be allowed to take part in the
certification election for the group of casual or
temporary employees. The Katubsanan Sa Mamumuo
has not waived its right to take part in the election
and it must be allowed to take part therein, and with
the facts thus modified, the ruling of the trial court
should be upheld.
Wherefore, the decision of the industrial court en
banc dated November 7, 1955 is hereby modified as
follows: (1) the Democratic labor Association is
hereby declared as the collective bargaining agent for
the regular and permanent employees and workers of
respondent company; and (2) let certification election
be held for casual or temporary employees and
workers in which the following organizations should
participate: Cebu Stevedores Association,
Democratic Labor Association, Katubsanan Sa
Mamumuo and Cebu Trade Union. No
pronouncement as to costs.
Paras, C. J., Bengzon, Padilla, Montemayor, Reyes,
A., Bautista Angelo, Labrador, Concepcion, Reyes, J.
B. L., Endencia, and Felix, JJ., concur.
#80 Lopez Sugar Corp. vs Sec of labor
G.R. No. 93117 August 1, 1995
LOPEZ SUGAR CORPORATION, petitioner,
vs.
HON. SECRETARY OF LABOR AND
EMPLOYMENT, NATIONAL CONGRESS OF
UNIONS IN THE SUGAR INDUSTRY OF THE
PHILIPPINES (NACUSIP) and COMMERCIAL
AND AGRO-INDUSTRIAL LABOR
ORGANIZATION (CAILO), respondents.
VITUG, J.:
The decision of public respondent, assailed in this
petition for certiorari, is anchored on Article 257 of
the Labor Code, as amended, which provides:
Art. 257. Petitions in unorganized
establishments. — In any
establishment where there is no
certified bargaining agent, a
certification election shall
automatically be conducted by the
Med-Arbiter upon the filing of a
petition by a legitimate labor
organization.
The Med-Arbiter, sustained by the Secretary
of Labor and Employment, has ruled that the
above provision is mandatory and gives him
no other choice than to conduct a
certification election upon the receipt of the
corresponding petition.
On 26 July 1989, private respondent National
Congress of Unions in the Sugar Industry of the
Philippines-TUCP ("NACUSIP-TUCP") filed with
the Department of Labor and Employment ("DOLE")
Regional Office No. VI, Bacolod City, a petition for
direct certification or for certification election to
determine the sole and exclusive collective
bargaining representative of the supervisory
employees of herein petitioner, Lopez Sugar
Corporation ("LSC"), at its sugar central in Fabrica,
Sagay, Negros Occidental.
In its petition, docketed Case No. RO6-MA-021-89,
NACUSIP-TUCP averred that it was a legitimate
national labor organization; that LSC was employing
55 supervisory employees, the majority of whom
were members of the union; that no other labor
organization was claiming membership over the
supervisory employees; that there was no existing
collective bargaining agreement covering said
employees; and that there was no legal impediment
either to a direct certification of NACUSIP-TUCP or
to the holding of a certification election. 1
In its comment and opposition, dated 14 August
1989, LSC contended, among other things, that the
petition was bereft of any legal or factual basis; that
the petition was nothing more than a useless scrap of
paper designed to harass the company; and that its
employees above the rank-and-file category were in
truth unaware of the petition.2
On 18 August 1989, the Commercial and Agro-
Industrial Labor Organization ("CAILO"), a
registered labor organization also claiming to count
substantial membership among the LSC supervisory
employees, moved to intervene.3 The motion was
granted.4
On 22 August 1989, NACUSIP-TUCP submitted
Charter Certificate No. 003-89, dated 20 July 1989,
of the NACUSIP-TUCP Lopez Sugar Central
Supervisory Chapter.5 LSC, on its part, submitted a
list of its employees above the rank-and-file status
preparatory to the inclusion/exclusion proceedings.6
On 13 September 1989, one Carlos S. Gevero,
asserting a right to represent the "supervisors of
LSC," filed a motion to dismiss the petition for lack
of interest on the part of the supervisory employees. 7
At the hearing of 20 September 1989, both
NACUSIP-TUCP and CAILO failed to appear.
Hearing was re-set for 29 September 19898 but,
again, neither NACUSIP-TUCP nor CAILO
appeared. On 16 October 1989, nonetheless, Med-
Arbiter Felizardo T. Serapio issued an
Order9 granting the petition. He ruled that under
Article 257 of the Labor Code, as amended, the Med-
Arbiter was left with no option but to order the
conduct of a certification election immediately upon
the filing of the petition, holding that the subsequent
disaffiliation or withdrawals of members did not
adversely affect the standing of the petition. The
dispositive portion of his Order read:
VIEWED IN THE LIGHT OF THE
FOREGOING, the petition for
certification election among the
supervisory employees of the
 Lopez Sugar Central, filed by the
NACUSIP-TUCP is, as it is hereby
GRANTED with the following
choices:
1) National Congress of Unions in
the Sugar Industry of the Phils.
(NACUSIP-TUCP);
2) Commercial and Agro-Industrial
Labor Organization (CAILO);
3) No Union.
The designated representation
officer is hereby directed to call the
parties to a pre-election conference
to thresh out the mechanics of the
certification election, including the
inclusion and exclusion of voters
and to conduct the election within
twenty (20) days from receipt by
the parties of this Order. The list
submitted by the Employer (LSC
Employees other than rank and file)
shall be used to determine the
eligible voters.
SO ORDERED. 10
LSC appealed to the DOLE and asseverated
that the order was a patent nullity and that
the Med-Arbiter acted with grave abuse of
discretion. 11
In denying the appeal, the Secretary of Labor, in his
Decision of 06 March 1990, has likewise ruled that
the holding by the Med-Arbiter of a certification
election is mandatory under Article 257 of the Labor
Code; that the subsequent withdrawals and
disauthorization/disaffiliation of some supervisory
personnel in the petition for certification election
could not bar its being granted; and that a
certification election is still the most appropriate
means to finally settle the issue of representation. 12
Hence, this petition for certiorari; it is argued that —
Public Respondent Honorable
Secretary of Labor and
Employment (has) committed grave
abuse of discretion amounting to
lack of jurisdiction when it refused
to dismiss a petition for
certification election despite clear
lack of legal and factual basis for
holding the same. 13
The Solicitor General agrees with public respondent
in arguing that the tenor of Article 257 (supra) of the
Labor Code is one of command. He cites paragraph
2, Section 6, Rule V, Book V, of the Implementing
Rules and Regulations of the Labor Code, to the
effect that once "a petition (is) filed by a legitimate
organization involving an unorganized establishment,
the Med-Arbiter shall immediately order the conduct
of a certification election," which is designed, he
continues, to give substance to the workers' right to
self- organization.14 Petitioner promptly retorts that it
has no quarrel with public respondent on the
objectives of the law but it points out that the
application of Article 257 clearly must first be
occasioned by a genuine petition from a legitimate
labor organization.
Not too long ago, the Court already had an
opportunity to pass upon this very issue
in Progressive Development Corporation
vs. Secretary, Department of Labor and
Employment, 15 where we said:
But while Article 257 cited by the
Solicitor General directs the
automatic conduct of a certification
election in an unorganized
establishment, it also requires that
the petition for certification
election must be filed by a
legitimate labor organization.
Article 242 enumerates the
exclusive rights of a legitimate
labor organization among which is
the right to be certified as the
exclusive representative of all the
employees in an appropriate
collective bargaining unit for
purposes of collective bargaining.
Meanwhile, Article 212(h) defines
a legitimate labor organization as
"any labor organization duly
registered with the DOLE
and includes any branch or local
thereof." (Emphasis supplied) Rule
I, Section 1(j), Book V of the
Implementing Rules likewise
defines a legitimate labor
organization as "any labor
organization duly registered with
 the DOLE and includes any
branch, local or affiliate thereof."
(Emphasis supplied)
Indeed, the law did not reduce the Med-Arbiter to an
automaton which can instantly be set to impulse by
the mere filing of a petition for certification election.
He is still tasked to satisfy himself that all the
conditions of the law are met, and among the legal
requirements is that the petitioning union must be a
legitimate labor organization in good standing.
The petition for certification election, in the case at
bench, was filed by the NACUSIP-TUCP, a national
labor organization duly registered with the DOLE
render Registration Certificate No. FED-402-6390-
IP. The legitimate status of NACUSIP-TUCP might
be conceded; being merely, however, an agent for the
local organization (the NACUSIP-TUCP Lopez
Sugar Central Supervisory Chapter), the
federation's bona fide status alone would not suffice.
The local chapter, as its principal, should also be a
legitimate labor organization in good standing.
Accordingly, in Progressive Development, we
elucidated:
In the case of union affiliation with
a federation, the documentary
requirements are found in Rule II,
Section 3(e), Book V of the
implementing Rules, which we
again quote as follows:
(c) The local or chapter of a labor
federation or national union shall
have and maintain a constitution
and by-laws, set of officers and
books of accounts. For reporting
purposes, the procedure governing
the reporting of independently
registered unions, federations or
national unions shall be observed.
(Emphasis supplied)
Since the "procedure governing the
reporting of independently
registered unions" refers to the
certification and attestation
requirements contained in Article
235, paragraph 2, it follows that the
constitution and by-laws, set of
officers and books of accounts
submitted by the local and chapter
must likewise comply with these
requirements. The same rationale
for requiring the submission of duly
subscribed documents upon union
registration exists in the case of
union affiliation. Moreover, there is
greater reason to exact compliance
with the certification and attestation
requirements because, as
previously mentioned, several
requirements applicable to
independent union registration are
no longer required in the case of the
formation of a local or chapter. The
policy of the law in conferring
greater bargaining power upon
labor unions must be balanced with
the policy of providing preventive
measures against the commission
of fraud.
A local or chapter therefore
becomes a legitimate labor
organization only upon submission
of the following to the BLR:
1) A charter certificate, within 30
days from its issuance by the labor
federation or national union, and
2) The constitution and by-laws, a
statement on the set of officers, and
the books of accounts all of which
are certified under oath by the
secretary or treasurer, as the case
may be, of such local or chapter,
and attested to by its president.
Absent compliance with these
mandatory requirements, the local
or chapter does not become a
legitimate labor organization. 16
The only document extant on record to establish the
legitimacy of the NACUSIP-TUCP Lopez Sugar
Central Supervisory Chapter is a charter certificate
and nothing else. The instant petition, at least for
now, must thus be GRANTED.
WHEREFORE, the assailed Decision of the
Secretary of Labor, dated 06 March 1990, affirming
that of the Med-Arbiter, is ANNULLED and SET
ASIDE. The petition for certification election is
dismissed. No costs.
SO ORDERED.
#81 Progressive Development Corporation vs Sec of
labor
G.R. No. 96425 February 4, 1992
PROGRESSIVE DEVELOPMENT
CORPORATION, petitioner,
vs.
THE HONORABLE SECRETARY,
DEPARTMENT OF LABOR AND
EMPLOYMENT, MED-ARBITER EDGARDO
DELA CRUZ and PAMBANSANG KILUSAN
NG PAGGAWA (KILUSAN)-TUCP, respondents.
Beltran, Bacungan & Candoy for petitioner.
Jimenez & Associates co-counsel for petitioner.
GUTIERREZ, JR., J.:
The controversy in this case centers on the
requirements before a local or chapter of a federation
may file a petition for certification election and be
certified as the sole and exclusive bargaining agent of
the petitioner's employees.
Petitioner Progressive Development Corporation
(PDC) filed this petition for certiorari to set aside the
following:
1) Resolution dated September 5, 1990, issued by
respondent Med-Arbiter Edgardo dela Cruz, directing
the holding of the certification election among the
regular rank-and-file employees of PDC:
2) Order dated October 12, 1990, issued by the
respondent Secretary of Labor and Employment,
denying PDC's appeal; and
3) Order dated November 12, 1990, also issued by
the respondent Secretary, denying the petitioner's
Motion for Reconsideration.
On June 19, 1990, respondent Pambansang Kilusan
ng Paggawa (KILUSAN) -TUCP (hereinafter
referred to as Kilusan) filed with the Department of
Labor and Employment (DOLE) a petition for
certification election among the rank-and-file
employees of the petitioner alleging that it is a
legitimate labor federation and its local chapter,
Progressive Development Employees Union, was
issued charter certificate No. 90-6-1-153. Kilusan
claimed that there was no existing collective
bargaining agreement and that no other legitimate
labor organization existed in the bargaining unit.
Petitioner PDC filed its motion to dismiss dated July
11, 1990 contending that the local union failed to
comply with Rule II Section 3, Book V of the Rules
Implementing the Labor Code, as amended, which
requires the submission of: (a) the constitution and
by-laws; (b) names, addresses and list of officers
and/or members; and (c) books of accounts.
On July 16 , 1990, respondent Kilusan submitted a
rejoinder to PDC's motion to dismiss claiming that it
had submitted the necessary documentary
requirements for registration, such as the constitution
and by-laws of the local union, and the list of
officers/members with their addresses. Kilusan
further averred that no books of accounts could be
submitted as the local union was only recently
organized.
In its "Supplemental Position Paper" dated September
3, 1990, the petitioner insisted that upon verification
with the Bureau of Labor Relations (BLR), it found
that the alleged minutes of the organizational meeting
was unauthenticated, the list of members did not bear
the corresponding signatures of the purported
members, and the constitution and by-laws did not
bear the signature of the members and was not duly
subscribed. It argued that the private respondent
therefore failed to substantially comply with the
registration requirements provided by the rules.
Additionally, it prayed that Med-Arbiter Edgardo
dela Cruz inhibit himself from handling the case for
the reason that he allegedly had prejudged the same.
In his September 5, 1990 resolution, Med Arbiter
dela Cruz held that there was substantial compliance
with the requirements for the formation of the
chapter. He further stated that mere issuance of the
charter certificate by the federation was sufficient
compliance with the rules. Considering that the
establishment was unorganized, he maintained that a
certification election should be conducted to resolve
the question of representation.
Treating the motion for reconsideration filed by the
PDC as an appeal to the Office of the Secretary,
Undersecretary Laguesma held that the same was
merely a "reiteration of the issues already ventilated
in the proceedings before the Med-Arbiter,
specifically, the matter involving the formal
organization of the chapter." (Rollo, p. 20) PDC's
motion for reconsideration from the aforementioned
ruling was likewise denied. Hence, this petition.
In an order dated February 25, 1991, the Court
resolved to issue a temporary restraining order
enjoining the public respondents from carrying out
the assailed resolution and orders or from proceeding
with the certification election. (Rollo, pp. 37-39)
It is the petitioner's contention that a labor
organization (such as the Kilusan) may not validly
invest the status of legitimacy upon a local or chapter
through the mere expedient of issuing a charter
certificate and submitting such certificate to the BLR
(Rollo, p. 85) Petitioner PDC posits that such local or
chapter must at the same time comply with the
requirement of submission of duly
subscribed constitution and by-laws, list of officers
and books of accounts. (Rollo, p. 35) PDC points out
that the constitution and by-laws and list of officers
submitted were not duly subscribed. Likewise, the
petitioner claims that the mere filing of the
aforementioned documents is insufficient; that there
must be due recognition or acknowledgment
accorded to the local or chapter by BLR through a
certificate of registration or any communication
emanating from it. (Rollo, p. 86)
The Solicitor General, in behalf of the public
respondent, avers that there was a substantial
compliance with the requirements for the formation
of a chapter. Moreover, he invokes Article 257 of the
Labor Code which mandates the automatic conduct
by the Med-Arbiter of a certification election in any
establishment where there is no certified bargaining
agreement.
The Court has repeatedly stressed that the holding of
a certification election is based on a statutory policy
that cannot be circumvented. (Airtime Specialists,
Inc. v. Ferrer-Calleja, 180 SCRA 749 [1989]; Belyca
Corporation v. Ferrer-Calleja, 168 SCRA 184 [1988];
George and Peter Lines, Inc. v. Associated Labor
Unions, 134 SCRA 82 [1986]). The workers must be
allowed to freely express their choice in a
determination where everything is open to their
sound judgment and the possibility of fraud and
misrepresentation is eliminated.
But while Article 257 cited by the Solicitor General
directs the automatic conduct of a certification
election in an unorganized establishment, it also
requires that the petition for certification election
must be filed by a legitimate labor organization.
Article 242 enumerates the exclusive rights of a
legitimate labor organization among which is the
right to be certified as the exclusive representative of
all the employees in an appropriate collective
bargaining unit for purposes of collective bargaining.
Meanwhile, Article 212(h) defines a legitimate labor
organization as "any labor organization duly
registered with the DOLE and includes any branch or
local thereof." (Emphasis supplied) Rule I, Section 1
(j), Book V of the Implementing Rules likewise
defines a legitimate labor organization as "any labor
organization duly registered with the DOLE
and includes any branch, local or affiliate thereof.
(Emphasis supplied)
The question that now arises is: when does a branch,
local or affiliate of a federation become a legitimate
labor organization?
Ordinarily, a labor organization acquires legitimacy
only upon registration with the BLR. Under Article
234 (Requirements of Registration):
Any applicant labor organization,
association or group of unions or workers
shall acquire legal personality and shall be
entitled to the rights and privileges granted
by law to legitimate labor organizations
upon issuance of the certificate of
registration based on the following
requirements:
(a) Fifty-pesos (P50.00) registration fee;
(b) The names of its officers, their
addresses, the principal address of the
labor organization, the minutes of the
organizational meeting and the list of the
workers who participated in such
meetings;
(c) The names of all its members
comprising at least twenty 20% percent of
all the employees in the bargaining unit
where it seek to operate;
(d) If the applicant has been in existence
for one or more years, copies , of its annual
financial reports; and
(e) Four copies of the constitution and by-
laws of the applicant union, the minutes of
 its adoption or ratification and the list of
the members who participated in it.
And under Article 235 (Action on Application)
The Bureau shall act on all
applications for registration within
thirty (30) days from filing.
All requisite documents and papers
shall be certified under oath by the
secretary or the treasurer of the
organization, as the case may be,
and attested to by its president.
Moreover, section 4 of Rule II, Book V of the
Implementing Rules requires that the application
should be signed by at least twenty percent (20%) of
the employees in the appropriate bargaining unit and
be accompanied by a sworn statement of the
applicant union that there is no certified bargaining
agent or, where there is an existing collective
bargaining agreement duly submitted to the DOLE,
that the application is filed during the last sixty (60)
days of the agreement.
The respondent Kilusan questions the requirements as
too stringent in their application but the purpose of
the law in prescribing these requisites must be
underscored. Thus, in Philippine Association of Free
Labor Unions v. Secretary of Labor, 27 SCRA 40
(1969), the Court declared:
The theory to the effect that Section 23 of
Republic Act No. 875 unduly curtails the
freedom of assembly and association guaranteed
in the Bill of Rights is devoid of factual basis.
The registration prescribed in Paragraph (b) of
said section is not a limitation to the right of
assembly or association, which may be
exercised with or without said registration. The
latter is merely a condition sine qua nonfor the
acquisition of legal personality by the labor
organizations, associations or unions and the
possession of the "rights and privileges granted
by law to legitimate labor organizations." The
Constitution does not guarantee these rights and
the privileges, much less said personality, which
are mere statutory creations, for the possession
and exercise of which registration is required to
protect both labor and the public against
abuses, fraud or impostors who pose as
organizers, although not truly accredited agents
of the union they purport to represent. Such
requirement is a valid exercise of the police
power, because the activities in which labor
organizations, associations and unions of
workers are engaged affect public interest,
which should be protected. Furthermore, the
obligation to submit financial statements, as a
condition for the non-cancellation of a
certificate of registration, is a reasonable
regulation for the benefit of the members of the
organization, considering that the same
generally solicits funds or membership, as well
as oftentimes collects, on behalf of its members,
huge amounts of money due to them or to the
organization. (Emphasis supplied)
But when an unregistered union becomes a branch,
local or chapter of a federation, some of the
aforementioned requirements for registration are no
longer required. The provisions governing union
affiliation are found in Rule II, Section 3, Book V of
the Implementing Rules, the relevant portions of
which are cited below:
Sec. 3. Union affiliation; direct membership
with national union. — An affiliate of a
labor federation or national union may be a
local or chapter thereof or an independently
registered union.
a) The labor federation or national union
concerned shall issue a charter certificate
indicating the creation or establishment of a
local or chapter, copy of which shall be
submitted to the Bureau of Labor Relations
within thirty (30) days from issuance of such
charter certificate.
b) An independently registered union shall
be considered an affiliate of a labor
federation or national union after submission
to the Bureau of the contract or agreement of
affiliation within thirty (30) days after its
execution.
xxx xxx xxx
e) The local or chapter of a labor federation
or national union shall have and maintain a
constitution and by laws, set of officers and
books and accounts. For reporting purposes,
the procedure governing the reporting of
independently registered unions, federations
or national unions shall be observed.
Paragraph (a) refers to the local or chapter of a
federation which did not undergo the rudiments of
registration while paragraph (b) refers to an
independently registered union which affiliated with
a federation. Implicit in the foregoing differentiation
is the fact that a local or chapter need not be
independently registered. By force of law (in this
case, Article 212[h]); such local or chapter becomes a
legitimate labor organization upon compliance with
the aforementioned provisions of Section 3.
Thus, several requirements that are otherwise
required for union registration are omitted, to wit:
(1) The requirement that the application for
registration must be signed by at least 20% of the
employees in the appropriate bargaining unit;
2) The submission of officers' addresses, principal
address of the labor organization, the minutes of
organizational meetings and the list of the workers
who participated in such meetings;
3) The submission of the minutes of the adoption or
ratification of the constitution and by the laws and the
list of the members who participated in it.
Undoubtedly, the intent of the law in imposing lesser
requirements in the case of the branch or local of a
registered federation or national union is to
encourage the affiliation of a local union with the
federation or national union in order to increase the
local union's bargaining powers respecting terms and
conditions of labor.
The petitioner maintains that the documentary
requirements prescribed in Section 3(c), namely: the
constitution and by-laws, set of officers and books of
accounts, must follow the requirements of law.
Petitioner PDC calls for the similar application of the
requirement for registration in Article 235 that all
requisite documents and papers be certified under
oath by the secretary or the treasurer of the
organization and attested to by the president.
In the case at bar, the constitution and by-laws and
list of officers submitted in the BLR, while attested to
by the chapter's president, were not certified under
oath by the secretary. Does such defect warrant the
withholding of the status of legitimacy to the local or
chapter?
In the case of union registration, the rationale for
requiring that the submitted documents and papers be
certified under oath by the secretary or treasurer, as
the case may be, and attested to by president is
apparent. The submission of the required documents
(and payment of P50.00 registration fee) becomes the
Bureau's basis for approval of the application for
registration. Upon approval, the labor union acquires
legal personality and is entitled to all the rights and
privileges granted by law to a legitimate labor
organization. The employer naturally needs assurance
that the union it is dealing with is a bona
fide organization, one which has not submitted false
statements or misrepresentations to the Bureau. The
inclusion of the certification and attestation
requirements will in a marked degree allay these
apprehensions of management. Not only is the
issuance of any false statement and misrepresentation
a ground for cancellation of registration (see Article
239 (a), (c) and (d)); it is also a ground for a criminal
charge of perjury.
The certification and attestation requirements are
preventive measures against the commission of fraud.
They likewise afford a measure of protection to
unsuspecting employees who may be lured into
joining unscrupulous or fly-by-night unions whose
sole purpose is to control union funds or to use the
union for dubious ends.
In the case of the union affiliation with a federation,
the documentary requirements are found in Rule II,
Section 3(e), Book V of the Implementing Rules,
which we again quote as follows:
(c) The local chapter of a labor
federation or national union shall
have and maintain a constitution
and by-laws, set of officers and
books of accounts. For reporting
purposes, the procedure governing
the reporting of independently
registered unions, federations or
national unions shall be
observed.(Emphasis supplied)
Since the "procedure governing the reporting of
independently registered unions" refers to the
certification and attestation requirements contained in
Article 235, paragraph 2, it follows that the
constitution and by-laws, set of officers and books of
accounts submitted by the local and chapter must
likewise comply with these requirements. The same
rationale for requiring the submission of duly
subscribed documents upon union registration exists
in the case of union affiliation. Moreover, there is
greater reason to exact compliance with the
certification and attestation requirements because, as
previously mentioned, several requirements
applicable to independent union registration are no
longer required in the case of formation of a local or
chapter. The policy of the law in conferring greater
bargaining power upon labor unions must be
balanced with the policy of providing preventive
measures against the commission of fraud.
A local or chapter therefore becomes a legitimate
labor organization only upon submission of the
following to the BLR:
1) A charter certificate, within 30 days from its
issuance by the labor federation or national union,
and
2) The constitution and by-laws, a statement on the
set of officers, and the books of accounts all of which
are certified under oath by the secretary or treasurer,
as the case may be, of such local or chapter, and
attested to by its president.
Absent compliance with these mandatory
requirements, the local or chapter does not become a
legitimate labor organization.
In the case at bar, the failure of the secretary of
PDEU-Kilusan to certify the required
documents under oath is fatal to its acquisition of a
legitimate status.
We observe that, as borne out by the facts in this
case, the formation of a local or chapter becomes a
handy tool for the circumvention of union registration
requirements. Absent the institution of safeguards, it
becomes a convenient device for a small group of
employees to foist a not-so-desirable federation or
union on unsuspecting co-workers and pare the need
for wholehearted voluntariness which is basic to free
unionism. The records show that on June 16, 1990,
Kilusan met with several employees of the petitioner.
Excerpts of the "Minutes of the
Organizational/General Membership Meeting of
Progressive Development Employees Union (PDEU)
— Kilusan," are quoted below:
The meeting was formally called to
order by Bro. Jose V. Parungao,
KILUSAN secretary for
organization by explaining to the
general membership the importance
of joining the union. He explained
to the membership why they should
join a union, and briefly explained
the ideology of the Pambansang
Kilusan ng Paggawa-TUCP as a
democratically based organization
and then read the proposed
Constitution and By-Laws, after
which said Constitution and By-
Laws was duly and unanimously
ratified after some clarification.
Bro. Jose Parungao was also
unanimously voted by the group to
act as the chairman of the
COMELEC in holding the
organizational election of officers
of the union.
Bro. Jose Parungao, officially
opened the table for nomination of
candidates after which the election
of officers followed by secret
balloting and the following were
the duly elected officers. (Original
Record, p. 25)
The foregoing shows that Kilusan took the initiative
and encouraged the formation of a union which
automatically became its chapter. On June 18, 1990,
Kilusan issued a charter certificate in favor of PDEU-
KILUSAN (Records, page 1). It can be seen that
Kilusan was moving very fast.
On June 19, 1990, or just three days after the
organizational meeting, Kilusan filed a petition for
certification election (Records, pages 2 and 3)
accompanied by a copy each of the charter certificate,
constitution and by-laws and minutes of the
organizational meeting. Had the local union filed an
application for registration, the petition for
certification election could not have been
immediately filed. The applicant union must firstly
comply with the "20% signature" requirement and all
the other requisites enumerated in Article 234.
Moreover, since under Article 235 the BLR shall act
on any application for registration within thirty (30)
days from its filing, the likelihood is remote that,
assuming the union complied with all the
requirements, the application would be approved on
the same day it was filed.
We are not saying that the scheme used by the
respondents is per se illegal for precisely, the law
allows such strategy. It is not this Court's function to
augment the requirements prescribed by law in order
to make them wiser or to allow greater protection to
the workers and even their employer. Our only
recourse is, as earlier discussed, to exact strict
compliance with what the law provides as requisites
for local or chapter formation.

It may likewise be argued that it was Kilusan (the

mother union) and not the local union which filed the
petition for certification election and, being a
legitimate labor organization, Kilusan has the
personality to file such petition.

At this juncture, it is important to clarify the

relationship between the mother union and the local
union. In the case of Liberty Cotton Mills Workers
Union v. Liberty Cotton Mills, Inc., 66 SCRA 512
[1975]), the Court held that the mother union, acting
for and in behalf of its affiliate, had the status of
an agent while the local union remained the basic
unit of the association, free to serve the common
interest of all its members subject only to the
restraints imposed by the constitution and by-laws of
the association. Thus, where as in this case the
petition for certification election was filed by the
federation which is merely an agent, the petition is
deemed to be filed by the chapter, the principal,
which must be a legitimate labor organization. The
chapter cannot merely rely on the legitimate status of
the mother union.

The Court's conclusion should not be misconstrued as

impairing the local union's right to be certified as the
employees' bargaining agent in the petitioner's
establishment. We are merely saying that the local
union must first comply with the statutory
requirements in order to exercise this right. Big
federations and national unions of workers should
take the lead in requiring their locals and chapters to
faithfully comply with the law and the rules instead
of merely snapping union after union into their folds
in a furious bid with rival federations to get the most
number of members.

WHEREFORE, the petition is GRANTED. The

assailed resolution and orders of respondent Med-
Arbiter and Secretary of Labor and Employment,
respectively, are hereby SET ASIDE. The temporary
restraining order dated February 25, 1991 is made
permanent.

SO ORDERED.
#82 Villar vs Inciong
G.R. No. L-50283-84 April 20, 1983
DOLORES VILLAR, ROMEO PEQUITO,
DIONISIO RAMOS, BENIGNO MAMARALDO,
ORLANDO ACOSTA, RECITACION BERNUS,
ANSELMA ANDAN, ROLANDO DE GUZMAN
and RITA LLAGAS, petitioners,
vs.
THE HON. AMADO G. INCIONG, as Deputy
Minister of the Ministry of Labor, AMIGO
MANUFACTURING INCORPORATED and
PHILIPPINE ASSOCIATION OF FREE LABOR
UNIONS (PAFLU), respondents.
Aniceto Haber for petitioners.
Roberto T. Neri for respondents.
GUERRERO, J.:
Petition for review by certiorari to set aside the Order
dated February 15, 1979 of respondent Deputy
Minister Amado G. Inciong affirming the Decision of
the OIC of Regional Office No. 4 dated October 14,
1978 which jointly resolved RO4-Case No. T-IV-
3549-T and RO4-Case No. RD 4-4088-77-T.
The facts are as follows:
Petitioners were members of the Amigo Employees
Union-PAFLU, a duly registered labor organization
which, at the time of the present dispute, was the
existing bargaining agent of the employees in private
respondent Amigo Manufacturing, Inc. (hereinafter
referred to as Company). The Company and the
Amigo Employees Union-PAFLU had a collective
bargaining agreement governing their labor relations,
which agreement was then about to expire on
February 28, 1977. Within the last sixty (60) days of
the CBA, events transpired giving rise to the present
dispute.
On January 5, 1977, upon written authority of at least
30% of the employees in the company, including the
petitioners, the Federation of Unions of Rizal
(hereinafter referred to as FUR) filed a petition for
certification election with the Med-Arbiter's Office,
Regional Office No. 4 of the Ministry of Labor and
Employment. The petition was, however, opposed by
the Philippine Association of Free Labor Unions
(hereinafter referred to as PAFLU) with whom, as
stated earlier, the Amigo Employees Union was at
that time affiliated. PAFLU's opposition cited the
"Code of Ethics" governing inter-federation disputes
among and between members of the Trade Unions
Congress of the Philippines (hereinafter referred to as
TUCP). Consequently, the Med-Arbiter indorsed the
case to TUCP for appropriate action but before any
such action could be taken thereon, the petitioners
disauthorized FUR from continuing the petition for
certification election for which reason FUR withdrew
the petition.
On February 7, 1977, the same employees who had
signed the petition filed by FUR signed a joint
resolution reading in toto as follows:
Sama-Samang Kapasiyahan
1. TUMIWALAG bilang kasaping
Unyon ng Philippine Association of
Free Labor Unions (PAFLU) at
kaalinsabay nito, inaalisan namin
ang PAFLU ng kapangyarihan na
katawanin kami sa anumang
pakikipagkasundo (CBA) sa
Pangasiwaan ng aming
pinapasukan at kung sila man ay
nagkasundo o magkakasundo sa
kabila ng pagtitiwalag na ito, ang
nasabing kasunduan ay hindi namin
pinagtitibay at tahasang aming
itinatakwil/tinatanggihan;
2. BINABAWI namin ang aming
pahintulot sa Federation of Unions
of Rizal (FUR) na katawanin kami
sa Petition for Certification
Election (RO4-MED Case No. 743-
77) at/o sa sama-samang
pakikipagkasundo sa aming
patrons;
3. PANATILIHIN na nagsasarili
(independent) ang aming samahan,
AMIGO EMPLOYEES' UNION,
alinsunod sa Artikulo 240 ng Labor
Code;
4. MAGHAIN KAAGAD ang
aming Unyong nagsasarili, sa
pamumuno ng aming
pangsamantalang Opisyal na
kinatawan, si Ginang DOLORES
 VILLAR, ng Petition for
Certification Election sa
Department of Labor, para kilalanin
ang aming Unyong nagsasarili
bilang Tanging kinatawan ng mga
manggagawa sa sama-samang
pakikipagkasundo (CBA);
5. BIGYAN ng kopya nito ang
bawa't kinauukulan at ang mga
kapasiyahang ito ay magkakabisa
sa oras na matanggap ng mga
kinauukulan ang kani-kanilang sipi
nito.1
Immediately thereafter or on February 9, 1977,
petitioner Dolores Villar, representing herself to be
the authorized representative of the Amigo
Employees Union, filed a petition for certification
election in the Company before Regional Office No.
4, with the Amigo Employees Union as the petitioner.
The Amigo Employees Union-PAFLU intervened
and moved for the dismissal of the petition for
certification election filed by Dolores Villar, citing as
grounds therefor, viz: (a) the petition lacked the
mandatory requisite of at least 30% of the employees
in the bargaining unit; (2) Dolores Villar had no legal
personality to sign the petition since she was not an
officer of the union nor is there factual or legal basis
for her claim that she was the authorized
representative of the local union; (3) there was a
pending case for the same subject matter filed by the
same individuals; (4) the petition was barred by the
new CBA concluded on February 15, 1977; (5) there
was no valid disaffiliation from PAFLU; and (6) the
supporting signatures were procured through false
pretenses.
Finding that the petition involved the same parties
and causes of action as the case previously indorsed
to the TUCP, the Med-Arbiter dismiss the petition
filed by herein petitioner Villar, which dismissal is
still pending appeal before the Bureau of Labor
Relations.
In the meantime, on February 14, 1977, the Amigo
Employees Union- PAFLU called a special meeting
of its general membership. A Resolution was thereby
unanimously approved which called for the
investigation by the PAFLU national president,
pursuant to the constitution and by-laws of the
Federation, of all of the petitioners and one Felipe
Manlapao, for "continuously maligning, libelling and
slandering not only the incumbent officers but even
the union itself and the federation;" spreading 'false
propaganda' that the union officers were 'merely
appointees of the management', and for causing
divisiveness in the union.
Pursuant to the Resolution approved by the Amigo
Employees Union- PAFLU, the PAFLU, through its
national President, formed a Trial Committee to
investigate the local union's charges against the
petitioners for acts of disloyalty inimical to the
interest of the local union, as well as directing the
Trial Committee to subpoena the complainants
(Amigo Employees Union-PAFLU) and the
respondents (herein petitioners) for investigation, to
conduct the said investigation and to submit its
findings and recommendations for appropriate action.
And on the same date of February 15, 1977, the
Amigo Employees Union- PAFLU and the Company
concluded a new CBA which, besides granting
additional benefits to the workers, also reincorporated
the same provisions of the existing CBA, including
the union security clause reading, to wit:
ARTICLE III
UNION SECURITY WITH
RESPECT TO PRESENT
MEMBERS
All members of the UNION as of
the signing of this Agreement shall
remain members thereof in good
standing. Therefore, any members
who shall resign, be expelled, or
shall in any manner cease to be a
member of the UNION, shall be
dismissed from his employment
upon written request of the UNION
to the Company. 2
Subsequently, petitioners were
summoned to appear before the
PAFLU Trial Committee for the
aforestated investigation of the
charges filed against them by the
Amigo Employees Union-PAFLU.
Petitioners, however, did not attend
but requested for a "Bill of
Particulars" of the charges, which
charges were stated by the
Chairman of the committee as
follows:
1. Disaffiliating from PAFLU and affiliating
with the Federation of Unions of Rizal (FUR).
 2. Filling petition for certification election
with the Bureau of Labor Relations and
docketed as Case No. R04-MED-830-77 and
authorizing a certain Dolores Villar as your
authorized representative without the official
sanction of the mother Federation- PAFLU.
3. Maligning, libelling and slandering the
incumbent officers of the union as well as of
the PAFLU Federation.
4. By spreading false propaganda among
members of the Amigo Employees Union-
PAFLU that the incumbent union officers are
'merely appointees' of the management.
5. By sowing divisiveness instead of
togetherness among members of the Amigo
Employees Union-PAFLU.
6. By conduct unbecoming as members of the
Amigo Employees Union- PAFLU which is
highly prejudicial to the union as well as to the
PAFLU Federation.
All these charges were formalized in a
resolution of the incumbent officers of the
Amigo Employees Union-PAFLU dated
February 14, 1977. 3
Not recognizing PAFLU's jurisdiction over their case,
petitioners again refused to participate in the
investigation rescheduled and conducted on March 9,
1979. Instead, petitioners merely appeared to file
their Answer to the charges and moved for a
dismissal.
Petitioners contend in their Answer that neither the
disaffiliation of the Amigo Employees Union from
PAFLU nor the act of filing the petition for
certification election constitute disloyalty as these are
in the exercise of their constitutional right to self-
organization. They further contended that PAFLU
was without jurisdiction to investigate their case
since the charges, being intra-union problems within
the Amigo Employees Union-PAFLU, should be
conducted pursuant to the provisions of Article XI,
Sections 2, 3, 4 and 5 of the local union's constitution
and by-laws.
The complainants, all of whom were the then
incumbent officers of the Amigo Employees Union-
PAFLU, however, appeared and adduced their
evidence supporting the charges against herein
petitioners.
Based on the findings and recommendations of the
PAFLU trial committee, the PAFLU President, on
March 15, 1977, rendered a decision finding the
petitioners guilty of the charges and disposing in the
last paragraph thereof, to wit,
Excepting Felipe Manlapao, the
expulsion from the AMIGO
EMPLOYEES UNION of all the
other nine (9) respondents, Dionisio
Ramos, Recitation Bernus, Dolores
Villar, Romeo Dequito, Rolando de
Guzman, Anselma Andan, Rita
Llagas, Benigno Mamaradlo and
Orlando Acosta is hereby ordered,
and as a consequence the
Management of the employer,
AMIGO MANUFACTURING,
INC. is hereby requested to
terminate them from their
employment in conformity with the
security clause in the collective
bargaining agreement. Further, the
Trial Committee is directed to
investigate Felipe Manlapao when
he shall have reported back for
duty. 4
Petitioners appealed the Decision to the PAFLU,
citing the same grounds as before, and in addition
thereto, argued that the PAFLU decision cannot
legally invoke a CBA which was unratified, not
certified, and entered into without authority from the
union general membership, in asking the Company to
terminate them from their employment. The appeal
was, likewise, denied by PAFLU in a Resolution
dated March 28, 1977.
After denying petitioner's appeal, PAFLU on March
28, 1977 sent a letter to the Company stating, to wit,
We are furnishing you a copy of
our Resolution on the Appeal of the
respondent in Administrative Case
No. 2, Series of 1977, Amigo
Employees Union-PAFLU vs.
Dionisio Ramos, et al.
In view of the denial of their appeal
and the Decision of March 15, 1977
having become final and executory
we would appreciate full
 cooperation on your part by
implementing the provision of our
CBA on security clause by
terminating the respondents
concerned from their employment.5
This was followed by another letter from PAFLU to
the Company dated April 25, 1977, reiterating the
demand to terminate the employment of the
petitioners pursuant to the security clause of the
CBA, with a statement absolving the Company from
any liability or damage that may arise from
petitioner's termination.
Acting on PAFLU's demand, the Company informed
PAFLU that it will first secure the necessary
clearances to terminate petitioners. By letter dated
April 28, 1977, PAFLU requested the Company to
put petitioners under preventive suspension pending
the application for said clearances to terminate the
petitioners, upon a declaration that petitioners'
continued stay within the work premises will "result
in the threat to the life and limb of the other
employees of the company."6
Hence, on April 29, 1977, the Company filed the
request for clearance to terminate the petitioners
before the Department of Labor, Regional Office No.
4. The application, docketed as RO4-Case No. 7-IV-
3549-T, stated as cause therefor, "Demand by the
Union Pursuant to the Union Security Clause," and
further, as effectivity date, "Termination-upon
issuance of clearance; Suspension-upon receipt of
notice of workers concerned." 7 Petitioners were then
informed by memorandum dated April 29, 1977 that
the Company has applied for clearance to terminate
them upon demand of PAFLU, and that each of them
were placed under preventive suspension pending the
resolution of the said applications. The security guard
was, likewise, notified to refuse petitioners entry into
the work premises. 8
In an earlier development, on April 25, 1977, or five
days before petitioners were placed under preventive
suspension, they filed a complaint with application
for preliminary injunction before the same Regional
Office No. 4, docketed as RO4-Case No. RD-4-4088-
77-T, praying that after due notice and hearing, "(1)
A preliminary injunction be issued forthwith to
restrain the respondents from doing the act herein
complained of, namely: the dismissal of the
individual complainants from their employment; (2)
After due hearing on the merits of the case, an Order
be entered denying and/or setting aside the Decision
dated March 15, 1977 and the Resolution dated
March 28, 1977, issued by respondent Onofre P.
Guevara, National President of respondent PAFLU;
(3) The Appeal of the individual complainants to the
General Membership of the complainant AMIGO
EMPLOYEES UNION, dated March 22, 1977,
pursuant to Sections 2, 3, 4 & 5, Article XI in relation
of Section 1, Article XII of the Union Constitution
and By-Laws, be given due course; and (4)
Thereafter, the said preliminary injunction be made
permanent, with costs, and with such further
orders/reliefs that are just and equitable in the
premises."9
In these two cases filed before the Regional Office
No. 4, the parties adopted their previous positions
when they were still arguing before the PAFLU trial
committee.
On October 14, 1977, Vicente Leogardo, Jr., Officer-
in-Charge of Regional Office No. 4, rendered a
decision jointly resolving said two cases, the
dispositive portion of which states, to wit,
IN VIEW OF THE FOREGOING,
judgment is hereby rendered granting the
application of the Amigo Manufacturing,
Inc., for clearance to terminate the
employment of Dolores D. Villar, Dionisio
Ramos, Benigno Mamaraldo, Orlando
Acosta, Recitacion Bernus, Anselma
Andan, Rolando de Guzman, and Rita
Llagas. The application of oppositors,
under RO4-Case No. RD-4-4088-77, for a
preliminary injunction to restrain the
Amigo Manufacturing, Inc. from
terminating their employment and from
placing them under preventive suspension,
is hereby DISMISSED. 10
Not satisfied with the decision, petitioners appealed
to the Office of the Secretary of Labor. By Order
dated February 15, 1979, the respondent Amado G.
Inciong, Deputy Minister of Labor, dismissed their
appeal for lack of merit. 11
Hence, the instant petition for review, raising the
following issues:
A. Is it not error in both constitutional and
statutory law by the respondent Minister
when he affirmed the decision of the RO4-
Officer-in-Charge allowing the preventive
suspension and subsequent dismissal of
petitioners by reason of the exercise of their
right to freedom of association?
 B. Is it not error in law by the respondent
Minister when he upheld the decision of the
RO4 OIC which sustained the availment of
the respondent PAFLU's constitution over
that of the local union constitution in the
settlement of intra-union dispute?
C. Is it not error in law amounting to grave
abuse of discretion by the Minister in
affirming the conclusion made by the RO4
OIC, upholding the legal applicability of the
security clause of a CBA over alleged
offenses committed earlier than its
conclusion, and within the 60-day freedom
period of an old CBA? 12
The main thrust of the petition is the alleged illegality
of the dismiss of the petitioners by private respondent
Company upon demand of PAFLU which invoked
the security clause of the collective bargaining
agreement between the Company and the local union,
Amigo Employees Union-PAFLU. Petitioners
contend that the respondent Deputy Minister acted in
grave abuse of discretion when he affirmed the
decision granting the clearance to terminate the
petitioners and dismissed petitioners' complaint, and
in support thereof, allege that their constitutional
right to self-organization had been impaired.
Petitioner's contention lacks merit.
It is true that disaffiliation from a labor union is not
open to legal objection. It is implicit in the freedom
of association ordained by the Constitution. 13 But
this Court has laid down the ruling that a closed shop
is a valid form of union security, and such provision
in a collective bargaining agreement is not a
restriction of the right of freedom of association
guaranteed by the Constitution. 14
In the case at bar, it appears as an undisputed fact that
on February 15, 1977, the Company and the Amigo
Employees Union-PAFLU entered into a Collective
Bargaining Agreement with a union security clause
provided for in Article XII thereof which is a
reiteration of the same clause in the old CBA. The
quoted stipulation for closed-shop is clear and
unequivocal and it leaves no room for doubt that the
employer is bound, under the collective bargaining
agreement, to dismiss the employees, herein
petitioners, for non- union membership. Petitioners
became non-union members upon their expulsion
from the general membership of the Amigo
Employees Union-PAFLU on March 15, 1977
pursuant to the Decision of the PAFLU national
president.
We reject petitioners' theory that their expulsion was
not valid upon the grounds adverted to earlier in this
Decision. That PAFLU had the authority to
investigate petitioners on the charges filed by their
co-employees in the local union and after finding
them guilty as charged, to expel them from the roll of
membership of the Amigo Employees Union-PAFLU
is clear under the constitution of the PAFLU to which
the local union was affiliated. And pursuant to the
security clause of the new CBA, reiterating the same
clause in the old CBA, PAFLU was justified in
applying said security clause. We find no abuse of
discretion on the part of the OIC of Regional Office
No. 4 in upholding the validity of the expulsion and
on the part of the respondent Deputy Minister of
Labor in sustaining the same. We agree with the
OIC's decision, pertinent portion of which reads:
Stripped of non-essentials, the basic and
fundamental issue in this case tapers down to
the determination of WHETHER OR NOT
PAFLU HAD THE AUTHORITY TO
INVESTIGATE OPPOSITORS AND,
THEREAFTER, EXPEL THEM FROM THE
ROLL OF MEMBERSHIP OF THE AMIGO
EMPLOYEES UNION-PAFLU.
Recognized and salutary is the principle that
when a labor union affiliates with a mother
union, it becomes bound by the laws and
regulations of the parent organization. Thus,
the Honorable Secretary of Labor, in the case
of Amador Bolivar, et al. vs. PAFLU, et al.,
NLRC Case No. LR-133 & MC-476,
promulgated on December 3, 1973, declared-
When a labor union affiliates with a parent
organization or mother union, or accepts a
charter from a superior body, it becomes
subject to the laws of the superior body under
whose authority the local union functions. The
constitution, by-laws and rules of the parent
body, together with the charter it issues
pursuant thereto to the subordinate union,
constitute an enforceable contract between the
parent body and the subordinate union, and
between the members of the subordinate
union inter se. (Citing Labor Unions, Dangel
and Shriber, pp. 279-280).
It is undisputable that oppositors were
members of the Amigo Employees Union at
the time that said union affiliated with
PAFLU; hence, under the afore-quoted
principle, oppositors are bound by the laws
and regulations of PAFLU.
Likewise, it is undeniable that in the
investigation of the charges against them,
oppositors were accorded 'due process',
because in this jurisdiction, the doctrine is
deeply entrenched that the term 'due process'
simply means that the parties were given the
opportunity to be heard. In the instant case,
ample and unmistakable evidence exists to
show that the oppositors were afforded the
opportunity to present their evidence, but they
themselves disdained or spurned the said
opportunity given to them.
PAFLU, therefore, correctly and legally acted
when, pursuant to its Constitution and By-
Laws, it conducted and proceeded with the
investigation of the charges against the
oppositors and found them guilty of acts
prejudicial and inimical to the interests of the
Amigo Employees Union- PAFLU, to wit:
that of falsely and maliciously slandering the
officers of the union; spreading false
propaganda among the members of the Amigo
Employees Union-PAFLU; calling the
incumbent officers as mere appointees and
robots of management; calling the union
company-dominated or assisted union;
committing acts unbecoming of the members
of the union and destructive of the union and
its members.
Inherent in every labor union, or any
organization for that matter, is the right of
self-preservation. When members of a labor
union, therefore, sow the seeds of dissension
and strife within the union; when they seek the
disintegration and destruction of the very
union to which they belong, they thereby
forfeit their rights to remain as members of the
union which they seek to destroy. Prudence
and equity, as well as the dictates of law and
justice, therefore, compelling mandate the
adoption by the labor union of such corrective
and remedial measures in keeping with its
laws and regulations, for its preservation and
continued existence; lest by its folly and
inaction, the labor union crumble and fall.
Correctly and legally, therefore, the PAFLU
acted when, after proper investigation and
finding of guilt, it decided to remove the
oppositors from the list of members of the
Amigo Employees Union-PAFLU, and
thereafter, recommended to the Amigo
Manufacturing, Inc.; the termination of the
employment of the oppositors. 15
We see no reason to disturb the same.
The contention of petitioners that the charges against
them being intra-union problems, should have been
investigated in accordance with the constitution and
by-laws of the Amigo Employees Union-PAFLU and
not of the PAFLU, is not impressed with merit. It is
true that under the Implementing Rules and
Regulations of the Labor Code, in case of intra-union
disputes, redress must first be sought within the
organization itself in accordance with its constitution
and by-laws. However, it has been held that this
requirement is not absolute but yields to exception
under varying circumstances. Thus, in Kapisanan ng
mga Manggagawa sa MRR vs. Hernandez, 20 SCRA
109, We held:
In the case at bar, noteworthy is the
fact that the complaint was filed
against the union and its incumbent
officers, some of whom were
members of the board of directors.
The constitution and by-laws of the
union provide that charges for any
violations thereof shall be filed
before the said board. But as
explained by the lower court, if the
complainants had done so the board
of directors would in effect be
acting as respondent investigator
and judge at the same time. To
follow the procedure indicated
would be a farce under the
circumstances, where exhaustion of
remedies within the union itself
would practically amount to a
denial of justice or would be
illusory or vain, it will not be
insisted upon, particularly where
property rights of the members are
involved, as a condition to the right
to invoke the aid of a court.
The facts of the instant petition stand on all fours
with the aforecited case that the principle therein
enunciated applies here as well. In the case at bar, the
petitioners were charged by the officers of the Amigo
Employees Union- PAFLU themselves who were
also members of the Board of Directors of the Amigo
Employees Union-PAFLU. Thus, were the petitioners
to be charged and investigated according to the local
union's constitution, they would have been tried by a
trial committee of three (3) elected from among the
members of the Board who are themselves the
accusers. (Section 2, Article 11, Constitution of the
Local Union). Petitioners would be in a far worse
position had this procedure been followed.
Nonetheless, petitioners admit in their petition that
two (2) of the six (6) charges, i.e. disaffiliation and
filing a petition for certification election, are not
intra-union matters and, therefore, are cognizable by
PAFLU.
Petitioners insist that their disaffiliation from PAFLU
and filing a petition for certification election are not
acts of disloyalty but an exercise of their right to self-
organization. They contend that these acts were done
within the 60-day freedom period when questions of
representation may freely be raised. Under the
peculiar facts of the case, We find petitioners'
insistence untenable.
In the first place, had petitioners merely disaffiliated
from the. Amigo Employees Union-PAFLU, there
could be no legal objections thereto for it was their
right to do so. But what petitioners did by the very
clear terms of their "Sama-Samang Kapasiyahan"
was to disaffiliate the Amigo Employees Union-
PAFLU from PAFLU, an act which they could not
have done with any effective consequence because
they constituted the minority in the Amigo
Employees Union-PAFLU.
Extant from the records is the fact that petitioners
numbering ten (10), were among the ninety-six (96)
who signed the "Sama-Samang Kapasiyahan"
whereas there are two hundred thirty four (234) union
members in the Amigo Employees Union-PAFLU.
Hence, petitioners constituted a small minority for
which reason they could not have successfully
disaffiliated the local union from PAFLU. Since only
96 wanted disaffiliation, it can be inferred that the
majority wanted the union to remain an affiliate of
PAFLU and this is not denied or disputed by
petitioners. The action of the majority must,
therefore, prevail over that of the minority
members. 16
Neither is there merit to petitioners' contention that
they had the right to present representation issues
within the 60-day freedom period. It is true, as
contended by petitioners, that under Article 257 of
the Labor Code and Section 3, Rule 2, Book 2 of its
Implementing Rules, questions of exclusive
bargaining representation are entertainable within the
sixty (60) days prior to the expiry date of an existing
CBA, and that they did file a petition for certification
election within that period. But the petition was filed
in the name of the Amigo Employees Union which
had not disaffiliated from PAFLU, the mother union.
Petitioners being a mere minority of the local union
may not bind the majority members of the local
union.
Moreover, the Amigo Employees Union, as
an independent union, is not duly registered as such
with the Bureau of Labor Relations. The appealed
decision of OIC Leogardo of Regional Office No. 4
states as a fact that there is no record in the Bureau of
Labor Relations that the Amigo Employees Union
(Independent) is registered, and this is not disputed
by petitioners, notwithstanding their allegation that
the Amigo Employees Union is a duly registered
labor organization bearing Ministry of Labor
Registration Certification No. 5290-IP dated March
27, 1967. But the independent union organized after
the "Sama-Samang Kapasiyahan" executed February
7, 1977 could not have been registered earlier, much
less March 27, 1967 under Registration Certificate
No. 5290-IP. As such unregistered union, it acquires
no legal personality and is not entitled to the rights
and privileges granted by law to legitimate labor
organizations upon issuance of the certificate of
registration. Article 234 of the New Labor Code
specifically provides:
Art. 234. Requirements of
Registration.—Any applicant labor
organization, association, or group
of unions or workers shall acquire
legal personality and shall be
entitled to the rights and privileges
granted by law to legitimate labor
organizations upon issuance of the
certificate of registration. ....
In Phil. Association of Free Labor Unions vs. Sec. of
Labor, 27 SCRA 40, We had occasion to interpret
Section 23 of R.A. No. 875 (Industrial Peace Act)
requiring of labor unions registration by the
Department of Labor in order to qualify as
"legitimate labor organization," and We said:
The theory to the effect that Section
23 of Republic Act No. 875 unduly
curtails the freedom of assembly
and association guaranteed in the
Bill of Rights is devoid of factual
basis. The registration prescribed in
paragraph (b) of said section 17 is
 not a limitation to the right of
assembly or association, which may
be exercised with or without said
registration. The latter is merely a
condition sine qua non for the
acquisition of legal personality by
labor organizations, associations or
unions and the possession of the
'rights and privileges granted by
law to legitimate labor
organizations.' The Constitution
does not guarantee these rights and
privileges, much less said
personality, which are mere
statutory creations, for the
possession and exercise of which
registration is required to protect
both labor and the public against
abuses, fraud, or impostors who
pose as organizers, although not
truly accredited agents of the union
they purport to represent. Such
requirement is a valid exercise of
the police power, because the
activities in which labor
organizations, associations and
union or workers are engaged affect
public interest, which should be
protected.
Simply put, the Amigo Employees Union
(Independent) Which petitioners claim to represent,
not being a legitimate labor organization, may not
validly present representation issues. Therefore, the
act of petitioners cannot be considered a legitimate
exercise of their right to self-organization. Hence, We
affirm and reiterate the rationale explained in Phil
Association of Free Labor Unions vs. Sec. of Labor
case, supra, in order to protect legitimate labor and at
the same time maintain discipline and responsibility
within its ranks.
The contention of petitioners that the new CBA
concluded between Amigo Employees Union-
PAFLU and the Company on February 15, 1977
containing the union security clause cannot be
invoked as against the petitioners for offenses
committed earlier than its conclusion, deserves scant
consideration. We find it to be the fact that the union
security clause provided in the new CBA merely
reproduced the union security clause provided in the
old CBA about to expire. And since petitioners were
expelled from Amigo Employees Union-PAFLU on
March 28, 1982 upon denial of their Motion for
Reconsideration of the decision expelling them, the
CBA of February 15, 1977 was already applicable to
their case. The "closed-shop provision" in the CBA
provides:
All members of the UNION as of
the signing of this Agreement shall
remain members thereof in good
standing. Therefore, any members
who shall resign, be expelled, or
shall in any manner cease to be a
member of the UNION, shall be
dismissed from his employment
upon written request of the UNION
to the Company. (Art. III)
A closed-shop is a valid form of union security, and a
provision therefor in a collective bargaining
agreement is not a restriction of the right of freedom
of association guaranteed by the Constitution.
(Manalang, et al. vs. Artex Development Co., Inc., et
al., L-20432, October 30, 1967, 21 SCRA 561).
Where in a closed-shop agreement it is stipulated that
union members who cease to be in good standing
shall immediately be dismissed, such dismissal does
not constitute an unfair labor practice exclusively
cognizable by the Court of Industrial Relations. (Seno
vs. Mendoza, 21 SCRA 1124).
Finally, We reject petitioners' contention that
respondent Minister committed error in law
amounting to grave abuse of discretion when he
affirmed the conclusion made by the RO4 OIC,
upholding the legal applicability of the security
clause of a CBA over alleged offenses committed
earlier than its conclusion and within the 60-day
freedom period of an old CBA. In the first place, as
We stated earlier, the security clause of the new CBA
is a reproduction or reiteration of the same clause in
the old CBA. While petitioners were charged for
alleged commission of acts of disloyalty inimical to
the interests of the Amigo Employees Union-PAFLU
in the Resolution of February 14, 1977 of the Amigo
Employees Union- PAFLU and on February 15, 1977
PAFLU and the Company entered into and concluded
a new collective bargaining agreement, petitioners
may not escape the effects of the security clause
under either the old CBA or the new CBA by
claiming that the old CBA had expired and that the
new CBA cannot be given retroactive enforcement.
To do so would be to create a gap during which no
agreement would govern, from the time the old
contract expired to the time a new agreement shall
have been entered into with the union. As this Court
said in Seno vs. Mendoza, 21 SCRA 1124, "without
any agreement to govern the relations between labor
and management in the interim, the situation would
well be productive of confusion and result in
breaches of the law by either party. "

The case of Seno vs. Mendoza, 21 SCRA 1124

mentioned previously needs further citation of the
facts and the opinion of the Court, speaking through
Justice Makalintal who later became Chief Justice,
and We quote:

It appears that petitioners other than

Januario T. Seno who is their
counsel, were members of the
United Seamen's Union of the
Philippines. Pursuant to a letter-
request of the Union stating that
they 'had ceased to be members in
good standing' and citing a closed
shop clause in its bargaining
agreement with respondent Carlos
A. Go Thong & Co., the latter
dismissed said petitioners. Through
counsel, petitioners requested that
they be reinstated to their former
positions and paid their backwages,
otherwise they would picket
respondents' offices and vessels.
The request was denied on the
ground that the dismissal was
unavoidable under the terms of the
collective bargaining agreement. ...

We, therefore, hold and rule that petitioners, although

entitled to disaffiliate from their union and form a
new organization of their own, must, however, suffer
the consequences of their separation from the union
under the security clause of the CBA.

WHEREFORE, IN VIEW OF ALL THE

FOREGOING, the Order appealed from affirming the
joint decision of the OIC of Regional Office No. 4 in
RO4-Case No. T-IV-3549-T and RO4 Case No. RD-
4-4088-77-T granting clearance to terminate
petitioners as well as dismissing their complaint with
application for preliminary injunction, is hereby
AFFIRMED. No costs.

SO ORDERED.
#83 Adamson and Adamson vs CIR
G.R. No. L-35120 January 31, 1984
ADAMSON & ADAMSON, INC., petitioner,
vs.
THE COURT OF INDUSTRIAL RELATIONS
and ADAMSON & ADAMSON SUPERVISORY
UNION (FFW), respondents.
Sycip, Salazar, Luna & Feliciano for petitioner.
Jaime D. Lauron for respondents.
GUTIERREZ, JR., J.:
Adamson and Adamson, Inc., filed this petition to set
aside orders of the respondent Court of Industrial
Relations (CIR) holding that the Adamson and
Adamson, Inc. supervisory Union (FFW) can legally
represent supervisors of the petitioner corporation
notwithstanding the affiliation of the lank and file
union of the same company with the same labor
federation, the Federation of Free Workers.
The Adamson and Adamson, Inc. Supervisory Union
(FFW) informed the petitioner about its having
organized on the same date that the Adamson and
Adamson, Inc. Salesmen Association (FFW) advised
the petitioner that the rank and file salesmen had
formed their own union.
The CIR dismissed the petition in CIR Case No.
3267-MC entitled "In the Matter of Representation of
the Supervisory Employees of Adamson and
Adamson, Inc., Petitioner " thus prompting the filing
of this petition for review on certiorari.
Subsequently and during the pendency of the present
petition, the rank and file employees formed their
own union, naming it Adamson and Adamson
Independent Workers (FFW).
The petitioner made a lone assignment of error, to
wit:
THE RESPONDENT COURT OF INDUSTRIAL
RELATIONS ERRED IN SUSTAINING THE
ELIGIBILITY OF THE RESPONDENT UNION TO
REPRESENT THE PETITIONER'S
SUPERVISORY EMPLOYEES NOT-
WITHSTANDING THE AFFILIATION OF THE
SAID UNION WITH THE SAME NATIONAL
FEDERATION WITH WHICH THE UNIONS OF
NON-SUPERVISORS IN THE PETITIONER
COMPANY ARE ALSO AFFILIATED.
The petitioner argues that the affiliation of the
respondent union of supervisors, the salesmen's
association, and the Adamson and Adamson
independent Workers Union of rank and file
personnel with the same national federation (FFW)
violates Section 3 of the Industrial Peace Act, as
amended, because — (1) it results in the indirect
affiliation Of supervisors and rank-and-file
employees with one labor organization; (2) since
respondent union and the unions of non-supervisors
in the same company are governed by the same
constitution and by-laws of the national federation, in
practical effect, there is but one union; and (3) it
would result in the respondent union's losing its
independence because it becomes the alter ego of the
federation.
The petitioner also submits that should affiliation be
allowed, this would violate the requirement of
separateness of bar units under Section 12 of the Act
because only one union will in fact represent both
supervisors and rank-and-file employees of the
petitioner.
The respondents on the other hand argue that the
supervisory employees of an employer may validly
join an organization of the rank-and-file employees
so long as the said rank and file employees are not
under their supervision. They submit that Adamson
and Adamson Supervisory Union (FFW) is not
composed of sales supervisors and, therefore, the
salesmen of the company are not under the
supervision of the supervisory employees forming the
union. Respondents also argue that even if the
salesmen of the petitioner company are under the
supervision of the members of the supervisory union,
the prohibition would not apply because the salesmen
and the supervisory employees of the company have
their separate and distinct labor organizations, and, as
a matter of fact, their respective unions sent separate
proposal for collective bargaining agreements. They
contend that their respective labor organizations, not
the FFW, will represent their members in the
negotiations as well as in the signing of their
respective contracts. Respondents further argue that
the Federation of Free Workers has, as its affiliates,
supervisory as well as rank-and-file employees, and
should both the supervisory and the rank-and-file
employees of a certain employer who have separate
certificates of registration affiliate with the same
federation, the prohibition does not apply as the
federation is not the organization of the supervisory
employees contemplated in the law.
The issue presented involves the correct
interpretation of Section 3 of Republic Act No. 875,
the Industrial Peace Act, as amended, which states:
Employees shall have the right to self-organization
and to form join or assist labor organizations of their
own choosing for the purpose 6f collective
bargaining through representatives of their own and
to engage in concerted activities for the purpose of
collective bargaining and other mutual aid or
protection. Individuals employed as supervisors shall
not be eligible for membership in a labor organization
of employees under their supervision but may form
separate organizations of their own.
The right of employees to self-organization and to
form, join or assist labor organizations of their own
choosing for the purpose of collective bargaining and
to engage in concerted activities for mutual aid or
protection is a fundamental right of labor that derives
its existence from the Constitution. It is recognized
and implemented through the abovecited Section 3 of
the Industrial Peace Act as amended.
In interpreting the protection to labor and social
justice provisions of the Constitution and the labor
laws or rules and regulations implementing the
constitutional mandates, we have always adopted the
liberal approach which favors the exercise of labor
rights.
In deciding this case, we start with the recognized
rule that the right of supervisory employees to
organize under the Industrial Peace Act carries
certain restrictions but the right itself may not be
denied or unduly abridged. The supervisory
employees of an employer cannot join any labor
organization of employees under their supervision but
may validly form a separate organization of their
own. As stated in Caltex Filipino Managers and
Supervisors Association v. Court of Industrial
Relations (47 SCRA 112), it would be to attach
unorthodoxy to, not to say an emasculation of, the
concept of law if managers as such were precluded
from organization. Thus, if Republic Act 875, in its
Section 3, recognizes the right of supervisors to form
a separate organization of their own, albeit they
cannot be members of a labor organization of
employees under their supervision, that authority of
supervisors to form a separate labor union carries
with it the right to bargain collectively with the
employer. (Government Service Insurance System v.
Government Service Insurance System Supervisors'
Union, 68 SCRA 418).
The specific issue before us is whether or not a
supervisor's union may affiliate with a federation
with which unions of rank and-file employees of the
same employer are also affiliated. We find without
merit the contentions of petitioner that if affilation
will be allowed, only one union will in fact represent
both supervisors and rank-and-file employees of the
petitioner; that there would be an indirect affiliation
of supervisors and rank-and-file employees with one
labor organization; that there would be emerging of
two bargaining units ; and that the respondent union
will loose its independence because it becomes an
alter ego of the federation.
In Elisco-Elirol Labor Union (NAFLU) v. Noriel (80
SCRA 681) and Liberty Cotton Mills Workers Union
v. Liberty Cotton Mills, Inc. (66 SCRA 512), we held
:
xxx xxx xxx
... the court expressly cited and
affirmed the basic principle that
'(T)he locals are separate and
distinct units primarily designed to
secure and maintain the equality of
bargaining power between the
employer and their employee-
member in the economic struggle
for the fruits of the joint productive
effort of labor and capital; and the
association of the locals into the
national union (as PAFLU) was in
the furtherance of the same
end. These association are
concensual entities capable of
entering into such legal relations
with their members. The essential
purpose was the affiliation of the
local unions into a common
enterprise to increase by collective
action the common bargaining
power in respect of the terms and
conditions of labor. Yet the locals
remained the basic units of
association; free to serve their own
and the common-interest of all,
subject to the restraints imposed
by the Constitution and By-laws of
 the Association; and free also to
renounce the affiliation for mutual
welfare upon the terms laid down
in the agreement which brought it
into existence.

We agree with the Court of Industrial Relations when

it ruled that:

xxx xxx xxx

The confusion seems to have

stemmed from the prefix of FFW
after the name of the local unions in
the registration of both.
Nonetheless, the inclusion of FWW
in the registration is merely to
stress that they are its affiliates at
the time of registrations. It does not
mean that said local unions cannot
stand on their own Neither can it be
construed that their personalities
are so merged with the mother
federation that for one difference or
another they cannot pursue their
own ways, independently of the
federation. This is borne by the fact
that FFW, like other federation is a
legitimate labor organization
separate and distinct from its locals
and affiliates and to construe the
registration certificates of the
aforecited unions, along the line of
the Company's argument. would tie
up any affiliates to the shoe string
of the federation. ...

The Adamson and Adamson Supervisory Union and

the Adamson and Adamson, Inc., Salesmen
Association (FFW), have their own respective
constitutions and by-laws. They are separately and
independently registered of each other. Both sent
their separate proposals for collective bar agreements
with their employer. There could be no employer
influence on rank-and-file organizational activities
nor their could be any rank and file influence on the
supervisory function of the supervisors because of the
representation sought to be proscribed.

WHEREFORE, the instant petition is DISMISSED

for lack of merit. The questioned order and the
resolution en bancof the respondent Court of
Industrial Relations are AFFIRMED.

SO ORDERED.
#84 Alliance of Democratic Free Labor Organization
vs Laguesma
G.R. No. 108625 March 11, 1996
ALLIANCE OF DEMOCRATIC FREE LABOR
ORGANIZATION (ADFLO), petitioner,
vs.
UNDERSECRETARY OF LABOR
BIENVENIDO LAGUESMA and
CONFEDERATION OF LABOR AND ALLIED
SOCIAL SERVICES (CLASS), respondents.
PANGANIBAN, J.:p
In the instant case, this Court upholds petitioner's
right to due process, the most basic tenet of which is
the right to be heard.
This is a petition for certiorari and prohibition under
Rule 65 of the Rules of Court to review and set aside
the Decision 1 of Respondent Undersecretary of
Labor Bienvenido Laguesma, dated October 16,
1992, in Case No. OS-A-12-289-89 cancelling the
registration of the Alliance of Democratic Free Labor
Organization (ADFLO) as a legitimate labor
federation; and the Order2 dated November 18, 1992
denying the motion for reconsideration.
By a Resolution dated October 25, 1995, the First
Division of this Court transferred the above case,
along with several others, to the Third. Deliberating
on the Petition, and the Comments by the Solicitor
General3 and the private respondent, this Court, on
February 12, 1996, gave due course to the Petition
and considered the case submitted for resolution
without requiring the parties to submit memoranda.
Thereafter, after due consultation and discussion, the
case was assigned to undersigned ponente for the
writing of this Decision.
The Facts
The facts of this case, as set out in the Comment of
the Solicitor General filed on June 4, 1993 are not
disputed by the private respondent in its own
Comment filed on July 29, 1993. They are
substantially the same as those stated in the Petition.
Narrates the Solicitor General4 :
1. The factual antecedents of this
controversy are as follows:
On 02 March 1988, the Alliance of
Democratic Free Labor
Organization (ADFLO) filed an
application for registration as a
national federation alleging, among
others that it has twelve (12)
affiliates, namely:
A. Affiliate independent unions:
1. Tolly's Employees Association 220
Brgy. Mapulang Lupa, Valenzuela,
Metro Manila
2. Healthknit Garments Workers
Association, 2110 Bolinao St., Sta.
Cruz, Manila
3. Malayang Manggagawa sa United
Asia Weaving and Trimming
Manufacturing Corporation, Macopa
Road, Malabon, Metro Manila
4. Fireprint Inc. Employees
Association, 187 General Mascardo
St., Bagong Barrio, Caloocan City
5. Batangas Lumber Labor Union,
Calicantio, Batangas City
6. Clover Manufacturing Corporation,
23-3 Pilaran Cpd., Quezon City.
7. Pacific Mills Workers Free Labor
Union, 108 Balintawak, Quezon City
8. Ronimart Employees Labor Union
Balibago, Sta. Rosa, Laguna
9. Kapisanan ng mga Manggagawa sa
Place Canteen, UST Cpd., UST,
Espana, Manila
10. Samahan ng mga Kawani at
Manggagawa sa A.V. Tantuco,
Bagong Ilog, Pasig, Metro Manila
B. Direct Affiliates
1. VICMAR Theater, Inc., ADFLO
Chapter, Batangas City
2. Ricman Enterprises, ADFLO
Chapter, Batangas City
After proper evaluation of its
application and finding ADFLO to
have complied with the requirements
for registration pursuant to Articles
234 and 237 of the Labor Code, the
Bureau (of Labor Relations) issued
on 22 March 1988 a Certificate of
Registration No. 11399-FED-LC to
the federation.
On 15 February 1989, the
Confederation of Labor and Allied
Social Services (CLASS) filed a
petition for the cancellation of the
Registration Certificate issued to
ADFLO.
Finding the petition to be in order, the
Bureau furnished ADFLO a copy of
said petition and directed the latter to
file an answer/comment thereon. The
Bureau also directed CLASS-TUCP
to substantiate its allegations in the
petition.
On 11 April 1989, instead of filing an
answer, ADFLO moved to dismiss
the petition. It alleged that the
petition contains merely general
allegations that are vague; that
petitioner has no cause of action
because if failed to substantiate its
accusations; that the petition was
filed by CLASS-TUCP for the
purpose of harassing the respondent
in connection with the certification
election case pending at Allen Arthur,
Inc., wherein CLASS is the
incumbent bargaining representative
and ADFLO is one of the contending
parties; that ADFLO's financial
statement will only become due at the
end of April, 1989; and, that the
report on the compliance with the
requirements on labor education will
likewise become due only on (sic)
April, 1989.
Petitioner CLASS-TUCP, in its
Memorandum dated 26 July 1989,
alleged that the documents submitted
by ADFLO were simulated. Among
the documents are: the minutes of the
organizational meetings, list of
delegates to the meeting, list of
locals/affiliates, the Constitution and
By-laws, collective bargaining and
the resolution of affiliation of the
local unions. In this respect, it
pointed out that a visit to the places
of operation of the enumerated
establishments whose workers are
alleged members of unions affiliated
with ADFLO with an interview of
their respective local officers
revealed that the said local officers
have never attended nor participated
in the ADFLO's organization meeting
held on 6 December 1987 at
Sampaloc, Manila; that said officers
have never participated in the
discussion and ratification of
ADFLO's Constitution and By-laws
and in the election of its national
officers.
Petitioner CLASS-TUCP, further
averred that the nine (9) resolutions
of affiliation all dated 6 December
1987 do not bear the signatures of the
members of the Board of Directors
and have not been ratified by the
general membership of each of the
nine (9) unions as required by Article
IV, Section 3 of the Constitution and
By-laws of ADFLO.
On 07 August 1989, ADFLO was
summoned to a conference by the
Bureau. In said conference, the
Bureau disclosed the seriousness of
the charges against ADFLO that may
warrant the cancellation of its
certificate of registration.
On 15 August 1989, a hearing was
conducted and both parties were duly
represented. ADFLO manifested that
it would move to inhibit the Director
of Labor Relations from taking
further action over the present
petition. It further manifested that it
would file its comment to the earlier
memorandum filed by CLASS.
CLASS, for its part, requested that it
be given five (5) days within which to
file its objection against the motion to
inhibit the Bureau Director.
On 25 August 1989, ADFLO filed its
answer, averring that it had complied
with all the legal requirements for
registration including the affiliation
of more than 10 local unions; that it
did not commit any fraud or
misrepresentation in its application
for registration; that it conducted
itself as a legitimate labor
organization and that the cancellation
of its registration certificate which
was secured in good faith will violate
the Constitutional right of the
workers to organize and will deprive
the membership of their rights
granted by law.
On even date, ADFLO filed a Motion
to Inhibit the Bureau Director from
hearing and deciding the case on the
ground that the Director prejudged
the instant petition when she verbally
declared that the federation obtained
its certificate of registration through
"fraud and misrepresentation; that the
recommendation to hold in abeyance
the election at Allen Arthur, Inc., was
based only on her unilateral finding
of a prima facie case; that she has
shown personal interest in this
petition when she made personal calls
to all locals and affiliates without
notice to the respondent, ADFLO"
(Resolution of Secretary of Labor
Ruben Torres, dated 21 February;
Records, Vol. I, pp. 431-435).
2. On November 16, 1990, the
Bureau of Labor Relations (BLR),
through Director Pura Ferrer-
Calleja, rendered a Decision
cancelling the registration of
ADFLO (Id. pp. 383-394). ADFLO
appealed the Decision to the
Secretary of Labor Ruben Torres,
who, on February 21, 1990, issued
a Resolution, the decretal portion of
which reads:
WHEREFORE, premises
considered, the appeal is
hereby granted and the
Decision of the Director,
Bureau of Labor Relations,
set aside. Conformably a
new order is entered
remanding the case to the
Bureau for further
proceedings.
Let, therefore, the entire
records of the case be
immediately forwarded to
the Bureau of Labor
Relations for
implementation of this
Order.
SO ORDERED (Ibid, p.
431; Emphasis supplied).
3. Private respondent
Confederation of Labor and Allied
Social Services (CLASS-TUCP)
moved for a reconsideration
thereof, which was denied for lack
of merit in the Order dated May 23,
1990 (Id., p. 524).
4. CLASS then filed a Petition
for Certiorari with the Supreme
Court, which, on November 5,
1990, was dismissed for lack of
merit (Id. p. 563).
5. The first hearing conducted by
the BLR after the case was
remanded to it for further
proceedings was held on October 7,
1991. However, since CLASS was
not yet ready with its evidence, the
hearing was postponed and CLASS
was given a period of ten (10) days
to submit its exhibits while ADFLO
was given a period of ten (10) days
from receipt of copies of the
evidence presented within which to
comment thereon (Id., p. 566).
6. On October 16, 1991, CLASS
filed its Formal Offer of Evidence
consisting of Exhibits "A" — "R",
in support of its allegation that
ADFLO committed frauds,
misrepresentation and forgeries in
the submission of the requirements
relative to its registration as a
legitimate federation (Id., pp. 625-
630).
7. On November 27, 1991, ADFLO
filed an Objection to Admission of
Exhibits based on the grounds that
the exhibits were not marked nor
identified by any witness during the
hearing of the case where ADFLO
had been properly notified (Id., pp.
658-659).
8. In the meantime, at the hearing
of the case scheduled on November
27, 1991, CLASS failed to appear
and only ADFLO's President
Antonio Cedilla appeared. Unaware
that an objection had already been
filed by ADFLO's counsel, Cedilla
manifested that ADFLO will file its
answer to CLASS' offer of
evidence within thirty (30) days or
up to December 27, 1991(Id., p.
658).
9. Subsequently, however, counsel
for CLASS was permitted to write
on the minutes of the aforesaid
hearing its objection to the "request
for extension", invoking its right to
a speedy trial of the case and
praying that the case be deemed
submitted for resolution on the
basis of its evidence (Id., p. 647).
10. On February 12 1992, BLR
Director Pura Ferrer — Calleja,
without first ruling on the
admissibility of the exhibits of
CLASS and without any further
hearing, rendered an order, the
dispositive portion of which reads
as follows:
WHEREFORE, premises
considered, judgment is
hereby rendered affirming
the decision of this Bureau,
entered on 16 November
1989 cancelling the
registration of Federation
Alliance of Democratic Free
Labor Organization
(ADFLO).
SO ORDERED (Id., p. 657).
11. On February 27, 1992, ADFLO
filed its Motion for Reconsideration
of said Decision dated February 12,
1992 (Id., pp. 670-671) which was
treated as an appeal, hence, the
records of the case were sent to the
Secretary of Labor. On October 16,
1992, public respondent
Undersecretary of Labor
Bienvenido E. Laguesma rendered
the assailed Decision, adjudicating
the case in this wise:
WHEREFORE, respondent's
appeal is hereby DENIED
for lack of merit and the
questioned order dated
February 12, 1992 is hereby
affirmed, subject to the
correction aforestated and
the requirements set forth in
the ultimate paragraph of
this Decision.
All existing affiliates of
respondents (sic) ADFLO
shall be notified of this
Decision, through the
Bureau of Labor Relations.
SO DECIDED (Id., p. 358).
12. On November 6, 1992, ADFLO
moved to reconsider such decision
on the ground that ADFLO was
denied the right to a hearing in
violation of its right to due process
of law, and that the Order dated
November 16, 1989 of the BLR
could no longer be "reinstated"
because it was annulled and set
aside by virtue of the Resolution of
the Secretary of Labor dated
February 21, 1990, which ruling
had been affirmed by the Supreme
Court (Petition, p. 6).
13. On November 18, 1992,
Undersecretary Laguesma issued an
 Order denying ADFLO's Motion
for Reconsideration (Id., pp. 364-
365).
14. Hence, ADFLO appealed to the
Secretary of Labor. However,
instead of forwarding the records to
the Secretary, public respondent
Undersecretary Laguesma endorsed
the records to the Officer-in-Charge
of the BLR "for (your) information
and guidance" (Id.. Vol. III p. 111).
15. On December 14, 1992,
ADFLO filed a Motion to Resolve
the case but since more than thirty
(30) days had passed since then,
and the Secretary of Labor failed to
act on its appeal, it was constrained
to resort to the filing of the instant
Petition for Certiorari and
Prohibition before this Honorable
Court.
The Issues
The main issues presented by petitioner5 are the
following:
(1) Was the decision cancelling the
registration of petitioner rendered
in violation of the due process
clause? and
(2) Is the decision supported by
substantial evidence?
The First Issue: Due Process
As prayed for by the Solicitor General, we grant the
Petition.
While, in general, administrative agencies exercising
quasi-judicial powers, like the Department of Labor
and Employment, are free from the rigidity of certain
procedural requirements, they are nonetheless bound
by law and practice to observe the fundamental and
essential requirements of due process in justiciable
cases presented before them6 .
These essential requirements of due process were laid
down in the landmark case of Ang Tibay vs. Court of
Industrial Relations, at al. 7 , as follows:
The fact, however, that the Court of
Industrial Relations may be said to
be free from the rigidity of certain
procedural requirements does not
mean that it can, in justiciable cases
coming before it, entirely ignore or
disregard the fundamental and
essential requirements of due
process in trials and investigations
of an administrative character.
There are cardinal primary rights
which must be respected even in
proceedings of this character:
(1) The first of these rights is the
right to a hearing, which includes
the right of the party interested or
affected to present his own case sad
submit evidence in support thereof.
In the language of Chief Justice
Hughes, in Morgan v. U. S., 304
U.S. 1, 58 S. Ct. 773, 999, 82 Law.
ed. 1129, "the liberty and property
of the citizen shall be protected by
the rudimentary requirements of
fair play."
(2) Not only must the party be
given an opportunity to present his
case and to adduce evidence
tending to establish the rights
which he asserts but the
tribunal must consider the evidence
presented. . . . In the language or
this Court in Edwards vs. McCoy,
22 Phil., 598, "the right to adduce
evidence, without the
corresponding duty on the part of
the board to consider it, is vain.
Such right is conspicuously futile if
the person or persons to whom the
evidence is presented can thrust it
aside without notice or
consideration."
(3) "While the duty to deliberate
does not impose the obligation to
decide right, it does imply a
necessity which cannot be
disregarded, namely, that of having
something to support its decision.
A decision with absolutely nothing
to support it is a nullity, a place
when directly attached." (Edwards
vs. McCoy, supra.). . .
(4) Not only must there be some
evidence to support a finding or
conclusion (City of Manila vs.
Agustin, G.R. No. 45844,
promulgated November 29, 1937,
XXXVI O. G. 1335), but the
evidence must be "substantial." . . .
"Substantial evidence is more than
a mere scintilla. It means such
relevant evidence as a reasonable
mind might accept as adequate to
support a conclusion." . . . But this
assurance of a desirable flexibility
in administrative procedure does
not go so far as to justify orders
without a basis in evidence having
rational probative force. Mere
uncorroboratborated hearsay or
rumor does not constitute
substantial evidence. (Consolidated
Edison Co. v. National Labor
Relations Board, 59 S. Ct. 206, 83
Law. ed. No. 4, Adv. Op., p. 131.)
(5) The decision must be rendered
on the evidence presented at the
hearing, or at least contained in the
record and disclosed to the parties
affected. . . . Only by confining the
administrative tribunal to the
evidence disclosed to the parties,
can the latter be protected in their
right to know and meet the case
against them.
(6) The Court of Industrial
Relations or any of its judges,
therefore, must act on its or his own
independent consideration of the
law and facts of the controversy,
and not simply accept the views of
a subordinate in arriving at a
decision.
(7) The Court of Industrial
Relations should, in all
controversial questions, render its
decision in such a manner that the
parties to the proceeding can know
the various issues involved, and the
reasons for the decisions rendered.
The performance of this duty is
inseparable from the authority
conferred upon it.
The most basic tenet of due process is the right to be
heard, and as applied in administrative proceedings,
an opportunity to explain one's side8. Such
opportunity was denied petitioner in this case.
The public respondent and his subaltern, the Director
of the Bureau of Labor Relations, should have
learned their lessons when the latter's resolution dated
November 16, 1989 cancelling petitioner's
registration due precisely to absence of due process
was reversed by the then Secretary of Labor whose
decision was, in effect, affirmed by this Court.
However, instead of taking a lesson in due process,
said director — this time abetted by public
respondent — violated again the same fundamental
principle.
After petitioner submitted its objections to the
admission of the documentary evidence of CLASS,
the BLR director should have first ruled on their
admissibility. However, without ruling on said offer
and without setting the case for reception of
petitioner's evidence, the said official proceeded to
render judgment affirming its earlier (but already
ruled as improper) decision to cancel the registration
of ADFLO. This is a gross violation of petitioner's
right to due process.
Under Section 1, Article II of our Constitution, "(n)o
person shall be deprived of life, liberty or property
without due process of law . . ." and under Article
238 of the Labor Code, "(t)he certificate of
registration of any legitimate labor organization,
whether national or local, shall be cancelled by the
Bureau if it has reason to believe, after due hearing,
that the said labor organization no longer meets one
or more of the requirements herein prescribed."
(emphasis supplied)
The cancellation of a certificate of registration is the
equivalent of snuffing out the life of a labor
organization. For without such registration, it loses
— as a rule — its rights under the Labor Code. Under
the circumstances, petitioner was indisputably
entitled to be heard before a judgment could be
rendered cancelling its certificate of registration.
In David vs. Aguilizan9 , it was held that a decision
rendered without any hearing is null and void.
The Second Issue: Substantial Basis
There is yet another reason why this petition should
be granted. It will be noted that the Director of the
Bureau of Labor Relations never made any ruling on
whether the exhibits submitted by CLASS were
admissible in evidence. That being so, the said
exhibits cannot be made use of in deciding the case.
And, in the absence of this evidence, there is nothing
in the record to support the assailed decision.
Therefore, the latter must necessarily fall for lack
of substantial basis. "A decision with absolutely
nothing to support it is a nullity." 10

So too, the assailed Decision of Undersecretary

Laguesma requiring the existing affiliates of ADFLO
"to register either independently in accordance with
Article 234, Title IV, Book V of the Labor Code or
affiliate with other existing duly-registered
federations or national union" within 30 days from
receipt of said Decision is totally unwarranted
inasmuch as said affiliates are not parties in the
instant case.

WHEREFORE, the Petition is GRANTED; the

Decision dated October 16, 1992 and Order dated
November 18, 1992 of public respondent are SET
ASIDE and REVERSED. The present case is hereby
REMANDED to the Bureau of Labor Relations for
further proceedings with the specific caveat to
observe due process as mandated by the Constitution
and the Labor Code.

SO ORDERED.
#85 Itogon-Suyoc Mines vs Itogon-Suyoc Workers
Union
G.R. No. L-24189 August 30, 1968
ITOGON-SUYOC MINES, INC., petitioner,
vs.
SANGILO-ITOGON WORKERS' UNION in
behalf of BARTOLOME MAYO, BERNARDO
AQUINO, ET AL.,respondents.
Reyes and Cabato for petitioner.
Benjamin C. Rillera for respondents.
SANCHEZ, J.:
Petitioner's appeal seeks reversal of the judgment of
the Court of Industrial Relations (CIR) directing
reinstatement of the fifteen individual respondents "to
their former positions or substantially equivalent
employment in the company, with full back wages
from the time of their dismissal to their actual
reinstatement, without loss of seniority and other
privileges."
The controversy arose because prior to May 28, 1958,
Itogon-Suyoc Mines, Inc., through its general
superintendent Claude Fertig, had been dismissing
from its employ members of respondent Sañgilo-
Itogon Workers' Union (Sañgilo, for short). Fifty-four
members of Sañgilo were already fired when
Department of Labor conciliators conferred with
petitioner's representative to explore the possibility of
their reinstatement. Petitioner refused reinstatement,
alleged that dismissal of the 54 was for cause.
On May 28, 1958, sensing that its members were
being eased out of employment one by one, Sañgilo
called a strike, accompanied by picketing carried out
at or near petitioner's mine premises in Itogon. Work
was paralyzed. On the fourth or fifth day of the strike,
company policemen drove the strikers out of
petitioner's premises. The strike lasted until about
June 2, 1958.
On that day, June 2, 1958, petitioner filed an
injunction suit against some strikers in the Court of
First Instance of Baguio (Civil Case No. 774).
Nothing clear appears of record as to the present
status of this suit.
On the same day, too, petitioner's officials conferred
with the officers of the other labor union in the
company, the Itogon Labor Union. They hammered
out an agreement whereby all strikers were given
fifteen (15) days from said date to return to work.
Thru a public address system, strikers were then
urged to go back to their jobs. Notices addressed to
the strikers which read — "All of you are required to
report immediately to your respective work otherwise
you will be considered AWOL [absent without leave]
and will be dropped from the rolls" 1 were posted on
the Itogon Labor Union bulletin board, the Itogon
store, and at 1300 checkpoint — the main entrance to
the company's mining premises. These notices did rot
contain the fifteen (15) days' grace period aforesaid.
On November 18, 1958, a CIR prosecutor in behalf
of Sañgilo charged petitioner and Claude Fertig, its
general superintendent, with unfair labor practice for
the dismissal of two company employees A. Manaois
and Jose Baldo on June 9, 1957 and March 5, 1958,
respectively, allegedly because of their affiliation
with Sañgilo and for having testified against
petitioner in Certification Case No. 3-MC-Pang.2 The
complaint prayed for reinstatement and back wages.
Petitioner asserted just cause in defense.
On October 5, 1960, CIR adjudged that the dismissal
of A. Manaois was just and legal, but that petitioner
was guilty of unfair labor practice in dismissing Jose
Baldo. CIR thus ordered Baldo's reinstatement with
back wages. The CIR judgment for Jose Baldo was
elevated by petitioner to this Court.3 On December
24, 1964, we affirmed.
Meanwhile, on March 3, 1961, CIR's prosecutor —
on Sañgilo's charge filed with CIR on July 12, 1960,
— lodged an unfair labor practice complaint against
herein petitioner, its general superintendent Claude
Fertig, and the Itogon Labor Union.4 Averment was
there made of the arbitrary dismissal of 107 of
Sañgilo's members because of membership and/or
affiliation with said union and for having testified or
about to testify in Certification Case G.R. No. 3-MC-
Pang.; that Sañgilo's president, Bartolome Mayo, was
dismissed also because of his refusal to dissolve the
union; and that said company and its general
superintendent Claude Fertig "had given aid and
support to ... Itogon Labor Union, another labor
organization" existing in said company "by allowing
the officers and members thereof, to hold meetings
inside the mine premises and the theatre building
owned" by the company and also allowing them to
use the company's light facilities — privileges which
were denied Sañgilo. The prayer was for judgment
declaring respondents therein guilty of unfair labor
practice; enjoining them from further committing
unfair labor practice acts; ordering the dissolution of
Itogon Labor Union, "it being a company dominated
union"; and directing reinstatement of the dismissed
107 employees mentioned in the complaint, with full
back wages from the time of dismissal up to actual
reinstatement.
The mining company and Claude Fertig in their
answer aver that the May 27, 1958 strike was illegal;
that thereafter "many of respondent company's
workers left for their respective home towns,
abandoning their jobs, and never reported for work
until the present; that some of the persons listed in the
complaint are still working; and some of them left
respondent company's employ even earlier than May
27, 1958 voluntarily or were discharged for cause."
The company's principal defense is that the action for
reinstatement with back wages is barred by laches.
Itogon Labor Union's defense is that the concessions
it enjoyed were in pursuance of a collective
bargaining contract between said union and the
company.
Of the 107 dismissed employees, 10 manifested in
writing that they had never been members of Sañgilo,
were actually working with the company and not
interested at all in the prosecution of the suit.5 One of
the named dismissed employees, Graciano Mejia,
died on October 26, 1957.6 Of the remaining
individual complainants, only 15 appeared and
testified in court. They were amongst the strikers.
Came the CIR decision of May 20, 1964. Associate
Judge Jose S. Bautista there observed that "the
picketing was conducted peacefully, as the strikers
did not commit acts of violence or cause injuries to
persons or damage to property" and that "the union
members staged the strike for the reason that their
fellow members were being eased out of employment
little by little by respondent company." .
On the charge that the Itogon Labor Union was
company dominated, CIR declared that "the privilege
of respondent union in holding meetings inside the
company's mine premises and theater building, and in
using the company's light facilities, is one of the
concessions obtained by said union in accordance
with the collective bargaining agreement entered into
by the respondent Company and the Itogon Labor
Union." .
CIR's judgment thus directed "respondent Itogon-
Suyoc Mines, Inc. to reinstate (1) Bartolome Mayo,
(2) Bernardo Aquino, (3) Florentino Ceralde, (4)
Marcelo Datuin, (5) Antonio Deogracias, (6)
Domingo Deray, (7) Pedro Espiritu, (8) Mariano
Idos, (9) Antonio Laop, (10) Gregorio Laureta, (11)
Chayon Pogay, (12) Roman Quinto, (13) Jose Santos,
(14) Simplicio Tambaoan, and (15) Tomas Valerio,
to their former positions or substantially equivalent
employment in the company, with full backwages
from the time of their dismissal to their actual
reinstatement, without loss of seniority and other
privileges. The complaint with respect to the
remaining members of complainant Sañgilo-Itogon
Workers' Union and with respect to the company
domination charge against respondent Itogon Labor
Union is hereby DISMISSED."
Its motion to reconsider having been denied by
CIR en banc, petitioner appealed to this Court.
1. Petitioner's brief 7 challenges Sañgilo's capacity to
sue. Sañgilo, so petitioner says, ceased to be a
legitimate labor union on March 31, 1960 when the
Department of Labor cancelled the former's
registration permit for failure to comply with
statutory requirements. Contrariwise Sañgilo avers
that at the time the complaint below was filed it was a
legitimate labor organization, and continues to be
so. 1äwphï1.ñët
Judicial inquiry was made by CIR on this issue.
A subpoena duces tecum was issued to the registrar
of labor organizations of the Department of Labor
requiring him or his duly authorized representative
"[t]o bring with [him] the following: (1) the list of
membership of the Sañgilo-Itogon Workers' Union;
(2) the revocation, if any, of the registration permit of
the Sañgilo-Itogon Workers' Union dated March 22,
1960; and (3) the cancellation proceedings of the
Sañgilo-Itogon Workers' Union which took place
sometime in 1960."8
Atty. Narciso Fabella, the duly authorized
representative, answered the subpoena. With the
record of the cancellation proceedings of Sañgilo
with him, he testified before the CIR hearing officer
that on March 31, 1960, Sañgilo's registration permit
[No. 2141-IP issued on May 21, 1957] was cancelled
by the Department of Labor under Cancellation
Proceedings 1722;9 that his office then received a
motion for reconsideration of said cancellation; that
on April 27, 1960, an order was issued advising
Sañgilo to comply with the requirement it failed to
satisfy and which was the cause of the cancellation of
Sañgilo's permit; that on March 9, 1962, Sañgilo filed
a manifestation and motion to lift resolution with the
request that it be given fifteen days within which to
present evidence of compliance; that on March 23,
1962, an order was issued directing the union to
submit, within fifteen days from notice, a copy of its
financial report for the period from May 12, 1957 to
May 11, 1958, sworn to by its treasurer, Ernesto
Aragon, pursuant to Sangilo's constitution and by-
laws and Section 17(k) of Republic Act 875; and that
no financial report had been submitted to the
Department of Labor.
And then, the witness testified as follows:
ATTY. RILLERA [Counsel for Sañgilo]:
Q Now, Mr. Fabella, per your records, do
you have the final order cancelling the
permit of the complainant union, or is the
proceeding still going on?
WITNESS
A As far as the record is concerned, it seems
that the proceeding is still going on because
there is no other order pertaining [to] the
non-submittal of the union of the financial
report required within fifteen (15) days.10
So it is, that there is no order final in character
cancelling Sañgilo's registration permit and dropping
its name from the roster of legitimate labor unions.
Sangilo's status does not appear in the record to have
changed. Therefore, Sañgilo still enjoys all the rights
accorded by law to a legitimate labor union. One of
those rights is the right to sue. 1äwphï1.ñët
Even assuming that Sañgilo later lost its registration
permit in the course of the present proceedings, still
Sañgilo may continue as a party without need of
substitution of parties, "subject however to the
understanding that whatever decision may be
rendered therein will only be binding upon those
members of the union who have not signified their
desire to withdraw from the case before its trial and
decision on the merits." 11
Really, we perceive of no reason why the judgment in
favor of the fifteen individual respondent laborers
should be overturned simply because the union of
which they were members ceased to be a legitimate
labor union. It cannot be disputed that CIR's
prosecutor brought this case not merely for Sañgilo; it
was also on behalf of the 107
employees enumerated therein. This accounts for the
fact that CIR's judgment for reinstatement and
backpay was rendered in favor of the fifteen
respondent laborers. To accept petitioner's argument
as valid is to shunt aside substance to give way to
form. Error, if any, was harmless. It does not affect
the substantial rights of the parties in interest. It is no
ground for reversal. 12 At this stage this Court may
even strike out Sañgilo-Itogon Workers' Union and
leave the fifteen individual respondents alone. 13
2. Next to be considered is petitioner's claim that
respondents were guilty of splitting their cause of
action.
Petitioner argues that the first unfair labor practice
suit (CIR Case 50-ULP- Pang.) heretofore mentioned
covers the second unfair labor practice suit - the case
at hand. And this, because "[a]ll acts of unfair labor
practice allegedly committed by the herein petitioner
[the company] prior to November 18, 1958 [when
CIR Case 50-ULP-Pang. was filed] against the
members of respondent union [Sañgilo] constituted
one single cause of action." Petitioner continues onto
say that since CIR Case 50-ULP-Pang, has been
finally decided by this Court in a decision
promulgated on December 24, 1964, said case is a
bar to the present action.
We do not go along with petitioner.
The rule against splitting of a cause of action applies
only where the actions are between the same
parties. 14 Here, the parties in the two cases aforecited
are different. The first case involves only two (2)
laborers, namely, Jose Baldo and A. Manaois the
second refers to the claim of other laborers
numbering 107 in all. These two cases, it is true, were
brought in the name of Sañgilo. However, the real
parties in interest in both cases are the dismissed
employees. Sañgilo merely represented its members
before CIR. 15 CIR found that the members "are not
situated under similar circumstances", and that their
alleged dismissal "took pace on different
dates". 16 Each one of these employees has a cause of
action arising from his particular dismissal. And the
cause of action of one is separate and distinct from
the others. 17 Although, of course, they may be joined
and brought in the name of the union. Res
judicata has not attached.
3. Petitioner's averment that it gave out notices for a
return to work would not be of help to its cause. On
this point, the court said: "The Court is aware of the
offer of the company to the strikers to return to work,
but it is even more cognizant of the fact that passions
and emotions among the striking employees were
running high at the heat of the strike." 18 The validity
of this reasoning we do not find cause to dispute.
And then, evidence there is that the individual
respondents were driven out of and denied admission
into the company's mine premises because they
staged a strike. They were turned out of the
bunkhouses they rented in the premises as living
quarters. They were virtually locked out. Evidence
there is, too, that because of the strike the laborers
were not allowed to go back to their jobs. 19
4. Petitioner seeks to nullify individual respondents'
right to reinstatement and backpay upon the ground
that they are guilty of laches. Really the present case
was started after the lapse of almost two years and
two months after the strike. 1äwphï1.ñët
Laches has been defined as "such delay in enforcing
one's rights as works disadvantage to another" and "in
a general sense is the neglect, for an unreasonable
and unexplained length of time, under circumstances
permitting diligence, to do what in law should have
been done." 20 As we go into the core of this problem,
we are reminded that for the doctrine of stale demand
to apply, four essential requisites must be present,
viz: "(1) conduct on the part of the defendant, or of
one under whom he claims, giving rise to the
situation of which complaint is made and for which
the complaint seeks a remedy; (2) delay in asserting
the complainant's rights, the complainant having had
knowledge or notice of the defendant's conduct and
having been afforded an opportunity to institute a
suit; (3) lack of knowledge or notice on the part of
the defendant that the complainant would assert the
right on which he bases his suit; and (4) injury or
prejudice to the defendant in the event relief is
accorded to the complainant, or the suit is not held
barred." 21
With these as guideposts, let us look at the facts.
It is true that CIR declared Sañgilo and its members
who did not come to court and testify guilty of
laches. 22 But as to the 15 individual respondents, the
question of laches was passed by — sub silentio.
Clearly implicit in this is that CIR is of the opinion
that laches is not a bar to reinstatement and recovery
of back wages for these 15 individual respondents
who actually testified in court. For CIR, despite a
categorical finding of laches on the part of the union
and some of its complaining members, proceeded to
order reinstatement and back wages for the 15
respondents. By and large, appreciation of laches
rests mainly with the trial court. Absent a clear abuse,
we are not to disturb its ruling thereon.
Indeed, these fifteen respondents showed sufficient
interest in their case. They went to court and
supported their cause by their own testimony. Delay
in the filing of suit should not hamper their suit. We
must not for a moment forget that these fifteen
laborers' belong to the lower economic stratum of our
society. They are not expected to possess the
intelligence or foresight of those who have been
favored by high formal education. 23 Individually,
they may not be in a position to file suit; they may
not have the means. Thrown out of job, driven off,
and refused entrance to, the company's premises,
each has to go his own way. They had to return — as
most of them did — to their families in the lowlands,
far from the mine site. And yet they were not remiss
in their duty to report the matter to their president.
But the president, respondent Bartolome Mayo, was
then in the Baguio General Hospital. Mayo lost no
time in reporting the laborers' plight to the union
counsel. The laborers had every right to assume that
their union was doing something for them. They had
done their part. They had to depend on the action
taken by their union leaders. A labor union certainly
would not be of much use if it does not act for the
welfare of its members.
As to respondent Mayo himself, evidence appears on
record that from the time of his dismissal, he had
personally and by telephone asked Superintendent
Fertig for his reinstatement. He was brushed off with
the reply: "Your union went on strike". 24 On one
occasion after the strike, when Mayo met Fertig in
Baguio, the former repeated his request for
reinstatement, but received the same answer: "You
are still on strike". 25
Laches, if any, we must say, is not solely to be laid at
the door of respondents. The company contributed
too in the delay of the filing of the present suit. And
this because, as testified to by the union president in
court, such delay in filing the present ULP case was
due to the fact that the legality of their strike
precisely was being litigated in the Court of First
Instance of Baguio in Injunction Case 774 filed on
June 2, 1958 by the very company itself against some
of the strikers. Naturally, if the strike is there
declared illegal, the strikers including the herein
fifteen respondents would lose their right to
reinstatement and backpay. But as said suit became
apparently dormant, the union, on behalf of
respondents, decided to lodge their present complaint
with the CIR.
Thus it is, that the taint of laches cannot attach to
individual respondents. For the second element
required for the defense of laches to prosper is here
absent.

5. The judgment below directs petitioner to pay

individual respondents back wages from the time of
their dismissal to their actual reinstatement without
loss of seniority and privileges.

Since the dismissal of respondents in 1958, more than

ten years had elapsed. It would not seem out of place
to restate the guidelines to be observed in the
ascertainment of the total back wages payable under
the judgment below. These are:.1äwphï1.ñët

First. To be deducted from the back wages

accruing to each of the laborers to be
reinstated is the total amount of earnings
obtained by him from other employment(s)
from the date of dismissal to the date of
reinstatement. Should the laborer decide that
it is preferable not to return to work, the
deduction should be made up to the time
judgment becomes final. And these, for the
reason that employees should not be
permitted to enrich themselves at the
expense of their employer. 26 Besides, there
is the "law's abhorrence for double
compensation." 27

Second. Likewise, in mitigation of the

damages that the dismissed respondents are
entitled to, account should be taken of
whether in the exercise of due diligence
respondents might have obtained income
from suitable remunerative
employment. 28 We are prompted to give out
this last reminder because it is really unjust
that a discharged employee should, with
folded arms, remain inactive in the
expectation that a windfall would come to
him. A contrary view would breed idleness;
it is conducive to lack of initiative on the
part of a laborer. Both bear the stamp of
undesirability.

For the reasons given, the judgment under review is

hereby affirmed.

Let the record of this case be returned to the Court of

Industrial Relations with instructions to forthwith
ascertain the amount of back wages due individual
respondents in accordance with the guidelines herein
set forth. Costs against petitioner. So ordered.
#86 PAFLU vs Sec of Labor
G.R. No. L-22228 February 27, 1969
PHILIPPINE ASSOCIATION OF LABOR
UNIONS (PAFLU) SOCIAL SECURITY
SYSTEM EMPLOYEES ASSOCIATION-
PAFLU, AL FAJARDO AND ALL THE OTHER
MEMBERS AND OFFICERS OF THE SOCIAL
SECURITY AND EMPLOYEES
ASSOCIATION-PAFLU, petitioners,
vs.
THE SECRETARY OF LABOR, THE
DIRECTOR OF LABOR RELATIONS and THE
REGISTRAR OF LABOR
ORGANIZATIONS, respondents.
Cipriano Cid and Associates and Israel Bocobo for
petitioners.
Office of the Solicitor General Arturo A. Alafriz and
Solicitor Camilo D. Quiason for respondents.
CONCEPCION, C.J.:
Petitioners pray for writs of certiorari and prohibition
to restrain respondents, the Secretary of Labor, the
Director of Labor Relations and the Registrar of
Labor Organizations, from enforcing an order of
cancellation of the registration certificate of the
Social Security System Employees Association —
hereinafter referred to as the SSSEA — which is
affiliated to the Philippine Association of Free Labor
Unions — hereinafter referred to as PAFLU — as
well as to annul all proceedings in connection with
said cancellation and to prohibit respondents from
enforcing Section 23 of Republic Act No. 875.
Petitioners, likewise, pray for a writ of preliminary
injunction pending the final determination of this
case. In their answer, respondents traversed some
allegations of fact and the legal conclusions made in
the petition. No writ of preliminary
injunction pendente lite has been issued.
It appears that on September 25, 1963, the
Registration of Labor Organizations — hereinafter
referred to as the Registrar — issued a notice of
hearing, on October 17, 1963, of the matter of
cancellation of the registration of the SSSEA,
because of:
1. Failure to furnish the Bureau of Labor
Relations with copies of the reports on the
finances of that union duly verified by
affidavits which its treasurer or treasurers
rendered to said union and its members
covering the periods from September 24,
1960 to September 23, 1961 and September
24, 1961 to September 23, 1962, inclusive,
within sixty days of the 2 respective latter
dates, which are the end of its fiscal year;
and
2. Failure to submit to this office the names,
postal addresses and non-subversive
affidavits of the officers of that union within
sixty days of their election in October (1st
Sunday), 1961 and 1963, in conformity with
Article IV (1) of its constitution and by-
laws.
in violation of Section 23 of Republic Act No. 875.
Counsel for the SSSEA moved to postpone the
hearing to October 21, 1963, and to submit then a
memorandum, as well as the documents specified in
the notice. The motion was granted, but, nobody
appeared for the SSSEA on the date last mentioned.
The next day, October 22, 1963, Manuel Villagracia,
Assistant Secretary of the SSSEA filed with the
Office of the Registrar, a letter dated October 21,
1963, enclosing the following:
1. Joint non-subversive affidavit of the
officers of the SSS Employees' Association-
PAFLU;
2. List of newly-elected officers of the
Association in its general elections held on
April 29, 1963; and
3. Copy of the amended constitution and by-
laws of the Association.
Holding
1. That the joint non-subversive affidavit
and the list of officers mentioned in the
letter of Mr. Manuel Villagracia were not
the documents referred to in the notice of
hearing and made the subject matter of the
present proceeding; and
2. That there is no iota of evidence on
records to show and/or warrant the dismissal
of the present proceeding.
on October 23, 1963, the Registrar rendered a
decision cancelling the SSSEA's Registration
Certificate No. 1-IP169, issued on September 30,
1960. Soon later, or on October 28, 1963, Alfredo
Fajardo, president of the SSSEA moved for a
reconsideration of said decision and prayed for time,
up to November 15, within which to submit the
requisite papers and data. An opposition thereto
having been filed by one Paulino Escueta, a member
of the SSSEA, upon the ground that the latter had
never submitted any financial statement to its
members, said motion was heard on November 27,
1963. Subsequently, or on December 4, 1963, the
Registrar issued an order declaring that the SSSEA
had "failed to submit the following requirements to
wit:
1. Non-subversive affidavits of Messrs.
Teodoro Sison, Alfonso Atienza, Rodolfo
Zalameda, Raymundo Sabino and Napoleon
Pefianco who were elected along with others
on January 30, 1962.
2. Names, postal addresses and non-
subversive affidavits of all the officers who
were supposedly elected on October (1st
Sunday), of its constitution and by-laws.
and granting the SSSEA 15 days from notice to
comply with said requirements, as well as meanwhile
holding in abeyance the resolution of its motion for
reconsideration.
Pending such resolution, or on December 16, the
PAFLU, the SSSEA, Alfredo Fajardo "and all the
officers and members" of the SSSEA commenced the
present action, for the purpose stated at the beginning
of this decision, upon the ground that Section 23 of
Republic Act No. 875 violates their freedom of
assembly and association, and is inconsistent with the
Universal Declaration of Human Rights; that it
unduly delegates judicial power to an administrative
agency; that said Section 23 should be deemed
repealed by ILO-Convention No. 87; that respondents
have acted without or in excess of jurisdiction and
with grave abuse of discretion in promulgating, on
November 19, 1963, its decision dated October 22,
1963, beyond the 30-day period provided in Section
23(c) of Republic Act No. 875; that "there is no
appeal or any other plain, speedy and adequate
remedy in the ordinary course of law"; that the
decision complained of had not been approved by the
Secretary of Labor; and that the cancellation of the
SSSEA's certificate of registration would cause
irreparable injury.
The theory to the effect that Section 23 of Republic
Act No. 875 unduly curtails the freedom of assembly
and association guaranteed in the Bill of Rights is
devoid of factual basis. The registration prescribed in
paragraph (b) of said section 1 is not a limitation to the
right of assembly or association, which may be
exercised with or without said registration. 2 The latter
is merely a condition sine qua non for the acquisition
of legal personality by labor organizations,
associations or unions and the possession of the
"rights and privileges granted by law to legitimate
labor organizations". The Constitution does not
guarantee these rights and privileges, much less said
personality, which are mere statutory creations, for
the possession and exercise of which registration is
required to protect both labor and the public against
abuses, fraud, or impostors who pose as organizers,
although not truly accredited agents of the union they
purport to represent. Such requirement is a valid
exercise of the police power, because the activities in
which labor organizations, associations and union of
workers are engaged affect public interest, which
should be protected. 3 Furthermore, the obligation to
submit financial statements, as a condition for the
non-cancellation of a certificate of registration, is a
reasonable regulation for the benefit of the members
of the organization, considering that the same
generally solicits funds or membership, as well as
oftentimes collects, on behalf of its members, huge
amounts of money due to them or to the
organization. 4
For the same reasons, said Section 23 does not
impinge upon the right of organization guaranteed in
the Declaration of Human Rights, or run counter to
Articles 2, 4, 7 and Section 2 of Article 8 of the ILO-
Convention No. 87, which provide that "workers and
employers, ... shall have the right to establish and ...
join organizations of their own choosing, without
previous authorization"; that "workers and employers
organizations shall not be liable to be dissolved or
suspended by administrative authority"; that "the
acquisition of legal personality by workers' and
employers' organizations, ... shall not be made subject
to conditions of such a character as to restrict the
application of the provisions" above mentioned; and
that "the guarantees provided for in" said Convention
shall not be impaired by the law of the land.
In B.S.P. v. Araos, 5 we held that there is no
incompatibility between Republic Act No. 875 and
the Universal Declaration of Human Rights. Upon the
other hand, the cancellation of the SSSEA's
registration certificate would not entail a dissolution
of said association or its suspension. The existence of
the SSSEA would not be affected by said
cancellation, although its juridical personality and its
statutory rights and privileges — as distinguished
from those conferred by the Constitution — would be
suspended thereby.
To be registered, pursuant to Section 23(b) of
Republic Act No. 875, a labor organization,
association or union of workers must file with the
Department of Labor the following documents:
(1) A copy of the constitution and by-laws
of the organization together with a list of all
officers of the association, their addresses
and the address of the principal office of the
organization;
(2) A sworn statement of all the officers of
the said organization, association or union to
the effect that they are not members of the
Communist Party and that they are not
members of any organization which teaches
the overthrow of the Government by force or
by any illegal or unconstitutional method;
and
(3) If the applicant organization has been in
existence for one or more years, a copy of its
last annual financial report.
Moreover, paragraph (d) of said-Section ordains that:
The registration and permit of a legitimate
labor organization shall be cancelled by the
Department of Labor, if the Department has
reason to believe that the labor
organization no longer meets one or more of
the requirements of paragraph (b) above; or
fails to file with the Department Labor either
its financial report within the sixty days of
the end of its fiscal year or the names of its
new officers along with their non-subversive
affidavits as outlined in paragraph (b) above
within sixty days of their election; however,
the Department of Labor shall not order the
cancellation of the registration and permit
without due notice and hearing, as provided
under paragraph (c) above and the affected
labor organization shall have the same right
of appeal to the courts as previously
provided.6
The determination of the question whether the
requirements of paragraph (b) have been met, or
whether or not the requisite financial report or non-
subversive affidavits have been filed within the
period above stated, is not judicial power. Indeed, all
officers of the government, including those in the
executive department, are supposed, to act on the
basis of facts, as they see the same. This is specially
true as regards administrative agencies given by law
the power to investigate and render decisions
concerning details related to the execution of laws the
enforcement of which is entrusted thereto. Hence,
speaking for this Court, Mr. Justice Reyes (J.B.L.)
had occassion to say:
The objections of the appellees to the
constitutionality of Republic Act No. 2056,
not only as an undue delegation of judicial
power to the Secretary of Public Works but
also for being unreasonable and arbitrary,
are not tenable. It will be noted that the Act
(R.A. 2056) merely empowers the Secretary
to remove unauthorized obstructions or
encroachments upon public streams,
constructions that no private person was
anyway entitled to make because the bed of
navigable streams is public property, and
ownership thereof is not acquirable by
adverse possession
(Palanca vs. Commonwealth, 69 Phil., 449).
It is true that the exercise of the Secretary's
power under the Act necessarily involves
the determination of some question of fact,
such as the existence of the stream and its
previous navigable character; but these
functions, whether judicial or quasi-judicial,
are merely incidental to the exercise of the
power granted by law to clear navigable
streams of unauthorized obstructions or
encroachments, and authorities are clear
that they are validly conferable upon
executive officials provided the party
affected is given opportunity to be heard, as
is expressly required by Republic Act No.
2056, section 2.7
It should be noted also, that, admittedly, the SSSEA
had not filed the non-subversive affidavits of some of
its officers — "Messrs. Sison, Tolentino, Atienza,
Zalameda, Sabino and Pefianca" — although said
organization avers that these persons "were either
resigned or out on leave as directors or officers of the
union", without specifying who had resigned and who
were on leave. This averment is, moreover,
controverted by respondents herein.
Again, the 30-day period invoked by the petitioners is prayed for denied, with costs against the petitioners.
inapplicable to the decision complained of. Said It is so ordered.
period is prescribed in paragraph (c) 8 of Section 23,
which refers to the proceedings for the "registration"
of labor organizations, associations or unions not to
the "cancellation" of said registration, which is
governed by the abovequoted paragraph (d) of the
same section.

Independently of the foregoing, we have repeatedly

held that legal provisions prescribing the period
within which a decision should be rendered are
directory, not mandatory in nature — in the sense
that, a judgment promulgated after the expiration of
said period is not null and void, although the officer
who failed to comply with law may be dealt with
administratively, in consequence of his delay 9 —
unless the intention to the contrary is manifest. Such,
however, is not the import of said paragraph (c). In
the language of Black:

When a statute specifies the time at or

within which an act is to be done by a public
officer or body, it is generally held to
be directory only as to the time, and not
mandatory, unless time is of the essence of
the thing to be done, or the language of the
statute contains negative words, or shows
that the designation of the time was intended
as a limitation of power, authority or right. 10

Then, again, there is no law requiring the approval,

by the Secretary of Labor, of the decision of the
Registrar decreeing the cancellation of a registration
certificate. In fact, the language of paragraph (d) of
Section 23, suggests that, once the conditions therein
specified are present, the office concerned "shall"
have no choice but to issue the order of cancellation.
Moreover, in the case at bar, there is nothing, as yet,
for the Secretary of Labor to approve or disapprove,
since petitioners, motion for reconsideration of the
Registrar's decision of October 23, 1963, is still
pending resolution. In fact, this circumstance shows,
not only that the present action is premature, 11 but,
also, that petitioners have failed to exhaust the
administrative remedies available to them. 12 Indeed,
they could ask the Secretary of Labor to disapprove
the Registrar's decision or object to its execution or
enforcement, in the absence of approval of the
former, if the same were necessary, on which we
need not and do not express any opinion.

IN VIEW OF THE FOREGOING, the petition herein

should be, as it is hereby dismissed, and the writs
#87 Tablante-Tungol Enterprises vs Tungol
G.R. No. L-47848 August 23, 1978
TABLANTE-TUNGOL
ENTERPRISES, petitioner,
vs.
HON. CARMELO C. NORIEL, ELISEO E.
PEÑAFLOR and ASSOCIATION OF
DEMOCRATIC LABOR
ORGANIZATION, respondents.
RESOLUTION
FERNANDO, J.:
Petitioner Tablante-Tungol Enterprises, resolute in its
determination not to bargain collectively with private
respondent, Association of Democratic Labor
Organization, has once again filed a certiorari
proceeding against respondents Director Carmelo C.
Noriel, Bureau of Labor Relations, and the Chief of
its Med-Arbiter Section, Regional Office No. 3,
Eliseo Peñaflor. The first attempt, 1 embodied in a
certiorari and prohibition petition dated May 3, 1976,
to set aside a resolution of respondent Noriel ordering
a certification election, was dismissed in a minute
resolution of May 12, 1976 2 for lack of merit. The
second petition for certiorari was filed on December
8, 1976, 3 this time to nullify a certification election
held on May 26, 1976, wherein private
respondent 4 was Unanimously chosen as the
collective bargaining representative.5 For obvious
lack of merit, it was likewise dismissed in a
resolution of November 18, 1977.6 In this certiorari
proceeding, it was alleged that public respondents
should have cancelled the registration and permit of
private respondent labor organization as private
respondent labor union had engaged in an illegal
strike. That was the novel issue raised in this petition.
Solicitor General Estelito P. Mendoza, 7 in his
exhaustive Comment, considered as the answer,
found no merit in such an allegation and sustained the
action of respondent public officials.
Petitioner is quite insistent that private respondent
labor union having engaged in an illegal strike, its
registration permit must be cancelled. It based its
contention on the relevant section of Presidential
Decree No. 823. 8 It did admit that as amended by
Presidential Decree No. 849, there is no mention of
such a penalty. It now reads in full: "Violation of any
provision thereof shall be punished by a fine of
P1,000 to P10,000 and/or imprisonment of 1 year to 5
years. Any person violating any provision of
Presidential Decree No. 823 shall be dealt with under
General Order No. 2-A and General Order No. 49." 9
Petitioner, nonetheless, would seek to import a
semblance of plausibility to its claim by the assertion
that the Labor Code itself provides, in another
section, that cancellation of registration follows from
"any activity prohibited by law." 10 The argument is
false and misleading according to the Comment of
the Solicitor-General. Thus: "By this amendatory law,
it is evident that no cause of action exists which will
warrant the cancellation of [Association of
Democratic Labor Organization's] permit and
registration. Of course, petitioner tried to evade said
issue by relying on Article 240 (e) and Article 242 (p)
of the Labor Code of the Philippines, as amended.
Let us examine its legal contention on this matter. For
expediency, we quote in entirety the aforesaid Article
relied upon by the petitioner for cancellation of the
registration and permit of the union: 'Article
239. Ground for cancellation of union
registration.The following shall constitute grounds
for cancellation of union registration: ... (e) Acting as
a labor contractor or engaging in the "cabo" system,
or otherwise engaging in any activity prohibited by
law. Suppletory to the above provision is Section 6
(c) of Rule II, Book V of the Rules and Regulations
implementing the Labor Code of the Philippines, as
amended, which reads as follows: 'Section 6. Denial
of Registration of local unions-The Regional Office
may deny the application for registration on any of
the following grounds: ... (c) Engaging in the "cabo
"system or other illegal practices.' It is a fact that
[Association of Democratic Labor Organization] is
not a labor contractor or is it engaged in the 'cabo'
system or is it otherwise engaged in any activity of
such nature which is prohibited by law. The above-
quoted article should not be interpreted or construed
to include an illegal strike engaged into by any union.
This is so because the phrase 'or otherwise engaging
in any activity prohibited by law'should be construed
to mean such activity engaged into by a union that
partakes of the nature of a labor contractor or 'cabo'
system. The law does not intend to include in the said
phrase illegally declared strike simply because strike
per se is legal. Also, if the law intends to include
illegally declared strike, the same could have been
expressly placed therein as had been previously done
in Presidential Decree No. 823." 11 Clearly, an
awareness of the relevance of the maxims noscitur a
sociis and ejusdem generis ought to have cautioned
counsel for petitioner to shy away from this
approach.

The realization must have dawned on petitioner's

counsel, Ramos L. Cura, whose abilities could have
been enlisted for a more worthwhile cause, that the
petition filed by him hardly has any prospect for
success. The Comment of Solicitor-General Mendoza
was filed on July 12, 1978. Then came, less than a
month later, August 3, 1978 to be exact, a joint
motion to dismiss filed by petitioner and private
respondent. It alleges: "1. That, on February 27,
1978, petitioners filed with this Honorable Court a
petition for certiorari and mandamus; 2. That, after
the filing of the aforesaid petition, the parties through
their respective representatives/counsel, met for the
purpose of amicable settlement of the issues raised in
the aforesaid petition; 3. That, both parties have
threshed-out their respective disputes and have found
ways and means which would render the above-
entitled case moot and academic; 4. That, both parties
are no longer interested in the outcome/result of this
case and pray of this Honorable Court to dismiss it
for being ,moot and academic. " 12 The prayer is for
the dismissal of the petition on the ground that it is
moot and academic.

WHEREFORE, this petition for certiorari is

dismissed for being moot and academic.
#88 Benguet Consolidated Inc vs BCI Employees &
Workers Union
G.R. No. L-24711 April 30, 1968
BENGUET CONSOLIDATED, INC., plaintiff-
appellant,
vs.
BCI EMPLOYEES and WORKERS UNION-
PAFLU, PHILIPPINE ASSOCIATION OF FREE
LABOR UNIONS, CIPRIANO CID and
JUANITO GARCIA, defendants-appellees.
Ross, Selph, Del Rosario, Bito and Misa for plaintiff-
appellant.
Cipriano Cid and Associates for defendants-
appellees.
BENGZON, J.P., J.:
The contending parties in this case —Benguet
Consolidated, Inc., ("BENGUET") on the one hand,
and on the other, BCI Employees & Workers Union
("UNION") and the Philippine Association of Free
Labor Unions ("PAFLU") —do not dispute the
following factual settings established by the lower
court.
On June 23, 1959, the Benguet-Balatoc Workers
Union ("BBWU"), for and in behalf of all BENGUET
employees in its mines and milling establishment
located at Balatoc, Antamok and Acupan,
Municipality of Itogon, Mt. Province, entered into a
Collective Bargaining Contract, Exh. "Z"
("CONTRACT") with BENGUET. Pursuant to its
very terms, said CONTRACT became effective for a
period of four and a half (4-½) years, or from June
23, 1959 to December 23, 1963. It likewise embodied
a No-Strike, No-Lockout clause. 1
About three years later, or on April 6, 1962, a
certification election was conducted by the
Department of Labor among all the rank and file
employees of BENGUET in the same collective
bargaining units. UNION obtained more than 50% of
the total number of votes, defeating BBWU, and
accordingly, the Court of Industrial Relations, on
August 18, 1962, certified UNION as the sole and
exclusive collective bargaining agent of all
BENGUET employees as regards rates of pay,
wages, hours of work and such other terms and
conditions of employment allowed them by law or
contract.
Subsequently, separate meetings were conducted on
November 22, 23 and 24, 1962 at Antamok, Balatoc
and Acupan Mines respectively by UNION. The
result thereof was the approval by UNION members
of a resolution 2 directing its president to file a notice
of strike against BENGUET for:
1. [Refusal] to grant any amount as monthly
living allowance for the workers;
2. Violation of Agreements reached in
conciliation meetings among which is the
taking down of investigation [sic] and
statements of employees without the
presence of union representative;
3. Refusal to dismiss erring executive after
affidavits had been presented, thereby
company showing [sic] bias and partiality to
company personnel;
4. Discrimination against union members in
the enforcement of disciplinary actions.
The Notice of Strike 3 was filed on December 28,
1962. Three months later, in the evening of March 2,
1963, UNION members who were BENGUET
employees in the mining camps at Acupan, Antamok
and Balatoc, went on strike. Regarding the conduct of
the strike, the trial court reports: 4
... Picket lines were formed at strategic
points within the premises of the plaintiff.
The picketers, by means of threats and
intimidation, and in some instances by the
use of force and violence, prevented passage
thru the picket lines by personnel of the
plaintiff who were reporting for work.
Human blocks were formed on points of
entrance to working areas so that even
vehicles could not pass thru, while the
officers of the plaintiff were not allowed for
sometime to leave the "staff" area.
The strikers forming picket lines bore
placards with the letters BBWU-PAFLU
written thereon. As a general rule, the
picketers were unruly, aggressive and
uttered threatening remarks to staff members
and non-strikers who desire to pass thru the
picket lines. On some occasions, the
picketers resorted to violence by pushing
back the car wherein staff officers were
riding who would like to enter the mine
 working area. The picketers lifted one side
of the vehicle and were in the act of
overturning it when they were prevented
from doing so by the timely intervention of
PC soldiers, who threw tear gas bombs to
make the crowd disperse. Many of the
picketers were apprehended by the PC
soldiers and criminal charges for grave
coercion were filed against them before the
Court of First Instance of Baguio. Two of
the strike leaders and twenty-two picketers,
however, were found guilty of light coercion
while nineteen other accused were acquitted.
There was a complete stoppage of work
during the strike in all the mines. After two
weeks elapsed, repair and maintenance of
the water pump was allowed by the strikers
and some of the staff members were
permitted to enter the mines, who inspected
the premises in the company of PC soldiers
to ascertain the extent of the damage to the
equipment and losses of company property.
xxx xxx xxx
On May 2, 1963, the parties agreed to end the raging
dispute. Accordingly, BENGUET and UNION
executed the AGREEMENT, Exh. 1. PAFLU placed
its conformity thereto and said agreement was
attested to by the Director of the Bureau of Labor
Relations. About a year later or on January 29, 1964,
a collective bargaining contract was finally executed
between UNION-PAFLU and BENGUET. 5
Meanwhile, as a result, allegedly, of the strike staged
by UNION and its members, BENGUET had to incur
expenses for the rehabilitation of mine openings,
repair of mechanical equipment, cost of pumping
water out of the mines, value of explosives, tools and
supplies lost and/or destroyed, and other
miscellaneous expenses, all amounting to
P1,911,363.83. So, BENGUET sued UNION,
PAFLU and their respective Presidents to recover
said amount in the Court of First Instance of
Manila, on the sole premise that said defendants
breached their undertaking in the existing
CONTRACT not to strike during the effectivity
thereof .
In answer to BENGUET's complaint, defendants
unions and their respective presidents put up the
following defenses: (1) they were not bound by the
CONTRACT which BBWU, the defeated union, had
executed with BENGUET; (2) the strike was
due, inter alia, to unfair labor practices of
BENGUET; and (3) the strike was lawful and in the
exercise of the legitimate rights of UNION-PAFLU
under Republic Act 875.
Issues having been joined, trial commenced. On
February 23, 1965, the trial court rendered judgment
dismissing the complaint on the ground that the
CONTRACT, particularly the No-Strike clause, did
not bind defendants. The latters' counterclaim was
likewise denied. Failing to get a reconsideration of
said decision, BENGUET interposed the present
appeal.
The several errors assigned by BENGUET basically
ask three questions:
(1) Did the Collective Bargaining Contract
executed between BENGUET and BBWU
on June 23, 1959 and effective until
December 23, 1963 automatically
bind UNION-PAFLU upon its certification,
on August 18, 1962, as sole bargaining
representative of all BENGUET employees?
(2) Are defendants labor unions and their
respective presidents liable for the illegal
acts committed during the course of the
strike and picketing by some union
members?
(3) Are defendants liable to pay the damages
claimed by BENGUET?
In support of an affirmative answer to the first
question, BENGUET first invokes the so-called
"Doctrine of Substitution" referred to in General
Maritime Stevedores' Union v. South Sea Shipping
Lines, L-14689, July 26, 1960. There it was
remarked:
xxx xxx xxx
We also hold that where the bargaining
contract is to run for more than two years,
the principle of substitution may well be
adopted and enforced by the CIR to the
effect that after two years of the life of a
bargaining agreement, a certification
election may be allowed by the CIR; that if a
bargaining agent other than the union or
organization that executed the contract, is
elected, said new agent would have to
respect said contract, but that it may bargain
 with the management for the shortening of
the life of the contract if it considers it too
long, or refuse to renew the contract
pursuant to an automatic renewal clause.
(Emphasis supplied)
xxx xxx xxx
The submission utterly fails to persuade Us. The
above-quoted pronouncement was obiter dictum. The
only issue in the General Maritime Stevedores'
Union case was whether a collective bargaining
agreement which had practically run for 5 years
constituted a bar to certification proceedings. We
held it did not and accordingly directed the court a
quo to order certification elections. With that, nothing
more was necessary for the disposition of the case.
Moreover, the pronouncement adverted to was rather
premature. The possible certification of a union
different from that which signed the bargaining
contract was a mere contingency then since the
elections were still to be held. Clearly, the Court was
not called upon to rule on possible effects of such
proceedings on the bargaining agreement. 6
But worse, BENGUET's reliance upon the Principle
of Substitution is totally misplaced. This principle,
formulated by the NLRB 7 as its initial compromise
solution to the problem facing it when there occurs a
shift in employees' union allegiance after the
execution of a bargaining contract with their
employer, merely states that even during the
effectivity of a collective bargaining agreement
executed between employer and employees thru their
agent, the employees can change said agent but the
contract continues to bind them up to its expiration
date. They may bargain however for the shortening
of said expiration date. 8
In formulating the "substitutionary" doctrine, the only
consideration involved was the employees' interest in
the existing bargaining agreement. The agent's
interest never entered the picture. In fact, the
justification 9 for said doctrine was:
... that the majority of the employees, as an
entity under the statute, is the true party in
interest to the contract, holding rights
through the agency of the union
representative. Thus, any exclusive interest
claimed by the agent is defeasible at the will
of the principal.... (Emphasis supplied)
Stated otherwise, the "substitutionary" doctrine only
provides that the employees cannot revoke the validly
executed collective bargaining contract with their
employer by the simple expedient of changing their
bargaining agent. And it is in the light of this that the
phrase "said new agent would have to respect said
contract" must be understood. It only means that the
employees, thru their new bargaining agent, cannot
renege on their collective bargaining contract, except
of course to negotiate with management for the
shortening thereof.
The "substitutionary" doctrine, therefore, cannot be
invoked to support the contention that a newly
certified collective bargaining agent automatically
assumes all the personal undertakings — like the no-
strike stipulation here — in the collective bargaining
agreement made by the deposed union. When BBWU
bound itself and its officers not to strike, it could not
have validly bound also all the other rival unions
existing in the bargaining units in question. BBWU
was the agent of the employees, not of the other
unions which possess distinct personalities. To
consider UNION contractually bound to the no-strike
stipulation would therefore violate the legal maxim
that res inter alios nec prodest nec nocet. 10
Of course, UNION, as the newly certified bargaining
agent, could always voluntarily assume all the
personal undertakings made by the displaced agent.
But as the lower court found, there was no showing at
all that, prior to the strike, 11 UNION formally
adopted the existing CONTRACT as its own and
assumed all the liability ties imposed by the same
upon BBWU.
BENGUET also alleges that UNION is now in
estoppel to claim that it is not contractually bound by
the CONTRACT for having filed on September 28,
1962, in Civil Case No. 1150 of the Court of First
Instance of Baguio, entitled "Bobok Lumber Jack
Ass'n. vs. Benguet Consolidated, Inc. and BCI
Employees Workers Union-PAFLU" 12 a motion
praying for the dissolution of the ex parte writ of
preliminary injunction issued therein, wherein the
following appears:
In that case, the CIR transfered the
contactual rights of the BBWU to the
defendant union. One of such rights
transferred was the right to the modified
union-shop — checked off union dues
arrangement now under injunction.
The collective bargaining contract
mentioned in the plaintiff's complaint did
not expire by the mere fact that the
 defendant union was certified as bargaining
agent in place of the BBWU. The Court of
Industrial Relations in the case above
mentioned made it clear that the collective
bargaining contract would be respected
unless and until the parties act otherwise. In
effect, the defendant union by act of
subrogation took the place of the BBWU as
the UNION referred to in the contract.
(Emphasis supplied)
There is no estoppel. UNION did not assert the above
statement against BENGUET to force it to rely upon
the same to effect the union check-off in its favor.
UNION and BENGUET were together as co-
defendants in said Civil Case No. 1150. Rather, the
statement was directed against Bobok Lumber Jack
Ass'n., plaintiff therein, to weaken its cause of action.
Moreover, BENGUET did not rely upon said
statement. What prompted Bobok Lumber Jack Ass'n.
to file the complaint for declaratory relief was the fact
that "... the defendants [UNION and BENGUET] are
planning to agree to the continuation of a modified
union shop in the three camps mentioned above
without giving the employees concerned the
opportunity to express their wishes on the matter ..."
BENGUET even went further in its answer filed on
October 18, 1962, by asserting that "... defendants
have already agreed to the continuation of the
modified union shop provision in the collective
bargaining agreement...." 13
Neither can we accept BENGUET's contention that
the inclusion of said aforequoted motion in the record
on appeal filed in said Civil Case No. 1150, now on
appeal before Us docketed as case No. L-24729,
refutes UNION's allegation that it has subsequently
abandoned its stand against Bobok Lumber Jack
Ass'n., in said case. The mere appearance of such
motion in the record on appeal is but a compliance
with the procedural requirement of Rule 41, Sec. 6, of
the Rules of Court, that all matters necessary for a
proper understanding of the issues involved be
included in the record on appeal. This therefore
cannot be taken as a rebuttal of the UNION's
explanation.
There is nothing then, in law as well as in fact, to
support plaintiff BENGUET's contention that
defendants are contractually bound by the
CONTRACT. And the stand taken by the trial court
all the more becomes unassailable in the light of Art.
1704 of the Civil Code providing that:
In the collective bargaining, the labor union
or members of the board or committee
signing the contract shall be liable for non-
fulfillment thereof. (Emphasis supplied)
There is no question, defendants were not signatories
nor participants in the CONTRACT.
Lastly, BENGUET contends, citing Clause II in
connection with Clause XVIII of the CONTRACT,
that since all the employees, as principals, continue
being bound by the no-strike stipulation until the
CONTRACT's expiration, UNION, as their agent,
must necessarily be bound also pursuant to the Law
on Agency. This is untenable. The way We
understand it, everything binding on a duly
authorized agent, acting as such, is binding on the
principal; not vice-versa, unless there is a mutual
agency, or unless the agent expressly binds himself to
the party with whom he contracts. As the Civil Code
decrees it: 14
The agent who acts as such is not personally
liable to the party with whom he contracts,
unless he expressly binds himself or exceeds
the limits of his authority without giving
such party sufficient notice of his powers.
(Emphasis supplied)1äwphï1.ñët
Here, it was the previous agent who expressly bound
itself to the other party, BENGUET. UNION, the
new agent, did not assume this undertaking of
BBWU.
In view of all the foregoing, We see no further
necessity of delving further into the other less
important points raised by BENGUET in connection
with the first question.
On the second question, it suffices to consider, in
answer thereto, that the rule of vicarious liability has,
since the passage of Republic Act 875, been
expressly legislated out. 15 The standing rule now is
that for a labor union and/or its officials and members
to be liable, there must be clear proof of actual
participation in, or authorization or ratification of the
illegal acts. 16 While the lower court found that some
strikers and picketers resorted to intimidation and
actual violence, it also found that defendants
presented uncontradicted evidence that before and
during the strike, the strike leaders had time and
again warned the strikers not to resort to violence but
to conduct peaceful picketing only. 17 Assuming that
the strikers did not heed these admonitions coming
from their leaders, the failure of the union officials to
go against the erring union members pursuant to the
UNION and PAFLU constitutions and by-laws
exposes, at the most, only a flaw or weakness in the
defense which, however, cannot be the basis for
plaintiff BENGUET to recover.

Lastly, paragraph VI of the Answer 18 sufficiently

traverses the material allegations in paragraph VI of
the Complaint, 19 thus precluding a fatal admission on
defendants' part. The purpose behind the rule
requiring specific denial is obtained: defendants have
set forth the matters relied upon in support of their
denial. Paragraph VI of the Answer may not be a
model pleading, but it suffices for purposes of the
rule. Pleadings should, after all, be liberally
construed. 20

Since defendants were not contractually bound by the

no-strike clause in the CONTRACT, for the simple
reason that they were not parties thereto, they could
not be liable for breach of contract to plaintiff. The
lower court therefore correctly absolved them from
liability.

WHEREFORE, the judgment of the lower court

appealed from is hereby affirmed. No costs. So
ordered.1äwphï1.ñët
#89 PICEWO-FFW vs PICC amply substantiated, and, therefore, adopts the
same as its own.
PEOPLE’S INDUSTRIAL AND
COMMERCIAL EMPLOYEES AND “WHEREFORE, in view of all the foregoing,
WORKERS ORGANIZATION (FFW), above-entitled
ERNESTO PAGAYATAN, ANTONIO cases should therefore be, as they are hereby
ERIÑO, RODRIGO BOADO AND LINO ordered
FRANCISCO, DISMISSED. chanroblespublishingcompany
Petitioners,

-versus- G.R. No. L-

37687 SO ORDERED.”
March 15, 1982
This petition limits itself to the controversy in Case
No. 4498-ULP
PEOPLE’S INDUSTRIAL AND filed by People’s Industrial and Commercial
COMMERCIAL CORPORATION, Employees and Workers
FEDERATION OF TENANTS AND Organization against People’s Industrial and
LABORERS ORGANIZATION, and THE Commercial Corporation
COURT OF INDUSTRIAL RELATIONS, and the Federation of Tenants and Laborers
Respondents. Organization.
x---------------------------------------------------x
On the basis of the Examiner’s Report, the following
facts appear: On
DECISION April 30, 1964, the Federation of Tenants and Laborers
Organization,
Rizal Chapter, FTLO for short, entered into a
GUERRERO, J.: collective bargaining
agreement with respondent People’s Industrial and
Commercial
Petition for Review of the Decision and En Banc Corporation, hereafter referred to as PINCOCO,
Resolution of the (Exhibits “2” and
Court of Industrial Relations dated April 2, 1973 and “G”). At the time the agreement was consummated,
October 3, 1973, herein individual
respectively, promulgated in three (3) consolidated petitioners, Ernesto Pagayatan, Antonio Eriño,
cases.[1] Rodrigo Boado and
Lino Francisco, who were also the individual
The decision penned by Associate Judge Alberto S. complainants in Case
Veloso adopting in No. 4498-ULP, together with those mentioned in
full the report of CIR Hearing Examiner Atty. Annex “A” of the
Francisco de los Reyes complaint (List of some forty-five [45] other
made the following dispositive portion, thus — employees), were
chanroblespublishingcompany employees of PINCOCO and members of FTLO. The
relevant portions
of the working agreement stipulate:
chanroblespublishingcompany

“After a careful review, scrutiny and evaluation of

the records of
these cases, as well as of every piece of evidence
adduced by the x xx
parties, pro and con, this court finds the findings of
facts and “Art. II — Union Security Maintenance Shop.
conclusions of law contained in the aforequoted Those who are
Report to be
 members in good standing of the Union before the other concerted activity other than in protest of unfair
signing of labor
this working agreement, shall continue to be union practice, and the court decision in the case that may be
members in good standing as a prerequisite for filed in
continued employment in this connection shall determine the propriety of such
the company. chanroblespublishingcompany concerted
activity under the Agreement. Violation of this
paragraph shall
be treated as subject to the same sanctions as a
violation of the
xxx duty to bargain collectively.
chanroblespublishingcompany
Any employee covered by this agreement who during
its term,
should resign from the union or shall be expelled
therefrom
according to its normal procedures for any of the A stoppage of work or cessation of operation due to
causes poor sales,
hereafter enumerated, shall upon written notice by the lack of raw material, or any other business reason, or
union to force
directorate, be discharged from employment, provided majeure, shall not be deemed a lockout for the purpose
that the of the
causes for expulsion from the Union be any of the preceding paragraph. In any case that the COMPANY
following: should stop operations due to any of the foregoing
reasons, adequate
1. Working in the interest of any labor organization notice shall be given to the UNION whenever
other possible. chanroblespublishingcompany
than the Union which claims or exercises
jurisdiction
similar to that claimed or exercised by the Union;
chanroblespublishingcompany
xxx

“Art. XI. Duration of the Agreement. This

Agreement shall
2. Refusal to pay or non-payment of Union dues take effect this ___ day of April, 1964 and shall
and only be in effect
Assessment; for a period of one (1) year thereafter. Unless
chanroblespublishingcompany written notice of a
desire to terminate or modify the same is given by
either party
to the other at least thirty (30) days before its
expiration, this
3. Disloyalty to the Union; agreement shall be deemed to be renewed for
another year.”
4. Separation from the Union for cause.
x x x”
x
x x On October 18, 1964, it appears that with the
knowledge of
“Art. VIII. No Strike, No Lockout. For the duration of PINCOCO, an election of union officers of the Rizal
the Chapter of FTLO
Agreement, the COMPANY shall not lockout its was conducted by virtue of a resolution (Exhibit “2-
employees, nor FFW,” t.s.n., pp.
shall the UNION or any employee stage any strike, 24-31, October 10, 1969) and that individual
picket or petitioners were elected
as the new officers with Ernesto Pagayatan as chapter considering that April 15, 1965 is a legal holiday
president we cannot serve
(Exhibits “4-FFW” and “5-FFW”). On January 10, you, our formal reply within the period specified by
1965, individual existing
petitioners together with fifty-one (51) other statute.chanroblespublishingcompany
employees executed a
Certification (Exhibit “3-FFW”) stating that they are
members of the
Federation of Tenants and Laborers Organization, but
as of the above “However, we assure you of our formal reply to
date, they have changed the name of their union to your proposal
People’s Industrial on April 14, 1965 and that management will
and Commercial Employees and Workers endeavor to avail of
Organization (PICEWO) the remedies within the financial capacity of the
and have affiliated this new union with the Federation company and
of Free other factors to be considered to meet the terms of
Workers. Ernesto Pagayatan was again made the your
president of the new proposal.” chanroblespublishingcompany
union (PICEWO) together with the set of officers
elected with him in
the last election retaining their respective positions.
Further, in the
same certification, the union counsel of FTLO, Atty. On April 13, 1965, FTLO passed a resolution
David Advincula, expelling petitioners
was disauthorized to represent the signatories. The Ernesto Pagayatan, Antonio Eriño, Rodrigo Boado and
certification Lino
contains no specific reason or cause for the change of Francisco from the Federation of Tenants and
union name. On Laborers Organization
February 10, 1965, the new union was granted a (FTLO) on grounds of disloyalty and working for the
certificate of interest of
registration by the Department of Labor (Exhibit “1- another labor federation (Exhibit “F”). On April 22,
FFW”). chanroblespublishingcompany 1965, Ernesto
Pagayatan, this time as president of PICEWO filed a
notice of strike,
alleging as cause thereof respondent employer’s
refusal to bargain.
On March 23, 1965, Ernesto Pagayatan, assuming the (Exhibit “9-H”). On April 29, 1965, prompted by the
capacity of demand of the
chapter president of FTLO and not as a president of majority of the FTLO directorate to enforce the
PICEWO, maintenance of
notified in writing respondent PINCOCO of their membership shop of the working agreement,
desire to terminate respondent PINCOCO
the working agreement. Later, a set of collective dismissed Ernesto Pagayatan and his companions from
bargaining proposals was sent in the name of PICEWO employment
(Exhibits “E,” “10” and “11”). (Exhibits “12-FFW,” “12-A-FFW” to 12-C-FFW”).
PINCOCO replied this wise: On May 1, 1965, the
FTLO and respondent PINCOCO executed a
xxx collective bargaining
agreement for a period of three (3) years (Exhibits “A-
“That in view of the study effected by the CO” and “D”).
management as to its
stand with regard to the said proposals and further Meanwhile, on April 30, 1965, PICEWO, led by
submission individual petitioners
of the same to our legal counsel for consultation struck. Thereafter, at the behest of the FTLO,
and advice and respondent PINCOCO
posted a notice for the strikers to return to work within
a period of
five (5) or ten (10) days or else they shall be considered
to have
abandoned their work. None of the strikers returned
and picketing
went on for a period of six (6) months. Later,
PINCOCO again posted
a notice that it had decided to resume operation on
March 9, 1966, and between March 7 and 8 of the same
year, all employees were
advised to signify their ability to work at which time
they will be
required to submit police clearances and to medical
and physical
examination by the company physician, otherwise
their failure to
return within the period shall be considered as
abandonment of work.
On March 31, 1966 petitioner-union, through its
president, signified
the intention to return to work beginning April 4, 1966.
None of the
strikers, however, were allowed to work.
From the preceding developments, three separate
cases were filed
with the Court of Industrial Relations. In Case No.
4428-ULP, FTLO
indicted herein individual petitioners for unfair labor
practice in
staging an illegal strike after they were already
dismissed from the
company. In Case No. 167-INJ, FTLO sought for the
issuance of a
permanent injunction to stop the alleged illegal strike.
In Case No.
4498-ULP, PICEWO sued PINCOCO and FTLO for
unfair labor
practice, alleging that by illegally dismissing
petitioners, the company
discriminated against them in regard to hire, tenure
and/or other
conditions of employment by unlawfully acceding and
effecting the
request of FTLO without proper investigation thereof,
with no just
reason but to encourage membership in the FTLO; and
that
respondent federation, in recommending and insisting
on the
dismissal of individual petitioners, had interfered in
their right to
self-organization (Annex “C,” p. 39, Rollo).
After the reception of evidence, the Hearing Examiner
designated by
the Court of Industrial Relations reported that the
petitioners were,
beyond doubt, members of the FTLO when the
Working Agreement
of April 30, 1964 took effect and that the working
agreement required
in Article II thereof maintenance of membership in the
federation as
condition for continued employment in the company.
Since the
specific causes for expulsion from membership have
been
enumerated, particularly that of working for the
interest of another
organization and disloyalty to the union, the Hearing
Examiner
concluded that petitioners’ conduct is within the said
causes
expressed in the agreement. The Report also
established that FTLO is
the sole and exclusive bargaining representative of the
employees
which entered into a bona fide agreement, putting a
limitation of
petitioners’ right to leave the union and join another.
The Examiner
found no unfair labor practice committed by either the
FTLO or PINCOCO, and that the strike staged by
petitioners was not on
account of any unfair labor practice, but, rather, done
to force
recognition.
Based on the above findings, respondent court
dismissed the three
cases. On April 10, 1973, petitioners filed their motion
for
reconsideration; same was denied in the en banc
resolution of
October 3, 1973. Petitioners now raise the following
assignment of
errors:
a) The respondent court erred in holding that the
Motion for
 Reconsideration and the Memorandum in support technicalities in procedure so as not to deprive the
of the Motion for Reconsideration were filed out of litigant’s pursuit of
time; his substantial rights under the Rules.

b) The respondent court erred in holding that the Under Article 13, last paragraph, of the Civil Code, in
strike computing the
declared by herein petitioners was intended only period, the first day shall be excluded, and the last day
to force included. And
recognition;. under Rule 28 of the Rules of Court, Section 1, time is
computed thus
c) The respondent court erred in not declaring both —
respondent
Corporation and respondent Federation guilty of “Sec 1. How to compute time. — In computing
committing any period
unfair labor practice; of time prescribed or allowed by these rules, by
order of court,
or by any applicable statute, the day of the act,
event, or default
after the designated period of time begins to run is
d) The respondent court erred in not declaring as not to be
illegal the included. The last day of the period so computed is
dismissal from employment of individual to be
petitioners; and included, unless it is a Sunday or a legal holiday,
in which event
e) Respondent court erred in not ordering the return the time shall run until the end of the next day
to work of which is neither
the striking members of petitioner Union with a Sunday nor a holiday.”
backwages
and other fringe benefits from April 30, 1965 Under the second assignment of error, the question to
until their be resolved is
actual reporting for work. whether or not the petitioners’ act of disaffiliating
themselves from
the mother federation constitutes an act of disloyalty
The last day for filing the motion for reconsideration to the union
was April 9, which would warrant their expulsion and consequently
1973 which was a holiday (BATAAN DAY), and the their
last day for filing dismissal from the company in pursuance to the union
the arguments in support of the motion for security clause
reconsideration, ten days embodied in the CBA.
after, was April 19, 1973, also a holiday (MAUNDY
THURSDAY). Petitioners contend that no disloyalty is involved since
Since petitioners have filed their pleadings on the next what they did
respective on January 10, 1965 was merely to change, as they did
business days, that is, April 10, 1973, for the motion change, the
for name of Rizal Chapter of the Federation of Tenants
reconsideration and April 23 for the arguments in and Laborers
support thereof Organization (FTLO) to People’s Industrial and
(April 20 to 22 not being business days), the pleadings Commercial
were, Employees and Workers Organization (PICEWO).
therefore, filed on time. On this procedural aspect, the
resolution of While We are not convinced with the petitioners’
October 3, 1973 has erred. It is the policy of the law to argument that the
disregard
only act that they have done was to change the name status of an agent while the local union remained
of their union the basic unit
for they have registered the new union and affiliated it of the association free to serve the common interest
with the of all its
Federation of Free Workers, We rule that individual members including the freedom to disaffiliate when
petitioners do the
not merit the dismissals meted by the company. circumstances warrant. This is clearly provided in
its
Constitution and By-laws, specifically Article X on
In Liberty Cotton Mills Workers Union vs. Liberty Union
Cotton Mills,[2] We Affiliation, supra. At this point, relevant is the
held that the validity of the dismissals pursuant to the ruling in an
security clause American case. (Harker et al. vs. Mckissock, et al.,
of CBA hinges on the validity of the disaffiliation of 81A 2d 480,
the local union 482
from the federation. It was further held in this case that
PAFLU (the federation) had the status of an agent
while the local union remained
the basic unit of association free to serve the common “The locals are separate and distinct units primarily
interest of all designed to
its members including the freedom to disaffiliate when secure and maintain an equality of bargaining
the power between
circumstances warrant such an act. The Supreme the employer and their employee-members in the
Court, speaking economic
thru Justice Esguerra, said: struggle for the fruits of the joint productive effort
of labor and
capital; and the association of the locals into the
national union
(as PAFLU) was in furtherance of the same end.
“All these questions boil down to the single issue These
of whether or associations are consensual entities capable of
not the dismissal of the complaining employees, entering into
petitioners such legal relations with their members. The
herein, was justified or not. The resolution of this essential purpose
question was the affiliation of the local unions into a
hinges on a precise and careful analysis of the common enterprise
Collective to increase by collective action the common
Bargaining Agreements. (Exhs. “H” and “I”). In bargaining power
these contracts in respect of the terms and conditions of labor. Yet
it appears that PAFLU has been recognized as the the locals
sole remained the basic units of association, free to
bargaining agent for all the employees of the serve their own and the common interest of all, subject
Company other to the restraints
than its supervisors and security guards. Moreover imposed by the Constitution and By-laws of the
it likewise Association,
appears that “PAFLU, represented in this Act by its and free also to renounce the affiliation for mutual
National welfare upon
Treasurer, and duly authorized representative, the terms laid down in the agreement which
(was) acting for brought it into
and in behalf of its affiliate, the Liberty Cotton existence
Mills Workers
Union and the employees of the Company, etc.” In
other words,
the PAFLU, acting for and in behalf of its affiliate,
had the The right of the local members to withdraw from the
federation and
to form a new local depends upon the provisions of the
union’s The third, fourth and fifth assignment of errors maybe
constitution, by laws and charter. In the absence of resolved on
enforceable the same issue which is the legality of the strike and
provisions in the federation’s constitution preventing the consequences
disaffiliation of thereof. Petitioners allege that the strike which was
a local union, a local may sever its relationship with its started on April 30, 1965
parent was staged because of the unfair labor practice of the
respondent
company in refusing to bargain collectively with
PICEWO and in
There is nothing shown in the records nor is it claimed dismissing individual petitioners. The Hearing Officer
by respondent in his Report
federation that the local union was expressly forbidden which was adopted in full by the Court of Industrial
to disaffiliate Relations settled
from the federation. Except for the union security the legality of the strike in the following manner:
clause, the
federation claims no other ground in expelling four of
the fifty-one xxx
who signed the certification.
“While the reply of respondent PINCOCO to the
proposal of the
new union evokes ambiguity, the same may not be
Fifty-one out of sixty employees is equivalent to treated as a
eighty five percent refusal to bargain. At the time the letter proposal
(85%) of the total working force. This is not a case was sent, the
where one or two presumed bargaining agent was the FTLO. No
members of the old union decided to organize another showing had
union in order been made that the PICEWO, upon its organization
to topple down the former, but it is a case where was and
majority of the union should have been accorded the status of a majority
members decided to reorganize the union and to bargaining
disaffiliate from the representative. The letter reply of PINCOCO,
mother federation. although it seem
to cast doubt as to its motivation, should not be held
There is no merit to the contention of the respondent and taken
federation that against it as a positive design to discriminate in the
the act of disaffiliation is disloyalty to the union. The absence of
federation and any additional or corroborative showing that the
the union are two different entities and it was the new union
federation which actually represented the majority of the employees
actively initiated the dismissal of the individual in the unit
petitioners. A local and that this fact was known to the management.
union does not owe its existence to the federation to
which it is
affiliated. It is a separate and distinct voluntary The strike therefore of the PICEWO was not on
association owing its account of any
creation and continued existence to the will of its unfair labor practice acts committed by the
members. The very respondent
essence of self-organization is for the workers to form PINCOCO. It seem to have been more of a strike to
a group for the force
effective enhancement and protection of their common recognition.”
interests
x x x”
We do not agree with the finding of the Hearing in the face of the established fact that a new union
Officer that the strike enjoyed a majority
was staged to force recognition. The chain of events status within the company.
which preceded chanroblespublishingcompany
the strike belie this conclusion. On April 5 , 1965,
Ernesto Pagayatan,
the president of PICEWO sent to the management a set
of proposals
for a collective bargaining agreement. The On the belief that the respondent company refused to
management on April 13, bargain
1965 replied that the formal reply to the proposals collectively with PICEWO, individual petitioners
cannot be made together with the
within the reglementary period because they will other members staged a strike. We have in several
submit the said cases ruled that a
proposals to their legal counsel for further study and strike may be considered legal when the Union
instead their believed that the
reply would be made on April 19, 1965. No reply was respondent company committed unfair labor acts and
made on that the
date. On April 29, 1965, individual petitioners were circumstances warranted such belief in good faith
dismissed. A although
strike was staged the next day. One day after the subsequently such allegation of unfair labor practice
petitioners struck, a new collective bargaining are found out as
agreement was signed by the respondent not true.
company and the FTLO.
Thus, in Norton and Harrison Co. and Jackbilt Blocks
Company
Labor Union (NLU) vs. Norton and Harrison, et al.,[3]
We held that
The respondent company knew that a new union was “the act of the company in dismissing Arcaina, done
formed without the
composed of about 85% of the total number of its required fair hearing, and, therefore, not tenable even
employees. It was under strict
furnished a copy of the certification that the majority legal ground, induced the union and its members to
of the FTLO believe that said
members are forming a new union called PICEWO. company was guilty of unfair labor practice although
The set of viewed now in
bargaining proposals were in the name of the new retrospect said act would fall short of unfair labor
union. While a practice. Since the
company cannot be forced to sit down and bargain strike of the union was in response to what it was
collectively with warranted in
the new union since it had no notice of the union’s believing in good faith to be unfair labor practice on
official capacity to the part of the
act as the bargaining agent, the respondent company management, said strike following the Ferrer ruling[4]
cannot deny did not result
that it had factual knowledge of the existence of a
majority union. It
could have asked for further proof that the new union
was indeed the
certified bargaining agent. It did not. Instead, it
dismissed individual
petitioners and signed a new CBA the day after the
expiration of the
old CBA, on the pretext that FTLO was presumed to
be the certified
bargaining agent. Such pretext does not seem justified
nor reasonable
in the termination of the striking members’ status as
employees and
therefore, they are still entitled to reinstatement
without backwages.”
The Ferrer ruling was also upheld in Shell Oil Workers
Union vs.
Shell Company of the Phil. Ltd.[5] where We stated
that “(i)t is not
even required that there be in fact an unfair labor
practice committed
by the employer. It suffices, if such a belief in good
faith is
entertained by labor as the inducing factor for staging
a strike. So it
was clearly stated by the present Chief Justice while
still an Associate
Justice of this Court: ‘As a consequence, we hold that
the strike in
question had been called to offset what petitioners
were warranted in
believing in good faith to be unfair labor practices on
the part of
Management, that petitioners were not bound,
therefore, to wait for
the expiration of thirty (30) days from notice of strike
before staging
the same, that said strike was not, accordingly, illegal
and that the
strikers had not thereby lost their status as employees
of respondents
herein.’“
The Ferrer ruling was promulgated in 1966, that in the
Shell Oil case
in 1971. In 1980, there was the case of Pepito vs.
Secretary of Labor,
L-49418, Feb. 29, 1980, where petitioner therein was
separated for
having been implicated in a pilferage case by a co-
employee but was
later absolved from the charge. The Supreme Court
thru Chief Justice
Fernando ruled that the cause for his dismissal was
proved non-
existent or false and thus ordered his reinstatement
with three years
backwages, without deduction and qualification.
We adopt the Pepito ruling and We hold that the
petitioners in the
case at bar are entitled not only to reinstatement but
also to three
years backwages without deduction and qualification.
This is justified
and proper since the strike was proved and We held
the same to be
not illegal but was induced in the honest belief that
management had
committed unfair labor practices and, therefore, the
cause of their
dismissal from employment was nonexistent. It is clear
that
management gave cause or reason to induce the
staging of the strike
by improperly refusing to recognize the new union
formed by
petitioners. It has been twelve (12) years since
petitioners were
dismissed from their employment and in their destitute
and
deplorable condition, to them the benign provisions of
the New
Constitution for the protection of labor, assuring the
rights of workers to self-organization, collective
bargaining and security of tenure
would be useless and meaningless. Labor, being the
weaker in
economic power and resources than capital, deserve
protection that is
actually substantial and material.
WHEREFORE, IN VIEW OF THE FOREGOING, the
decision
under review is hereby SET ASIDE. The respondent
company is
hereby ordered to reinstate individual petitioners and
other striking
members within thirty (30) days from notice of this
decision, with
backwages equivalent to three (3) years at the rates
actually received
by them before their dismissal without deduction and
qualification.
In view of the length of time that this dispute has been
pending, this
decision shall be immediately executory upon
promulgation and
notice to the parties. Without pronouncement as to
costs.
SO ORDERED.
#90 Tropical Hut Food Employees Union vs Tropical
Hut
G.R. No. L-43495-99 January 20, 1990
TROPICAL HUT EMPLOYEES' UNION-CGW,
JOSE ENCINAS, JOSE LUIS TRIBINO, FELIPE
DURAN, MANUEL MANGYAO, MAMERTO
CAHUCOM, NEMESIO BARRO, TEODULFO
CAPAGNGAN, VICTORINO ABORRO, VIDAL
MANTOS, DALMACIO DALDE, LUCIO
PIASAN, CANUTO LABADAN, TERESO
ROMERDE, CONRADO ENGALAN,
SALVADOR NERVA, BERNARDO ENGALAN,
BONIFACIO CAGATIN, BENEDICTO
VALDEZ, EUSEBIO SUPILANAS, ALFREDO
HAMAYAN, ASUERO BONITO, GAVINO DEL
CAMPO, ZACARIAS DAMING, PRUDENCIO
LADION, FULGENCIO BERSALUNA,
ALBERTO PERALES, ROMEO MAGRAMO,
GODOFREDO CAMINOS, GILDARDO
DUMAS, JORGE SALDIVAR, GENARO
MADRIO, SEGUNDINO KUIZON, LUIS
SANDOVAL, NESTOR JAPAY, ROGELIO
CUIZON, RENATO ANTIPADO, GREGORIO
CUEVO, MARTIN BALAZUELA,
CONSTANCIO CHU, CRISPIN TUBLE,
FLORENCIO CHIU, FABIAN CAHUCOM,
EMILIANO VILLAMOR, RESTITUTO
HANDAYAN, VICTORINO ESPEDILLA, NOEL
CHUA, ARMANDO ALCORANO, ELEUTERIO
TAGUIK, SAMSON CRUDA, DANILO
CASTRO, CENON VALLENAS, DANILO
CAWALING, SIMPLICIO GALLEROS,
PERFECTO CUIZON, PROCESO LAUROS,
ANICETO BAYLON, EDISON ANDRES,
REYNALDO BAGOHIN, IRENEO SUPANGAN,
RODRIGO CAGATIN, TEODORO ORENCIO,
ARMANDO LUAYON, JAIME NERVA,
NARCISO CUIZON, ALFREDO DEL
ROSARIO, EDUARDO LORENZO, PEDRO
ARANGO, VICENTE SUPANGAN, JACINTO
BANAL AND BONIFACIO PUERTO, petitioners,
vs.
TROPICAL HUT FOOD MARKET, INC.,
ESTELITA J. QUE, ARTURO DILAG,
MARCELINO LONTOK JR., NATIONAL
ASSOCIATION OF TRADE UNIONS (NATU),
NATIONAL LABOR RELATIONS
COMMISSION (NLRC), HON. DIEGO P.
ATIENZA, GERONIMO Q. QUADRA,
FEDERICO C. BORROMEO, AND HON. BLAS
F. OPLE, respondents.
Pacifico C. Rosal for petitioners.
Marcelino Lontok, Jr. for private respondents.
Dizon, Vitug & Fajardo Law Office for Tropical Hut
Food Market, Inc. and Que.
MEDIALDEA, J.:
This is a petition for certiorari under Rule 65 seeking
to set aside the decisions of the public respondents
Secretary of Labor and National Labor Relations
Commission which reversed the Arbitrators rulings in
favor of petitioners herein.
The following factual background of this case
appears from the record:
On January 2, 1968, the rank and file workers of the
Tropical Hut Food Market Incorporated, referred to
herein as respondent company, organized a local
union called the Tropical Hut Employees Union,
known for short as the THEU, elected their officers,
adopted their constitution and by-laws and
immediately sought affiliation with the National
Association of Trade Unions (NATU). On January 3,
1968, the NATU accepted the THEU application for
affiliation. Following such affiliation with NATU,
Registration Certificate No. 5544-IP was issued by
the Department of Labor in the name of the Tropical
Hut Employees Union — NATU. It appears,
however, that NATU itself as a labor federation, was
not registered with the Department of Labor.
After several negotiations were conducted between
THEU-NATU, represented by its local president and
the national officers of the NATU, particularly
Ignacio Lacsina, President, Pacifico Rosal, Executive
Vice-President and Marcelino Lontok, Jr., Vice
President, and respondent Tropical Hut Food Market,
Incorporated, thru its President and General Manager,
Cesar Azcona, Sr., a Collective Bargaining
Agreement was concluded between the parties on
April 1, 1968, the term of which expired on March
31, 1971. Said agreement' contained these clear and
unequivocal terms:
This Agreement made and entered into this
__________ day of ___________, 1968, by
and between:
The Tropical Hut Food Market, Inc., a
corporation duly organized and existing
under and by virtue of the laws of the
Republic of the Philippines, with principal
office at Quezon City, represented in this
Act by its President, Cesar B. Azcona
(hereinafter referred to as the Company)
—and—
The Tropical Hut Employees Union —
NATU, a legitimate labor organization duly
organized and existing in accordance with
the laws of the Republic of the Philippines,
and affiliated with the National Association
of Trade Unions, with offices at San Luis
Terraces, Ermita, Manila, and represented in
this Act by its undersigned officers
(hereinafter referred to as the UNION)
Witnesseth:
xxx xxx xxx
Article I
Coverage and Effectivity
Sec. 1. The COMPANY recognizes the
UNION as the sole and exclusive collective
bargaining agent for all its workers and
employees in all matters concerning wages,
hours of work, and other terms and
conditions of employment.
xxx xxx xxx
Article III
Union Membership and Union Check-off
Sec. 1 —. . . Employees who are already
members of the UNION at the time of the
signing of this Agreement or who become so
thereafter shall be required to maintain their
membership therein as a condition of
continued employment.
xxx xxx xxx
Sec. 3—Any employee who is expelled from
the UNION for joining another federation or
forming another union, or who fails or
refuses to maintain his membership therein
as required, . . . shall, upon written request
of the UNION be discharged by the
COMPANY. (Rollo, pp. 667-670)
And attached to the Agreement as Appendix "A" is a
check-off Authorization Form, the terms of which are
as follows:
We, the undersigned, hereby designate the
NATIONAL Association of Trade Unions,
of which the TROPICAL HUT
EMPLOYEES UNION is an affiliate as sole
collective bargaining agent in all matters
relating to salary rates, hours of work and
other terms and conditions of employment in
the Tropical Hut Food Market, Inc. and we
hereby authorize the said company to deduct
the amount of Four (P 4.00) Pesos each
every month as our monthly dues and to
deliver the amount to the Treasurer of the
Union or his duly authorized representatives.
(Rollo, pp. 680-684)
On May 21, 1971, respondent company and THEU-
NATU entered into a new Collective Bargaining
Agreement which ended on March 31, 1974. This
new CBA incorporated the previous union-shop
security clause and the attached check-off
authorization form.
Sometime in July, 1973, Arturo Dilag, incumbent
President of THEU-NATU, was appointed by the
respondent company as Assistant Unit Manager. On
July 24, 1973, he wrote the general membership of
his union that for reason of his present position, he
was resigning as President of the THEU-NATU
effective that date. As a consequence thereof, his
Vice-President, Jose Encinas, assumed and
discharged the duties of the presidency of the THEU-
NATU.
On December 19,1973, NATU received a letter dated
December 15, 1973, jointly signed by the incumbent
officers of the local union informing the NATU that
THEU was disaffiliating from the NATU federation.
On December 20, 1973, the Secretary of the THEU,
Nemesio Barro, made an announcement in an open
letter to the general membership of the THEU,
concerning the latter's disaffiliation from the NATU
and its affiliation with the Confederation of General
Workers (CGW). The letter was passed around
among the members of the THEU-NATU, to which
around one hundred and thirty-seven (137) signatures
appeared as having given their consent to and
acknowledgment of the decision to disaffiliate the
THEU from the NATU.
On January 1, 1974, the general membership of the
so-called THEU-CGW held its annual election of
officers, with Jose Encinas elected as President. On
January 3, 1974, Encinas, in his capacity as THEU-
CGW President, informed the respondent company of
the result of the elections. On January 9, 1974,
Pacifico Rosal, President of the Confederation of
General Workers (CGW), wrote a letter in behalf of
complainant THEU-CGW to the respondent company
demanding the remittance of the union dues collected
by the Tropical Hut Food Mart, Incorporated to the
THEU-CGW, but this was refused by the respondent
company.
On January 11, 1974, the NATU thru its Vice-
President Marcelino Lontok, Jr., wrote Vidal Mantos,
requiring the latter to assume immediately the
position of President of the THEU-NATU in place of
Jose Encinas, but the position was declined by
Mantos. On the same day, Lontok, Jr., informed
Encinas in a letter, concerning the request made by
the NATU federation to the respondent company to
dismiss him (Encinas) in view of his violation of
Section 3 of Article III of the Collective Bargaining
Agreement. Encinas was also advised in the letter
that NATU was returning the letter of disaffiliation
on the ground that:
1. Under the restructuring program NOT of
the Bureau of Labor but of the Philippine
National Trade Union Center in conjunction
with the NATU and other established
national labor centers, retail clerks and
employees such as our members in the
Tropical Hut pertain to Industry II which by
consensus, has been assigned already to the
jurisdiction of the NATU;
2. The right to disaffiliate belongs to the
union membership who — on the basis of
verified reports received by — have not
even been consulted by you regarding the
matter;
3. Assuming that the disaffiliation decision
was properly reached; your letter
nevertheless is unacceptable in view of
Article V, Section 1, of the NATU
Constitution which provides that
"withdrawal from the organization shall he
valid provided three (3) months notice of
intention to withdraw is served upon the
National Executive Council." (p. 281, Rollo)
In view of NATU's request, the respondent company,
on the same day, which was January 11, 1974,
suspended Encinas pending the application for
clearance with the Department of Labor to dismiss
him. On January 12, 1974, members of the THEU-
CGW passed a resolution protesting the suspension
of Encinas and reiterated their ratification and
approval of their union's disaffiliation from NATU
and their affiliation with the Confederation of
General Workers (CGW). It was Encinas' suspension
that caused the filing of NLRC Case No. LR-2511 on
January 11, 1974 against private respondents herein,
charging them of unfair labor practice.
On January 15,1974, upon the request of NATU,
respondent company applied for clearance with the
Secretary of Labor to dismiss the other officers and
members of THEU-CGW. The company also
suspended them effective that day. NLRC Case No.
LR-2521 was filed by THEU-CGW and individual
complainants against private respondents for unfair
labor practices.
On January 19, 1974, Lontok, acting as temporary
chairman, presided over the election of officers of the
remaining THEU-NATU in an emergency meeting
pending the holding of a special election to be called
at a later date. In the alleged election, Arturo Dilag
was elected acting THEU-NATU President together
with the other union officers. On February 14, 1974,
these temporary officers were considered as having
been elected as regular officers for the year 1974.
On January 30, 1974, petitioner THEU-CGW wrote a
letter to Juan Ponce Enrile, Secretary of National
Defense, complaining of the unfair labor practices
committed by respondent company against its
members and requesting assistance on the matter. The
aforementioned letter contained the signatures of one
hundred forty-three (143) members.
On February 24,1974, the secretary of THEU-NATU,
notified the entire rank and file employees of the
company that they will be given forty-eight (48)
hours upon receipt of the notice within which to
answer and affirm their membership with THEU-
NATU. When the petitioner employees failed to
reply, Arturo Dilag advised them thru letters dated
February 26, March 2 and 5, 1974, that the THEU-
NATU shall enforce the union security clause set
forth in the CBA, and that he had requested
respondent company to dismiss them.
Respondent company, thereafter, wrote the petitioner
employees demanding the latter's comment on Dilag's
charges before action was taken thereon. However,
no comment or reply was received from petitioners.
In view of this, Estelita Que, President/General
Manager of respondent company, upon Dilag's
request, suspended twenty four (24) workers on
March 5, 1974, another thirty seven (37) on March 8,
1974 and two (2) more on March 11, 1974, pending
approval by the Secretary of Labor of the application
for their dismissal.
As a consequence thereof, NLRC Case Nos. LR-
2971, LR-3015 and an unnumbered case were filed
by petitioners against Tropical Hut Food Market,
Incorporated, Estelita Que, Hernando Sarmiento and
Arturo Dilag.
It is significant to note that the joint letter petition
signed by sixty-seven (67) employees was filed with
the Secretary of Labor, the NLRC Chairman and
Director of Labor Relations to cancel the words
NATU after the name of Tropical Hut Employee
Union under Registration Certificate No. 5544 IP.
Another letter signed by one hundred forty-six (146)
members of THEU-CGW was sent to the President of
the Philippines informing him of the unfair labor
practices committed by private respondents against
THEU-CGW members.
After hearing the parties in NLRC Cases Nos. 2511
and 2521 jointly filed with the Labor Arbiter,
Arbitrator Daniel Lucas issued an order dated March
21, 1974, holding that the issues raised by the parties
became moot and academic with the issuance of
NLRC Order dated February 25, 1974 in NLRC Case
No. LR-2670, which directed the holding of a
certification election among the rank and file workers
of the respondent company between the THEU-
NATU and THEU-CGW. He also ordered: a) the
reinstatement of all complainants; b) for the
respondent company to cease and desist from
committing further acts of dismissals without
previous order from the NLRC and for the
complainant Tropical Hut Employees UNION-CGW
to file representation cases on a case to case basis
during the freedom period provided for by the
existing CBA between the parties (pp. 91-93, Rollo).
With regard to NLRC Case Nos. LR-2971, LR-3015,
and the unnumbered case, Arbitrator Cleto T.
Villatuya rendered a decision dated October 14,
1974, the dispositive portion of which states:
Premises considered, a DECISION is hereby
rendered ordering respondent company to
reinstate immediately the sixty three (63)
complainants to their former positions with
back wages from the time they were illegally
suspended up to their actual reinstatement
without loss of seniority and other
employment rights and privileges, and
ordering the respondents to desist from
further committing acts of unfair labor
practice. The respondent company's
application for clearance filed with the
Secretary of Labor to terminate the subject
complainants' services effective March 20
and 23, 1974, should be denied.
SO ORDERED. (pp. 147-148, Rollo)
From the orders rendered above by Abitrator Daniel
Lucas in NLRC Cases No. LR-2511 and LR-2521
and by Arbitrator Cleto Villatuya in NLRC Cases
Nos. LR-2971, LR-3015, and the unnumbered case,
all parties thereto, namely, petitioners herein,
respondent company, NATU and Dilag appealed to
the National Labor Relations Commission.
In a decision rendered on August 1, 1975, the
National Labor Relations Commission found the
private respondents' appeals meritorious, and
stated, inter alia:
WHEREFORE, in view of the foregoing
premises, the Order of Arbitrator Lucas in
NLRC CASE NOS. LR-2511, 2521 and the
decision of Arbitrator Villatuya in NLRC
CASE NOS. LR-2971, 3015 and the
unnumbered Case are hereby REVERSED.
Accordingly, the individual complainants
are deemed to have lost their status as
employees of the respondent company.
However, considering that the individual
complainants are not presumed to be
familiar with nor to have anticipated the
legal mesh they would find themselves in,
after their "disaffiliation" from National
Association of Trade Unions and the THEU-
NATU, much less the legal consequences of
the said action which we presume they have
taken in all good faith; considering, further,
that the thrust of the new orientation in labor
relations is not towards the punishment of
acts violative of contractual relations but
rather towards fair adjustments of the
resulting complications; and considering,
finally, the consequent economic hardships
 that would be visited on the individual
complainants, if the law were to be strictly
enforced against them, this Commission is
constrained to be magnanimous in this
instant, notwithstanding its obligation to
give full force and effect to the majesty of
the law, and hereby orders the respondent
company, under pain of being cited for
contempt for failure to do so, to give the
individual complainants a second chance by
reemploying them upon their voluntary
reaffirmation of membership and loyalty to
the Tropical Hut Employees Union-NATU
and the National Association of Trade
Unions in the event it hires additional
personnel.
SO ORDERED. (pp. 312-313, Rollo)
The petitioner employees appealed the decision of the
respondent National Labor Relations Commission to
the Secretary of Labor. On February 23, 1976, the
Secretary of Labor rendered a decision affirming the
findings of the Commission, which provided inter
alia:
We find, after a careful review of the record,
no sufficient justification to alter the
decision appealed from except that portion
of the dispositive part which states:
. . . this Commission . . . hereby
orders respondent company under
pain of being cited for contempt for
failure to do so, to give the
individual complainants a second
chance by reemploying them upon
their voluntary reaffirmation of
membership and loyalty to the
Tropical Hut Employees UNION-
NATU and the National
Association of Trade Union in the
event it hires additional personnel.
Compliance by respondent of the above
undertaking is not immediately feasible
considering that the same is based on an
uncertain event, i.e., reemployment of
individual complainants "in the event that
management hires additional personnel,"
after they shall have reaffirmed their loyalty
to THEU-NATU, which is unlikely.
In lieu of the foregoing, and to give
complainants positive relief pursuant to
Section 9, Implementing Instruction No. 1.
dated November 9, 1972, respondent is
hereby ordered to grant to all the individual
complainants financial assistance equivalent
to one (1) month salary for every year of
service.
WHEREFORE, with the modification as
above indicated, the Decision of the
National Labor Relations Commission is
hereby affirmed.
SO ORDERED.(pp. 317-318, Rollo)
From the various pleadings filed and arguments
adduced by petitioners and respondents, the
following issues appear to be those presented for
resolution in this petition to wit: 1) whether or not the
petitioners failed to exhaust administrative remedies
when they immediately elevated the case to this
Court without an appeal having been made to the
Office of the President; 2) whether or not the
disaffiliation of the local union from the national
federation was valid; and 3) whether or not the
dismissal of petitioner employees resulting from their
unions disaffiliation for the mother federation was
illegal and constituted unfair labor practice on the
part of respondent company and federation.
We find the petition highly meritorious.
The applicable law then is the Labor Code, PD 442,
as amended by PD 643 on January 21, 1975, which
states:
Art. 222. Appeal — . . .
xxx xxx xxx
Decisions of the Secretary of Labor may be
appealed to the President of the Philippines
subject to such conditions or limitations as
the President may direct. (Emphasis ours)
The remedy of appeal from the Secretary of Labor to
the Office of the President is not a mandatory
requirement before resort to courts can be had, but an
optional relief provided by law to parties seeking
expeditious disposition of their labor disputes. Failure
to avail of such relief shall not in any way served as
an impediment to judicial intervention. And where
the issue is lack of power or arbitrary or improvident
exercise thereof, decisions of the Secretary of Labor
may be questioned in a certiorari proceeding without
prior appeal to the President (Arrastre Security
Association —TUPAS v. Ople, No. L-45344,
February 20, 1984, 127 SCRA 580). Since the instant
petition raises the same issue of grave abuse of
discretion of the Secretary of Labor amounting to
lack of or in excess of jurisdiction in deciding the
controversy, this Court can properly take cognizance
of and resolve the issues raised herein.
This brings Us to the question of the legality of the
dismissal meted to petitioner employees. In the
celebrated case of Liberty Cotton Mills Workers
Union v. Liberty Cotton Mills, L-33187, September 4,
1975, 66 SCRA 512, We held that the validity of the
dismissals pursuant to the union security clause in the
collective bargaining agreement hinges on the
validity of the disaffiliation of the local union from
the federation.
The right of a local union to disaffiliate from its
mother federation is well-settled. A local union,
being a separate and voluntary association, is free to
serve the interest of all its members including the
freedom to disaffiliate when circumstances warrant.
This right is consistent with the constitutional
guarantee of freedom of association (Volkschel Labor
Union v. Bureau of Labor Relations, No. L-45824,
June 19, 1985, 137 SCRA 42).
All employees enjoy the right to self organization and
to form and join labor organizations of their own
choosing for the purpose of collective bargaining and
to engage in concerted activities for their mutual aid
or protection. This is a fundamental right of labor that
derives its existence from the Constitution. In
interpreting the protection to labor and social justice
provisions of the Constitution and the labor laws or
rules or regulations, We have always adopted the
liberal approach which favors the exercise of labor
rights.
Relevant on this point is the basic principle We have
repeatedly in affirmed in many rulings:
. . . The locals are separate and distinct units
primarily designed to secure and maintain an
equality of bargaining power between the
employer and their employee-members in
the economic struggle for the fruits of the
joint productive effort of labor and capital;
and the association of the locals into the
national union (PAFLU) was in furtherance
of the same end. These associations are
consensual entities capable of entering into
such legal relations with their member. The
essential purpose was the affiliation of the
local unions into a common enterprise to
increase by collective action the common
bargaining power in respect of the terms and
conditions of labor. Yet the locals remained
the basic units of association, free to serve
their own and the common interest of all,
subject to the restraints imposed by the
Constitution and By-Laws of the
Association, and free also to renounce the
affiliation for mutual welfare upon the terms
laid down in the agreement which brought it
into existence. (Adamson & Adamson, Inc.
v. CIR, No. L-35120, January 31, 1984, 127
SCRA 268; Elisco-Elirol Labor Union
(NAFLU) v. Noriel, No. L-41955,
December 29, 1977, 80 SCRA 681; Liberty
Cotton Mills Workers Union v. Liberty
Cotton Mills, Inc., supra).
The inclusion of the word NATU after the name of
the local union THEU in the registration with the
Department of Labor is merely to stress that the
THEU is NATU's affiliate at the time of the
registration. It does not mean that the said local union
cannot stand on its own. Neither can it be interpreted
to mean that it cannot pursue its own interests
independently of the federation. A local union owes
its creation and continued existence to the will of its
members and not to the federation to which it
belongs.
When the local union withdrew from the old
federation to join a new federation, it was merely
exercising its primary right to labor organization for
the effective enhancement and protection of common
interests. In the absence of enforceable provisions in
the federation's constitution preventing disaffiliation
of a local union a local may sever its relationship
with its parent (People's Industrial and Commercial
Employees and Workers Organization (FFW) v.
People's Industrial and Commercial Corporation, No.
37687, March 15, 1982, 112 SCRA 440).
There is nothing in the constitution of the NATU or
in the constitution of the THEU-NATU that the
THEU was expressly forbidden to disaffiliate from
the federation (pp. 62, 281, Rollo), The alleged non-
compliance of the local union with the provision in
the NATU Constitution requiring the service of three
months notice of intention to withdraw did not
produce the effect of nullifying the disaffiliation for
the following grounds: firstly, NATU was not even a
legitimate labor organization, it appearing that it was
not registered at that time with the Department of
Labor, and therefore did not possess and acquire, in
the first place, the legal personality to enforce its
constitution and laws, much less the right and
privilege under the Labor Code to organize and
affiliate chapters or locals within its group, and
secondly, the act of non-compliance with the
procedure on withdrawal is premised on purely
technical grounds which cannot rise above the
fundamental right of self-organization.
Respondent Secretary of Labor, in affirming the
decision of the respondent Commission, concluded
that the supposed decision to disaffiliate was not the
subject of a free and open discussion and decision on
the part of the THEU-NATU general membership (p.
305, Rollo). This, however, is contradicted by the
evidence on record. Moreover, We are inclined to
believe Arbitrator Villatuya's findings to the contrary,
as follows:
. . . . However, the complainants refute this
allegation by submitting the following: a)
Letter dated December 20, 1.973 signed by
142 members (Exhs. "B to B-5") resolution
dated January 12, 1974, signed by 140
members (Exhs. "H to H-6") letter dated
February 26, 1974 to the Department of
Labor signed by 165 members (Exhs. "I to I-
10"); d) letter dated January 30, 1974 to the
Secretary of the National Defense signed by
144 members (Exhs. "0 to 0-5") and; e)
letter dated March 6, 1974 signed by 146
members addressed to the President of the
Philippines (Exhs. "HH to HH-5"), to show
that in several instances, the members of the
THEU-NATU have acknowledged their
disaffiliation from NATU. The letters of the
complainants also indicate that an
overwhelming majority have freely and
voluntarily signed their union's disaffiliation
from NATU, otherwise, if there was really
deception employed in securing their
signatures as claimed by NATU/ Dilag, it
could not be possible to get their signatures
in five different documents. (p. 144, Rollo)
We are aware of the time-honored doctrine that the
findings of the NLRC and the Secretary of Labor are
binding on this Court if supported by substantial
evidence. However, in the same way that the findings
of facts unsupported by substantial and credible
evidence do not bind this Court, neither will We
uphold erroneous conclusions of the NLRC and the
Secretary of Labor when We find that the latter
committed grave abuse of discretion in reversing the
decision of the labor arbiter (San Miguel Corporation
v. NLRC, L-50321, March 13, 1984, 128 SCRA
180). In the instant case, the factual findings of the
arbitrator were correct against that of public
respondents.
Further, there is no merit in the contention of the
respondents that the act of disaffiliation violated the
union security clause of the CBA and that their
dismissal as a consequence thereof is valid. A perusal
of the collective bargaining agreements shows that
the THEU-NATU, and not the NATU federation, was
recognized as the sole and exclusive collective
bargaining agent for all its workers and employees in
all matters concerning wages, hours of work and
other terms and conditions of employment (pp. 667-
706, Rollo). Although NATU was designated as the
sole bargaining agent in the check-off authorization
form attached to the CBA, this simply means it was
acting only for and in behalf of its affiliate. The
NATU possessed the status of an agent while the
local union remained the basic principal union which
entered into contract with the respondent company.
When the THEU disaffiliated from its mother
federation, the former did not lose its legal
personality as the bargaining union under the CBA.
Moreover, the union security clause embodied in the
agreements cannot be used to justify the dismissals
meted to petitioners since it is not applicable to the
circumstances obtaining in this case. The CBA
imposes dismissal only in case an employee is
expelled from the union for joining another
federation or for forming another union or who fails
or refuses to maintain membership therein. The case
at bar does not involve the withdrawal of merely
some employees from the union but of the whole
THEU itself from its federation. Clearly, since there
is no violation of the union security provision in the
CBA, there was no sufficient ground to terminate the
employment of petitioners.
Public respondents considered the existence of Arturo
Dilag's group as the remaining true and valid union.
We, however, are inclined to agree instead with the
Arbitrator's findings when he declared:
. . . . Much more, the so-called THEU-
NATU under Dilag's group which assumes
to be the original THEU-NATU has a very
doubtful and questionable existence not to
mention that the alleged president is
performing supervisory functions and not
qualified to be a bona fide member of the
rank and file union. (p. 146, Rollo)
Records show that Arturo Dilag had resigned in the
past as President of THEU-NATU because of his
promotion to a managerial or supervisory position as
Assistant Unit Manager of respondent Company.
Petitioner Jose Encinas replaced Dilag as President
and continued to hold such position at the time of the
disaffiliation of the union from the federation. It is
therefore improper and contrary to law for Dilag to
reassume the leadership of the remaining group
which was alleged to be the true union since he
belonged to the managerial personnel who could not
be expected to work for the betterment of the rank
and file employees. Besides, managers and
supervisors are prohibited from joining a rank and
file union (Binalbagan Isabela Sugar Co., Inc.
(BISCOM) v. Philippine Association of Free Labor
Unions (PAFLU), et al., L-18782, August 29, 1963, 8
SCRA 700). Correspondingly, if a manager or
supervisor organizes or joins a rank and file union, he
will be required to resign therefrom (Magalit, et al. v.
Court of Industrial Relations, et al., L-20448, May
25, 1965,14 SCRA 72).
Public respondents further submit that several
employees who disaffiliate their union from the
NATU subsequently retracted and reaffirmed their
membership with the THEU-NATU. In the decision
which was affirmed by respondent Secretary of
Labor, the respondent Commission stated that:
. . . out of the alleged one hundred and
seventy-one (171) members of the THEU-
CGW whose signatures appeared in the
"Analysis of Various Documents Signed by
Majority Members of the THEU-CGW,
(Annex "T", Complainants), which
incidentally was relied upon by Arbitrator
Villatuya in holding that complainant
THEU-CGW commanded the majority of
employees in respondent company, ninety-
three (93) of the alleged signatories
reaffirmed their membership with the
THEU-NATU and renounced whatever
connection they may have had with other
labor unions, (meaning the complainant
THEU-CGW) either through resolution or
membership application forms they have
unwittingly signed." (p. 306, Rollo)
Granting arguendo, that the fact of retraction is true,
the evidence on record shows that the letters of
retraction were executed on various dates beginning
January 11, 1974 to March 8, 1974 (pp. 278-
280, Rollo). This shows that the retractions were
made more or less after the suspension pending
dismissal on January 11, 1974 of Jose Encinas,
formerly THEU-NATU President, who became
THEU-CGW President, and the suspension pending
their dismissal of the other elected officers and
members of the THEU-CGW on January 15, 1974. It
is also clear that some of the retractions occurred
after the suspension of the first set of workers
numbering about twenty-four (24) on March 5, 1974.
There is no use in saying that the retractions
obliterated the act of disaffiliation as there are doubts
that they were freely and voluntarily done especially
during such time when their own union officers and
co-workers were already suspended pending their
dismissal.
Finally, with regard to the process by which the
workers were suspended or dismissed, this Court
finds that it was hastily and summarily done without
the necessary due process. The respondent company
sent a letter to petitioners herein, advising them of
NATU/Dilag's recommendation of their dismissal
and at the same time giving them forty-eight (48)
hours within which to comment (p. 637, Rollo).
When petitioners failed to do so, respondent company
immediately suspended them and thereafter effected
their dismissal. This is certainly not in fulfillment of
the mandate of due process, which is to afford the
employee to be dismissed an opportunity to be heard.
The prerogative of the employer to dismiss or lay-off
an employee should be done without abuse of
discretion or arbitrainess, for what is at stake is not
only the employee's name or position but also his
means of livelihood. Thus, the discharge of an
employee from his employment is null and void
where the employee was not formally investigated
and given the opportunity to refute the alleged
findings made by the company (De Leon v. NLRC,
L-52056, October 30, 1980, 100 SCRA 691).
Likewise, an employer can be adjudged guilty of
unfair labor practice for having dismissed its
employees in line with a closed shop provision if they
were not given a proper hearing (Binalbagan-Isabela
Sugar Co., Inc.,(BISCOM) v. Philippine Association
of Free Labor Unions (PAFLU) et al., L-18782,
August 29, 1963, 8 SCRA 700).
In view of the fact that the dispute revolved around
the mother federation and its local, with the company
suspending and dismissing the workers at the
instance of the mother federation then, the company's
liability should be limited to the immediate
reinstatement of the workers. And since their
dismissals were effected without previous hearing
and at the instance of NATU, this federation should
be held liable to the petitioners for the payment of
their backwages, as what We have ruled in the
Liberty Cotton Mills Case (supra).

ACCORDINGLY, the petition is hereby GRANTED

and the assailed decision of respondent Secretary of
Labor is REVERSED and SET ASIDE, and the
respondent company is hereby ordered to
immediately reinstate all the petitioner employees
within thirty (30) days from notice of this decision. If
reinstatement is no longer feasible, the respondent
company is ordered to pay petitioners separation pay
equivalent to one (1) month pay for every year of
service. The respondent NATU federation is directed
to pay petitioners the amount of three (3) years
backwages without deduction or qualification. This
decision shall be immediately executory upon
promulgation and notice to the parties.

SO ORDERED.
#91. Volkschel labor union vs BLR
G.R. No. L-45824 June 19, 1985
VOLKSCHEL LABOR UNION, petitioner,
vs.
BUREAU OF LABOR RELATIONS,
ASSOCIATED LABOR UNION FOR METAL,
WORKERS, DMG, INC., PEOPLE'S CAR, INC.,
KARBAYAN INC., and RTC TRADING,
INC., respondents.
Ignacio P. Lacsina for petitioner.
William D. Dichoso for respondent DMG, Inc.
Abraham B. Drapiza for private respondent.
CUEVAS, J.:
Petition for certiorari to review the Resolutions dated
January 25, 1977 and March 14, 1977 of the Bureau
of Labor Relations.
On April 25. 1977, however, a Supplemental Petition
was filed seeking the issuance of —
(1) A preliminary mandatory
injunction commanding
respondents to return to petitioner
the union dues amounting to about
P55,000.00 lawfully pertaining to it
but illegally levied upon, collected
and handed over by respondent
Bureau, acting through the NLRC
sheriff, to respondent Associated
Labor Union for Metal workers,
with the collusion of respondents
DMG, Inc., Karbayan, Inc. and
RTC Machineries, Inc.;
(2) A preliminary restraining order
prohibiting respondents from
making further delivery to
respondent Associated Labor Union
for Metal workers of Union dues
collected or to be collected through
check-off from the wages of
petitioner's members by
respondents, DMG, Inc., Karbayan,
Inc., RTC Machineries, Inc., and
People's Car, Inc., under or by
virtue of the questioned writ of
execution issued by respondent
Bureau, dated April 4, 1977.
Petitioner was once affiliated with the Associated
Labor Union for Metal Workers (ALUMETAL for
short). On August 1, 1975, both unions, using the
name Volkschel Labor Union Associated Labor
Union for Metal Workers, jointly entered into a
collective bargaining agreement with respondent
companies. One of the subjects dealt with is the
payment of union dues which is provided for in
Section 3, Article 1, of the CBA, which reads:
Section 3. CHECK-OFF. — The
COMPANY agrees to make payroll
deductions not softener than twice a
month of UNION membership dues
and such special assessments fees
or fines as may be duly authorized
by the UNION, provided that the
same is covered by the individual
check-off authorization of the
UNION members. All said
deductions shall be promptly
transmitted within five (5) days by
the COMPANY to the UNION
Treasurer. The COMPANY shall
prepare two (2) checks. One (1)
check will be under the name of the
local union as their local fund
including local special assessment
funds and the other check will be
for the ALU Regional Office
regarding the remittance of the
UNION dues deduction.
On March 10, 1976, a majority of petitioner's
members decided to disaffiliate from respondent
federation in order to operate on its own as an
independent labor group pursuant to Article 241
(formerly Article 240) of the Labor Code of the
Philippines, the pertinent portion of which reads:
Incumbent affiliates of existing
federations or national unions may
disaffiliate only for the purpose of
joining a federation or national
union in the industry or region in
which it properly belongs or for the
purpose of operating as an
independent labor group.
Accordingly, a resolution was adopted and signed by
petitioner's members revoking their check-off
authorization in favor of ALUMETAL and notices
thereof were served on ALUMETAL and respondent
companies.
Confronted with the predicament of whether or not to
continue deducting from employees' wages and
remitting union dues to respondent, ALUMETAL
which wrote respondent companies advising them to
continue deducting union dues and remitting them to
said federation, respondent companies sought the
legal opinion of the respondent Bureau as regards the
controversy between the two unions. On November
11, 1976, Med-Arbiter George A. Eduvalla of
respondent Bureau rendered a Resolution which in
effect found the disaffiliation legal but at the same
time gave the opinion that, petitioner's members
should continue paying their dues to ALUMETAL in
the concept of agency fees. 1
From the said Resolution, of the Med-Arbiter both
petitioner and respondent ALUMETAL appealed to
the Director of respondent Bureau. Petitioner'
contended that the Med-Arbiter's opinion to the effect
that petitioner's members remained obligated to pay
dues to respondent ALUMETAL was inconsistent
with the dispositive finding that petitioner's
disaffiliation from ALUMETAL was valid.
ALUMETAL, on the other hand, assailed the
Resolution in question asserting that the disaffiliation
should have been declared contrary to law.
On January 25, 1977, respondent Bureau, through its
Acting Director, Francisco L. Estrella, REVERSED
the Med-Arbiter's Resolution., and declared that the
Bureau recognized "the continued affiliation of
Volkschel Labor Union with the Associated Labor
Union for Metal Workers." 2
Petitioner appealed the Acting Director's Resolution
to the Secretary of Labor know Minister of Labor and
Employment) who, treating the appeal as a Motion
for Reconsideration referred the same back to
respondent Bureau On March 14, 1977, the Bureau
denied the appeal for lack of merit.
Hence, the instant petition.
Meanwhile, on April 4, 1977, on motion of
ALUMETAL, the then Acting Secretary of Labor,
Amado Gat Inciong, issued a of execution
commanding the Sheriff of the National Labor
Relations Commission to enforce and execute the
order of January 25, 1977, which has become final
and executory. 3 Pursuant thereto, the NLRC Sheriff
enforced and implemented the Order of January 25,
1977, as a result of which respondent companies
turned over and handed to respondent federation the
union dues and other assessments in accordance with
the check-off provision of the CBA,
From the pleadings filed and arguments of counsel,
the following issues present themselves for this
Court's resolution.
I
Is petitioner union's disaffiliation from
respondent federation valid?
II
Do respondent companies have the right to
effect union dues collections despite
revocation by the employees of the check-off
authorization? and
III
Is respondent federation entitled to union dues
payments from petitioner union's members
notwithstanding their disaffiliation from said
federation?
We resolve the first issue in the affirmative.
The right of a local union to disaffiliate from its
mother union is well-settled. In previous cases, it has
been repeatedly held that a local union, being a
separate and voluntary association, is free to serve the
interest of all its members including the freedom to
disaffiliate when circumstances warrant. 4 This right
is consistent with the Constitutional guarantee of
freedom of association (Article IV, Section 7,
Philippine Constitution).
Petitioner contends that the disaffiliation was not due
to any opportunists motives on its part. Rather it was
prompted by the federation's deliberate and habitual
dereliction of duties as mother federation towards
petitioner union. Employees' grievances were
allegedly left unattended to by respondent federation
to the detriment of the employees' rights and
interests.
In reversing the Med-Arbiter's resolution, respondent
Bureau declared: the Department of Labor is set on a
task to restructure the labor movement to the end that
the workers will unite themselves along industry
lines. Carried to its complete fruition, only one union
for every industry will remain to bargain collectively
for the workers. The clear policy therefore even now
is to conjoin workers and worker groups, not to
dismember them. 5 This policy is commendable.
However, we must not lose sight of the constitutional
mandate of protecting labor and the workers' right to
self-organization. In the implementation and
interpretation of the provisions of the Labor Code and
its implementing regulations, the workingman's
welfare should be the primordial and paramount
consideration. In the case at bar, it would go against
the spirit of the labor law to restrict petitioner's right
to self-organization due to the existence of the CBA.
We agree with the Med-Arbiter's opinion that "A
disaffiliation does not disturb the enforceability and
administration of a collective agreement; it does not
occasion a change of administrators of the contract
nor even an amendment of the provisions
thereof." 6 But nowhere in the record does it appear
that the contract entered into by the petitioner and
ALUMETAL prohibits the withdrawal of the former
from the latter.
Suffice it to state that respondent federation is not
entitled to union dues payments from petitioner's
members. "A local union which has validly
withdrawn from its affiliation with the parent
association and which continues to represent the
employees of an employer is entitled to the check-off
dues under a collective bargaining contract." 9
WHEREFORE, the Resolutions of the Bureau of
Labor Relations of January 25, 1977 and March 14,
1977 are REVERSED and SET ASIDE. Respondent
ALUMETAL is ordered to return to petitioner union
all the union dues enforced and collected through the
NLRC Sheriff by virtue of the writ of execution dated
April 4, 1977 issued by respondent Bureau.
No costs.
SO ORDERED.

This now brings us to the second issue. Under

Section 3, Article I, of the CBA, the obligation of the
respondent companies to deduct and remit dues to
ALUMETAL is conditioned on the individual check-
off authorization of petitioner's members, In other
words, ALUMETAL is entitled to receive the dues
from respondent companies as long as petitioner
union is affiliated with it and respondent companies
are authorized by their employees (members of
petitioner union) to deduct union dues. Without said
affiliation, the employer has no link to the mother
union. The obligation of an employee to pay union
dues is coterminous with his affiliation or
membership. "The employees' check-off
authorization, even if declared irrevocable, is good
only as long as they remain members of the union
concerned." 7 A contract between an employer and
the parent organization as bargaining agent for the
employees is terminated by the disaffiliation of the
local of which the employees are
members. 8 Respondent companies therefore were
wrong in continuing the check-off in favor of
respondent federation since they were duly notified
of the disaffiliation and of petitioner's members
having already rescinded their check-off
authorization.

With the view we take on those two issues, we find

no necessity in dwelling further on the last issue.
#92. Employees Union of Bayer vs Bayer Phil.
EUBP staged a strike, prompting the Secretary of the
EMPLOYEES UNION OF G.R. No. 162943
BAYER PHILS., FFW and Present: Department of Labor and Employment (DOLE) to
JUANITO S. FACUNDO, in
his capacity as President, CARPIO assume jurisdiction over the dispute.
Petitioners, MORA
LES, J.,
Chairperson, In November 1997, pending the resolution of the
- versus - BRION, dispute, respondent Avelina Remigio (Remigio) and
BERSAMIN,
VILLARAMA, 27 other union members, without any authority from
JR., and
their union leaders, accepted Bayers wage-increase
SERENO, JJ.
proposal. EUBPs grievance committee questioned
BAYER PHILIPPINES,
INC., DIETER J. Promulgated: Remigios action and reprimanded Remigio and her
LONISHEN allies. On January 7, 1998, the DOLE Secretary issued
(President), ASUNCION A December 6, 2010
MISTOSO (HRD an arbitral award ordering EUBP and Bayer to execute
Manager), AVELINA a CBA retroactive to January 1, 1997 and to be made
REMIGIO AND
ANASTACIA effective until December 31, 2001. The said
VILLAREAL,
CBA[4] was registered on July 8, 1998 with the
Respondents.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Industrial Relations Division of the DOLE-National
- - - - - - - - - - - - - -x
Capital Region (NCR).[5]
DECISION

VILLARAMA, JR., J.:
This petition for review on certiorari assails the
Decision[1] dated December 15,
Resolution[2] dated March 23, 2004 of the Court of
Appeals (CA) in CA-G.R. SP No. 73813.
Petitioner Employees Union
Philippines[3] (EUBP) is the exclusive bargaining
agent of all rank-and-file employees of Bayer
Philippines (Bayer), and is an affiliate of the
Federation of Free Workers (FFW). In 1997, EUBP,
headed by its president Juanito S. Facundo (Facundo),
negotiated with Bayer for the signing of a collective
bargaining agreement (CBA). During the negotiations,
EUBP rejected Bayers 9.9% wage-increase proposal
resulting in a bargaining deadlock. Subsequently,
Meanwhile, the rift between Facundos leadership and
Remigios group broadened. On August 3, 1998, barely
six months from the signing of the new CBA, during a
company-sponsored seminar,[6]Remigio solicited
2003 and
signatures from union members in support of a
resolution containing the decision of the signatories to:
(1) disaffiliate from FFW, (2) rename the union as
Reformed Employees Union of Bayer Philippines
of Bayer
(REUBP), (3) adopt a new constitution and by-laws
for the union, (4) abolish all existing officer positions
in the union and elect a new set of interim officers, and
(5) authorize REUBP to administer the CBA between
EUBP and Bayer.[7] The said resolution was signed by
147 of the 257 local union members. A subsequent
resolution was also issued affirming the first
resolution.[8]
A tug-of-war then ensued between the two rival
groups, with both seeking recognition from Bayer and
demanding remittance of the union dues collected
from its rank-and-file members. On September 8,
1998, Remigios splinter group wrote Facundo, FFW
and Bayer informing them of the decision of the
majority of the union members to disaffiliate from
FFW.[9] This was followed by another letter informing
Facundo, FFW and Bayer that an interim set of
REUBP executive officers and board of directors had
been appointed, and demanding the remittance of all
union dues to REUBP. Remigio also asked Bayer to
desist from further transacting with EUBP. Facundo,
meanwhile, sent similar requests to
Bayer[10] requesting for the remittance of union dues in
favor of EUBP and accusing the company of
interfering with purely union matters.[11] Bayer
responded by deciding not to deal with either of the
two groups, and by placing the union dues collected in
a trust account until the conflict between the two
groups is resolved.[12]
On September 15, 1998, EUBP filed a complaint for
unfair labor practice (first ULP complaint) against
Bayer for non-remittance of union dues. The case was
docketed as NLRC-NCR-Case No. 00-09-07564-
98.[13]
EUBP later sent a letter dated November 5, 1998 to
Bayer asking for a grievance conference.[14]The
meeting was conducted by the management
on November 11, 1998, with all REUBP officers
including their lawyers present. Facundo did not
attend the meeting, but sent two EUBP officers to
inform REUBP and the management that a preventive
mediation conference between the two groups has
been scheduled on November 12, 1998 before the
National Conciliation and Mediation Board
(NCMB).[15]
Apparently, the two groups failed to settle their issues
as Facundo again sent respondent Dieter J. Lonishen
two more letters, dated January 14,
1999[16] and September 2, 1999,[17] asking for a
grievance meeting with the management to discuss the
failure of the latter to comply with the terms of their
CBA. Both requests remained unheeded.
On February 9, 1999, while the first ULP case was still
pending and despite EUBPs repeated request for a
grievance conference, Bayer decided to turn over the
collected union dues amounting to P254,857.15 to
respondent Anastacia Villareal, Treasurer of REUBP.
Aggrieved by the said development, EUBP lodged a
complaint[18] on March 4, 1999 against Remigios
group before the Industrial Relations Division of the
DOLE praying for their expulsion from EUBP for
commission of acts that threaten the life of the union.
On June 18, 1999, Labor Arbiter Jovencio Ll. Mayor,
Jr. dismissed the first ULP complaint for lack of
jurisdiction.[19] The Arbiter explained that the root
cause for Bayers failure to remit the collected union
dues can be traced to the intra-union conflict between
EUBP and Remigios group[20] and that the charges
imputed against Bayer should have been submitted
instead to voluntary arbitration.[21]EUBP did not
appeal the said decision.[22]
On December 14, 1999, petitioners filed
a second ULP complaint against herein respondents
docketed as NLRC-RAB-IV Case No. 12-11813-99-L. filed by EUBP against Remigio and her allies for
Three days later, petitioners amended the complaint failure to exhaust reliefs within the union and ordering
charging the respondents with unfair labor practice the conduct of a referendum to determine which of the
committed by organizing a company union, gross two groups should be recognized as union
violation of the CBA and violation of their duty to officers.[29] EUBP seasonably appealed the said
bargain.[23] Petitioners complained that Bayer refused decision to the Bureau of Labor Relations
to remit the collected union dues to EUBP despite (BLR).[30] On June 16, 2000, the BLR reversed the
several demands sent to the management.[24] They also Regional Directors ruling and ordered the
alleged that notwithstanding the requests sent to Bayer management of Bayer to respect the authority of the
for a renegotiation of the last two years of the 1997- duly-elected officers of EUBP in the administration of
2001 CBA between EUBP and Bayer, the latter opted the prevailing CBA.[31]
to negotiate instead with Remigios group.[25]
Unfortunately, the said BLR ruling came late since
On even date, REUBP and Bayer agreed to sign a new Bayer had already signed a new CBA[32] with REUBP
CBA. Remigio immediately informed her allies of the on February 21, 2000. The said CBA was eventually
managements decision.[26] ratified by majority of the bargaining unit.[33]

In response, petitioners immediately filed an urgent On June 2, 2000, Labor Arbiter Waldo Emerson R.
motion for the issuance of a restraining Gan dismissed EUBPs second ULP complaint for lack
order/injunction[27] before the National Labor of jurisdiction.[34] The Labor Arbiter explained the
Relations Commission (NLRC) and the Labor Arbiter dismissal as follows:
against respondents. Petitioners asserted their All told, were it not for the fact that
there were two (2) [groups] of
authority as the exclusive bargaining representative of employees, the Union led by its
all rank-and-file employees of Bayer and asked that a President Juanito Facundo and the
members who decided to disaffiliate
temporary restraining order be issued against led by Ms. Avelina Remigio,
Remigios group and Bayer to prevent the employees claiming to be the rightful
representative of the rank and file
from ratifying the new CBA. Later, petitioners filed a employees, the Company would not
have acted the way it did and the
second amended complaint[28] to include in its
Union would not have filed the
complaint the issue of gross violation of the CBA for instant case.
violation of the contract bar rule following Bayers Clearly then, as the case involves
decision to negotiate and sign a new CBA with intra-union disputes, this Office is
bereft of any jurisdiction pursuant to
Remigios group. Article 226 of the Labor Code, as
amended, which provides
pertinently in part, thus:
Meanwhile, on January 26, 2000, the Regional
Bureau of Labor Relations The
Director of the Industrial Relations Division of DOLE Bureau of Labor Relations and the
issued a decision dismissing the issue on expulsion Labor Relations Divisions in the
 regional offices of the Department of
Labor and Employment shall have
original and exclusive authority to
act, at their own initiative or upon
request of either or both parties, on all
inter-union and intra-union conflicts,
and all disputes, grievances or
problems arising from or affecting
labor-management relations in all
workplaces whether agricultural or
non-agricultural, except those arising
from the implementation or
interpretation of collective
bargaining agreements which shall be
the subject of grievance procedure
and/or voluntary arbitration.
Specifically, with respect to the
union dues, the authority is the case
of Cebu Seamens Association[,] Inc.
vs. Ferrer-Calleja, (212 SCRA 51),
where the Supreme Court held that
when the issue calls for the
determination of which between the
two groups within a union is entitled
to the union dues, the same cannot
be taken cognizance of by the
NLRC.
xxxx
WHEREFORE, premises
considered, the instant complaint is
hereby DISMISSED on the ground
of lack of jurisdiction.
SO ORDERED.[35]
On June 28, 2000, the NLRC resolved
dismiss[36] petitioners motion for a restraining order
and/or injunction stating that the subject matter
involved an intra-union dispute, over which the said
[37]
Commission has no jurisdiction.
Aggrieved by the Labor Arbiters decision to dismiss
the second ULP complaint, petitioners appealed the
said decision, but the NLRC denied
appeal.[38] EUBPs motion for reconsideration was
likewise denied.[39]
Thus, petitioners filed a Rule 65 petition to the
CA. On December 15, 2003, the CA sustained both the
Labor Arbiter and the NLRCs rulings. The appellate
court explained,
A cursory reading of the three
pleadings, to wit: the Complaint
(Vol. I, Rollo, p[p]. 166-167);
the Amended Complaint (Vol. I,
Rollo[,] pp. 168-172) and
the Second Amended
Complaint dated March 8, 2000
(Vol. II, Rollo, pp. 219-225) will
readily show that the instant case
was brought about by the action of
the Group of REM[I]GIO to
disaffiliate from FFW and to
organized (sic) REUBP under the
tutelage of REM[I]GIO and
VILLAREAL. At first glance of the
case at bar, it involves purely an
(sic) inter-union and intra-union
conflicts or disputes between
EUBP-FFW and REUBP which
issue should have been resolved by
the Bureau of Labor Relations under
Article 226 of the Labor Code.
However, since no less than
petitioners who admitted that
respondents committed gross
violations of the CBA, then the BLR
is divested of jurisdiction over the
case and the issue should have been
referred to the Grievance Machinery
and Voluntary Arbitrator and not to
the Labor Arbiter as what
petitioners did in the case at bar. x x
to
x
xxxx
Furthermore, the CBA entered
between BAYER and EUBP-FFW
[has] a life span of only five years
and after the said period, the
employees have all the right to
change their bargaining unit who
will represent them. If there exist[s]
two opposing unions in the same
the company, the remedy is not to
declare that such act is considered
unfair labor practice but rather they
should conduct a certification
 election provided [that] it should be PROMULGATED ON 15
conducted within 60 days of the so[- DECEMBER 2003 AND
]called freedom period before the RESOLUTION
expiration of the CBA. PROMULGATED ON 23
MARCH 2004, GRAVELY
WHEREFORE, premises ABUSE[D] ITS
considered, this Petition DISCRETION IN ITS
is DENIED and the assailed FINDINGS AND
Decision dated September 27, 2001 CONCLUSION THAT:
as well as the Order dated June 21,
2002, denying the motion for THE ACTS OF ABETTING OR
reconsideration, by the National ASSISTING IN THE CREATION
Labor Relations Commission, First OF ANOTHER UNION,
Division, in NLRC Case No. RAB- NEGOTIATING OR
IV-12-11813-99-L, are BARGAINING WITH SUCH
hereby AFFIRMED in toto. Costs UNION, WHICH IS NOT THE
against petitioners. SOLE AND EXCLUSIVE
BARGAINING AGENT,
SO ORDERED.[40] VIOLATING THE DUTY TO
BARGAIN COLLECTIVELY,
REFUSAL TO PROCESS
GRIEVABLE ISSUES IN THE
Undaunted, petitioners filed this Rule 45 petition GRIEVANCE MACHINERY
before this Court. Initially, the said petition was denied AND/OR REFUSAL TO DEAL
WITH THE SOLE AND
for having been filed out of time and for failure to EXCLUSIVE BARGAINING
comply with the requirements provided in the 1997 AGENT ARE ACTS
CONSTITUTING OR
Rules of Civil Procedure, as amended.[41] Upon TANTAMOUNT TO UNFAIR
LABOR PRACTICE.[42]
petitioners motion, however, we decided to reinstate
their appeal.
Respondents Bayer, Lonishen and Amistoso,
The following are the issues raised by petitioners, to meanwhile, identify the issues as follows:
wit:
I. WHETHER OR NOT THE
I. WHETHER OR NOT THE UNIFORM FINDINGS OF
HONORABLE COURT OF THE COURT OF
APPEALS, IN ARRIVING APPEALS, THE NLRC
AT THE DECISION AND THE LABOR
PROMULGATED ON 15 ARBITER ARE BINDING
DECEMBER 2003 AND ON THIS HONORABLE
RESOLUTION COURT;
PROMULGATED ON 23
MARCH 2004, DECIDED II. WHETHER OR NOT THE
THE CASE IN LABOR ARBITER AND
ACCORDANCE WITH THE NLRC HAVE
LAW AND JURISDICTION OVER
JURISPRUDENCE; AND THE INSTANT CASE;

II. WHETHER OR NOT THE III. WHETHER OR NOT THE

HONORABLE COURT OF INSTANT CASE
APPEALS, IN ARRIVING INVOLVES AN INTRA-
AT THE DECISION UNION DISPUTE;
 IV. WHETHER OR NOT
RESPONDENTS should be gross, and that it should involve violation in
COMPANY, LONISHEN the economic provisions of the CBA were not
AND AMISTOSO
COMMITTED AN ACT OF satisfied. Moreover, they cite the ruling of the Labor
UNFAIR LABOR Arbiter that the issues raised in the complaint should
PRACTICE; AND
have been ventilated and threshed out before the
V. WHETHER OR NOT THE voluntary arbitrators as provided in Article 261 of
INSTANT CASE HAS
BECOME MOOT AND the Labor Code, as amended.[46] Respondents Remigio
ACADEMIC.[43]
and Villareal, meanwhile, point out that the case
should be dismissed as against them since they are not
Essentially, the issue in this petition is whether the act
real parties in interest in the ULP complaint against
of the management of Bayer in dealing and negotiating
Bayer,[47] and since there are no specific or material
with Remigios splinter group despite its validly
acts imputed against them in the complaint.[48]
existing CBA with EUBP can be considered unfair
labor practice and, if so, whether EUBP is entitled to
The petition is partly meritorious.
any relief.

An intra-union dispute refers to any conflict between

Petitioners argue that the subject matter of their and among union members, including grievances
complaint, as well as the subsequent amendments arising from any violation of the rights and conditions
thereto, pertain to the unfair labor practice act of of membership, violation of or disagreement over any
respondents Bayer, Lonishen and Amistoso in dealing provision of the unions constitution and by-laws, or
with Remigios splinter union. They contend that (1) disputes arising from chartering or disaffiliation of the
the acts of abetting or assisting in the creation of union.[49] Sections 1 and 2, Rule XI of Department
another union is among those considered by the Labor Order No. 40-03, Series of 2003 of the DOLE
Code, as amended, specifically under Article 248 enumerate the following circumstances as inter/intra-
[44]
(d) thereof, as unfair labor practice; (2) the act of union disputes, viz:
negotiating with such union constitutes a violation of
RULE XI
Bayers duty to bargain collectively; and (3) Bayers INTER/INTRA-UNION
DISPUTES AND
unjustified refusal to process EUBPs grievances and to
OTHER RELATED LABOR
recognize the said union as the sole and exclusive RELATIONS DISPUTES
bargaining agent are tantamount to unfair labor
SECTION 1. Coverage. -
practice.[45] Inter/intra-union disputes shall
include:
(a) cancellation of
Respondents Bayer, Lonishen and Amistoso, on the registration of a labor organization
other hand, contend that there can be no unfair labor filed by its members or by another
labor organization;
practice on their part since the requisites for unfair
(b) conduct of election of
labor practice i.e., that the violation of the CBA union and workers association
officers/nullification of election of labor organization or workers
union and workers association officers; association. This includes: (1)
cancellation of registration of unions
(c) audit/accounts
and workers associations; and (2) a
examination of union or workers
petition for interpleader.
association funds;
(d) deregistration of collective
bargaining agreements;
It is clear from the foregoing that the issues
(e) validity/invalidity of
union affiliation or disaffiliation; raised by petitioners do not fall under any of the

(f) validity/invalidity of aforementioned circumstances constituting an intra-

acceptance/non-acceptance for union union dispute. More importantly, the petitioners do not
membership;
seek a determination of whether it is the Facundo
(g) validity/invalidity of
impeachment/expulsion of union and group (EUBP) or the Remigio group (REUBP) which
workers association officers and
is the true set of union officers. Instead, the issue raised
members;
pertained only to the validity of the acts of
(h) validity/invalidity of
voluntary recognition; management in light of the fact that it still has an
(i) opposition to application existing CBA with EUBP. Thus as to Bayer, Lonishen
for union and CBA registration;
and Amistoso the question was whether they were
(j) violations of or
disagreements over any provision in a liable for unfair labor practice, which issue was within
union or workers association the jurisdiction of the NLRC. The dismissal of the
constitution and by-laws;
second ULP complaint was therefore erroneous.
(k) disagreements over
chartering or registration of labor
organizations and collective bargaining
However, as to respondents Remigio and
agreements;
Villareal, we find that petitioners complaint was
(l) violations of the rights and
conditions of union or workers validly dismissed.
association membership;
(m) violations of the rights of
legitimate labor organizations, except Petitioners ULP complaint cannot prosper as
interpretation of collective bargaining against respondents Remigio and Villareal because the
agreements;
issue, as against them, essentially involves an intra-
(n) such other disputes or
conflicts involving the rights to self- union dispute based on Section 1 (n) of DOLE
organization, union membership and Department Order No. 40-03. To rule on the validity
collective bargaining
or illegality of their acts, the Labor Arbiter and the
(1) between and among legitimate
labor organizations; NLRC will necessarily touch on the issues respecting
(2) between and among members the propriety of their disaffiliation and the legality of
of a union or workers association.
the establishment of REUBP issues that are outside the
SECTION 2. Coverage. Other scope of their jurisdiction. Accordingly, the dismissal
related labor relations disputes shall
include any conflict between a labor of the complaint was validly made, but only with
union and the employer or any respect to these two respondents.
individual, entity or group that is not a
 But are Bayer, Lonishen and Amistoso liable
for unfair labor practice? On this score, we find that the
evidence supports an answer in the affirmative.
It must be remembered that a CBA is entered
into in order to foster stability and mutual cooperation
between labor and capital. An employer should not be
allowed to rescind unilaterally its CBA with the duly
certified bargaining agent it had previously contracted
with, and decide to bargain anew with a different
group if there is no legitimate reason for doing so and
without first following the proper procedure. If such
behavior would be tolerated, bargaining and
negotiations between the employer and the union will
never be truthful and meaningful, and no CBA forged
after arduous negotiations will ever be honored or be
relied upon. Article 253 of the Labor Code, as
amended, plainly provides:
ART. 253. Duty to bargain
collectively when there exists a
collective bargaining
agreement. Where there is a
collective bargaining agreement,
the duty to bargain collectively
shall also mean that neither party
shall terminate or modify such
agreement during its
lifetime. However, either party can
serve a written notice to terminate or
modify the agreement at least sixty
(60) days prior to its expiration date.
It shall be the duty of both parties to
keep the status quo and to continue
in full force and effect the terms and
conditions of the existing agreement
during the 60-day period and/or
until a new agreement is reached by
the parties. (Emphasis supplied.)
This is the reason why it is axiomatic in labor relations
that a CBA entered into by a legitimate labor
organization that has been duly certified as the
exclusive bargaining representative and the employer
becomes the law between them. Additionally, in the
Certificate of Registration[50] issued by the DOLE, it is
specified that the registered CBA serves as the
covenant between the parties and has the force and
effect of law between them during the period of its
duration. Compliance with the terms and conditions of
the CBA is mandated by express policy of the law
primarily to afford protection to labor[51] and to
promote industrial peace. Thus, when a valid and
binding CBA had been entered into by the workers and
the employer, the latter is behooved to observe the
terms and conditions thereof bearing on union dues
and representation.[52] If the employer grossly violates
its CBA with the duly recognized union, the former
may be held administratively and criminally liable for
unfair labor practice.[53]
Respondents Bayer, Lonishen and Amistoso, contend
that their acts cannot constitute unfair labor practice as
the same did not involve gross violations in the
economic provisions of the CBA, citing the provisions
of Articles 248 (1) and 261[54] of the Labor Code, as
amended.[55] Their argument is, however, misplaced.
Indeed, in Silva v. National Labor Relations
Commission,[56] we explained the correlations of
Article 248 (1) and Article 261 of the Labor Code to
mean that for a ULP case to be cognizable by the Labor
Arbiter, and for the NLRC to exercise appellate
jurisdiction thereon, the allegations in the complaint
must show prima facie the concurrence of two things,
namely: (1) gross violation of the CBA; and (2) the
violation pertains to the economic provisions of the
CBA.[57]
 This pronouncement in Silva, however,
should not be construed to apply to violations of the
CBA which can be considered as gross violations per
se, such as utter disregard of the very existence of the
CBA itself, similar to what happened in this case.
When an employer proceeds to negotiate with a
splinter union despite the existence of its valid CBA
with the duly certified and exclusive bargaining agent,
the former indubitably abandons its recognition of the
latter and terminates the entire CBA.
Respondents cannot claim good faith to justify their
acts. They knew that Facundos group represented the
duly-elected officers of EUBP. Moreover, they were
cognizant of the fact that even the DOLE Secretary
himself had recognized the legitimacy of EUBPs
mandate by rendering an arbitral award ordering the
signing of the 1997-2001 CBA between Bayer and
EUBP. Respondents were likewise well-aware of the
pendency of the intra-union dispute case, yet they still
proceeded to turn over the collected union dues to
REUBP and to effusively deal with Remigio. The
totality of respondents conduct, therefore, reeks with
anti-EUBP animus.
Bayer, Lonishen and Amistoso argue that the
case is already moot and academic following the lapse
of the 1997-2001 CBA and their renegotiation with
EUBP for the 2006-2007 CBA. They also reason that
the act of the company in negotiating with EUBP for
the 2006-2007 CBA is an obvious recognition on their
part that EUBP is now the certified collective
bargaining agent of its rank-and-file employees.[58]
We do not agree. First, a legitimate labor
organization cannot be construed to have abandoned
its pending claim against the management/employer
by returning to the negotiating table to fulfill its duty
to represent the interest of its members, except when
the pending claim has been expressly waived or
compromised in its subsequent negotiations with the
management. To hold otherwise would be tantamount
to subjecting industrial peace to the precondition that
previous claims that labor may have against capital
must first be waived or abandoned before negotiations
between them may resume. Undoubtedly, this would
be against public policy of affording protection to
labor and will encourage scheming employers to
commit unlawful acts without fear of being sanctioned
in the future.
Second, that the management of Bayer
decided to recognize EUBP as the certified collective
bargaining agent of its rank-and-file employees for
purposes of its 2006-2007 CBA negotiations is of no
moment. It did not obliterate the fact that the
management of Bayer had withdrawn its recognition
of EUBP and supported REUBP during the
tumultuous implementation of the 1997-2001
CBA. Such act of interference which is violative of the
existing CBA with EUBP led to the filing of the
subject complaint.
On the matter of damages prayed for by the
petitioners, we have held that as a general rule, a
corporation cannot suffer nor be entitled to moral
damages. A corporation, and by analogy a labor
organization, being an artificial person and having
existence only in legal contemplation, has no feelings,
no emotions, no senses; therefore, it cannot experience
physical suffering and mental anguish. Mental
suffering can be experienced only by one having a
nervous system and it flows from real ills, sorrows, and 2) The complaint, as against
griefs of life all of which cannot be suffered by an respondents Remigio and Villareal.
artificial, juridical person.[59] A fortiori, the prayer for is DISMISSED due to the lack of
exemplary damages must also be jurisdiction of the Labor Arbiter and
denied.[60] Nevertheless, we find it in order to award the NLRC, the complaint being in the
(1) nominal damages in the amount of P250,000.00 on nature of an intra-union dispute.
the basis of our ruling in De La Salle University v. De
La Salle University Employees Association (DLSUEA- No pronouncement as to costs.

NAFTEU)[61] and Article 2221,[62] and (2) attorneys

SO ORDERED.
fees equivalent to 10% of the monetary award. The
remittance to petitioners of the collected union dues
previously turned over to Remigio and Villareal is
likewise in order.

WHEREFORE, the petition for review on

certiorari is PARTLY GRANTED. The Decision
dated December 15, 2003 and the Resolution
dated March 23, 2004 of the Court of Appeals in CA-
G.R. SP No. 73813 are MODIFIED as follows:

1) Respondents Bayer Phils., Dieter J.

Lonishen and Asuncion Amistoso are
found LIABLE for Unfair Labor
Practice, and are
hereby ORDERED to remit to
petitioners the amount of P254,857.15
representing the collected union dues
previously turned over to Avelina
Remigio and Anastacia Villareal.
They are likewise ORDERED to pay
petitioners nominal damages in the
amount of P250,000.00 and attorneys
fees equivalent to 10% of the
monetary award; and
#93. Tablante-Tungol Enterprises vs Tungol
G.R. No. L-47848 August 23, 1978
TABLANTE-TUNGOL
ENTERPRISES, petitioner,
vs.
HON. CARMELO C. NORIEL, ELISEO E.
PEÑAFLOR and ASSOCIATION OF
DEMOCRATIC LABOR
ORGANIZATION, respondents.
RESOLUTION
FERNANDO, J.:
Petitioner Tablante-Tungol Enterprises, resolute in its
determination not to bargain collectively with private
respondent, Association of Democratic Labor
Organization, has once again filed a certiorari
proceeding against respondents Director Carmelo C.
Noriel, Bureau of Labor Relations, and the Chief of
its Med-Arbiter Section, Regional Office No. 3,
Eliseo Peñaflor. The first attempt, 1 embodied in a
certiorari and prohibition petition dated May 3, 1976,
to set aside a resolution of respondent Noriel ordering
a certification election, was dismissed in a minute
resolution of May 12, 1976 2 for lack of merit. The
second petition for certiorari was filed on December
8, 1976, 3 this time to nullify a certification election
held on May 26, 1976, wherein private
respondent 4 was Unanimously chosen as the
collective bargaining representative.5 For obvious
lack of merit, it was likewise dismissed in a
resolution of November 18, 1977.6 In this certiorari
proceeding, it was alleged that public respondents
should have cancelled the registration and permit of
private respondent labor organization as private
respondent labor union had engaged in an illegal
strike. That was the novel issue raised in this petition.
Solicitor General Estelito P. Mendoza, 7 in his
exhaustive Comment, considered as the answer,
found no merit in such an allegation and sustained the
action of respondent public officials.
Petitioner is quite insistent that private respondent
labor union having engaged in an illegal strike, its
registration permit must be cancelled. It based its
contention on the relevant section of Presidential
Decree No. 823. 8 It did admit that as amended by
Presidential Decree No. 849, there is no mention of
such a penalty. It now reads in full: "Violation of any
provision thereof shall be punished by a fine of
P1,000 to P10,000 and/or imprisonment of 1 year to 5
years. Any person violating any provision of
Presidential Decree No. 823 shall be dealt with under
General Order No. 2-A and General Order No. 49." 9
Petitioner, nonetheless, would seek to import a
semblance of plausibility to its claim by the assertion
that the Labor Code itself provides, in another
section, that cancellation of registration follows from
"any activity prohibited by law." 10 The argument is
false and misleading according to the Comment of
the Solicitor-General. Thus: "By this amendatory law,
it is evident that no cause of action exists which will
warrant the cancellation of [Association of
Democratic Labor Organization's] permit and
registration. Of course, petitioner tried to evade said
issue by relying on Article 240 (e) and Article 242 (p)
of the Labor Code of the Philippines, as amended.
Let us examine its legal contention on this matter. For
expediency, we quote in entirety the aforesaid Article
relied upon by the petitioner for cancellation of the
registration and permit of the union: 'Article
239. Ground for cancellation of union
registration.The following shall constitute grounds
for cancellation of union registration: ... (e) Acting as
a labor contractor or engaging in the "cabo" system,
or otherwise engaging in any activity prohibited by
law. Suppletory to the above provision is Section 6
(c) of Rule II, Book V of the Rules and Regulations
implementing the Labor Code of the Philippines, as
amended, which reads as follows: 'Section 6. Denial
of Registration of local unions-The Regional Office
may deny the application for registration on any of
the following grounds: ... (c) Engaging in the "cabo
"system or other illegal practices.' It is a fact that
[Association of Democratic Labor Organization] is
not a labor contractor or is it engaged in the 'cabo'
system or is it otherwise engaged in any activity of
such nature which is prohibited by law. The above-
quoted article should not be interpreted or construed
to include an illegal strike engaged into by any union.
This is so because the phrase 'or otherwise engaging
in any activity prohibited by law'should be construed
to mean such activity engaged into by a union that
partakes of the nature of a labor contractor or 'cabo'
system. The law does not intend to include in the said
phrase illegally declared strike simply because strike
per se is legal. Also, if the law intends to include
illegally declared strike, the same could have been
expressly placed therein as had been previously done
in Presidential Decree No. 823." 11 Clearly, an
awareness of the relevance of the maxims noscitur a
sociis and ejusdem generis ought to have cautioned
counsel for petitioner to shy away from this
approach.

The realization must have dawned on petitioner's

counsel, Ramos L. Cura, whose abilities could have
been enlisted for a more worthwhile cause, that the
petition filed by him hardly has any prospect for
success. The Comment of Solicitor-General Mendoza
was filed on July 12, 1978. Then came, less than a
month later, August 3, 1978 to be exact, a joint
motion to dismiss filed by petitioner and private
respondent. It alleges: "1. That, on February 27,
1978, petitioners filed with this Honorable Court a
petition for certiorari and mandamus; 2. That, after
the filing of the aforesaid petition, the parties through
their respective representatives/counsel, met for the
purpose of amicable settlement of the issues raised in
the aforesaid petition; 3. That, both parties have
threshed-out their respective disputes and have found
ways and means which would render the above-
entitled case moot and academic; 4. That, both parties
are no longer interested in the outcome/result of this
case and pray of this Honorable Court to dismiss it
for being ,moot and academic. " 12 The prayer is for
the dismissal of the petition on the ground that it is
moot and academic.

WHEREFORE, this petition for certiorari is

dismissed for being moot and academic.
#94. Volkschel Labor union vs BLR
G.R. No. L-45824 June 19, 1985
VOLKSCHEL LABOR UNION, petitioner,
vs.
BUREAU OF LABOR RELATIONS,
ASSOCIATED LABOR UNION FOR METAL,
WORKERS, DMG, INC., PEOPLE'S CAR, INC.,
KARBAYAN INC., and RTC TRADING,
INC., respondents.
Ignacio P. Lacsina for petitioner.
William D. Dichoso for respondent DMG, Inc.
Abraham B. Drapiza for private respondent.
CUEVAS, J.:
Petition for certiorari to review the Resolutions dated
January 25, 1977 and March 14, 1977 of the Bureau
of Labor Relations.
On April 25. 1977, however, a Supplemental Petition
was filed seeking the issuance of —
(1) A preliminary mandatory
injunction commanding
respondents to return to petitioner
the union dues amounting to about
P55,000.00 lawfully pertaining to it
but illegally levied upon, collected
and handed over by respondent
Bureau, acting through the NLRC
sheriff, to respondent Associated
Labor Union for Metal workers,
with the collusion of respondents
DMG, Inc., Karbayan, Inc. and
RTC Machineries, Inc.;
(2) A preliminary restraining order
prohibiting respondents from
making further delivery to
respondent Associated Labor Union
for Metal workers of Union dues
collected or to be collected through
check-off from the wages of
petitioner's members by
respondents, DMG, Inc., Karbayan,
Inc., RTC Machineries, Inc., and
People's Car, Inc., under or by
virtue of the questioned writ of
execution issued by respondent
Bureau, dated April 4, 1977.
Petitioner was once affiliated with the Associated
Labor Union for Metal Workers (ALUMETAL for
short). On August 1, 1975, both unions, using the
name Volkschel Labor Union Associated Labor
Union for Metal Workers, jointly entered into a
collective bargaining agreement with respondent
companies. One of the subjects dealt with is the
payment of union dues which is provided for in
Section 3, Article 1, of the CBA, which reads:
Section 3. CHECK-OFF. — The
COMPANY agrees to make payroll
deductions not softener than twice a
month of UNION membership dues
and such special assessments fees
or fines as may be duly authorized
by the UNION, provided that the
same is covered by the individual
check-off authorization of the
UNION members. All said
deductions shall be promptly
transmitted within five (5) days by
the COMPANY to the UNION
Treasurer. The COMPANY shall
prepare two (2) checks. One (1)
check will be under the name of the
local union as their local fund
including local special assessment
funds and the other check will be
for the ALU Regional Office
regarding the remittance of the
UNION dues deduction.
On March 10, 1976, a majority of petitioner's
members decided to disaffiliate from respondent
federation in order to operate on its own as an
independent labor group pursuant to Article 241
(formerly Article 240) of the Labor Code of the
Philippines, the pertinent portion of which reads:
Incumbent affiliates of existing
federations or national unions may
disaffiliate only for the purpose of
joining a federation or national
union in the industry or region in
which it properly belongs or for the
purpose of operating as an
independent labor group.
Accordingly, a resolution was adopted and signed by
petitioner's members revoking their check-off
authorization in favor of ALUMETAL and notices
thereof were served on ALUMETAL and respondent
companies.
Confronted with the predicament of whether or not to
continue deducting from employees' wages and
remitting union dues to respondent, ALUMETAL
which wrote respondent companies advising them to
continue deducting union dues and remitting them to
said federation, respondent companies sought the
legal opinion of the respondent Bureau as regards the
controversy between the two unions. On November
11, 1976, Med-Arbiter George A. Eduvalla of
respondent Bureau rendered a Resolution which in
effect found the disaffiliation legal but at the same
time gave the opinion that, petitioner's members
should continue paying their dues to ALUMETAL in
the concept of agency fees. 1
From the said Resolution, of the Med-Arbiter both
petitioner and respondent ALUMETAL appealed to
the Director of respondent Bureau. Petitioner'
contended that the Med-Arbiter's opinion to the effect
that petitioner's members remained obligated to pay
dues to respondent ALUMETAL was inconsistent
with the dispositive finding that petitioner's
disaffiliation from ALUMETAL was valid.
ALUMETAL, on the other hand, assailed the
Resolution in question asserting that the disaffiliation
should have been declared contrary to law.
On January 25, 1977, respondent Bureau, through its
Acting Director, Francisco L. Estrella, REVERSED
the Med-Arbiter's Resolution., and declared that the
Bureau recognized "the continued affiliation of
Volkschel Labor Union with the Associated Labor
Union for Metal Workers." 2
Petitioner appealed the Acting Director's Resolution
to the Secretary of Labor know Minister of Labor and
Employment) who, treating the appeal as a Motion
for Reconsideration referred the same back to
respondent Bureau On March 14, 1977, the Bureau
denied the appeal for lack of merit.
Hence, the instant petition.
Meanwhile, on April 4, 1977, on motion of
ALUMETAL, the then Acting Secretary of Labor,
Amado Gat Inciong, issued a of execution
commanding the Sheriff of the National Labor
Relations Commission to enforce and execute the
order of January 25, 1977, which has become final
and executory. 3 Pursuant thereto, the NLRC Sheriff
enforced and implemented the Order of January 25,
1977, as a result of which respondent companies
turned over and handed to respondent federation the
union dues and other assessments in accordance with
the check-off provision of the CBA,
From the pleadings filed and arguments of counsel,
the following issues present themselves for this
Court's resolution.
I
Is petitioner union's disaffiliation
from respondent federation valid?
II
Do respondent companies have the
right to effect union dues
collections despite revocation by
the employees of the check-off
authorization? and
III
Is respondent federation entitled to
union dues payments from
petitioner union's members
notwithstanding their disaffiliation
from said federation?
We resolve the first issue in the affirmative.
The right of a local union to disaffiliate from its
mother union is well-settled. In previous cases, it has
been repeatedly held that a local union, being a
separate and voluntary association, is free to serve the
interest of all its members including the freedom to
disaffiliate when circumstances warrant. 4 This right
is consistent with the Constitutional guarantee of
freedom of association (Article IV, Section 7,
Philippine Constitution).
Petitioner contends that the disaffiliation was not due
to any opportunists motives on its part. Rather it was
prompted by the federation's deliberate and habitual
dereliction of duties as mother federation towards
petitioner union. Employees' grievances were
allegedly left unattended to by respondent federation
to the detriment of the employees' rights and
interests.
In reversing the Med-Arbiter's resolution, respondent
Bureau declared: the Department of Labor is set on a
task to restructure the labor movement to the end that
the workers will unite themselves along industry
lines. Carried to its complete fruition, only one union
for every industry will remain to bargain collectively
for the workers. The clear policy therefore even now
is to conjoin workers and worker groups, not to
dismember them. 5 This policy is commendable.
However, we must not lose sight of the constitutional
mandate of protecting labor and the workers' right to
self-organization. In the implementation and
interpretation of the provisions of the Labor Code and
its implementing regulations, the workingman's
welfare should be the primordial and paramount
consideration. In the case at bar, it would go against
the spirit of the labor law to restrict petitioner's right
to self-organization due to the existence of the CBA.
We agree with the Med-Arbiter's opinion that "A
disaffiliation does not disturb the enforceability and
administration of a collective agreement; it does not
occasion a change of administrators of the contract
nor even an amendment of the provisions
thereof." 6 But nowhere in the record does it appear
that the contract entered into by the petitioner and
ALUMETAL prohibits the withdrawal of the former
from the latter.
With the view we take on those two issues, we find
no necessity in dwelling further on the last issue.
Suffice it to state that respondent federation is not
entitled to union dues payments from petitioner's
members. "A local union which has validly
withdrawn from its affiliation with the parent
association and which continues to represent the
employees of an employer is entitled to the check-off
dues under a collective bargaining contract." 9
WHEREFORE, the Resolutions of the Bureau of
Labor Relations of January 25, 1977 and March 14,
1977 are REVERSED and SET ASIDE. Respondent
ALUMETAL is ordered to return to petitioner union
all the union dues enforced and collected through the
NLRC Sheriff by virtue of the writ of execution dated
April 4, 1977 issued by respondent Bureau.
No costs.
SO ORDERED.

This now brings us to the second issue. Under

Section 3, Article I, of the CBA, the obligation of the
respondent companies to deduct and remit dues to
ALUMETAL is conditioned on the individual check-
off authorization of petitioner's members, In other
words, ALUMETAL is entitled to receive the dues
from respondent companies as long as petitioner
union is affiliated with it and respondent companies
are authorized by their employees (members of
petitioner union) to deduct union dues. Without said
affiliation, the employer has no link to the mother
union. The obligation of an employee to pay union
dues is coterminous with his affiliation or
membership. "The employees' check-off
authorization, even if declared irrevocable, is good
only as long as they remain members of the union
concerned." 7 A contract between an employer and
the parent organization as bargaining agent for the
employees is terminated by the disaffiliation of the
local of which the employees are
members. 8 Respondent companies therefore were
wrong in continuing the check-off in favor of
respondent federation since they were duly notified
of the disaffiliation and of petitioner's members
having already rescinded their check-off
authorization.
#95. De La Salle University vs DLSU Employees
Union
G.R. No. 169254 August 23, 2012
DE LA SALLE UNIVERSITY, Petitioner,
vs.
DE LA SALLE UNIVERSITY EMPLOYEES
ASSOCIATION (DLSUEA-
NAFTEU), Respondent.
LEONARDO-DE CASTRO,*
PERLAS-BERNABE, **
DECISION
LEONARDO-DE CASTRO, J.:
Before this Court is a petition for review
on certiorari under Rule 45 of the Rules of Court
assailing the March 4, 2005 Decision 1 and August 5,
2005 Resolution2 of the Court of Appeals in CA-G.R.
SP No. 82472, entitled De La Salle University versus
the Honorable Secretary of Labor and De La Salle
University Employees Association (DLSUEA-
NAFTEU), which affirmed the November 17, 2003
Decision3 and January 20, 2004 Order4 of the
Secretary of Labor in OS-AJ-0033-2003 (NCMB-
NCR-NS-08-246-03). These decisions and
resolutions consistently found petitioner guilty of
unfair labor practice for failure to bargain collectively
with respondent.
This petition involves one of the three notices of
strike filed by respondent De La Salle University
Employees Association (DLSUEANAFTEU) against
petitioner De La Salle University due to its refusal to
bargain collectively with it in light of the intra-union
dispute between respondent’s two opposing factions.
The following narration of facts will first discuss the
circumstances surrounding the said intra-union
conflict between the rival factions of respondent
union and, thereafter, recite the cases relating to the
aforementioned conflict, from the complaint for
unfair labor practice to the subsequent notices of
strike, and to the assumption of jurisdiction by the
Secretary of Labor.
Petition for Election of Union
Officers
On May 30, 2000, some of respondent’s members
headed by Belen Aliazas (the Aliazas faction) filed a
petition for the election of union officers in the
Bureau of Labor Relations (BLR).5 They alleged
therein that there has been no election for
respondent’s officers since 1992 in supposed
violation of the respondent union’s constitution and
by-laws which provided for an election of officers
every three years.6 It would appear that respondent’s
members repeatedly voted to approve the hold-over
of the previously elected officers led by Baylon R.
Bañez (Bañez faction) and to defer the elections to
expedite the negotiations of the economic terms
covering the last two years of the 1995-2000
collective bargaining agreement (CBA)7 pursuant to
Article 253-A of the Labor Code.8
On March 19, 2001, BLR Regional Director Alex E.
Maraan issued a Decision ordering the conduct of an
election of union officers to be presided by the Labor
Relations Division of the Department of Labor and
Employment-National Capital Region (DOLE-
NCR).9 He noted therein that the members of the
Bañez faction were not elected by the general
membership but were appointed by the Executive
Board to their positions since 1985.10
The Bañez faction appealed the said March 19, 2001
Decision of the BLR Regional Director.
While the appeal was pending, the Aliazas faction
filed a Very Urgent Motion for Intervention in the
BLR. They alleged therein that the Bañez faction, in
complete disregard of the March 19, 2001 Decision,
scheduled a "regular" election of union officers
without notice to or participation of the DOLE-
NCR.11
In an Order dated July 6, 2001, BLR Director IV
Hans Leo J. Cacdac granted the motion for
intervention.12 He held that the unilateral act of
setting the date of election on July 9, 2001 and the
disqualification of the Aliazas faction by the
DLSUEA-COMELEC supported the intervening
faction’s fear of biased elections.13
Thereafter, in a Resolution dated May 23, 2002, BLR
Director Cacdac dismissed the appeal of the Bañez
faction. The salient portions thereof stated:
The exercise of a union member’s basic liberty to
choose the union leadership is guaranteed in Article
X of [respondent’s] constitution and by-laws. Section
4 mandates the conduct of a regular election of
officers on the first Saturday of July and on the same
date every three years thereafter.
In unequivocal terms, Article 241(c) of the Labor
Code states that "[t]he members shall directly elect
their officers, including those of the national union or
federation, to which they or their union is affiliated,
by secret ballot at intervals of five (5) years."
[The Bañez faction] admitted that no elections
were conducted in 1992 and 1998, when the terms
of office of the officers expired. This Office
emphasizes that even the decision to dispense with
the elections and allow the hold-over officers to
continue should have been subjected to a secret ballot
under Article 241(d) which states:
The members shall determine by secret ballot, after
due deliberation, any question of major policy
affecting the entire membership of the organization,
unless the nature of the organization or force majeure
renders such secret ballot impractical, in which case
the board of directors of the organization may make
the decision in behalf of the general membership.
With the clear and open admission that no election
transpired even after the expiration of the union
officers’ terms of office, the call for the conduct of
elections by the Regional Director was valid and
should be sustained.14 (Emphases supplied.)
Subsequently, in a memorandum dated May 16,
2003, BLR Director Cacdac stated that there was no
void in the union leadership as the March 19, 2001
Decision of Regional Director Maraan did not
automatically terminate the Bañez faction’s tenure in
office. He explained therein that "[a]s duly-elected
officers of [respondent], their leadership is not
deemed terminated by the expiration of their terms of
office, for they shall continue their functions and
enjoy the rights and privileges pertaining to their
respective positions in a hold-over capacity, until
their successors shall have been elected and
qualified."15
On August 28, 2003, an election of union officers
under the supervision of the DOLE was conducted.
The Bañez faction emerged as the winner
thereof.16 The Aliazas faction contested the election
results.
On October 29, 2003, the Bañez faction was formally
proclaimed as the winner in the August 28, 2003
election of union officers.17
The Complaint for Unfair Labor
Practices and Three Notices of
Strike
On March 20, 2001, despite the brewing conflict
between the Aliazas and Bañez factions, petitioner
entered into a five-year CBA covering the period
from June 1, 2000 to May 31, 2005.18
On August 7, 2001, the Aliazas faction wrote a letter
to petitioner requesting it to place in escrow the union
dues and other fees deducted from the salaries of
employees pending the resolution of the intra-union
conflict. We quote the pertinent portion of the letter
here:
The [BLR], in its March 19, 2001 [decision],
declared that the hold-over capacity as president of
Mr. Baylon Bañez, as well as that of the other
officers [of respondent] has been extinguished. It was
likewise stated in the [decision] that "to further defer
the holding of a local election is whimsical,
capricious and is a violation of the union members’
rights under Article 241 and is punishable by
expulsion."
This being so, we would like to request [petitioner] to
please put on escrow all union dues/agency fees and
whatever money considerations deducted from
salaries of the concerned co-academic personnel until
such time that an election of union officials has been
scheduled and subsequent elections has been held.
We fully understand that putting the collection on
escrow means the continuance of our monthly
deductions but the same will not be remitted to
respondent’s funds.19
Petitioner acceded to the request of the Aliazas
faction and informed the Bañez faction of such fact in
a letter dated August 16, 2001. Petitioner explained:
It is evident that the intra-union dispute between the
incumbent set of officers of your Union on one hand
and a sizeable number of its members on the other
hand has reached serious levels. By virtue of the 19
March 2001 Decision and the 06 July 2001 Order of
the Department of Labor and Employment (DOLE),
the hold-over authority of your incumbent set of
officers has been considered extinguished and an
election of new union officers, to be conducted and
supervised by the DOLE, has been directed to be
held. Until the result of this election [come] out
and a declaration by the DOLE of the validly
elected officers is made, a void in the Union
leadership exists.
In light of these circumstances, the University has no
other alternative but to temporarily do the following:
1. Establish a savings account for the Union
where all the collected union dues and
agency fees will be deposited and held in
trust; and
2. Discontinue normal relations with any
group within the Union including the
incumbent set of officers.
We are informing you of this decision of [petitioner]
not only for your guidance but also for the apparent
reason that [it] does not want itself to be
unnecessarily involved in your intra-union dispute.
This is the only way [petitioner] can maintain
neutrality on this matter of grave
concern.20 (Emphasis supplied.)
In view of the foregoing decision of petitioner,
respondent filed a complaint for unfair labor practice
in the National Labor Relations Commission (NLRC)
on August 21, 2001.21 It alleged that petitioner
committed a violation of Article 248(a) and (g) of the
Labor Code which provides:
Article 248. Unfair labor practices of employers. It
shall be unlawful for an employer to commit any of
the following unfair labor practice:
(a) To interfere with, restrain or coerce employees in
the exercise of their right to self-organization.
xxxx
(d) To initiate, dominate, assist or otherwise interfere
with the formation or administrator of any labor
organization, including the giving of financial or
other support to it or its organizers or supporters.
Respondent union asserted that the creation of escrow
accounts was not an act of neutrality as it was
influenced by the Aliazas factions’s letter and was an
act of interference with the internal affairs of the
union. Thus, petitioner’s non-remittance of union
dues and discontinuance of normal relations with it
constituted unfair labor practice.
Petitioner, for its defense, denied the allegations of
respondent and insisted that its actions were
motivated by good faith.
Meanwhile, on March 7, 2002, respondent filed a
notice of strike in the National Conciliation and
Mediation Board (NCMB).22
Shortly thereafter, or on July 12, 2002, Labor Arbiter
Felipe P. Pati dismissed the August 21, 2001
complaint for unfair labor practice against petitioner
for lack of merit in view of the May 23, 2002
decision of the BLR, affirming the need to conduct an
election of the union’s officers.23 The labor arbiter, in
effect, upheld the validity of petitioner’s view that
there was a void in the leadership of respondent.
The July 12, 2002 Decision of Labor Arbiter Pati,
however, did not settle matters between respondent
and petitioner.
On March 15, 2003, respondent sent a letter to
petitioner requesting for the renegotiation of the
economic terms for the fourth and fifth years of the
then current CBA, to wit:
This refers to the re-negotiation of the economic
provisions for the [fourth and fifth] year[s] of the
2000-2005 [CBA] that will commence sometime in
March 2003.
In this regard, the [Bañez faction] for and in behalf of
[respondent] would like to respectfully request your
good office to provide us a copy of the latest Audited
Financial Statements of [petitioner,] including its
budget performance report so that [petitioner] and
[respondent through] their respective authorized
representatives could facilitate the negotiations
thereof.
We are furnishing [petitioner through] your good self
a copy of [our] CBA economic proposals for the
[fourth and fifth] year[s] of the 2000-2005 CBA
signed by its authorized negotiating panel.
We also request [petitioner] to furnish us a copy of its
counter proposals as well as a list of its negotiating
panel not later than ten (10) days from receipts of
[our] CBA proposals so that [we] and [petitioner] can
now proceed with the initial conference to discuss the
ground rules that will govern the CBA negotiation.24
In a letter dated March 20, 2003,25 petitioner denied
respondent’s request. It stated therein:
Pursuant to the [d]ecisions of appropriate government
authority, and consistent with the position enunciated
and conveyed to you by [petitioner] in my letter dated
August 16, 2001, there is a conclusion of fact that
there is an absolute void in the leadership
of [respondent]. Accordingly, your representation as
President or officer of, as well as, that of all persons
purporting to be officers and members of the board of
the said employees association [will] not [be]
recognized. Normal relations with the union
cannot occur until the said void in the leadership
of [respondent] is appropriately filled. Affected by
the temporary suspension of normal relations
with [respondent] is the renegotiation of the
economic provisions of the 2002-2005 CBA. No
renegotiation can occur given the void in the
leadership of [respondent.]26
As a consequence of the aforementioned letter,
respondent filed a second notice of strike on April 4,
2003.27 Upon the petition filed by petitioner on April
11, 2003,28 the Secretary of Labor assumed
jurisdiction over the matter pursuant to Article 263 of
the Labor Code29 as petitioner, an educational
institution, was considered as belonging to an
industry indispensable to national interest and
docketed the case as OS-AJ-0015-2003.30
On June 26, 2003, the Second Division of the NLRC
affirmed the July 12, 2002 Decision of Labor Arbiter
Pati.31 Respondent moved for reconsideration but it
was denied by the NLRC in a Resolution dated
September 30, 2003.32
Meanwhile, on July 28, 2003, the Secretary of Labor
issued a Decision33 in OS-AJ-0015-2003, finding
petitioner guilty of violating Article 248(g) in relation
to Article 252 of the Labor Code.34 The salient
portion thereof stated:
The University is guilty of refusal to bargain
amounting to an unfair labor practice under Article
248(g) of the Labor Code. Indeed there was a
requirement on both parties of the performance of the
mutual obligation to meet and convene promptly and
expeditiously in good faith for the purpose of
negotiating an agreement. Undoubtedly, both
[petitioner] and [respondent] entered into a [CBA] on
[March 20, 2001. The term of the said CBA
commenced on [June 1, 2000 and with the expiration
of the economic provisions on the third year,
[respondent] initiated negotiation by sending a letter
dated March 15, 2003, together with the CBA
proposal. In reply to the letter of [respondent],
[petitioner] in its letter dated [March 20, 2003
refused.
Such an act constituted an intentional avoidance of a
duty imposed by law. There was nothing in the
[March 19, 2001 and July 6, 2001 orders] of Director
Maraan and Cacdac which restrained or enjoined
compliance by the parties with their obligations under
the CBA and under the law. The issue of union
leadership is distinct and separate from the duty to
bargain.
In fact, BLR Director Cacdac clarified that there was
no void in [respondent’s] leadership. The pertinent
decision dated March 19, 2001 x x x reads35 :
We take this opportunity to clarify that there is no
void in [respondent’s] leadership. The [March 19,
2001 decision] x x x should not be construed as an
automatic termination of the incumbent officers[’]
tenure of office. As duly-elected officers of
[respondent], their leadership is not deemed
terminated by the expiration of their terms of office,
for they shall continue their functions and enjoy the
rights and privileges pertaining to their respective
positions in a hold-over capacity, until their
successors shall have been elected and qualified.
It is thus very clear. x x x. This official determination
by the BLR Director [Cacdac] removes whatever
cloud of doubt on the authority of the incumbent to
negotiate for and in behalf of [respondent] as the
bargaining agent of all the covered employees.
[Petitioner] is duty bound to negotiate collectively
pursuant to Art. 252 of the Labor Code, as amended.
xxxx
On the question: [i]s [petitioner] guilty of unfair labor
practice? This office resolves the issue in the
affirmative. Citing the case of the Divine Word
University of Tacloban v. Secretary of Labor,
[petitioner] is guilty of unfair labor practice in
refusing to abide by its duty to bargain collectively.
The refusal of [petitioner] to bargain is tainted with
bad faith amounting to unfair labor practice. There is
no other way to resolve the issue given the facts of
the case and the law on the matter.
WHEREFORE, premises considered, this Office
finds [petitioner] guilty of refusal to bargain
collectively in violation of Article 252 in relation to
Article 248 of the Labor Code, as amended.
Management is hereby directed to cease and desist
from refusing to bargain collectively. The parties are
therefore directed to commence negotiations effective
immediately.36 (Citations omitted.)
On August 1, 2003, respondent reiterated its demand
on petitioner to bargain collectively pursuant to the
aforementioned Decision of the Secretary of Labor. 37
On August 4, 2003, petitioner sent a letter to
respondent explaining that it cannot act on the latter’s
letter. The August 4, 2003 letter of petitioner stated:
[Petitioner’s] counsel is preparing a Motion for
Reconsideration that would be filed with the Office
of the Secretary of Labor and Employment. Under
the Rule, [petitioner] still has the remedy of filing
such Motion with the Office of the Secretary before
elevating the matter to higher authorities should it
become necessary.
We, therefore, regret to advise you that [petitioner]
cannot accede to your demand to immediately
commence negotiations for the CBA with your group
or any other group of Union members, as the case
may be, until such time that the case before the
Secretary is resolved with finality. We will, therefore,
continue to defer the CBA negotiations pending final
resolution of the matter.
As regards your other demands, [petitioner] is of the
position that the matters subject of said demands are
still pending before the various offices of the Labor
Arbiters and NLRC and, therefore, it cannot act on
the same until such time that said cases are likewise
resolved with finality. It cannot be assumed that all
these cases that you filed have been rendered moot
and academic by the Secretary’s Decision, otherwise
you would, in effect, be admitting that you have
engaged in "forum shopping."38
Failing to secure a reconsideration of the July 28,
2003 Decision of the Secretary of Labor, petitioner
assailed the same in the Court of Appeals via a
petition for certiorari docketed as CA-G.R. SP No.
81649.
On August 27, 2003, respondent filed the third notice
of strike,39 in the wake of petitioner’s August 4, 2003
letter and citing among others petitioner’s alleged
violation of the CBA and continuing refusal to
bargain in good faith. Petitioner, on the other hand,
filed a petition for assumption of jurisdiction for this
third notice of strike.40 Again, the Secretary of Labor
assumed jurisdiction. This case was docketed as OS-
AJ-0033-2003.
On November 17, 2003, the Secretary of Labor, in
resolving OS-AJ-0033-2003, cited the July 28, 2003
Decision in OS-AJ-0015-2003, and consequently
declared that petitioner committed an unfair labor
practice. The salient portions of said Decision stated:
Considering that this case, docketed as Case No.
OS-AJ-0033-2003 is based on the same set of facts
with another case, involving the same parties
numbered as OS-AJ-0015-2003, and based on the
same factual and legal circumstances, we have to
consistently hold that the [petitioner] has indeed
failed to comply with its obligation under the law.
As a matter of fact, it admits in persisting to refuse
despite the fact that there is no more legal obstacle
preventing the commencement of the Collective
Bargaining Negotiation between the parties. Anent
the so called void in the Union leadership, We
declared that the same does not constitute a valid
ground to refuse to negotiate
because [petitioner’s] duty to bargain under the
law is due and demandable under the law
by [respondent] as a whole and not by any faction
within the union.
xxxx
x x x Events have lately turned out in favor of
[respondent], thereby obliterating any further
justification on the part of [petitioner] not to bargain.
On October 29, 2003, the new Regional Director of
DOLENCR, Ciriaco E. Lagunzad III, issued a
resolution declaring the Bañez group as the duly
elected officers of the Union. x x x.
xxxx
The above election results were the outcome of a
duly-held union election, supervised by the
Department’s Regional Office. This was the
election ordered in the [July 6, 2001 and March
19, 2001 orders of the BLR]. This was also the
same election invoked by [petitioners] in trying to
justify it continuing refusal to bargain.
The [members of the Bañez faction have] reportedly
taken their oath of office and have qualified.
[Petitioner] is now under estoppel from recognizing
them, considering that it committed in writing to
recognize and commence bargaining once a set of
duly elected officers [is] proclaimed after an election
duly conducted under the supervision of the
Department.
xxxx
Not only has [petitioner] refused to negotiate with
[respondent], it has unduly withheld the money
belonging to the bargaining agent. Both these acts
are illegal and are tantamount to Unfair Labor
Practice under Article 248 in relation to Article
252 of the Labor Code x x x.
ACCORDINGLY, all the foregoing premises being
duly considered, this Office hereby declares that
[petitioner] committed Unfair Labor Practice in
violation of [Article 248 in relation to Article 252 of
the Labor Code x x x. [Petitioner] and its duly
authorized officers and personnel are therefore
ordered to cease and desist from committing said acts
under pain of legal sanction.
[Petitioner] is therefore specifically directed to
commence collective bargaining negotiation with
[respondents] without further delay and to
immediately turn over to the Bañez group the
unlawfully withheld union dues and agency fees with
legal interest corresponding to the period of the
unlawful withholding. All these specific directives
should be done within ten (10) days from receipt of
this Decision and with sufficient proof of compliance
herewith to be submitted immediately thereafter.41
In accordance with the terms of the aforementioned
Decision, petitioner turned over to respondent the
collected union dues and agency fees from employees
which were previously placed in escrow amounting
to ₱ 441,924.99.42
Nonetheless, petitioner moved for the reconsideration
of the November 17, 2003 Decision of the Secretary
of Labor but it was denied in an Order dated January
20, 2004.
Aggrieved, petitioner filed a petition
for certiorari under Rule 65 of the Rules of Court
with the Court of Appeals. Petitioner alleged therein
that the Secretary of Labor committed grave abuse of
discretion by holding that it (petitioner) was liable for
unfair labor practice. Taking a contrary stance to the
findings of the Secretary of Labor, petitioner stressed
that it created the escrow accounts for the benefit of
the winning faction and undertook temporary
measures in light of the March 19, 2001 and July 6,
2001 Orders of the BLR. Thus, it should not be
penalized for taking a hands-off stance in the intra-
union controversy between the Aliazas and Bañez
factions.
In a Decision dated March 4, 2005, the Court of
Appeals affirmed the November 17, 2003 Decision
and January 20, 2004 Order of the Secretary of Labor
and dismissed the said petition. It held:
[Petitioner] finds reason to refuse to negotiate with
[respondent’s incumbent officers] because of the
alleged "void in the union leadership" declared by the
Regional Director in his March 19, 2001 decision,
[but] after the election of the union officers held on
August 28, 2003, continued refusal by the University
to negotiate amounts to unfair labor practice. The
non-proclamation of the newly elected union
officers cannot be used as an excuse to fulfill the
duty to bargain collectively.43 (Emphasis supplied.)
Petitioner moved for reconsideration but it was
denied in a Resolution dated August 5, 2005. The
Court of Appeals noted that petitioner’s arguments
were a mere "rehash of the issues and discussions it
presented in its petition and in the relevant pleadings
submitted x x x."44
Meanwhile, the Court of Appeals dismissed CA-G.R.
SP No. 81649 (which assailed the July 28, 2003
Decision in OS-AJ-0015-2003), in a Decision dated
March 18, 2005.45 The said decision likewise found
that petitioner erred in unilaterally suspending
negotiations with respondent since the pendency of
the intra-union dispute was not a justifiable reason to
do so.
Petitioner moved for reconsideration of the aforesaid
decision in CAG. R. SP No. 81649 but it was denied
in a Resolution dated June 7, 200546 due to lack of
merit.
Aggrieved, petitioner elevated both the assailed
decisions and resolutions in this case and in CA-G.R.
SP No. 81649, which was docketed as G.R. No.
168477, to this Court. Petitioner, in both instances,
essentially argued that it did not maliciously evade its
duty to bargain. On the contrary, it asserts that it
merely relied in good faith on the March 19, 2001
Decision of the BLR that there was a void in
respondent’s leadership.47
This Court, through its Third Division, denied G.R.
No. 168477 in a minute resolution dated July 20,
2005 due to the petition’s "failure x x x to show that a
reversible error had been committed by the appellate
court."48 The motion for reconsideration was denied
with finality on September 21,
200549 and entry of judgment was made on November
3, 2005.50
Meanwhile, respondent was ordered to file a
comment herein, and, subsequently, this petition was
given due course.
We note that both G.R. No. 168477 and this petition
are offshoots of petitioner’s purported temporary
measures to preserve its neutrality with regard to the
perceived void in the union leadership. While these
two cases arose out of different notices to strike filed
on April 3, 2003 and August 27, 2003, it is
undeniable that the facts cited and the arguments
raised by petitioner are almost identical. Inevitably,
G.R. No. 168477 and this petition seek only one
relief, that is, to absolve petitioner from
respondent’s charge of committing an unfair labor
practice, or specifically, a violation of Article
248(g) in relation to Article 252 of the Labor
Code.
For this reason, we are constrained to apply the law
of the case doctrine in light of the finality of our July
20, 2005 and September 21, 2005 resolutions in G.R.
No. 168477. In other words, our previous affirmance
of the Court of Appeals’ finding – that petitioner
erred in suspending collective bargaining
negotiations with the union and in placing the union
funds in escrow considering that the intra-union
dispute between the Aliazas and Bañez factions was
not a justification therefor — is binding herein.
Moreover, we note that entry of judgment in G.R.
No. 168477 was made on November 3, 2005, and that
put to an end to the litigation of said issues once and
for all.51
The law of the case has been defined as the opinion
delivered on a former appeal. It means that whatever
is once irrevocably established as the controlling
legal rule or decision between the same parties in the
same case continues to be the law of the
case, whether correct on general principles or not, so
long as the facts on which such decision was
predicated continue to be the facts of the case before
the court.52
In any event, upon our review of the records of this
case, we find that the Court of Appeals committed no
reversible error in its assailed Decision dated March
4, 2005 and Resolution dated August 5, 2005.
Petitioner’s reliance on the July 12, 2002 Decision of
Labor Arbiter Pati, and the NLRC’s affirmance
thereof, is misplaced. The unfair labor practice
complaint dismissed by Labor Arbiter Pati questioned
petitioner’s actions immediately after the March 19,
2001 Decision of BLR Regional Director Maraan,
finding that "the reason for the hold-over [of the
previously elected union officers] is already
extinguished." The present controversy involves
petitioner’s actions subsequent to (1) the clarification
of said March 19, 2001 Maraan Decision by BLR
Director Cacdac who opined in a May 16, 2003
memorandum that the then incumbent union officers
(i.e., the Bañez faction) continued to hold office until
their successors have been elected and qualified, and
(2) the July 28, 2003 Decision of the Secretary of
Labor in OS-AJ-0015-2003 ruling that the very same
intra-union dispute (subject of several notices of
strike) is insufficient ground for the petitioner to
suspend CBA negotiations with respondent union.
We take notice, too, that the aforesaid Decision of
Labor Arbiter Pati has since been set aside by the
Court of Appeals and such reversal was upheld by
this Court’s Second Division in its Decision dated
April 7, 2009 in G.R. No. 177283, wherein petitioner
was found liable for unfair labor practice.53
Neither can petitioner seek refuge in its defense that
as early as November 2003 it had already released the
escrowed union dues to respondent and normalized
relations with the latter. The fact remains that from its
receipt of the July 28, 2003 Decision of the Secretary
of Labor in OS-AJ-0015-2003 until its receipt of the
November 17, 2003 Decision of the Secretary of
Labor in OS-AJ-0033-2003, petitioner failed in its
duty to collectively bargain with respondent union
without valid reason. At most, such subsequent acts
of compliance with the issuances in OS-AJ-0015-
2003 and OS-AJ-0033-2003 merely rendered moot
and academic the Secretary of Labor’s directives for
petitioner to commence collective bargaining
negotiations within the period provided.
To conclude, we hold that the findings of fact of the
Secretary of Labor and the Court of Appeals, as well
as the conclusions derived therefrom, were amply
supported by evidence on record. Thus, in line with
jurisprudence that such findings are binding on this
Court, we see no reason to disturb the same.54
WHEREFORE, the petition is DENIED.
SO ORDERED.
#96. Victoriano vs Elizalde Rope Workers’ Union
G.R. No. L-25246 September 12, 1974
BENJAMIN VICTORIANO, plaintiff-appellee,
vs.
ELIZALDE ROPE WORKERS' UNION and
ELIZALDE ROPE FACTORY, INC., defendants,
ELIZALDE ROPE WORKERS'
UNION, defendant-appellant.
Salonga, Ordonez, Yap, Sicat & Associates for
plaintiff-appellee.
Cipriano Cid & Associates for defendant-appellant.
ZALDIVAR, J.:p
Appeal to this Court on purely questions of law from
the decision of the Court of First Instance of Manila
in its Civil Case No. 58894.
The undisputed facts that spawned the instant case
follow:
Benjamin Victoriano (hereinafter referred to as
Appellee), a member of the religious sect known as
the "Iglesia ni Cristo", had been in the employ of the
Elizalde Rope Factory, Inc. (hereinafter referred to as
Company) since 1958. As such employee, he was a
member of the Elizalde Rope Workers' Union
(hereinafter referred to as Union) which had with the
Company a collective bargaining agreement
containing a closed shop provision which reads as
follows:
Membership in the Union shall be
required as a condition of
employment for all permanent
employees workers covered by this
Agreement.
The collective bargaining agreement expired on
March 3, 1964 but was renewed the following day,
March 4, 1964.
Under Section 4(a), paragraph 4, of Republic Act No.
875, prior to its amendment by Republic Act No.
3350, the employer was not precluded "from making
an agreement with a labor organization to require as a
condition of employment membership therein, if such
labor organization is the representative of the
employees." On June 18, 1961, however, Republic
Act No. 3350 was enacted, introducing an
amendment to — paragraph (4) subsection (a) of
section 4 of Republic Act No. 875, as follows: ... "but
such agreement shall not cover members of any
religious sects which prohibit affiliation of their
members in any such labor organization".
Being a member of a religious sect that prohibits the
affiliation of its members with any labor
organization, Appellee presented his resignation to
appellant Union in 1962, and when no action was
taken thereon, he reiterated his resignation on
September 3, 1974. Thereupon, the Union wrote a
formal letter to the Company asking the latter to
separate Appellee from the service in view of the fact
that he was resigning from the Union as a member.
The management of the Company in turn notified
Appellee and his counsel that unless the Appellee
could achieve a satisfactory arrangement with the
Union, the Company would be constrained to dismiss
him from the service. This prompted Appellee to file
an action for injunction, docketed as Civil Case No.
58894 in the Court of First Instance of Manila to
enjoin the Company and the Union from dismissing
Appellee.1 In its answer, the Union invoked the
"union security clause" of the collective bargaining
agreement; assailed the constitutionality of Republic
Act No. 3350; and contended that the Court had no
jurisdiction over the case, pursuant to Republic Act
No. 875, Sections 24 and 9 (d) and (e).2 Upon the
facts agreed upon by the parties during the pre-trial
conference, the Court a quo rendered its decision on
August 26, 1965, the dispositive portion of which
reads:
IN VIEW OF THE FOREGOING,
judgment is rendered enjoining the
defendant Elizalde Rope Factory,
Inc. from dismissing the plaintiff
from his present employment and
sentencing the defendant Elizalde
Rope Workers' Union to pay the
plaintiff P500 for attorney's fees
and the costs of this action.3
From this decision, the Union appealed directly to
this Court on purely questions of law, assigning the
following errors:
I. That the lower court erred when
it did not rule that Republic Act
No. 3350 is unconstitutional.
 II. That the lower court erred when
it sentenced appellant herein to pay
plaintiff the sum of P500 as
attorney's fees and the cost thereof.
In support of the alleged unconstitutionality of
Republic Act No. 3350, the Union contented, firstly,
that the Act infringes on the fundamental right to
form lawful associations; that "the very phraseology
of said Republic Act 3350, that membership in a
labor organization is banned to all those belonging to
such religious sect prohibiting affiliation with any
labor organization"4 , "prohibits all the members of a
given religious sect from joining any labor union if
such sect prohibits affiliations of their members
thereto"5 ; and, consequently, deprives said members
of their constitutional right to form or join lawful
associations or organizations guaranteed by the Bill
of Rights, and thus becomes obnoxious to Article III,
Section 1 (6) of the 1935 Constitution. 6
Secondly, the Union contended that Republic Act No.
3350 is unconstitutional for impairing the obligation
of contracts in that, while the Union is obliged to
comply with its collective bargaining agreement
containing a "closed shop provision," the Act relieves
the employer from its reciprocal obligation of
cooperating in the maintenance of union membership
as a condition of employment; and that said Act,
furthermore, impairs the Union's rights as it deprives
the union of dues from members who, under the Act,
are relieved from the obligation to continue as such
members.7
Thirdly, the Union contended that Republic Act No.
3350 discriminatorily favors those religious sects
which ban their members from joining labor unions,
in violation of Article Ill, Section 1 (7) of the 1935
Constitution; and while said Act unduly protects
certain religious sects, it leaves no rights or
protection to labor organizations.8
Fourthly, Republic Act No. 3350, asserted the Union,
violates the constitutional provision that "no religious
test shall be required for the exercise of a civil right,"
in that the laborer's exercise of his civil right to join
associations for purposes not contrary to law has to
be determined under the Act by his affiliation with a
religious sect; that conversely, if a worker has to
sever his religious connection with a sect that
prohibits membership in a labor organization in order
to be able to join a labor organization, said Act would
violate religious freedom.9
Fifthly, the Union contended that Republic Act No.
3350, violates the "equal protection of laws" clause of
the Constitution, it being a discriminately legislation,
inasmuch as by exempting from the operation of
closed shop agreement the members of the "Iglesia ni
Cristo", it has granted said members undue
advantages over their fellow workers, for while the
Act exempts them from union obligation and liability,
it nevertheless entitles them at the same time to the
enjoyment of all concessions, benefits and other
emoluments that the union might secure from the
employer. 10
Sixthly, the Union contended that Republic Act No.
3350 violates the constitutional provision regarding
the promotion of social justice. 11
Appellant Union, furthermore, asserted that a "closed
shop provision" in a collective bargaining agreement
cannot be considered violative of religious freedom,
as to call for the amendment introduced by Republic
Act No. 3350; 12and that unless Republic Act No.
3350 is declared unconstitutional, trade unionism in
this country would be wiped out as employers would
prefer to hire or employ members of the Iglesia ni
Cristo in order to do away with labor organizations. 13
Appellee, assailing appellant's arguments, contended
that Republic Act No. 3350 does not violate the right
to form lawful associations, for the right to join
associations includes the right not to join or to resign
from a labor organization, if one's conscience does
not allow his membership therein, and the Act has
given substance to such right by prohibiting the
compulsion of workers to join labor
organizations; 14 that said Act does not impair the
obligation of contracts for said law formed part of,
and was incorporated into, the terms of the closed
shop agreement; 15 that the Act does not violate the
establishment of religion clause or separation of
Church and State, for Congress, in enacting said law,
merely accommodated the religious needs of those
workers whose religion prohibits its members from
joining labor unions, and balanced the collective
rights of organized labor with the constitutional right
of an individual to freely exercise his chosen religion;
that the constitutional right to the free exercise of
one's religion has primacy and preference over union
security measures which are merely contractual 16;
that said Act does not violate the constitutional
provision of equal protection, for the classification of
workers under the Act depending on their religious
tenets is based on substantial distinction, is germane
to the purpose of the law, and applies to all the
members of a given class; 17 that said Act, finally,
does not violate the social justice policy of the
Constitution, for said Act was enacted precisely to
equalize employment opportunities for all citizens in
the midst of the diversities of their religious
beliefs." 18
I. Before We proceed to the discussion of the first
assigned error, it is necessary to premise that there
are some thoroughly established principles which
must be followed in all cases where questions of
constitutionality as obtains in the instant case are
involved. All presumptions are indulged in favor of
constitutionality; one who attacks a statute, alleging
unconstitutionality must prove its invalidity beyond a
reasonable doubt, that a law may work hardship does
not render it unconstitutional; that if any reasonable
basis may be conceived which supports the statute, it
will be upheld, and the challenger must negate all
possible bases; that the courts are not concerned with
the wisdom, justice, policy, or expediency of a
statute; and that a liberal interpretation of the
constitution in favor of the constitutionality of
legislation should be adopted. 19
1. Appellant Union's contention that Republic Act
No. 3350 prohibits and bans the members of such
religious sects that forbid affiliation of their members
with labor unions from joining labor unions appears
nowhere in the wording of Republic Act No. 3350;
neither can the same be deduced by necessary
implication therefrom. It is not surprising, therefore,
that appellant, having thus misread the Act,
committed the error of contending that said Act is
obnoxious to the constitutional provision on freedom
of association.
Both the Constitution and Republic Act No. 875
recognize freedom of association. Section 1 (6) of
Article III of the Constitution of 1935, as well as
Section 7 of Article IV of the Constitution of 1973,
provide that the right to form associations or societies
for purposes not contrary to law shall not be
abridged. Section 3 of Republic Act No. 875 provides
that employees shall have the right to self-
organization and to form, join of assist labor
organizations of their own choosing for the purpose
of collective bargaining and to engage in concerted
activities for the purpose of collective bargaining and
other mutual aid or protection. What the Constitution
and the Industrial Peace Act recognize and guarantee
is the "right" to form or join associations.
Notwithstanding the different theories propounded by
the different schools of jurisprudence regarding the
nature and contents of a "right", it can be safely said
that whatever theory one subscribes to, a right
comprehends at least two broad notions, namely:
first, liberty or freedom, i.e., the absence of legal
restraint, whereby an employee may act for himself
without being prevented by law; and second, power,
whereby an employee may, as he pleases, join or
refrain from Joining an association. It is, therefore,
the employee who should decide for himself whether
he should join or not an association; and should he
choose to join, he himself makes up his mind as to
which association he would join; and even after he
has joined, he still retains the liberty and the power to
leave and cancel his membership with said
organization at any time. 20 It is clear, therefore, that
the right to join a union includes the right to abstain
from joining any union. 21 Inasmuch as what both the
Constitution and the Industrial Peace Act have
recognized, and guaranteed to the employee, is the
"right" to join associations of his choice, it would be
absurd to say that the law also imposes, in the same
breath, upon the employee the duty to join
associations. The law does not enjoin an employee to
sign up with any association.
The right to refrain from joining labor organizations
recognized by Section 3 of the Industrial Peace Act
is, however, limited. The legal protection granted to
such right to refrain from joining is withdrawn by
operation of law, where a labor union and an
employer have agreed on a closed shop, by virtue of
which the employer may employ only member of the
collective bargaining union, and the employees must
continue to be members of the union for the duration
of the contract in order to keep their jobs. Thus
Section 4 (a) (4) of the Industrial Peace Act, before
its amendment by Republic Act No. 3350, provides
that although it would be an unfair labor practice for
an employer "to discriminate in regard to hire or
tenure of employment or any term or condition of
employment to encourage or discourage membership
in any labor organization" the employer is, however,
not precluded "from making an agreement with a
labor organization to require as a condition of
employment membership therein, if such labor
organization is the representative of the employees".
By virtue, therefore, of a closed shop agreement,
before the enactment of Republic Act No. 3350, if
any person, regardless of his religious beliefs, wishes
to be employed or to keep his employment, he must
become a member of the collective bargaining union.
Hence, the right of said employee not to join the
labor union is curtailed and withdrawn.
To that all-embracing coverage of the closed shop
arrangement, Republic Act No. 3350 introduced an
exception, when it added to Section 4 (a) (4) of the
Industrial Peace Act the following proviso: "but such
agreement shall not cover members of any religious
sects which prohibit affiliation of their members in
any such labor organization". Republic Act No. 3350
merely excludes ipso jure from the application and
coverage of the closed shop agreement the employees
belonging to any religious sects which prohibit
affiliation of their members with any labor
organization. What the exception provides, therefore,
is that members of said religious sects cannot be
compelled or coerced to join labor unions even when
said unions have closed shop agreements with the
employers; that in spite of any closed shop
agreement, members of said religious sects cannot be
refused employment or dismissed from their jobs on
the sole ground that they are not members of the
collective bargaining union. It is clear, therefore, that
the assailed Act, far from infringing the constitutional
provision on freedom of association, upholds and
reinforces it. It does not prohibit the members of said
religious sects from affiliating with labor unions. It
still leaves to said members the liberty and the power
to affiliate, or not to affiliate, with labor unions. If,
notwithstanding their religious beliefs, the members
of said religious sects prefer to sign up with the labor
union, they can do so. If in deference and fealty to
their religious faith, they refuse to sign up, they can
do so; the law does not coerce them to join; neither
does the law prohibit them from joining; and neither
may the employer or labor union compel them to
join. Republic Act No. 3350, therefore, does not
violate the constitutional provision on freedom of
association.
2. Appellant Union also contends that the Act is
unconstitutional for impairing the obligation of its
contract, specifically, the "union security clause"
embodied in its Collective Bargaining Agreement
with the Company, by virtue of which "membership
in the union was required as a condition for
employment for all permanent employees workers".
This agreement was already in existence at the time
Republic Act No. 3350 was enacted on June 18,
1961, and it cannot, therefore, be deemed to have
been incorporated into the agreement. But by reason
of this amendment, Appellee, as well as others
similarly situated, could no longer be dismissed from
his job even if he should cease to be a member, or
disaffiliate from the Union, and the Company could
continue employing him notwithstanding his
disaffiliation from the Union. The Act, therefore,
introduced a change into the express terms of the
union security clause; the Company was partly
absolved by law from the contractual obligation it
had with the Union of employing only Union
members in permanent positions, It cannot be denied,
therefore, that there was indeed an impairment of said
union security clause.
According to Black, any statute which introduces a
change into the express terms of the contract, or its
legal construction, or its validity, or its discharge, or
the remedy for its enforcement, impairs the contract.
The extent of the change is not material. It is not a
question of degree or manner or cause, but of
encroaching in any respect on its obligation or
dispensing with any part of its force. There is an
impairment of the contract if either party is absolved
by law from its performance. 22 Impairment has also
been predicated on laws which, without destroying
contracts, derogate from substantial contractual
rights. 23
It should not be overlooked, however, that the
prohibition to impair the obligation of contracts is not
absolute and unqualified. The prohibition is general,
affording a broad outline and requiring construction
to fill in the details. The prohibition is not to be read
with literal exactness like a mathematical formula, for
it prohibits unreasonable impairment only. 24 In spite
of the constitutional prohibition, the State continues
to possess authority to safeguard the vital interests of
its people. Legislation appropriate to safeguarding
said interests may modify or abrogate contracts
already in effect. 25 For not only are existing laws
read into contracts in order to fix the obligations as
between the parties, but the reservation of essential
attributes of sovereign power is also read into
contracts as a postulate of the legal order. All
contracts made with reference to any matter that is
subject to regulation under the police power must be
understood as made in reference to the possible
exercise of that power. 26 Otherwise, important and
valuable reforms may be precluded by the simple
device of entering into contracts for the purpose of
doing that which otherwise may be prohibited. The
policy of protecting contracts against impairment
presupposes the maintenance of a government by
virtue of which contractual relations are worthwhile a
government which retains adequate authority to
secure the peace and good order of society. The
contract clause of the Constitution must, therefore, be
not only in harmony with, but also in subordination
to, in appropriate instances, the reserved power of the
state to safeguard the vital interests of the people. It
follows that not all legislations, which have the effect
of impairing a contract, are obnoxious to the
constitutional prohibition as to impairment, and a
statute passed in the legitimate exercise of police
power, although it incidentally destroys existing
contract rights, must be upheld by the courts. This
has special application to contracts regulating
relations between capital and labor which are not
merely contractual, and said labor contracts, for being
impressed with public interest, must yield to the
common good. 27
In several occasions this Court declared that the
prohibition against impairing the obligations of
contracts has no application to statutes relating to
public subjects within the domain of the general
legislative powers of the state involving public
welfare. 28 Thus, this Court also held that the Blue
Sunday Law was not an infringement of the
obligation of a contract that required the employer to
furnish work on Sundays to his employees, the law
having been enacted to secure the well-being and
happiness of the laboring class, and being,
furthermore, a legitimate exercise of the police
power. 29
In order to determine whether legislation
unconstitutionally impairs contract obligations, no
unchanging yardstick, applicable at all times and
under all circumstances, by which the validity of each
statute may be measured or determined, has been
fashioned, but every case must be determined upon
its own circumstances. Legislation impairing the
obligation of contracts can be sustained when it is
enacted for the promotion of the general good of the
people, and when the means adopted to secure that
end are reasonable. Both the end sought and the
means adopted must be legitimate, i.e., within the
scope of the reserved power of the state construed in
harmony with the constitutional limitation of that
power. 30
What then was the purpose sought to be achieved by
Republic Act No. 3350? Its purpose was to insure
freedom of belief and religion, and to promote the
general welfare by preventing discrimination against
those members of religious sects which prohibit their
members from joining labor unions, confirming
thereby their natural, statutory and constitutional
right to work, the fruits of which work are usually the
only means whereby they can maintain their own life
and the life of their dependents. It cannot be gainsaid
that said purpose is legitimate.
The questioned Act also provides protection to
members of said religious sects against two
aggregates of group strength from which the
individual needs protection. The individual
employee, at various times in his working life, is
confronted by two aggregates of power — collective
labor, directed by a union, and collective capital,
directed by management. The union, an institution
developed to organize labor into a collective force
and thus protect the individual employee from the
power of collective capital, is, paradoxically, both the
champion of employee rights, and a new source of
their frustration. Moreover, when the Union interacts
with management, it produces yet a third aggregate of
group strength from which the individual also needs
protection — the collective bargaining relationship. 31
The aforementioned purpose of the amendatory law
is clearly seen in the Explanatory Note to House Bill
No. 5859, which later became Republic Act No.
3350, as follows:
It would be unthinkable indeed to
refuse employing a person who, on
account of his religious beliefs and
convictions, cannot accept
membership in a labor organization
although he possesses all the
qualifications for the job. This is
tantamount to punishing such
person for believing in a doctrine
he has a right under the law to
believe in. The law would not allow
discrimination to flourish to the
detriment of those whose religion
discards membership in any labor
organization. Likewise, the law
would not commend the
deprivation of their right to work
and pursue a modest means of
livelihood, without in any manner
violating their religious faith and/or
belief. 32
It cannot be denied, furthermore, that the means
adopted by the Act to achieve that purpose —
exempting the members of said religious sects from
coverage of union security agreements — is
reasonable.
It may not be amiss to point out here that the free
exercise of religious profession or belief is superior to
contract rights. In case of conflict, the latter must,
therefore, yield to the former. The Supreme Court of
the United States has also declared on several
occasions that the rights in the First Amendment,
which include freedom of religion, enjoy a preferred
position in the constitutional system. 33 Religious
freedom, although not unlimited, is a fundamental
personal right and liberty, 34 and has a preferred
position in the hierarchy of values. Contractual rights,
therefore, must yield to freedom of religion. It is only
where unavoidably necessary to prevent an
immediate and grave danger to the security and
welfare of the community that infringement of
religious freedom may be justified, and only to the
smallest extent necessary to avoid the danger.
3. In further support of its contention that Republic
Act No. 3350 is unconstitutional, appellant Union
averred that said Act discriminates in favor of
members of said religious sects in violation of
Section 1 (7) of Article Ill of the 1935 Constitution,
and which is now Section 8 of Article IV of the 1973
Constitution, which provides:
No law shall be made respecting an
establishment of religion, or
prohibiting the free exercise
thereof, and the free exercise and
enjoyment of religious profession
and worship, without
discrimination and preference, shall
forever be allowed. No religious
test shall be required for the
exercise of civil or political rights.
The constitutional provision into only prohibits
legislation for the support of any religious tenets or
the modes of worship of any sect, thus forestalling
compulsion by law of the acceptance of any creed or
the practice of any form of worship, 35 but also
assures the free exercise of one's chosen form of
religion within limits of utmost amplitude. It has been
said that the religion clauses of the Constitution are
all designed to protect the broadest possible liberty of
conscience, to allow each man to believe as his
conscience directs, to profess his beliefs, and to live
as he believes he ought to live, consistent with the
liberty of others and with the common good. 36 Any
legislation whose effect or purpose is to impede the
observance of one or all religions, or to discriminate
invidiously between the religions, is invalid, even
though the burden may be characterized as being only
indirect. 37 But if the stage regulates conduct by
enacting, within its power, a general law which has
for its purpose and effect to advance the state's
secular goals, the statute is valid despite its indirect
burden on religious observance, unless the state can
accomplish its purpose without imposing such
burden. 38
In Aglipay v. Ruiz 39 , this Court had occasion to state
that the government should not be precluded from
pursuing valid objectives secular in character even if
the incidental result would be favorable to a religion
or sect. It has likewise been held that the statute, in
order to withstand the strictures of constitutional
prohibition, must have a secular legislative purpose
and a primary effect that neither advances nor inhibits
religion. 40 Assessed by these criteria, Republic Act
No. 3350 cannot be said to violate the constitutional
inhibition of the "no-establishment" (of religion)
clause of the Constitution.
The purpose of Republic Act No. 3350 is secular,
worldly, and temporal, not spiritual or religious or
holy and eternal. It was intended to serve the secular
purpose of advancing the constitutional right to the
free exercise of religion, by averting that certain
persons be refused work, or be dismissed from work,
or be dispossessed of their right to work and of being
impeded to pursue a modest means of livelihood, by
reason of union security agreements. To help its
citizens to find gainful employment whereby they can
make a living to support themselves and their
families is a valid objective of the state. In fact, the
state is enjoined, in the 1935 Constitution, to afford
protection to labor, and regulate the relations between
labor and capital and industry. 41 More so now in the
1973 Constitution where it is mandated that "the State
shall afford protection to labor, promote full
employment and equality in employment, ensure
equal work opportunities regardless of sex, race or
creed and regulate the relation between workers and
employers. 42
The primary effects of the exemption from closed
shop agreements in favor of members of religious
sects that prohibit their members from affiliating with
a labor organization, is the protection of said
employees against the aggregate force of the
collective bargaining agreement, and relieving certain
citizens of a burden on their religious beliefs; and by
eliminating to a certain extent economic insecurity
due to unemployment, which is a serious menace to
the health, morals, and welfare of the people of the
State, the Act also promotes the well-being of
society. It is our view that the exemption from the
effects of closed shop agreement does not directly
advance, or diminish, the interests of any particular
religion. Although the exemption may benefit those
who are members of religious sects that prohibit their
members from joining labor unions, the benefit upon
the religious sects is merely incidental and indirect.
The "establishment clause" (of religion) does not ban
regulation on conduct whose reason or effect merely
happens to coincide or harmonize with the tenets of
some or all religions. 43 The free exercise clause of
the Constitution has been interpreted to require that
religious exercise be preferentially aided. 44
We believe that in enacting Republic Act No. 3350,
Congress acted consistently with the spirit of the
constitutional provision. It acted merely to relieve the
exercise of religion, by certain persons, of a burden
that is imposed by union security agreements. It was
Congress itself that imposed that burden when it
enacted the Industrial Peace Act (Republic Act 875),
and, certainly, Congress, if it so deems advisable,
could take away the same burden. It is certain that not
every conscience can be accommodated by all the
laws of the land; but when general laws conflict with
scrupples of conscience, exemptions ought to be
granted unless some "compelling state interest"
intervenes. 45 In the instant case, We see no such
compelling state interest to withhold exemption.
Appellant bewails that while Republic Act No. 3350
protects members of certain religious sects, it leaves
no right to, and is silent as to the protection of, labor
organizations. The purpose of Republic Act No. 3350
was not to grant rights to labor unions. The rights of
labor unions are amply provided for in Republic Act
No. 875 and the new Labor Code. As to the lamented
silence of the Act regarding the rights and protection
of labor unions, suffice it to say, first, that the validity
of a statute is determined by its provisions, not by its
silence 46 ; and, second, the fact that the law may
work hardship does not render it unconstitutional. 47
It would not be amiss to state, regarding this matter,
that to compel persons to join and remain members of
a union to keep their jobs in violation of their
religious scrupples, would hurt, rather than help,
labor unions, Congress has seen it fit to exempt
religious objectors lest their resistance spread to other
workers, for religious objections have contagious
potentialities more than political and philosophic
objections.
Furthermore, let it be noted that coerced unity and
loyalty even to the country, and a fortiori to a labor
— union assuming that such unity and loyalty can be
attained through coercion — is not a goal that is
constitutionally obtainable at the expense of religious
liberty. 48 A desirable end cannot be promoted by
prohibited means.
4. Appellants' fourth contention, that Republic Act
No. 3350 violates the constitutional prohibition
against requiring a religious test for the exercise of a
civil right or a political right, is not well taken. The
Act does not require as a qualification, or condition,
for joining any lawful association membership in any
particular religion or in any religious sect; neither
does the Act require affiliation with a religious sect
that prohibits its members from joining a labor union
as a condition or qualification for withdrawing from a
labor union. Joining or withdrawing from a labor
union requires a positive act. Republic Act No. 3350
only exempts members with such religious affiliation
from the coverage of closed shop agreements. So,
under this Act, a religious objector is not required to
do a positive act — to exercise the right to join or to
resign from the union. He is exempted ipso
jure without need of any positive act on his part. A
conscientious religious objector need not perform a
positive act or exercise the right of resigning from the
labor union — he is exempted from the coverage of
any closed shop agreement that a labor union may
have entered into. How then can there be a religious
test required for the exercise of a right when no right
need be exercised?
We have said that it was within the police power of
the State to enact Republic Act No. 3350, and that its
purpose was legal and in consonance with the
Constitution. It is never an illegal evasion of a
constitutional provision or prohibition to accomplish
a desired result, which is lawful in itself, by
discovering or following a legal way to do it. 49
5. Appellant avers as its fifth ground that Republic
Act No. 3350 is a discriminatory legislation,
inasmuch as it grants to the members of certain
religious sects undue advantages over other workers,
thus violating Section 1 of Article III of the 1935
Constitution which forbids the denial to any person of
the equal protection of the laws. 50
The guaranty of equal protection of the laws is not a
guaranty of equality in the application of the laws
upon all citizens of the state. It is not, therefore, a
requirement, in order to avoid the constitutional
prohibition against inequality, that every man,
woman and child should be affected alike by a
statute. Equality of operation of statutes does not
mean indiscriminate operation on persons merely as
such, but on persons according to the circumstances
surrounding them. It guarantees equality, not identity
of rights. The Constitution does not require that
things which are different in fact be treated in law as
though they were the same. The equal protection
clause does not forbid discrimination as to things that
are different. 51 It does not prohibit legislation which
is limited either in the object to which it is directed or
by the territory within which it is to operate.
The equal protection of the laws clause of the
Constitution allows classification. Classification in
law, as in the other departments of knowledge or
practice, is the grouping of things in speculation or
practice because they agree with one another in
certain particulars. A law is not invalid because of
simple inequality. 52 The very idea of classification is
that of inequality, so that it goes without saying that
the mere fact of inequality in no manner determines
the matter of constitutionality. 53 All that is required
of a valid classification is that it be reasonable, which
means that the classification should be based on
substantial distinctions which make for real
differences; that it must be germane to the purpose of
the law; that it must not be limited to existing
conditions only; and that it must apply equally to
each member of the class. 54 This Court has held that
the standard is satisfied if the classification or
distinction is based on a reasonable foundation or
rational basis and is not palpably arbitrary. 55
In the exercise of its power to make classifications
for the purpose of enacting laws over matters within
its jurisdiction, the state is recognized as enjoying a
wide range of discretion. 56 It is not necessary that the
classification be based on scientific or marked
differences of things or in their relation. 57 Neither is
it necessary that the classification be made with
mathematical nicety. 58 Hence legislative
classification may in many cases properly rest on
narrow distinctions, 59 for the equal protection
guaranty does not preclude the legislature from
recognizing degrees of evil or harm, and legislation is
addressed to evils as they may appear.
We believe that Republic Act No. 3350 satisfies the
aforementioned requirements. The Act classifies
employees and workers, as to the effect and coverage
of union shop security agreements, into those who by
reason of their religious beliefs and convictions
cannot sign up with a labor union, and those whose
religion does not prohibit membership in labor
unions. Tile classification rests on real or substantial,
not merely imaginary or whimsical, distinctions.
There is such real distinction in the beliefs, feelings
and sentiments of employees. Employees do not
believe in the same religious faith and different
religions differ in their dogmas and cannons.
Religious beliefs, manifestations and practices,
though they are found in all places, and in all times,
take so many varied forms as to be almost beyond
imagination. There are many views that comprise the
broad spectrum of religious beliefs among the people.
There are diverse manners in which beliefs, equally
paramount in the lives of their possessors, may be
articulated. Today the country is far more
heterogenous in religion than before, differences in
religion do exist, and these differences are important
and should not be ignored.
Even from the phychological point of view, the
classification is based on real and important
differences. Religious beliefs are not mere beliefs,
mere ideas existing only in the mind, for they carry
with them practical consequences and are the motives
of certain rules. of human conduct and the
justification of certain acts. 60 Religious sentiment
makes a man view things and events in their relation
to his God. It gives to human life its distinctive
character, its tone, its happiness or unhappiness its
enjoyment or irksomeness. Usually, a strong and
passionate desire is involved in a religious belief. To
certain persons, no single factor of their experience is
more important to them than their religion, or their
not having any religion. Because of differences in
religious belief and sentiments, a very poor person
may consider himself better than the rich, and the
man who even lacks the necessities of life may be
more cheerful than the one who has all possible
luxuries. Due to their religious beliefs people, like the
martyrs, became resigned to the inevitable and
accepted cheerfully even the most painful and
excruciating pains. Because of differences in
religious beliefs, the world has witnessed turmoil,
civil strife, persecution, hatred, bloodshed and war,
generated to a large extent by members of sects who
were intolerant of other religious beliefs. The
classification, introduced by Republic Act No. 3350,
therefore, rests on substantial distinctions.
The classification introduced by said Act is also
germane to its purpose. The purpose of the law is
precisely to avoid those who cannot, because of their
religious belief, join labor unions, from being
deprived of their right to work and from being
dismissed from their work because of union shop
security agreements.
Republic Act No. 3350, furthermore, is not limited in
its application to conditions existing at the time of its
enactment. The law does not provide that it is to be
effective for a certain period of time only. It is
intended to apply for all times as long as the
conditions to which the law is applicable exist. As
long as there are closed shop agreements between an
employer and a labor union, and there are employees
who are prohibited by their religion from affiliating
with labor unions, their exemption from the coverage
of said agreements continues.
Finally, the Act applies equally to all members of
said religious sects; this is evident from its provision.
The fact that the law grants a privilege to members of
said religious sects cannot by itself render the Act
unconstitutional, for as We have adverted to, the Act
only restores to them their freedom of association
which closed shop agreements have taken away, and
puts them in the same plane as the other workers who
are not prohibited by their religion from joining labor
unions. The circumstance, that the other employees,
because they are differently situated, are not granted
the same privilege, does not render the law
unconstitutional, for every classification allowed by
the Constitution by its nature involves inequality.
The mere fact that the legislative classification may
result in actual inequality is not violative of the right
to equal protection, for every classification of persons
or things for regulation by law produces inequality in
some degree, but the law is not thereby rendered
invalid. A classification otherwise reasonable does
not offend the constitution simply because in practice
it results in some inequality. 61 Anent this matter, it
has been said that whenever it is apparent from the
scope of the law that its object is for the benefit of the
public and the means by which the benefit is to be
obtained are of public character, the law will be
upheld even though incidental advantage may occur
to individuals beyond those enjoyed by the general
public. 62
6. Appellant's further contention that Republic Act
No. 3350 violates the constitutional provision on
social justice is also baseless. Social justice is
intended to promote the welfare of all the
people. 63 Republic Act No. 3350 promotes that
welfare insofar as it looks after the welfare of those
who, because of their religious belief, cannot join
labor unions; the Act prevents their being deprived of
work and of the means of livelihood. In determining
whether any particular measure is for public
advantage, it is not necessary that the entire state be
directly benefited — it is sufficient that a portion of
the state be benefited thereby.
Social justice also means the adoption by the
Government of measures calculated to insure
economic stability of all component elements of
society, through the maintenance of a proper
economic and social equilibrium in the inter-relations
of the members of the community. 64 Republic Act
No. 3350 insures economic stability to the members
of a religious sect, like the Iglesia ni Cristo, who are
also component elements of society, for it insures
security in their employment, notwithstanding their
failure to join a labor union having a closed shop
agreement with the employer. The Act also advances
the proper economic and social equilibrium between
labor unions and employees who cannot join labor
unions, for it exempts the latter from the compelling
necessity of joining labor unions that have closed
shop agreements and equalizes, in so far as
opportunity to work is concerned, those whose
religion prohibits membership in labor unions with
those whose religion does not prohibit said
membership. Social justice does not imply social
equality, because social inequality will always exist
as long as social relations depend on personal or
subjective proclivities. Social justice does not require
legal equality because legal equality, being a relative
term, is necessarily premised on differentiations
based on personal or natural conditions. 65 Social
justice guarantees equality of opportunity 66 , and this
is precisely what Republic Act No. 3350 proposes to
accomplish — it gives laborers, irrespective of their
religious scrupples, equal opportunity for work.
7. As its last ground, appellant contends that the
amendment introduced by Republic Act No. 3350 is
not called for — in other words, the Act is not proper,
necessary or desirable. Anent this matter, it has been
held that a statute which is not necessary is not, for
that reason, unconstitutional; that in determining the
constitutional validity of legislation, the courts are
unconcerned with issues as to the necessity for the
enactment of the legislation in question. 67 Courts do
inquire into the wisdom of laws. 68 Moreover,
legislatures, being chosen by the people, are
presumed to understand and correctly appreciate the
needs of the people, and it may change the laws
accordingly. 69 The fear is entertained by appellant
that unless the Act is declared unconstitutional,
employers will prefer employing members of
religious sects that prohibit their members from
joining labor unions, and thus be a fatal blow to
unionism. We do not agree. The threat to unionism
will depend on the number of employees who are
members of the religious sects that control the
demands of the labor market. But there is really no
occasion now to go further and anticipate problems
We cannot judge with the material now before Us. At
any rate, the validity of a statute is to be determined
from its general purpose and its efficacy to
accomplish the end desired, not from its effects on a
particular case. 70 The essential basis for the exercise
of power, and not a mere incidental result arising
from its exertion, is the criterion by which the
validity of a statute is to be measured. 71
II. We now pass on the second assignment of error, in
support of which the Union argued that the decision
of the trial court ordering the Union to pay P500 for
attorney's fees directly contravenes Section 24 of
Republic Act No. 875, for the instant action involves
an industrial dispute wherein the Union was a party,
and said Union merely acted in the exercise of its
rights under the union shop provision of its existing
collective bargaining contract with the Company; that
said order also contravenes Article 2208 of the Civil
Code; that, furthermore, Appellee was never actually
dismissed by the defendant Company and did not
therefore suffer any damage at all . 72
In refuting appellant Union's arguments, Appellee
claimed that in the instant case there was really no
industrial dispute involved in the attempt to compel
Appellee to maintain its membership in the union
under pain of dismissal, and that the Union, by its act,
inflicted intentional harm on Appellee; that since
Appellee was compelled to institute an action to
protect his right to work, appellant could legally be
ordered to pay attorney's fees under Articles 1704 and
2208 of the Civil Code. 73
The second paragraph of Section 24 of Republic Act
No. 875 which is relied upon by appellant provides
that:
No suit, action or other proceedings
shall be maintainable in any court
against a labor organization or any
officer or member thereof for any
act done by or on behalf of such
organization in furtherance of an
industrial dispute to which it is a
party, on the ground only that such
act induces some other person to
break a contract of employment or
that it is in restraint of trade or
interferes with the trade, business
or employment of some other
person or with the right of some
other person to dispose of his
capital or labor. (Emphasis
supplied)
does not necessarily mean that all its acts are in
furtherance of an industrial dispute. 75 Appellant
Union, therefore, cannot invoke in its favor Section
24 of Republic Act No. 875. This case is not
intertwined with any unfair labor practice case
existing at the time when Appellee filed his
complaint before the lower court.
Neither does Article 2208 of the Civil Code, invoked
by the Union, serve as its shield. The article provides
that attorney's fees and expenses of litigation may be
awarded "when the defendant's act or omission has
compelled the plaintiff ... to incur expenses to protect
his interest"; and "in any other case where the court
deems it just and equitable that attorney's fees and
expenses of litigation should be recovered". In the
instant case, it cannot be gainsaid that appellant
Union's act in demanding Appellee's dismissal caused
Appellee to incur expenses to prevent his being
dismissed from his job. Costs according to Section 1,
Rule 142, of the Rules of Court, shall be allowed as a
matter of course to the prevailing party.
WHEREFORE, the instant appeal is dismissed, and
the decision, dated August 26, 1965, of the Court of
First Instance of Manila, in its Civil Case No. 58894,
appealed from is affirmed, with costs against
appellant Union. It is so ordered.

That there was a labor dispute in the instant case

cannot be disputed for appellant sought the discharge
of respondent by virtue of the closed shop agreement
and under Section 2 (j) of Republic Act No. 875 a
question involving tenure of employment is included
in the term "labor dispute". 74 The discharge or the act
of seeking it is the labor dispute itself. It being the
labor dispute itself, that very same act of the Union in
asking the employer to dismiss Appellee cannot be
"an act done ... in furtherance of an industrial
dispute". The mere fact that appellant is a labor union
#97. Holy Child Catholic School vs Sto. Tomas
G.R. No. 179146 July 23, 2013
HOLY CHILD CATHOLIC SCHOOL, Petitioner,
vs.
HON. PATRICIA STO. TOMAS, in her official
capacity as Secretary of the Department of Labor
and Employment, and PINAG-ISANG TINIG AT
LAKAS NG ANAKPAWIS – HOLY CHILD
CATHOLIC SCHOOL TEACHERS AND
EMPLOYEES LABOR UNION (HCCS-TELU-
PIGLAS), Respondents.
DECISION
PERALTA, J.:
Assailed in this petition for review on certiorari under
Rule 45 of the Rules of Civil Procedure are the April
18, 2007 Decision1 and July 31, 2007 Resolution2 of
the Court of Appeals in CA-G.R. SP No. 76175,
which affirmed the December 27, 2002 Decision3 and
February 13, 2003 Resolution4 of the Secretary of the
Department of Labor and Employment (SOLE) that
set aside the August 10, 2002 Decision5 of the Med-
Arbiter denying private respondent’s petition for
certification election.
The factual antecedents are as follows:
On May 31, 2002, a petition for certification election
was filed by private respondent Pinag-Isang Tinig at
Lakas ng Anakpawis – Holy Child Catholic School
Teachers and Employees Labor Union (HCCS-
TELUPIGLAS), alleging that: PIGLAS is a
legitimate labor organization duly registered with the
Department of Labor and Employment (DOLE)
representing HCCS-TELU-PIGLAS; HCCS is a
private educational institution duly registered and
operating under Philippine laws; there are
approximately one hundred twenty (120) teachers and
employees comprising the proposed appropriate
bargaining unit; and HCCS is unorganized, there is
no collective bargaining agreement or a duly certified
bargaining agent or a labor organization certified as
the sole and exclusive bargaining agent of the
proposed bargaining unit within one year prior to the
filing of the petition.6 Among the documents attached
to the petition were the certificate of affiliation with
Pinag-Isang Tinig at Lakas ng Anakpawis
Kristiyanong Alyansa ng Makabayang Obrero
(PIGLAS-KAMAO) issued by the Bureau of Labor
Relations (BLR), charter certificate issued by
PIGLASKAMAO, and certificate of registration of
HCCS-TELU as a legitimate labor organization
issued by the DOLE.7
In its Comment8 and Position Paper,9 petitioner
HCCS consistently noted that it is a parochial school
with a total of 156 employees as of June 28, 2002,
broken down as follows: ninety-eight (98) teaching
personnel, twenty-five (25) non-teaching academic
employees, and thirty-three (33) non-teaching non-
academic workers. It averred that of the employees
who signed to support the petition, fourteen (14)
already resigned and six (6) signed twice. Petitioner
raised that members of private respondent do not
belong to the same class; it is not only a mixture of
managerial, supervisory, and rank-and-file employees
– as three (3) are vice-principals, one (1) is a
department head/supervisor, and eleven (11) are
coordinators – but also a combination of teaching and
non-teaching personnel – as twenty-seven (27) are
non-teaching personnel. It insisted that, for not being
in accord with Article 24510 of the Labor Code,
private respondent is an illegitimate labor
organization lacking in personality to file a petition
for certification election, as held in Toyota Motor
Philippines Corporation v. Toyota Motor Philippines
Corporation Labor Union;11 and an inappropriate
bargaining unit for want of community or mutuality
of interest, as ruled in Dunlop Slazenger (Phils.), Inc.
v. Secretary of Labor and Employment12 and De La
Salle University Medical Center and College of
Medicine v. Laguesma.13
Private respondent, however, countered that
petitioner failed to substantiate its claim that some of
the employees included in the petition for
certification election holds managerial and
supervisory positions.14 Assuming it to be true, it
argued that Section 11 (II),15 Rule XI of DOLE
Department Order (D.O.) No. 9, Series of 1997,
provided for specific instances in which a petition
filed by a legitimate organization shall be dismissed
by the Med-Arbiter and that "mixture of employees"
is not one of those enumerated. Private respondent
pointed out that questions pertaining to qualifications
of employees may be threshed out in the inclusion-
exclusion proceedings prior to the conduct of the
certification election, pursuant to Section 2,16 Rule
XII of D.O. No. 9. Lastly, similar to the ruling in In
Re: Globe Machine and Stamping Company,17 it
contended that the will of petitioner’s employees
should be respected as they had manifested their
desire to be represented by only one bargaining unit.
To back up the formation of a single employer unit,
private respondent asserted that even if the teachers
may receive additional pay for an advisory class and
for holding additional loads, petitioner’s academic
and non-academic personnel have similar working
conditions. It cited Laguna College v. Court of
Industrial Relations,18 as well as the case of a union
in West Negros College in Bacolod City, which
allegedly represented both academic and non-
academic employees.
On August 10, 2002, Med-Arbiter Agatha Ann L.
Daquigan denied the petition for certification election
on the ground that the unit which private respondent
sought to represent is inappropriate. She resolved:
A certification election proceeding directly involves
two (2) issues namely: (a) the proper composition and
constituency of the bargaining unit; and (b) the
validity of majority representation claims. It is
therefore incumbent upon the Med-Arbiter to rule on
the appropriateness of the bargaining unit once its
composition and constituency is questioned.
Section 1 (q), Rule I, Book V of the Omnibus Rules
defines a "bargaining unit" as a group of employees
sharing mutual interests within a given employer unit
comprised of all or less than all of the entire body of
employees in the employer unit or any specific
occupational or geographical grouping within such
employer unit. This definition has provided the
"community or mutuality of interest" test as the
standard in determining the constituency of a
collective bargaining unit. This is so because the
basic test of an asserted bargaining unit’s
acceptability is whether or not it is fundamentally the
combination which will best assure to all employees
the exercise of their collective bargaining rights. The
application of this test may either result in the
formation of an employer unit or in the fragmentation
of an employer unit.
In the case at bar, the employees of petitioner, may,
as already suggested, quite easily be categorized into
(2) general classes: one, the teaching staff; and two,
the non-teaching-staff. Not much reflection is needed
to perceive that the community or mutuality of
interest is wanting between the teaching and the non-
teaching staff. It would seem obvious that the
teaching staff would find very little in common with
the non-teaching staff as regards responsibilities and
function, working conditions, compensation rates,
social life and interests, skills and intellectual
pursuits, etc. These are plain and patent realities
which cannot be ignored. These dictate the separation
of these two categories of employees for purposes of
collective bargaining. (University of the Philippines
vs. Ferrer-Calleja, 211 SCRA 451)19
Private respondent appealed before the SOLE, who,
on December 27, 2002, ruled against the dismissal of
the petition and directed the conduct of two separate
certification elections for the teaching and the non-
teaching personnel, thus:
We agree with the Med-Arbiter that there are
differences in the nature of work, hours and
conditions of work and salary determination between
the teaching and non-teaching personnel of petitioner.
These differences were pointed out by petitioner in its
position paper. We do not, however, agree with the
Med-Arbiter that these differences are substantial
enough to warrant the dismissal of the petition. First,
as pointed out by private respondent,
"inappropriateness of the bargaining unit sought to be
represented is not a ground for the dismissal of the
petition." In fact, in the cited case of University of the
Philippines v. Ferrer-Calleja, supra, the Supreme
Court did not order the dismissal of the petition but
ordered the conduct of a certification election,
limiting the same among the non-academic personnel
of the University of the Philippines.
It will be recalled that in the U.P. case, there were
two contending unions, the Organization of Non-
Academic Personnel of U.P. (ONAPUP) and All U.P.
Workers Union composed of both academic and
nonacademic personnel of U.P. ONAPUP sought the
conduct of certification election among the rank-and-
file non-academic personnel only while the all U.P.
Workers Union sought the conduct of certification
election among all of U.P.’s rank-and-file employees
covering academic and nonacademic personnel.
While the Supreme Court ordered a separate
bargaining unit for the U.P. academic personnel, the
Court, however, did not order them to organize a
separate labor organization among themselves. The
All U.P. Workers Union was not directed to divest
itself of its academic personnel members and in fact,
we take administrative notice that the All U.P.
Workers Union continue to exist with a combined
membership of U.P. academic and non-academic
personnel although separate bargaining agreements is
sought for the two bargaining units. Corollary,
private respondent can continue to exist as a
legitimate labor organization with the combined
teaching and non-teaching personnel in its
membership and representing both classes of
employees in separate bargaining negotiations and
agreements.
WHEREFORE, the Decision of the Med-Arbiter
dated 10 August 2002 is hereby REVERSED and
SET ASIDE. In lieu thereof, a new order is hereby
issued directing the conduct of two certification
elections, one among the non-teaching personnel of
Holy Child Catholic School, and the other, among the
teaching personnel of the same school, subject to the
usual pre-election conferences and inclusion-
exclusion proceedings, with the following choices:
A. Certification Election Among Petitioner’s
Teaching Personnel:
1. Holy Child Catholic School
Teachers and Employees Labor
Union; and
2. No Union.
B. Certification Election Among Petitioner’s
Non-Teaching Personnel:
1. Holy Child Catholic School
Teachers and Employees Labor
Union; and
2. No Union.
Petitioner is hereby directed to submit to the Regional
Office of origin within ten (10) days from receipt of
this Decision, a certified separate list of its teaching
and non-teaching personnel or when necessary a
separate copy of their payroll for the last three (3)
months prior to the issuance of this Decision.20
Petitioner filed a motion for reconsideration21 which,
per Resolution dated February 13, 2003, was denied.
Consequently, petitioner filed before the CA a
Petition for Certiorari with Prayer for Temporary
Restraining Order and Preliminary Injunction.22 The
CA resolved to defer action on the prayer for TRO
pending the filing of private respondent’s
Comment.23 Later, private respondent and petitioner
filed their Comment24 and Reply,25 respectively.
On July 23, 2003, petitioner filed a motion for
immediate issuance of a TRO, alleging that Hon.
Helen F. Dacanay of the Industrial Relations Division
of the DOLE was set to implement the SOLE
Decision when it received a summons and was
directed to submit a certified list of teaching and non-
teaching personnel for the last three months prior to
the issuance of the assailed Decision.26 Acting
thereon, on August 5, 2003, the CA issued the TRO
and ordered private respondent to show cause why
the writ of preliminary injunction should not be
granted.27 Subsequently, a Manifestation and
Motion28 was filed by private respondent, stating that
it repleads by reference the arguments raised in its
Comment and that it prays for the immediate lifting
of the TRO and the denial of the preliminary
injunction. The CA, however, denied the
manifestation and motion on November 21,
200329 and, upon motion of petitioner,30 granted the
preliminary injunction on April 21,
2005.31 Thereafter, both parties filed their respective
Memorandum.32
On April 18, 2007, the CA eventually dismissed the
petition. As to the purported commingling of
managerial, supervisory, and rank-and-file employees
in private respondent’s membership, it held that the
Toyota ruling is inapplicable because the vice-
principals, department head, and coordinators are
neither supervisory nor managerial employees. It
reasoned:
x x x While it may be true that they wield power over
other subordinate employees of the petitioner, it must
be stressed, however, that their functions are not
confined with policy-determining such as hiring,
firing, and disciplining of employees, salaries,
teaching/working hours, other monetary and non-
monetary benefits, and other terms and conditions of
employment. Further, while they may formulate
policies or guidelines, nonetheless, such is merely
recommendatory in nature, and still subject to review
and evaluation by the higher executives, i.e., the
principals or executive officers of the petitioner. It
cannot also be denied that in institutions like the
petitioner, company policies have already been pre-
formulated by the higher executives and all that the
mentioned employees have to do is carry out these
company policies and standards. Such being the case,
it is crystal clear that there is no improper
commingling of members in the private respondent
union as to preclude its petition for certification of
(sic) election.33
Anent the alleged mixture of teaching and non-
teaching personnel, the CA agreed with petitioner
that the nature of the former’s work does not coincide
with that of the latter. Nevertheless, it ruled that the
SOLE did not commit grave abuse of discretion in
not dismissing the petition for certification election,
since it directed the conduct of two separate
certification elections based on Our ruling in
University of the Philippines v. Ferrer-Calleja.34
A motion for reconsideration35 was filed by
petitioner, but the CA denied the same;36 hence, this
petition assigning the alleged errors as follows:
I.
THE HONORABLE COURT OF APPEALS
ERRED IN HOLDING THAT THE RULING IN
THE CASE OF TOYOTA MOTOR PHILIPPINES
CORPORATION VS. TOYOTA MOTOR
PHILIPPINES CORPORATION LABOR UNION
(268 SCRA 573) DOES NOT APPLY IN THE
CASE AT BAR DESPITE THE [COMMINGLING]
OF BOTH SUPERVISORY OR MANAGERIAL
AND RANK-AND-FILE EMPLOYEES IN THE
RESPONDENT UNION;
II
THE HONORABLE COURT OF APPEALS
ERRED IN ITS CONFLICTING RULING
ALLOWING THE CONDUCT OF
CERTIFICATION ELECTION BY UPHOLDING
THAT THE RESPONDENT UNION
REPRESENTED A BARGAINING UNIT DESPITE
ITS OWN FINDINGS THAT THERE IS NO
MUTUALITY OF INTEREST BETWEEN THE
MEMBERS OF RESPONDENT UNION
APPLYING THE TEST LAID DOWN IN THE
CASE OF UNIVERSITY OF THE PHILIPPINES
VS. FERRER-CALLEJA (211 SCRA 451).37
We deny.
Petitioner claims that the CA contradicted the very
definition of managerial and supervisory employees
under existing law and jurisprudence when it did not
classify the vice-principals, department head, and
coordinators as managerial or supervisory employees
merely because the policies and guidelines they
formulate are still subject to the review and
evaluation of the principal or executive officers of
petitioner. It points out that the duties of the vice-
principals, department head, and coordinators include
the evaluation and assessment of the effectiveness
and capability of the teachers under them; that such
evaluation and assessment is independently made
without the participation of the higher Administration
of petitioner; that the fact that their recommendation
undergoes the approval of the higher Administration
does not take away the independent nature of their
judgment; and that it would be difficult for the vice-
principals, department head, and coordinators to
objectively assess and evaluate the performances of
teachers under them if they would be allowed to be
members of the same labor union.
On the other hand, aside from reiterating its previous
submissions, private respondent cites Sections 9 and
1238 of Republic Act (R.A.) No. 9481 to buttress its
contention that petitioner has no standing to oppose
the petition for certification election. On the basis of
the statutory provisions, it reasons that an employer is
not a party-in-interest in a certification election; thus,
petitioner does not have the requisite right to protect
even by way of restraining order or injunction.
First off, We cannot agree with private respondent’s
invocation of R.A. No. 9481. Said law took effect
only on June 14, 2007; hence, its applicability is
limited to labor representation cases filed on or after
said date.39 Instead, the law and rules in force at the
time private respondent filed its petition for
certification election on May 31, 2002 are R.A. No.
6715, which amended Book V of Presidential Decree
(P.D.) No. 442 (the Labor Code), as amended, and
the Rules and Regulations Implementing R.A. No.
6715, as amended by D.O. No. 9, which was dated
May 1, 1997 but took effect on June 21, 1997. 40
However, note must be taken that even without the
express provision of Section 12 of RA No. 9481, the
"Bystander Rule" is already well entrenched in this
jurisdiction. It has been consistently held in a number
of cases that a certification election is the sole
concern of the workers, except when the employer
itself has to file the petition pursuant to Article 259 of
the Labor Code, as amended, but even after such
filing its role in the certification process ceases and
becomes merely a bystander.41 The employer clearly
lacks the personality to dispute the election and has
no right to interfere at all therein.42 This is so since
any uncalled-for concern on the part of the employer
may give rise to the suspicion that it is batting for a
company union.43 Indeed, the demand of the law and
policy for an employer to take a strict, hands-off
stance in certification elections is based on the
rationale that the employees’ bargaining
representative should be chosen free from any
extraneous influence of the management; that, to be
effective, the bargaining representative must owe its
loyalty to the employees alone and to no other.44
Now, going back to petitioner’s contention, the issue
of whether a petition for certification election is
dismissible on the ground that the labor
organization’s membership allegedly consists of
supervisory and rank-and-file employees is actually
not a novel one. In the 2008 case of Republic v.
Kawashima Textile Mfg., Philippines, Inc.,45 wherein
the employer-company moved to dismiss the petition
for certification election on the ground inter alia that
the union membership is a mixture of rank-and-file
and supervisory employees, this Court had
conscientiously discussed the applicability of Toyota
and Dunlop in the context of R.A. No. 6715 and D.O.
No. 9, viz.:
It was in R.A. No. 875, under Section 3, that such
questioned mingling was first prohibited, to wit:
Sec. 3. Employees' right to self-organization. -
Employees shall have the right to self-organization
and to form, join or assist labor organizations of their
own choosing for the purpose of collective
bargaining through representatives of their own
choosing and to engage in concerted activities for the
purpose of collective bargaining and other mutual aid
or protection. Individuals employed as supervisors
shall not be eligible for membership in a labor
organization of employees under their supervision but
may form separate organizations of their own.
(Emphasis supplied)
Nothing in R.A. No. 875, however, tells of how the
questioned mingling can affect the legitimacy of the
labor organization. Under Section 15, the only
instance when a labor organization loses its
legitimacy is when it violates its duty to bargain
collectively; but there is no word on whether such
mingling would also result in loss of legitimacy.
Thus, when the issue of whether the membership of
two supervisory employees impairs the legitimacy of
a rank-and-file labor organization came before the
Court En Banc in Lopez v. Chronicle Publication
Employees Association, the majority pronounced:
It may be observed that nothing is said of the effect
of such ineligibility upon the union itself or on the
status of the other qualified members thereof should
such prohibition be disregarded. Considering that the
law is specific where it intends to divest a legitimate
labor union of any of the rights and privileges granted
to it by law, the absence of any provision on the
effect of the disqualification of one of its organizers
upon the legality of the union, may be construed to
confine the effect of such ineligibility only upon the
membership of the supervisor. In other words, the
invalidity of membership of one of the organizers
does not make the union illegal, where the
requirements of the law for the organization thereof
are, nevertheless, satisfied and met. (Emphasis
supplied)
Then the Labor Code was enacted in 1974 without
reproducing Sec. 3 of R.A. No. 875. The provision in
the Labor Code closest to Sec. 3 is Article 290, which
is deafeningly silent on the prohibition against
supervisory employees mingling with rank-and-file
employees in one labor organization. Even the
Omnibus Rules Implementing Book V of the Labor
Code (Omnibus Rules) merely provides in Section
11, Rule II, thus:
Sec. 11. Supervisory unions and unions of security
guards to cease operation. - All existing supervisory
unions and unions of security guards shall, upon the
effectivity of the Code, cease to operate as such and
their registration certificates shall be deemed
automatically cancelled. However, existing collective
agreements with such unions, the life of which
extends beyond the date of effectivity of the Code
shall be respected until their expiry date insofar as the
economic benefits granted therein are concerned.
Members of supervisory unions who do not fall
within the definition of managerial employees shall
become eligible to join or assist the rank and file
organization. The determination of who are
managerial employees and who are not shall be the
subject of negotiation between representatives of
supervisory union and the employer. If no agreement
s reached between the parties, either or both of them
may bring the issue to the nearest Regional Office for
determination. (Emphasis supplied)
The obvious repeal of the last clause of Sec. 3, R.A.
No. 875 prompted the Court to declare in Bulletin v.
Sanchez that supervisory employees who do not fall
under the category of managerial employees may join
or assist in the formation of a labor organization for
rank-and-file employees, but they may not form their
own labor organization.
While amending certain provisions of Book V of the
Labor Code, E.O. No. 111 and its implementing rules
continued to recognize the right of supervisory
employees, who do not fall under the category of
managerial employees, to join a rank- and-file labor
organization.
Effective 1989, R.A. No. 6715 restored the
prohibition against the questioned mingling in one
labor organization, viz.:
Sec. 18. Article 245 of the same Code, as amended, is
hereby further amended to read as follows:
Art. 245. Ineligibility of managerial employees to
join any labor organization; right of supervisory
employees. Managerial employees are not eligible to
join, assist or form any labor organization.
Supervisory employees shall not be eligible for
membership in a labor organization of the rank-and-
file employees but may join, assist or form separate
labor organizations of their own (Emphasis supplied)
Unfortunately, just like R.A. No. 875, R.A. No. 6715
omitted specifying the exact effect any violation of
the prohibition would bring about on the legitimacy
of a labor organization.
It was the Rules and Regulations Implementing R.A.
No. 6715 (1989 Amended Omnibus Rules) which
supplied the deficiency by introducing the following
amendment to Rule II (Registration of Unions):
Sec. 1. Who may join unions. - x x x Supervisory
employees and security guards shall not be eligible
for membership in a labor organization of the rank-
and-file employees but may join, assist or form
separate labor organizations of their own; Provided,
that those supervisory employees who are included in
an existing rank-and-file bargaining unit, upon the
effectivity of Republic Act No. 6715, shall remain in
that unit x x x. (Emphasis supplied)
and Rule V (Representation Cases and Internal-Union
Conflicts) of the Omnibus Rules, viz.;
Sec. 1. Where to file. - A petition for certification
election may be filed with the Regional Office which
has jurisdiction over the principal office of the
employer. The petition shall be in writing and under
oath.
Sec. 2. Who may file. - Any legitimate labor
organization or the employer, when requested to
bargain collectively, may file the petition.
The petition, when filed by a legitimate labor
organization, shall contain, among others:
xxxx
(c) description of the bargaining unit which shall be
the employer unit unless circumstances otherwise
require; and provided further, that the appropriate
bargaining unit of the rank-and-file employees shall
not include supervisory employees and/or security
guards. (Emphasis supplied)
By that provision, any questioned mingling will
prevent an otherwise legitimate and duly registered
labor organization from exercising its right to file a
petition for certification election.
Thus, when the issue of the effect of mingling was
brought to the fore in Toyota, the Court, citing
Article 245 of the Labor Code, as amended by R.A.
No. 6715, held:
Clearly, based on this provision, a labor organization
composed of both rank-and-file and supervisory
employees is no labor organization at all. It cannot,
for any guise or purpose, be a legitimate labor
organization. Not being one, an organization which
carries a mixture of rank-and-file and supervisory
employees cannot possess any of the rights of a
legitimate labor organization, including the right to
file a petition for certification election for the purpose
of collective bargaining. It becomes necessary,
therefore, anterior to the granting of an order
allowing a certification election, to inquire into the
composition of any labor organization whenever the
status of the labor organization is challenged on the
basis of Article 245 of the Labor Code.
xxxx
In the case at bar, as respondent union's membership
list contains the names of at least twenty-seven (27)
supervisory employees in Level Five positions, the
union could not, prior to purging itself of its
supervisory employee members, attain the status of a
legitimate labor organization. Not being one, it
cannot possess the requisite personality to file a
petition for certification election. (Emphasis
supplied)
In Dunlop, in which the labor organization that filed a
petition for certification election was one for
supervisory employees, but in which the membership
included rank-and-file employees, the Court
reiterated that such labor organization had no legal
right to file a certification election to represent a
bargaining unit composed of supervisors for as long
as it counted rank-and-file employees among its
members.
It should be emphasized that the petitions for
certification election involved in Toyota and Dunlop
were filed on November 26, 1992 and September 15,
1995, respectively; hence, the 1989 Rules was
applied in both cases.
But then, on June 21, 1997, the 1989 Amended
Omnibus Rules was further amended by Department
Order No. 9, series of 1997 (1997 Amended Omnibus
Rules). Specifically, the requirement under Sec. 2(c)
of the 1989 Amended Omnibus Rules - that the
petition for certification election indicate that the
bargaining unit of rank-and-file employees has not
been mingled with supervisory employees - was
removed. Instead, what the 1997 Amended Omnibus
Rules requires is a plain description of the bargaining
unit, thus:
Rule XI
Certification Elections
xxxx
Sec. 4. Forms and contents of petition. - The petition
shall be in writing and under oath and shall contain,
among others, the following: x x x (c) The
description of the bargaining unit."
In Pagpalain Haulers, Inc. v. Trajano, the Court had
occasion to uphold the validity of the 1997 Amended
Omnibus Rules, although the specific provision
involved therein was only Sec. 1, Rule VI, to wit:
Sec. 1. Chartering and creation of a local/chapter.- A
duly registered federation or national union may
directly create a local/chapter by submitting to the
Regional Office or to the Bureau two (2) copies of
the following: a) a charter certificate issued by the
federation or national union indicating the creation or
establishment of the local/chapter; (b) the names of
the local/chapter's officers, their addresses, and the
principal office of the local/chapter; and (c) the local/
chapter's constitution and by-laws; provided that
where the local/chapter's constitution and by-laws is
the same as that of the federation or national union,
this fact shall be indicated accordingly.
All the foregoing supporting requirements shall be
certified under oath by the Secretary or the Treasurer
of the local/chapter and attested to by its President.
which does not require that, for its creation and
registration, a local or chapter submit a list of its
members.
Then came Tagaytay Highlands Int'l. Golf Club, Inc.
v. Tagaytay Highlands Employees Union-PTGWO in
which the core issue was whether mingling affects
the legitimacy of a labor organization and its right to
file a petition for certification election. This time,
given the altered legal milieu, the Court abandoned
the view in Toyota and Dunlop and reverted to its
pronouncement in Lopez that while there is a
prohibition against the mingling of supervisory and
rank-and-file employees in one labor organization,
the Labor Code does not provide for the effects
thereof. Thus, the Court held that after a labor
organization has been registered, it may exercise all
the rights and privileges of a legitimate labor
organization. Any mingling between supervisory and
rank-and-file employees in its membership cannot
affect its legitimacy for that is not among the grounds
for cancellation of its registration, unless such
mingling was brought about by misrepresentation,
false statement or fraud under Article 239 of the
Labor Code.
In San Miguel Corp. (Mandaue Packaging Products
Plants) v. Mandaue Packing Products Plants-San
Miguel Packaging Products-San Miguel Corp.
Monthlies Rank-and-File Union-FFW, the Court
explained that since the 1997 Amended Omnibus
Rules does not require a local or chapter to provide a
list of its members, it would be improper for the
DOLE to deny recognition to said local or chapter on
account of any question pertaining to its individual
members.
More to the point is Air Philippines Corporation v.
Bureau of Labor Relations, which involved a petition
for cancellation of union registration filed by the
employer in 1999 against a rank-and-file labor
organization on the ground of mixed membership: the
Court therein reiterated its ruling in Tagaytay
Highlands that the inclusion in a union of disqualified
employees is not among the grounds for cancellation,
unless such inclusion is due to misrepresentation,
false statement or fraud under the circumstances
enumerated in Sections (a) and (c) of Article 239 of
the Labor Code.
All said, while the latest issuance is R.A. No. 9481,
the 1997 Amended Omnibus Rules, as interpreted by
the Court in Tagaytay Highlands, San Miguel and Air
Philippines, had already set the tone for it. Toyota
and Dunlop no longer hold sway in the present
altered state of the law and the rules.46
When a similar issue confronted this Court close to
three years later, the above ruling was substantially
quoted in Samahang Manggagawa sa Charter
Chemical Solidarity of Unions in the Philippines for
Empowerment and Reforms (SMCC-Super) v.
Charter Chemical and Coating Corporation.47 In
unequivocal terms, We reiterated that the alleged
inclusionof supervisory employees in a labor
organization seeking to represent the bargaining unit
of rank-and-file employees does not divest it of its
status as a legitimate labor organization.48
Indeed, Toyota and Dunlop no longer hold true under
the law and rules governing the instant case. The
petitions for certification election involved in Toyota
and Dunlop were filed on November 26, 1992 and
September 15, 1995, respectively; hence, the 1989
Rules and Regulations Implementing R.A. No. 6715
(1989 Amended Omnibus Rules) was applied. In
contrast, D.O. No. 9 is applicable in the petition for
certification election of private respondent as it was
filed on May 31, 2002.
Following the doctrine laid down in Kawashima and
SMCC-Super, it must be stressed that petitioner
cannot collaterally attack the legitimacy of private
respondent by praying for the dismissal of the
petition for certification election:
Except when it is requested to bargain collectively,
an employer is a mere bystander to any petition for
certification election; such proceeding is non-
adversarial and merely investigative, for the purpose
thereof is to determine which organization will
represent the employees in their collective bargaining
with the employer. The choice of their representative
is the exclusive concern of the employees; the
employer cannot have any partisan interest therein; it
cannot interfere with, much less oppose, the process
by filing a motion to dismiss or an appeal from it; not
even a mere allegation that some employees
participating in a petition for certification election are
actually managerial employees will lend an employer
legal personality to block the certification election.
The employer's only right in the proceeding is to be
notified or informed thereof.
The amendments to the Labor Code and its
implementing rules have buttressed that policy even
more.49
Further, the determination of whether union
membership comprises managerial and/or
supervisory employees is a factual issue that is best
left for resolution in the inclusion-exclusion
proceedings, which has not yet happened in this case
so still premature to pass upon. We could only
emphasize the rule that factual findings of labor
officials, who are deemed to have acquired expertise
in matters within their jurisdiction, are generally
accorded not only with respect but even finality by
the courts when supported by substantial
evidence.50 Also, the jurisdiction of this Court in
cases brought before it from the CA via Rule 45 is
generally limited to reviewing errors of law or
jurisdiction. The findings of fact of the CA are
conclusive and binding. Except in certain recognized
instances,51 We do not entertain factual issues as it is
not Our function to analyze or weigh evidence all
over again; the evaluation of facts is best left to the
lower courts and administrative agencies/quasi-
judicial bodies which are better equipped for the
task.52
Turning now to the second and last issue, petitioner
argues that, in view of the improper mixture of
teaching and non-teaching personnel in private
respondent due to the absence of mutuality of interest
among its members, the petition for certification
election should have been dismissed on the ground
that private respondent is not qualified to file such
petition for its failure to qualify as a legitimate labor
organization, the basic qualification of which is the
representation of an appropriate bargaining unit.
We disagree.
The concepts of a union and of a legitimate labor
organization are different from, but related to, the
concept of a bargaining unit:
Article 212(g) of the Labor Code defines a labor
organization as "any union or association of
employees which exists in whole or in part for the
purpose of collective bargaining or of dealing with
employers concerning terms and conditions of
employment." Upon compliance with all the
documentary requirements, the Regional Office or
Bureau shall issue in favor of the applicant labor
organization a certificate indicating that it is included
in the roster of legitimate labor organizations. Any
applicant labor organization shall acquire legal
personality and shall be entitled to the rights and
privileges granted by law to legitimate labor
organizations upon issuance of the certificate of
registration.53
In case of alleged inclusion of disqualified employees
in a union, the proper procedure for an employer like
petitioner is to directly file a petition for cancellation
of the union’s certificate of registration due to
misrepresentation, false statement or fraud under the
circumstances enumerated in Article 239 of the Labor
Code, as amended.54 To reiterate, private respondent,
having been validly issued a certificate of
registration, should be considered as having acquired
juridical personality which may not be attacked
collaterally.
On the other hand, a bargaining unit has been defined
as a "group of employees of a given employer,
comprised of all or less than all of the entire body of
employees, which the collective interests of all the
employees, consistent with equity to the employer,
indicated to be best suited to serve reciprocal rights
and duties of the parties under the collective
bargaining provisions of the law." 55 In determining
the proper collective bargaining unit and what unit
would be appropriate to be the collective bargaining
agency, the Court, in the seminal case of Democratic
Labor Association v. Cebu Stevedoring Company,
Inc.,56 mentioned several factors that should be
considered, to wit: (1) will of employees (Globe
Doctrine); (2) affinity and unity of employees'
interest, such as substantial similarity of work and
duties, or similarity of compensation and working
conditions; (3) prior collective bargaining history;
and (4) employment status, such as temporary,
seasonal and probationary employees. We stressed,
however, that the test of the grouping is community
or mutuality of interest, because "the basic test of an
asserted bargaining unit's acceptability is whether or
not it is fundamentally the combination which will
best assure to all employees the exercise of their
collective bargaining rights."57
As the SOLE correctly observed, petitioner failed to
comprehend the full import of Our ruling in U.P. It
suffices to quote with approval the apt disposition of
the SOLE when she denied petitioner’s motion for
reconsideration:
Petitioner likewise claimed that we erred in
interpreting the decision of the Supreme Court in
U.P. v. Ferrer-Calleja, supra. According to petitioner,
the Supreme Court stated that the non-academic rank-
andfile employees of the University of the
Philippines shall constitute a bargaining unit to the
exclusion of the academic employees of the
institution. Hence, petitioner argues, it sought the
creation of separate bargaining units, namely: (1)
petitioner’s teaching personnel to the exclusion of
non-teaching personnel; and (2) petitioner’s non-
teaching personnel to the exclusion of teaching
personnel.
Petitioner appears to have confused the concepts of
membership in a bargaining unit and membership in a
union. In emphasizing the phrase "to the exclusion of
academic employees" stated in U.P. v. Ferrer-Calleja,
petitioner believed that the petitioning union could
not admit academic employees of the university to its
membership. But such was not the intention of the
Supreme Court.
A bargaining unit is a group of employees sought to
be represented by a petitioning union. Such
employees need not be members of a union seeking
the conduct of a certification election. A union
certified as an exclusive bargaining agent represents
not only its members but also other employees who
are not union members. As pointed out in our assailed
Decision, there were two contending unions in the
U.P. case, namely, the Organization of Non-
Academic Personnel of U.P. (ONAPUP) and the All
U.P. Worker’s Union composed of both U.P.
academic and non-academic personnel. ONAPUP
sought the conduct of a certification election among
the rank-and-file non-academic personnel only, while
the All U.P. Workers Union intended to cover all
U.P. rank-and-file employees, involving both
academic and non-academic personnel.
The Supreme Court ordered the "non-academic rank-
and-file employees of U.P. to constitute a bargaining
unit to the exclusion of the academic employees of
the institution", but did not order them to organize a
separate labor organization. In the U.P. case, the
Supreme Court did not dismiss the petition and
affirmed the order for the conduct of a certification
election among the non-academic personnel of U.P.,
without prejudice to the right of the academic
personnel to constitute a separate bargaining unit for
themselves and for the All U.P. Workers Union to
institute a petition for certification election.
In the same manner, the teaching and non-teaching
personnel of petitioner school must form separate
bargaining units.1âwphi1 Thus, the order for the
conduct of two separate certification elections, one
involving teaching personnel and the other involving
non-teaching personnel. It should be stressed that in
the subject petition, private respondent union sought
the conduct of a certification election among all the
rank-and-file personnel of petitioner school. Since the
decision of the Supreme Court in the U.P. case
prohibits us from commingling teaching and non-
teaching personnel in one bargaining unit, they have
to be separated into two separate bargaining units
with two separate certification elections to determine
whether the employees in the respective bargaining
units desired to be represented by private respondent.
In the U.P. case, only one certification election
among the non-academic personnel was ordered,
because ONAPUP sought to represent that bargaining
unit only. No petition for certification election among
the academic personnel was instituted by All U.P.
Workers Union in the said case; thus, no certification
election pertaining to its intended bargaining unit was
ordered by the Court.58
Indeed, the purpose of a certification election is
precisely to ascertain the majority of the employees’
choice of an appropriate bargaining unit – to be or not
to be represented by a labor organization and, if in
the affirmative case, by which one.59
the Secretary of the Department of Labor and
Employment that set aside the
August 10, 2002 Decision of the Med-Arbiter
denying private respondent's petition for certification
election are hereby AFFIRMED.
SO ORDERED.

At this point, it is not amiss to stress once more that,

as a rule, only questions of law may be raised in a
Rule 45 petition. In Montoya v. Transmed Manila
Corporation,60 the Court discussed the particular
parameters of a Rule 45 appeal from the CA’s Rule
65 decision on a labor case, as follows:

x x x In a Rule 45 review, we consider the

correctness of the assailed CA decision, in contrast
with the review for jurisdictional error that we
undertake under Rule 65. Furthermore, Rule 45 limits
us to the review of questions of law raised against the
assailed CA decision. In ruling for legal correctness,
we have to view the CA decision in the same context
that the petition for certiorari it ruled upon was
presented to it; we have to examine the CA decision
from the prism of whether it correctly determined the
presence or absence of grave abuse of discretion in
the NLRC decision before it, not on the basis of
whether the NLRC decision on the merits of the case
was correct. In other words, we have to be keenly
aware that the CA undertook a Rule 65 review, not a
review on appeal, of the NLRC decision challenged
before it. This is the approach that should be basic in
a Rule 45 review of a CA ruling in a labor case. In
question form, the question to ask is: Did the CA
correctly determine whether the NLRC committed
grave abuse of discretion in ruling on the case? 61

Our review is, therefore, limited to the determination

of whether the CA correctly resolved the presence or
absence of grave abuse of discretion in the decision
of the SOLE, not on the basis of whether the latter's
decision on the merits of the case was strictly correct.
Whether the CA committed grave abuse of discretion
is not what is ruled upon but whether it correctly
determined the existence or want of grave abuse of
discretion on the part of the SOLE.

WHEREFORE, the pet1t1on is DENIED. The April

18, 2007 Decision and July 31, 2007, Resolution of
the Court of Appeals in CA-G.R. SP No. 76175,
which affirmed the December 27, 2002 Decision of
 #98. Culili vs Eastern Telecommunications Phils
. CULILI,
Petitioner,
- versus -
TELECOMMUNICATIONS PHILIPPINES,
LVADOR HIZON (President and Chief
Officer), EMILIANO JURADO (Chairman of
VIRGILIO GARCIA (Vice President) and
ARCIA (Assistant Vice President),
Respondents.
(IGF).[7] The other respondents are ETPIs officers:
G.R. No. 165381 Salvador Hizon, President and Chief Executive
Present: Officer; Emiliano Jurado, Chairman of the Board;
Virgilio Garcia, Vice President; and Stella Garcia,
CORONA, C.J.,
Chairperson, Assistant Vice President.
VELASCO, JR.,
LEONARDO-DE CASTRO,
DEL CASTILLO, and Petitioner Nelson A. Culili (Culili) was
PEREZ, JJ.
employed by ETPI as a Technician in its Field
Promulgated:
Operations Department on January 27, 1981. On
February 9, 2011
December 12, 1996, Culili was promoted to Senior
Technician in the Customer Premises Equipment
Management Unit of the Service Quality Department
and his basic salary was increased.[8]

x---------------------------------------
-------------x
DECISION
LEONARDO-DE CASTRO, J.:
Before Us is a petition for review
on certiorari[1] of the February 5, 2004 Decision[2] and
September 13, 2004 Resolution[3] of the Court of
Appeals in CA-G.R. SP No. 75001, wherein the Court
of Appeals set aside the March 1, 2002 Decision[4] and
September 24, 2002 Resolution[5] of the National
Labor Relations Commission (NLRC), which affirmed
the Labor Arbiters Decision[6]dated April 30, 2001.
Respondent Eastern Telecommunications
Philippines, Inc. (ETPI) is a telecommunications
company engaged mainly in the business of
establishing commercial telecommunications systems
and leasing of international datalines or circuits that
pass through the international gateway facility
As a telecommunications company and an
authorized IGF operator, ETPI was required, under
Republic Act. No. 7925 and Executive Order No. 109,
to establish landlines in Metro Manila and certain
provinces.[9] However, due to interconnection
problems with the Philippine Long Distance
Telephone Company (PLDT), poor subscription and
cancellation of subscriptions, and other business
difficulties, ETPI was forced to halt its roll out of one
hundred twenty-nine thousand (129,000) landlines
already allocated to a number of its employees.[10]
In 1998, due to business troubles and losses,
ETPI was compelled to implement a Right-Sizing
Program which consisted of two phases: the first
phase involved the reduction of ETPIs workforce to
only those employees that were necessary and which
ETPI could sustain; the second phase entailed a
company-wide reorganization which would result in
the transfer, merger, absorption or abolition of certain
departments of ETPI.[11]
 As part of the first phase, ETPI, on December
10, 1998, offered to its employees who had rendered
at least fifteen years of service, the Special Retirement
Program, which consisted of the option to voluntarily
retire at an earlier age and a retirement package
equivalent to two and a half (2) months salary for
every year of service.[12] This offer was initially
rejected by the Eastern Telecommunications
Employees Union (ETEU), ETPIs duly recognized
bargaining agent, which threatened to stage a
strike. ETPI explained to ETEU the exact details of the
Right-Sizing Program and the Special Retirement
Program and after consultations with ETEUs
members, ETEU agreed to the implementation of both
programs.[13] Thus, on February 8, 1999, ETPI re-
offered the Special Retirement Program and the
corresponding retirement package to the one hundred
two (102) employees who qualified for the
program.[14] Of all the employees who qualified to
avail of the program, only Culili rejected the offer.[15]
After the successful implementation of the
first phase of the Right-Sizing Program, ETPI, on
March 1, 1999 proceeded with the second phase which
necessitated the abolition, transfer and merger of a
number of ETPIs departments. [16]
Among the departments abolished was the
Service Quality Department. The functions of the
Customer Premises Equipment Management Unit,
Culilis unit, were absorbed by the Business and
Consumer Accounts Department. The abolition of the
Service Quality Department rendered the specialized
functions of a Senior Technician unnecessary. As a
result, Culilis position was abolished due to
redundancy and his functions were absorbed by Andre
Andrada, another employee already with the Business
and Consumer Accounts Department.[17]
On March 5, 1999, Culili discovered that his
name was omitted in ETPIs New Table of
Organization. Culili, along with three of his co-
employees who were similarly situated, wrote their
union president to protest such omission.[18]
In a letter dated March 8, 1999, ETPI,
through its Assistant Vice President Stella Garcia,
informed Culili of his termination from employment
effective April 8, 1999. The letter reads:
March 8, 1999
To: N. Culili
Thru: S. Dobbin/G. Ebue
From: AVP-HRD
-------------------------------------------
-------------------------------------------
----
As you are aware, the current
economic crisis has adversely
affected our operations and
undermined our earlier plans to put
in place major work programs and
activities. Because of this, we have
to implement a Rightsizing Program
in order to cut
administrative/operating costs and
to avoid losses. In line with this
program, your employment with the
company shall terminate effective at
the close of business hours on April
08, 1999. However, to give you
ample time to look for other
employment, provided you have
amply turned over your pending
work and settled your
accountabilities, you are no longer
required to report to work starting
tomorrow. You will be considered
on paid leave until April 08, 1999.
You will likewise be paid separation
pay in compliance with legal
 requirements (see attached), as well
as other benefits accruing to you
under the law, and the CBA. We ETPI denied singling Culili out for
take this opportunity to thank you
for your services and wish you well termination. ETPI claimed that while it is true that they
in your future endeavors. offered the Special Retirement Package to reduce their

(Signed) workforce to a sustainable level, this was only the first

Stella J. Garcia[19] phase of the Right-Sizing Program to which ETEU
agreed. The second phase intended to simplify and
This letter was similar to the memo shown to
streamline the functions of the departments and
Culili by the union president weeks before Culili was
employees of ETPI. The abolition of Culilis
dismissed. The memo was dated December 7, 1998,
department - the Service Quality Department - and the
and was advising him of his dismissal effective
absorption of its functions by the Business and
January 4, 1999 due to the Right-Sizing Program ETPI
Consumer Accounts Department were in line with the
was going to implement to cut costs and avoid
programs goals as the Business and Consumer
losses.[20]
Accounts Department was more economical and
versatile and it was flexible enough to handle the
Culili alleged that neither he nor the
limited functions of the Service Quality
Department of Labor and Employment (DOLE) were
Department. ETPI averred that since Culili did not
formally notified of his termination. Culili claimed
avail of the Special Retirement Program and his
that he only found out about it sometime in March
position was subsequently declared redundant, it had
1999 when Vice President Virgilio Garcia handed him
no choice but to terminate Culili.[23] Culili, however,
a copy of the March 8, 1999 letter, after he was barred
continued to report for work. ETPI said that because
from entering ETPIs premises by its armed security
there was no more work for Culili, it was constrained
personnel when he tried to report for work.[21] Culili
to serve a final notice of termination[24] to Culili,
believed that ETPI had already decided to dismiss him
which Culili ignored. ETPI alleged that Culili
even prior to the March 8, 1999 letter as evidenced by
informed his superiors that he would agree to his
the December 7, 1998 version of that letter. Moreover,
termination if ETPI would give him certain special
Culili asserted that ETPI had contracted out the
work tools in addition to the benefits he was already
services he used to perform to a labor-only contractor
offered. ETPI claimed that Culilis counter-offer was
which not only proved that his functions had not
unacceptable as the work tools Culili wanted were
become unnecessary, but which also violated their
worth almost a million pesos. Thus, on March 26,
Collective Bargaining Agreement (CBA) and the
1999, ETPI tendered to Culili his final pay check of
Labor Code. Aside from these, Culili also alleged that
Eight Hundred Fifty-Nine Thousand Thirty-Three and
he was discriminated against when ETPI offered some
99/100 Pesos (P859,033.99) consisting of his basic
of his co-employees an additional benefit in the form
salary, leaves, 13th month pay and separation
of motorcycles to induce them to avail of the Special
pay.[25] ETPI claimed that Culili refused to accept his
Retirement Program, while he was not.[22]
termination and continued to report for work. [26] ETPI
 attorneys fees. Complainant
denied hiring outside contractors to perform Culilis likewise is to be reinstated to his
work and denied offering added incentives to its former position or to a substantially
equivalent position in accordance
employees to induce them to retire early. ETPI also with the pertinent provisions of the
explained that the December 7, 1998 letter was never Labor Code as interpreted in the
case of Pioneer texturing [Pioneer
given to Culili in an official capacity. ETPI claimed Texturizing Corp. v. National Labor
that it really needed to reduce its workforce at that time Relations Commission], G.R. No.
11865[1], 16 October 1997.Hence,
and that it had to prepare several letters in advance in Complainant must be paid the total
amount of TWO MILLION SEVEN
the event that none of the employees avail of the
HUNDRED FORTY[-]FOUR
Special Retirement Program. However, ETPI decided THOUSAND THREE
[HUNDRED] SEVENTY[-] NINE
to wait for a favorable response from its employees and 41/100 (P2,744,379.41),
regarding the Special Retirement Program instead of computed as follows:
I. Backwages (from 16 March
terminating them.[27] 1999 to 16 March
2001)

On February 8, 2000, Culili filed a complaint a. Basic Salary

(P29,030 x 24
against ETPI and its officers for illegal dismissal,
mos.) P696,720.96
unfair labor practice, and money claims before the
b. 13th Month Pay
Labor Arbiter. (P692,720.96/12) 58,
On April 30, 2001, the Labor Arbiter 060.88

rendered a decision finding ETPI guilty of illegal c. Leave Benefits

dismissal and unfair labor practice, to wit:
1. Vacation Leave (30
days/annum)
WHEREFORE, decision is hereby P1,116.54 x 60
rendered declaring the dismissal of days 66,992.40
complainant Nelson A. Culili illegal
for having been made through an 2. Sick Leave (30
arbitrary and malicious declaration days/annum)
of redundancy of his position and P1,116.54 x 60
for having been done without due days 66,992.40
process for failure of the respondent
to give complainant and the DOLE 3. Birthday Leave (1
written notice of such termination day/annum)
prior to the effectivity thereof. P1,116.54 x2
days 2,233.08
In view of the foregoing,
respondents Eastern d. Rice and Meal
Telecommunications Philippines Subsidy
and the individual respondents are 16 March 31 July
hereby found guilty of unfair labor 1999
practice/discrimination and illegal (P1,750 x 4.5 mos.
dismissal and ordered to pay = P7,875.00)
complainant backwages and such
other benefits due him if he were not 01 August 1991 31
illegally dismissed, including moral July 2000
and exemplary damages and 10%
 (P1,850 x 12 mos.
= P22,200.00) claims of discrimination and subcontracting, hence,
ETPI was guilty of unfair labor practice.
01 August 2000 16
March 2001
(P1,950 x 7.5 mos. On appeal, the NLRC affirmed the Labor
= P14,625.00) 44,700
.00 Arbiters decision but modified the amount of moral
and exemplary damages awarded, viz:
e. Uniform Allowance
P7,000/annum x 2
years __14,000.00 WHEREFORE, the Decision
P949,699.72 appealed from
is AFFIRMED granting
II. Damages complainant the money claims
prayed for including full
a. MoralP500, backwages, allowances and other
000.00 benefits or their monetary
b. ExemplaryP equivalent computed from the time
250,000.00 of his illegal dismissal on 16 March
III. Attorneys Fees (10% 1999 up to his actual reinstatement
of except the award of moral and
award) __94,969.97 exemplary damages which is
modified to P200,000.00 for moral
GRAND and P100,000.00 for exemplary
TOTAL: P2,744,379.41[28] damages. For this purpose, this case
is REMANDED to the Labor
Arbiter for computation of
backwages and other monetary
The Labor Arbiter believed Culilis claim that awards to complainant.[29]
ETPI intended to dismiss him even before his position
was declared redundant. He found the December 7,
ETPI filed a Petition for Certiorari under Rule 65 of
1998 letter to be a telling sign of this intention. The
the Rules of Civil Procedure before the Court of
Labor Arbiter held that a reading of the termination
Appeals on the ground of grave abuse of
letter shows that the ground ETPI was actually
discretion. ETPI prayed that a Temporary Restraining
invoking was retrenchment and not redundancy, but
Order be issued against the NLRC from implementing
ETPI stuck to redundancy because it was easier to
its decision and that the NLRC decision and resolution
prove than retrenchment. He also did not believe that
be set aside.
Culilis functions were as limited as ETPI made it
appear to be, and held that ETPI failed to present any
The Court of Appeals, on February 5, 2004, partially
reasonable criteria to justify the declaration of Culilis
granted ETPIs petition. The dispositive portion of the
position as redundant. On the issue of unfair labor
decision reads as follows:
practice, the Labor Arbiter agreed that the contracting WHEREFORE, all the foregoing
out of Culilis functions to non-union members violated considered, the petition
is PARTIALLY GRANTED. The
Culilis rights as a union member. Moreover, the Labor assailed Decision of public
respondent National Labor
Arbiter said that ETPI was not able to dispute Culilis
Relations Commission
is MODIFIED in that petitioner
 Eastern Telecommunications
Philippines Inc. (ETPI) is Culili is now before this Court praying for the reversal
hereby ORDERED to pay of the Court of Appeals decision and the reinstatement
respondent Nelson Culili full
backwages from the time his of the NLRCs decision based on the following
salaries were not paid until the grounds:
finality of this Decision plus
separation pay in an amount
equivalent to one (1) month salary I
for every year of service. The
awards for moral and exemplary THE COURT OF APPEALS
damages are DELETED. The Writ DECIDED A QUESTION OF
of Execution issued by the Labor SUBSTANCE NOT IN ACCORD
Arbiter dated September 8, 2003 WITH THE APPLICABLE LAW
is DISSOLVED.[30] AND JURISPRUDENCE WHEN
IT REVERSED THE DECISIONS
OF THE NLRC AND THE LABOR
ARBITER HOLDING THE
The Court of Appeals found that Culilis position was DISMISSAL OF PETITIONER
validly abolished due to redundancy. The Court of ILLEGAL IN THAT:

Appeals said that ETPI had been very candid with its A. CONTRARY TO THE
FINDINGS OF THE
employees in implementing its Right-Sizing Program,
COURT OF
and that it was highly unlikely that ETPI would effect APPEALS,
RESPONDENTS
a company-wide reorganization simply for the purpose CHARACTERIZATI
of getting rid of Culili. The Court of Appeals also held ON OF
PETITIONERS
that ETPI cannot be held guilty of unfair labor practice POSITION AS
as mere contracting out of services being performed by REDUNDANT WAS
TAINTED BY BAD
union members does not per se amount to unfair labor FAITH.
practice unless it interferes with the employees right to
B. THERE WAS NO
self-organization. The Court of Appeals further held ADEQUATE
JUSTIFICATION TO
that ETPIs officers cannot be held liable absent a
DECLARE
showing of bad faith or malice. However, the Court of PETITIONERS
POSITION AS
Appeals found that ETPI failed to observe the REDUNDANT.
standards of due process as required by our laws when
II
it failed to properly notify both Culili and the DOLE THE COURT OF APPEALS
of Culilis termination. The Court of Appeals DECIDED A QUESTION OF
SUBSTANCE NOT IN ACCORD
maintained its position in its September 13, 2004 WITH LAW AND
JURISPRUDENCE IN FINDING
Resolution when it denied Culilis Motion for
THAT NO UNFAIR LABOR
Reconsideration and Urgent Motion to Reinstate the PRACTICE ACTS WERE
COMMITTED AGAINST THE
Writ of Execution issued by the Labor Arbiter, and PETITIONER.
ETPIs Motion for Partial Reconsideration.
 III
when it reexamined the facts in this case and reversed
THE COURT OF APPEALS the factual findings of the Labor Arbiter and the NLRC
DECIDED A QUESTION OF
SUBSTANCE NOT IN ACCORD in a special civil action for certiorari.
WITH LAW AND
JURISPRUDENCE IN DELETING
THE AWARD OF MORAL AND This Court has already confirmed the power of the
EXEMPLARY DAMAGES AND Court of Appeals, even on a Petition
ATTORNEYS FEES IN FAVOR
OF PETITIONER AND IN for Certiorari under Rule 65,[32] to review the
DISSOLVING THE WRIT OF
evidence on record, when necessary, to resolve factual
EXECUTION DATED 8
SEPTEMBER 2003 ISSUED BY issues:
THE LABOR ARBITER.

IV The power of the Court of Appeals

to review NLRC decisions via Rule
THE COURT OF APPEALS 65 or Petition for Certiorari has been
DECIDED A QUESTION OF settled as early as in our decision
SUBSTANCE NOT IN ACCORD in St. Martin Funeral Home v.
WITH LAW AND National Labor Relations
JURISPRUDENCE IN Commission. This Court held that
ABSOLVING THE INDIVIDUAL the proper vehicle for such review
RESPONDENTS OF PERSONAL was a Special Civil Action for
LIABILITY. Certiorari under Rule 65 of the
Rules of Court, and that this action
should be filed in the Court of
Appeals in strict observance of the
doctrine of the hierarchy of courts.
V Moreover, it is already settled that
under Section 9 of Batas Pambansa
CONTRARY TO APPLICABLE Blg. 129, as amended by Republic
LAW AND JURISPRUDENCE, Act No. 7902[10] (An Act
THE COURT OF APPEALS, IN A Expanding the Jurisdiction of the
CERTIORARI PROCEEDING, Court of Appeals, amending for the
REVIEWED THE FACTUAL purpose of Section Nine of Batas
FINDINGS OF THE NLRC Pambansa Blg. 129 as amended,
WHICH AFFIRMED THAT OF known as the Judiciary
THE LABOR ARBITER AND, Reorganization Act of 1980), the
THEREAFTER, ISSUED A WRIT Court of Appeals pursuant to the
OF CERTIORARI REVERSING exercise of its original jurisdiction
THE DECISIONS OF THE NLRC over Petitions for Certiorari is
AND THE LABOR ARBITER specifically given the power to pass
EVEN IN THE ABSENCE OF upon the evidence, if and when
GRAVE ABUSE OF necessary, to resolve factual
DISCRETION.[31] issues.[33]

Procedural Issue: Court of Appeals While it is true that factual findings made by
Power to Review Facts in a Petition
For Certiorari under Rule 65 quasi-judicial and administrative tribunals, if
supported by substantial evidence, are accorded great
Culili argued that the Court of Appeals acted in respect and even finality by the courts, this general rule
contravention of applicable law and jurisprudence

admits of exceptions. When there is a showing that a
palpable and demonstrable mistake that needs
rectification has been committed[34] or when the
factual findings were arrived at arbitrarily or in
disregard of the evidence on record, these findings
may be examined by the courts.[35]
In the case at bench, the Court of Appeals
found itself unable to completely sustain the findings
of the NLRC thus, it was compelled to review the facts
and evidence and not limit itself to the issue of grave
abuse of discretion.
With the conflicting findings of facts by the
tribunals below now before us, it behooves this Court
to make an independent evaluation of the facts in this
case.
Main Issue: Legality of Dismissal
Culili asserted that he was illegally dismissed
because there was no valid cause to terminate his
employment. He claimed that ETPI failed to prove that
his position had become redundant and that ETPI was
indeed incurring losses. Culili further alleged that his
functions as a Senior Technician could not be
considered a superfluity because his tasks were crucial
and critical to ETPIs business.
Under our laws, an employee may be
terminated for reasons involving measures taken
by the employer due to business
necessities. Article 283 of the Labor Code
provides:
Art. 283. Closure of
establishment and reduction of
personnel. - The employer may also
terminate the employment of any
employee due to the installation of
labor saving devices, redundancy,
retrenchment to prevent losses or
the closing or cessation of operation
of the establishment or undertaking
unless the closing is for the purpose
of circumventing the provisions of
this Title, by serving a written notice
on the workers and the Department
of Labor and Employment at least
one (1) month before the intended
date thereof. In case of termination
due to the installation of labor-
saving devices or redundancy, the
worker affected thereby shall be
entitled to a separation pay
equivalent to at least his one (1)
month pay or to at least one (1)
month pay for every year of service,
whichever is higher. In case of
retrenchment to prevent losses and
in cases of closures or cessation of
operations of establishment or
undertaking not due to serious
business losses or financial reverses,
the separation pay shall be
equivalent to one (1) month pay or
at least one-half (1/2) month pay for
every year of service, whichever is
higher. A fraction of at least six (6)
months shall be considered one (1)
whole year.
There is redundancy when the service
capability of the workforce is greater than what is
reasonably required to meet the demands of the
business enterprise. A position becomes redundant
when it is rendered superfluous by any number of
factors such as over-hiring of workers, decrease in
volume of business, or dropping a particular product
line or service activity previously manufactured or
undertaken by the enterprise.[36]
 This Court has been consistent in holding that
the determination of whether or not an employees
services are still needed or sustainable properly
belongs to the employer. Provided there is no violation
of law or a showing that the employer was prompted
by an arbitrary or malicious act, the soundness or
wisdom of this exercise of business judgment is not
subject to the discretionary review of the Labor Arbiter
and the NLRC.[37]
However, an employer cannot simply declare that it
has become overmanned and dismiss its employees
without producing adequate proof to sustain its claim
of redundancy.[38] Among the requisites of a valid
redundancy program are: (1) the good faith of the
employer in abolishing the redundant position; and (2)
fair and reasonable criteria in ascertaining what
positions are to be declared redundant,[39] such as but
not limited to: preferred status, efficiency, and
seniority.[40]
This Court also held that the following evidence may
be proffered to substantiate redundancy: the new
staffing pattern, feasibility studies/ proposal on the
viability of the newly created positions, job description
and the approval by the management of the
restructuring.[41]
In the case at bar, ETPI was upfront with its
employees about its plan to implement a Right-Sizing
Program. Even in the face of initial opposition from
and rejection of the said program by ETEU, ETPI
patiently negotiated with ETEUs officers to make
them understand ETPIs business dilemma and its need
to reduce its workforce and streamline its
organization. This evidently rules out bad faith on the
part of ETPI.
In deciding which positions to retain and
which to abolish, ETPI chose on the basis of
efficiency, economy, versatility and flexibility. It
needed to reduce its workforce to a sustainable level
while maintaining functions necessary to keep it
operating. The records show that ETPI had sufficiently
established not only its need to reduce its workforce
and streamline its organization, but also the existence
of redundancy in the position of a Senior
Technician. ETPI explained how it failed to meet its
business targets and the factors that caused this, and
how this necessitated it to reduce its workforce and
streamline its organization. ETPI also submitted its old
and new tables of organization and sufficiently
described how limited the functions of the abolished
position of a Senior Technician were and how it
decided on whom to absorb these functions.
In his affidavit dated April 10, 2000,[42] Mr.
Arnel D. Reyel, the Head of both the Business Services
Department and the Finance Department of ETPI,
described how ETPI went about in reorganizing its
departments. Mr. Reyel said that in the course of
ETPIs reorganization, new departments were created,
some were transferred, and two were
abolished. Among the departments abolished was the
Service Quality Department. Mr. Reyel said that ETPI
felt that the functions of the Service Quality
Department, which catered to both corporate and small
and medium-sized clients, overlapped and were too
large for a single department, thus, the functions of this
department were split and simplified into two smaller
but more focused and efficient departments. In
arriving at the decision to abolish the position of
Senior Technician, Mr. Reyel explained:

11.3. Thus, in accordance
with the reorganization of the
different departments of ETPI, the
Service Quality Department was
abolished and its functions were
absorbed by the Business and
Consumer Accounts Department
and the Corporate and Major
Accounts Department.
11.4. With the abolition and
resulting simplification of the
Service Quality Department, one of
the units thereunder, the Customer
Premises Equipment Maintenance
(CPEM) unit was transferred to the
Business and Consumer Accounts
Department. Since the Business and
Consumer Accounts Department
had to remain economical and
focused yet versatile enough to meet
all the needs of its small and
medium sized clients, it was decided
that, in the judgment of ETPI
management, the specialized
functions of a Senior Technician in
the CPEM unit whose sole function
was essentially the repair and
servicing of ETPIs
telecommunications equipment was
no longer needed since the Business
and Consumer [Accounts]
Department had to remain
economical and focused yet
versatile enough to meet all the
multifarious needs of its small and
medium sized clients.
11.5. The business reason for the
abolition of the position of Senior
Technician was because in ETPIs
judgment, what was needed in the
Business and Consumer Accounts
Department was a versatile, yet
economical position with functions
which were not limited to the mere
repair and servicing of
telecommunications equipment. It
was determined that what was called
for was a position that could also
perform varying functions such as
the actual installation of
telecommunications products for
medium and small scale clients,
handle telecommunications
equipment inventory monitoring,
evaluation of telecommunications
equipment purchased and the
preparation of reports on the daily
and monthly activation of
telecommunications equipment by
these small and medium scale
clients.
11.6. Thus, for the foregoing
reasons, ETPI decided that the
position of Senior Technician was to
be abolished due to
redundancy. The functions of a
Senior Technician was to be
abolished due to redundancy. The
functions of a Senior Technician
would then be absorbed by an
employee assigned to the Business
and Consumer Accounts
Department who was already
performing the functions of actual
installation of telecommunications
products in the field and handling
telecommunications equipment
inventory monitoring, evaluation of
telecommunications equipment
purchased and the preparation of
reports on the daily and monthly
activation of telecommunications
equipment. This employee would
then simply add to his many other
functions the duty of repairing and
servicing telecommunications
equipment which had been
previously performed by a Senior
Technician.[43]
In the new table of organization that the
management approved, one hundred twelve (112)
employees were redeployed and nine (9) positions
were declared redundant.[44] It is inconceivable that
ETPI would effect a company-wide reorganization of
this scale for the mere purpose of singling out Culili
and terminating him. If Culilis position were indeed
indispensable to ETPI, then it would be absurd for
ETPI, which was then trying to save its operations, to
abolish that one position which it needed the
most. Contrary to Culilis assertions that ETPI could
not do away with his functions as long as it is in the
Art. 248. Unfair labor
telecommunications industry, ETPI did not abolish the practices of employers. - It shall be
functions performed by Culili as a Senior unlawful for an employer to commit
any of the following unfair labor
Technician. What ETPI did was to abolish the position practice:
itself for being too specialized and limited. The
xxxx
functions of that position were then added to another
employee whose functions were broad enough to c. To contract out services or
functions being performed by union
absorb the tasks of a Senior Technician. members when such will interfere
with, restrain or coerce employees
in the exercise of their rights to self-
Culili maintains that ETPI had already organization;
decided to dismiss him even before the second phase xxxx
of the Right-Sizing Program was implemented as
e. To discriminate in regard
evidenced by the December 7, 1998 letter. to wages, hours of work, and other
terms and conditions of employment
in order to encourage or discourage
The December 7, 1998 termination letter membership in any labor
organization. Nothing in this Code
signed by ETPIs AVP Stella Garcia hardly suffices to
or in any other law shall stop the
prove bad faith on the part of the company. The fact parties from requiring membership
in a recognized collective
remains that the said letter was never officially bargaining agent as a condition for
transmitted and Culili was not terminated at the end of employment, except those
employees who are already
the first phase of ETPIs Right-Sizing Program. ETPI members of another union at the
had given an adequate explanation for the existence of time of the signing of the collective
bargaining agreement. Employees
the letter and considering that it had been transparent of an appropriate collective
bargaining unit who are not
with its employees, through their union ETEU, so
members of the recognized
much so that ETPI even gave ETEU this unofficial collective bargaining agent may be
assessed a reasonable fee equivalent
letter, there is no reason to speculate and attach malice to the dues and other fees paid by
to such act. That Culili would be subsequently members of the recognized
collective bargaining agent, if such
terminated during the second phase of the Right- non-union members accept the
Sizing Program is not evidence of undue benefits under the collective
agreement: Provided, that the
discrimination or singling out since not only Culilis individual authorization required
position, but his entire unit was abolished and under Article 242, paragraph (o) of
this Code shall not apply to the non-
absorbed by another department. members of the recognized
Unfair Labor Practice collective bargaining agent.

Culili also alleged that ETPI is guilty of

Culili asserted that ETPI is guilty of
unfair labor practice for violating Article 248(c)
unfair labor practice because his functions were
and (e) of the Labor Code, to wit:
 sourced out to labor-only contractors and he was
discriminated against when his co-employees were
treated differently when they were each offered an
additional motorcycle to induce them to avail of
the Special Retirement Program. ETPI denied
hiring outside contractors and averred that the
motorcycles were not given to his co-employees
but were purchased by them pursuant to their
Collective Bargaining Agreement, which allowed
a retiring employee to purchase the motorcycle he
was assigned during his employment.
The concept of unfair labor practice is
provided in Article 247 of the Labor Code which
states:
Article 247. Concept of
unfair labor practice and
procedure for prosecution
thereof. -- Unfair labor practices
violate the constitutional right of
workers and employees to self-
organization, are inimical to the
legitimate interest of both labor and
management, including their right to
bargain collectively and otherwise
deal with each other in an
atmosphere of freedom and mutual
respect, disrupt industrial peace and
hinder the promotion of healthy and
stable labor-management relations.
In the past, we have ruled that unfair labor
practice refers to acts that violate the workers' right to
organize. The prohibited acts are related to the
workers' right to self-organization and to the
observance of a CBA.[45] We have likewise declared
that there should be no dispute that all the prohibited
acts constituting unfair labor practice in essence relate
to the workers' right to self-organization.[46] Thus, an
employer may only be held liable for unfair labor
practice if it can be shown that his acts affect in
whatever manner the right of his employees to self-
organize.[47]
There is no showing that ETPI, in
implementing its Right-Sizing Program, was
motivated by ill will, bad faith or malice, or that it was
aimed at interfering with its employees right to self-
organize. In fact, ETPI negotiated and consulted with
ETEU before implementing its Right-Sizing Program.
Both the Labor Arbiter and the NLRC
found ETPI guilty of unfair labor practice because
of its failure to dispute Culilis allegations.
According to jurisprudence, basic is the
principle that good faith is presumed and he who
alleges bad faith has the duty to prove the same.[48] By
imputing bad faith to the actuations of ETPI, Culili has
the burden of proof to present substantial evidence to
support the allegation of unfair labor practice. Culili
failed to discharge this burden and his bare allegations
deserve no credit.
Observance of Procedural Due Process
Although the Court finds Culilis dismissal
was for a lawful cause and not an act of unfair labor
practice, ETPI, however, was remiss in its duty to
observe procedural due process in effecting the
termination of Culili.
We have previously held that there are two
aspects which characterize the concept of due process
under the Labor Code: one is substantive whether the
termination of employment was based on the provision
of the Labor Code or in accordance with the prevailing
jurisprudence; the other is procedural the manner in
which the dismissal was effected.[49]
Section 2(d), Rule I, Book VI of the Rules
Implementing the Labor Code provides:
(d) In all cases of
termination of employment, the
following standards of due process
shall be substantially observed:
xxxx
For termination of
employment as defined in Article
283 of the Labor Code, the
requirement of due process shall be
deemed complied with upon service
of a written notice to the employee
and the appropriate Regional Office
of the Department of Labor and
Employment at least thirty days
before effectivity of the termination,
specifying the ground or grounds for
termination.
In Mayon Hotel & Restaurant v. Adana,[50] we
observed:
The requirement of law
mandating the giving of notices was
intended not only to enable the
employees to look for another
employment and therefore ease the
impact of the loss of their jobs and
the corresponding income, but more
importantly, to give the Department
of Labor and Employment (DOLE)
the opportunity to ascertain the
verity of the alleged authorized
cause of termination.[51]
ETPI does not deny its failure to provide DOLE with
a written notice regarding Culilis termination.It,
however, insists that it has complied with the
requirement to serve a written notice to Culili as
evidenced by his admission of having received it and
forwarding it to his union president.
In Serrano v. National Labor Relations
Commission,[52] we noted that a job is more than the
salary that it carries. There is a psychological effect or
a stigma in immediately finding ones self laid off from
work.[53] This is exactly why our labor laws have
provided for mandating procedural due process
clauses. Our laws, while recognizing the right of
employers to terminate employees it cannot sustain,
also recognize the employees right to be properly
informed of the impending severance of his ties with
the company he is working for. In the case at bar,
ETPI, in effecting Culilis termination, simply asked
one of its guards to serve the required written notice
on Culili.Culili, on one hand, claims in his petition that
this was handed to him by ETPIs vice president, but
previously testified before the Labor Arbiter that this
was left on his table.[54] Regardless of how this notice
was served on Culili, this Court believes that ETPI
failed to properly notify Culili about his
termination. Aside from the manner the written notice
was served, a reading of that notice shows that ETPI
failed to properly inform Culili of the grounds for his
termination.
The Court of Appeals, in finding that Culili was not
afforded procedural due process, held that Culilis
dismissal was ineffectual, and required ETPI to pay
Culili full backwages in accordance with our decision
in Serrano v. National Labor Relations
Commission.[55] Over the years, this Court has had the
opportunity to reexamine the sanctions imposed upon
employers who fail to comply with the procedural due
process requirements in terminating
employees. In Agabon v. National Labor Relations
Commission,[56] this Court reverted back to the
doctrine in Wenphil Corporation v. National Labor
Relations Commission[57] and held that where the
dismissal is due to a just or authorized cause, but
without observance of the due process requirements,
the dismissal may be upheld but the employer must
pay an indemnity to the employee. The sanctions to be
imposed however, must be stiffer than those imposed
in Wenphil to achieve a result fair to both the
employers and the employees.[58]
In Jaka Food Processing Corporation v.
[59]
Pacot, this Court, taking a cue from Agabon, held
that since there is a clear-cut distinction between a
dismissal due to a just cause and a dismissal due to an
authorized cause, the legal implications for employers
who fail to comply with the notice requirements must
also be treated differently:
Accordingly, it is wise to
hold that: (1) if the dismissal is
based on a just cause under Article
282 but the employer failed to
comply with the notice requirement,
the sanction to be imposed upon him
should be tempered because the
dismissal process was, in effect,
initiated by an act imputable to the
employee; and (2) if the dismissal is
based on an authorized cause under
Article 283 but the employer failed
to comply with the notice
requirement, the sanction should be
stiffer because the dismissal process
was initiated by the employer's
exercise of his management
prerogative.[60]
Hence, since it has been established that Culilis
termination was due to an authorized cause and cannot
its
be considered unfair labor practice on the part of ETPI,
his dismissal is valid. However, in view of ETPIs
failure to comply with the notice requirements under
the Labor Code, Culili is entitled to nominal damages
in addition to his separation pay.
Personal Liability of ETPIs Officers
And Award of Damages
Culili asserts that the individual
respondents, Salvador Hizon, Emiliano Jurado,
Virgilio Garcia, and Stella Garcia, as ETPIs officers,
should be held personally liable for the acts of ETPI
which were tainted with bad faith and
arbitrariness. Furthermore, Culili insists that he is
entitled to damages because of the sufferings he had to
endure and the malicious manner he was terminated.
As a general rule, a corporate officer cannot
be held liable for acts done in his official capacity
because a corporation, by legal fiction, has a
personality separate and distinct from its officers,
stockholders, and members. To pierce this fictional
veil, it must be shown that the corporate personality
was used to perpetuate fraud or an illegal act, or to
evade an existing obligation, or to confuse a legitimate
issue. In illegal dismissal cases, corporate officers may
be held solidarily liable with the corporation if the
termination was done with malice or bad faith. [61]
In illegal dismissal cases, moral damages are
awarded only where the dismissal was attended by bad
faith or fraud, or constituted an act oppressive to labor,
or was done in a manner contrary to morals, good
customs or public policy.[62] Exemplary damages may
avail if the dismissal was effected in a wanton,
oppressive or malevolent manner to warrant an award
for exemplary damages.[63]

It is our considered view that Culili has failed

to prove that his dismissal was orchestrated by the
individual respondents herein for the mere purpose of
getting rid of him. In fact, most of them have not even
dealt with Culili personally. Moreover, it has been
established that his termination was for an authorized
cause, and that there was no bad faith on the part of
ETPI in implementing its Right-Sizing Program,
which involved abolishing certain positions and
departments for redundancy.It is not enough that ETPI
failed to comply with the due process requirements to
warrant an award of damages, there being no showing
that the companys and its officers acts were attended
with bad faith or were done oppressively.

WHEREFORE, the instant petition

is DENIED and the assailed February 5, 2004
Decision and September 13, 2004 Resolution of the
Court of Appeals in CA-G.R. SP No.
75001 are AFFIRMED with
the MODIFICATION that petitioner Nelson A.
Culilis dismissal is declared valid but respondent
Eastern Telecommunications Philippines, Inc. is
ordered to pay petitioner Nelson A. Culili the amount
of Fifty Thousand Pesos (P50,000.00) representing
nominal damages for non-compliance with statutory
due process, in addition to the mandatory separation
pay required under Article 283 of the Labor Code.

SO ORDERED.
#99. Associated Labor Unions vs Gomez
G.R. No. L-25999 February 9, 1967
ASSOCIATED LABOR UNION, petitioner,
vs.
JUDGE AMADOR E. GOMEZ, JUDGE JOSE C.
BORROMEO and SUPERIOR GAS AND
EQUIPMENT CO., OF CEBU, INC., respondents.
Sino, Mendoza, Ruiz & Associates for petitioner.
Parades, Poblador, Cruz & Nazareno for
respondents.
SANCHEZ, J.:
Following are the facts that spawned the present
proceedings:
On January 1, 1965, Associated Labor Union1 and
Superior Gas and Equipment Co. of Cebu,
Inc.,2 entered into a collective bargaining contract. It
was to expire on January 1, 1966. Prior to the
contract's expiry, Union and employer started
negotiations for its renewal. Late in February, 1966,
while bargaining was in progress, 12 of Sugeco's
employees resigned from the Union. Negotiations
were broken. On March 1, 1966, the Union wrote
Sugeco. There, request was made that unless the 12
resigned employees3 could produce a clearance from
the Union, they be not allowed in the meantime to
report for work. On the same day, Sugeco's attorney
rejected the request. The reasons given are that
irreparable injury would ensue, that the bargaining
contract had lapsed, and that the Company could no
longer demand from its employees the requested
clearance. Sugeco made it understood that after the
12 men would have returned into the Union fold, said
company would then be "in a position to negotiate
again for the renewal of the collective bargaining
contract." Also on the same day, March 1, the Union
wrote Sugeco, charged the latter with bargaining in
bad faith, and its supervisors with "campaigning for
the resignation of members of this Union". The
Union there served notice "that unless the
aforementioned unfair labor practice acts will
immediately be stopped and a collective bargaining
agreement be signed between your company and this
union immediately after receipt of this letter, this
union will declare a strike against your management
and correspondingly establish picket lines in any
place where your business may be found". On March
3, 1966, counsel for Sugeco wrote the Union stating
that with the resignation of Union members aforesaid,
the Union was no longer the representative of the
majority of the employees "for purposes of
negotiation and recognition".
On March 4, the Union struck, picketed the Basak
(Mandawe) plant of Sugeco.
The next day, March 5, 1966, Sugeco went to the
Court of First Instance of Cebu (Case No. R-9221,
entitled "Superior Gas and Equipment Co. of Cebu,
Inc., petitioner, vs. Associated Labor Union,
respondent"), praying that the Union be restrained
from alleged illegal picketing activities at its Basak
plant, and also from, picketing Sugeco's offices at
Juan Luna street, Cebu City, and its other offices
located elsewhere in the Philippines.
On the same date, March 5, 1966, upon a bond of
P5,000.00, respondent Judge Amador E. Gomez,
purportedly upon the authority of the Rules of
Court,4 issued ex parte the writ of preliminary
injunction prayed for. The Union moved to
reconsider. Ground, inter alia, is that the court of first
instance had no jurisdiction over the subject-matter
— unfair labor practice. It was the turn of the other
respondent, Judge Jose C. Borromeo, to refuse
reconsideration.
Meanwhile, on March 5, 1966 — on the same day the
Court of First Instance complaint was filed by Sugeco
against the Union — the latter lodged with the Court
of Industrial Relations (CIR, for short) a charge for
unfair labor practice against Sugeco, its general
manager, Concepelon Y. Lua, and its two
supervisors, Nestor Yu and Mariano Nulla. The
Union there averred that said respondents coerced
and exerted pressure upon the union members to
resign, as they did resign, from the Union; and that
such resignations were seized upon by Sugeco to
refuse further negotiations with the Union. Offshoot
is the complaint for unfair labor practice registered in
the CIR on April 29, 1966 by its Acting Prosecutor.5
On May 9, 1966, the Union came to this Court
on certiorari and prohibition. The Union here prays
that respondent judges of the Court of First Instance
of Cebu be declared without jurisdiction over the
subject matter of the petition in Civil Case No. R-
9221 aforesaid; that the writ of preliminary injunction
therein issued be annulled; and that said judges be
directed to dismiss said case. The Union also asks
that pendente lite the respondent judges be stopped
from further proceeding with the case just adverted
to.
This Court on May 16, 1966, issued the solicited
cease-and-desist order.1äwphï1.ñët
The quintessence of this case is jurisdiction.
First, we go to the background facts. We take stock of
Sugeco's petition against the Union in the Court of
First Instance of Cebu (Case No. R-9221). Read as it
should be, Sugeco in paragraph 10 thereof charges
the Union with "coercing the resigned employees to
rejoin" the same. And this, obviously to neutralize the
Union claim that Sugeco was coercing and cajoling
its members to separate therefrom.6
This charge and countercharge require us to focus
attention on the Industrial Peace Act.7 Section 4(a)
and (b) thereof recite, as follows:
(a) It shall be unfair labor practice for an
employer:
(1) To interfere with, restrain or coerce
employees in the exercise of their rights
guaranteed in section three;
xxx xxx xxx
(b) It shall be unfair labor practice for a
labor organization or its agents:
(1) To restrain or coerce employees in the
exercise of their rights under section three
....
And Section 3 referred to in Section 4(a) and (b)
provides:
... Employees shall have the right to self-
organization and to form, join or assist labor
organizations of their own choosing for the
purpose of collective bargaining through
representatives of their own choosing and to
engage in concerted activities for the
purpose of collective bargaining and other
mutual aid or protection. ....
The broad sweep of the law suggests that the
coercion or cajolery of employees heretofore
described, by management or union, is unfair labor
practice.8 Therefore, the alleged act of coercing or
instigating union members to resign therefrom is
clearly within the coverage of the prescription. It is
aimed at crippling the Union, throwing it off balance,
destroying its bargaining authority. It is an attack
against the Magna Carta of Labor. By the same
token, the charge levelled by Sugeco against the
Union that the latter "is coercing
the resigned employees to rejoin the Union" is no less
an unfair labor practice.
Jurisdiction then is exclusively vested in the Court of
Industrial Relations. For, explicit in Section 5(a) of
the Industrial Peace Act is the precept that —
The Court shall have jurisdiction over the
prevention of unfair labor practices and is
empowered to prevent any person from
engaging in any unfair labor practice. This
power shall be exclusive and shall not be
affected by any other means of adjustment
or prevention that has been or may be
established by an agreement, code, law or
otherwise. [Emphasis supplied]
Nor will Sugeco's averment below that it suffers
damages, by reason of the strike, work to defeat the
CIR's jurisdiction to hear the unfair labor practice
charge. Reason for this is that the right to damages
"would still have to depend on the evidence in the
unfair labor practice case" — in the CIR.9 To hold
otherwise is to sanction split jurisdiction — which is
obnoxious to the orderly administration of justice. 10
The stance that the ULP case initiated by the Union
in the CIR was an afterthought, will not carry the day
for Sugeco. That case was filed on the very same day
Sugeco went to the Court of First Instance — which,
anyway, is without jurisdiction over the subject-
matter. The Union struck precisely because of the
unfair labor practice allegedly indulged in by Sugeco.
So that, the ULP case was not calculated merely to
divest the Cebu court of first instance of jurisdiction
which it did not possess.11
A rule buttressed upon statute and reason that
frequently reiterated in jurisprudence is that labor
cases involving unfair labor practice are within
the exclusive jurisdiction of the ClR. By now, this
rule has ripened into dogma. It thus commands
adherence not breach.12 This Court once pointedly
remarked that "[t]he policy of social justice
guaranteed by the Constitution demands that when
cases appear to involve labor disputes courts should
take care in the exercise of their prerogatives and
discretion".13
The Court of First Instance of Cebu, we rule, is
without jurisdiction over the subject-matter of Case
No. R-9221. Its judges, therefore, did not have the
authority to provide for an ancillary remedy in that
case. Hence, the injunction below complained of was
issued coram non judice. It is void.

For the reasons given:

(1) the petition herein for a writ of certiorari and

prohibition is hereby granted, and the writ of
preliminary injunction we issued on May 13, 1966 is
declared permanent;

(2) the writ of preliminary injunction issued by the

Court of First Instance of Cebu in Case No. L-9221,
entitled "Superior Gas and Equipment Co. of Cebu,
Inc., petitioner, vs. Associated Labor Union,
respondent" is hereby declared null and void; and

(3) the respondent judges, or whoever shall take their

place, are hereby directed to dismiss the said Case
No. L-9221.

Costs against respondent Superior Gas and

Equipment Co. of Cebu, Inc. So ordered.
#100. Cuadra vs CA
1964, he was administratively charged before the Civil
GERONIMO Q. QUADRA, G.R. No. 147593
Petitioner, Service Commission with violation of Civil Service
Present:
Law and Rules for neglect of duty and misconduct
PUNO, J., Chairperson, and/or conduct prejudicial to the interest of the
- versus - SANDOVAL-GUTIERREZ,
CORONA, service. On July 14, 1965, the Civil Service
AZCUNA, and Commission rendered a decision finding petitioner
GARCIA, JJ.
THE COURT OF APPEALS guilty of the charges and recommending the penalty of
and the PHILIPPINE CHARITY Promulgated:
dismissal. The following day, on July 15, 1965, the
SWEEPSTAKES OFFICE,
Respondents. July 31, 2006 General Manager of PCSO, Ignacio Santos Diaz, sent

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - petitioner a letter of dismissal, in accordance with the

- - - - - - - - - - - - - - -x decision of the Civil Service Commission. Petitioner
filed a motion for reconsideration of the decision of the
DECISION Civil Service Commission on August 10, 1965. At the
same time, petitioner, together with ASSPS
PUNO, J.:
(CUGCO), filed with the Court of Industrial Relations
(CIR) a complaint for unfair labor practice against
respondent PCSO and its officers. The case was
This is a petition for review of the decision of the Court
docketed as Case No. 4312-ULP.
of Appeals in CA-G.R. SP No. 55634 dated December
29, 2000 and its resolution dated March 26, 2001. The
On November 19, 1966, the CIR issued its decision
Court of Appeals reversed and set aside the decision
finding respondent PCSO guilty of unfair labor
of the National Labor Relations Commission (NLRC)
practice for having committed discrimination against
in NLRC NCR Case No. 4312-ULP which affirmed
the union and for having dismissed petitioner due to
the decision of the Labor Arbiter granting moral and
his union activities. It ordered the reinstatement of
exemplary damages to petitioner Geronimo Q. Quadra
petitioner to his former position with
in connection with his dismissal from the service.
full backwages and with all the rights and privileges
pertaining to said position.[1]
Petitioner Geronimo Q. Quadra was the Chief
Legal Officer of respondent Philippine Charity
Respondent PCSO complied with the decision of the
Sweepstakes Office (PCSO) when he organized and
CIR. But while it reinstated petitioner to his former
actively participated in the activities of Philippine
position and paid his backwages, it also filed with the
Charity Sweepstakes Employees Association
Supreme Court a petition for review on certiorari
(CUGCO), an organization composed of the rank and
entitled Philippine Charity Sweepstakes Office, et al.
file employees of PCSO, and then later, the
v. The Association of Sweepstakes Staff Personnel, et
Association of Sweepstakes Staff Personnel and
al. assailing the decision of the CIR in Case No. 4312-
Supervisors (CUGCO) (ASSPS [CUGCO]). In April
 besmirched reputation; Three
ULP. The petition was docketed as G.R. No. L- Hundred Fifty Thousand Pesos
27546.[2] (P350,000.00) for social
humiliation; One Hundred
Thousand Pesos (P100,000.00) for
On March 16, 1967, during the pendency of the case mental anguish;One Hundred
Thousand Pesos (P100,000.00) for
in the Supreme Court, petitioner filed with the CIR a serious anxiety; One Hundred
Petition for Damages. He prayed for moral and Thousand Pesos (P100,000.00) for
wounded feelings; One Hundred
exemplary damages in connection with Case No. Thousand Pesos (P100,000.00) for
moral shock; and the further sum
4312-ULP. He cited the decision of the Supreme Court
of P500,000.00 as exemplary
in Rheem of the Philippines, Inc., et al. v. Ferrer, et damages, on account of the arbitrary
and unlawful dismissal effected by
al.[3] where it upheld the jurisdiction of the CIR over respondents. Consequently,
claims for damages incidental to an employees respondents are therefore ordered to
pay complainant Quadra the total
dismissal. sum of One Million Six Hundred
Thousand Pesos (P1,600,000.00)
within ten (10) days after this
Respondent PCSO moved to dismiss the petition for Decision becomes final.
damages on the following grounds: (1) the CIR has no
SO ORDERED.[4]
jurisdiction to award moral and exemplary damages;
(2) the cause of action is barred by prior judgment, it
appearing that two complaints are brought for different The NLRC affirmed the decision of the Labor
parts of a single cause of action;and (3) the petition Arbiter,[5] prompting respondent PCSO to file a
states no valid cause of action. petition for certiorari with the Court of Appeals.

Petitioner resigned from PCSO on August 18, 1967. The Court of Appeals reversed the decision of the
NLRC. It held that there was no basis for the grant of
The petition for damages and the motion to dismiss, moral and exemplary damages to petitioner as his
however, remained pending with the CIR until it was dismissal was not tainted with bad faith.It was the
abolished and the NLRC was created. On April 25, Civil Service Commission that recommended
1980, the Labor Arbiter rendered a decision awarding petitioners dismissal after conducting an
moral and exemplary damages to petitioner in the investigation. It also held that the petition claiming
amount of P1.6 million. The dispositive portion of the moral and exemplary damages filed by petitioner after
decision stated: respondent PCSO had complied with the CIR decision
of reinstatement and backwagesamounted to splitting
WHEREFORE, in view of all the
foregoing considerations, judgment of cause of action.[6]
is hereby rendered awarding to
complainant Geronimo Q. Quadra
moral damages consisting of the Petitioner filed a motion for reconsideration of the
following sum: Three Hundred Fifty decision of the Court of Appeals, but the same was
Thousand Pesos (P350,000.00) for
denied for lack for merit.[7]
 Petitioner now seeks the Court to review the
ruling of the Court of Appeals. He basically argues:
First: The ruling of the
Court of Appeals that the PCSO did
not act in bad faith when it
dismissed the petitioner is contrary
to the already final
and executory decision of the CIR
dated November 1[9], 1966 finding
the PCSO guilty of bad faith and
unfair labor practice in dismissing
the petitioner. The decision of the
CIR was affirmed by the High Court
in the case of PCSO, et al. v.
Geronimo Q. Quadra, et al., 115
SCRA 34. The Court of Appeals has
no jurisdiction to amend the final
and executory decision of
November 1[9], 1966 of the CIR
which was affirmed by the High
Court. Once a decision has become
final [and] executory, it could no
longer be amended or altered.
Second: The ruling of the
Court of Appeals that the claims for
moral and exemplary damages of
the petitioner is allegedly
tantamount to splitting of cause of
action under Sec. 4, Rule 2 of the
1997 Rules of Civil Procedure is
contrary to law. When petitioner
filed with the CIR his complaint for
illegal dismissal and unfair labor
practice, the prevailing law and
jurisprudence was that the CIR did
not have jurisdiction to grant moral
and exemplary damages. Petitioners
claim for moral damages was filed
with the CIR in the same case by
virtue of the ruling of the High Court
in Rheem v. Ferrer, 19 SCRA 130
holding that the CIR has jurisdiction
to award moral and exemplary
damages arising out of illegal
dismissal and unfair labor
practice.[8]
The petition is impressed with merit.
A dismissed employee is entitled to moral
damages when the dismissal is attended by bad faith
or fraud or constitutes an act oppressive to labor, or is
done in a manner contrary to good morals, good
customs or public policy. Exemplary damages may be
awarded if the dismissal is effected in a wanton,
oppressive or malevolent manner.[9] It appears from
the facts that petitioner was deliberately dismissed
from the service by reason of his active involvement
in the activities of the union groups of both the rank
and file and the supervisory employees of PCSO,
which unions he himself organized and
headed. Respondent PCSO first charged petitioner
before the Civil Service Commission for alleged
neglect of duty and conduct prejudicial to the service
because of his union activities. The Civil Service
Commission recommended the dismissal of
petitioner. Respondent PCSO immediately served on
petitioner a letter of dismissal even before the latter
could move for a reconsideration of the decision of the
Civil Service Commission. Respondent PCSO may
not impute to the Civil Service Commission the
responsibility for petitioners illegal dismissal as it was
respondent PCSO that first filed the administrative
charge against him. As found by the CIR, petitioners
dismissal constituted unfair labor practice. It was done
to interfere with, restrain or coerce employees in the
exercise of their right to self-organization. It stated:
Upon the entire evidence
as a whole (sic), the [c]ourt feels and
believes that complainant Quadra
was discriminatorily dismissed by
reason of his militant union
activities, not only as President of
PCSEA, but also as President of the
ASSPS.[10]
 In Nueva Ecija I Electric Cooperative, Inc.
(NEECO I) Employees Association, et al. v.
NLRC, et al.,[11] we found it proper to award moral
and exemplary damages to illegally dismissed
employees as their dismissal was tainted with unfair
labor practice. The Court said:
Unfair labor practices
violate the constitutional rights of
workers and employees to self-
organization, are inimical to the
legitimate interests of both labor and
management, including their right to
bargain collectively and otherwise
deal with each other in an
atmosphere of freedom and mutual
respect; and disrupt industrial peace
and hinder the promotion of healthy
and stable labor-management
relations. As the conscience of the
government, it is the Courts sworn
duty to ensure that none trifles with
labor rights.
and tried before the CIR was that said court had no
jurisdiction over claims for damages.Hence,
petitioner, at that time, could not raise the issue of
damages in the proceedings. However, on January 27,
1967, the Supreme Court rendered its ruling
in Rheem of the Philippines, Inc., et al. v. Ferrer, et
al.[13] upholding the jurisdiction of the CIR over claims
for damages incidental to an employees illegal
dismissal. Petitioner properly filed his claim for
damages after the declaration by the Court and before
the ruling on their case became final. Such filing could
not be considered as splitting of cause of action.
IN VIEW WHEREOF, the assailed decision
and resolution of the Court of Appeals
are REVERSED and SET ASIDE. The decision of
the NLRC in NLRC NCR Case No. 4312-ULP

For this reason, we find it is REINSTATED.

proper in this case to impose moral
and exemplary damages on private
respondent. x x x SO ORDERED.

On the second issue, we agree with petitioner

that the filing of a petition for damages before the CIR
did not constitute splitting of cause of action under the
Revised Rules of Court. The Revised Rules of Court
prohibits parties from instituting more than one suit for
a single cause of action.Splitting a cause of action is
the act of dividing a single cause of action, claim or
demand into two or more parts, and bringing suit for
one of such parts only, intending to reserve the rest for
another separate action. The purpose of the rule is to
avoid harassment and vexation to the defendant and
avoid multiplicity of suits.[12]
The prevailing rule at the time that the action
for unfair labor practice and illegal dismissal was filed