Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No.

171023 December 18, 2009

matters 5. Excessive tardiness 6. Excessive tardiness 7. Simple Absence 8. Excessive tardiness 02/08/99 10/06/97 03/11/97 06/14/96 09/03/92 02/08/99 10/06/97 03/11/97 06/14/96 09/03/92 Reprimand Reprimand Reprimand Reprimand Reprimand

ARSENIO S. QUIAMBAO, Petitioner, vs. MANILA ELECTRIC COMPANY, Respondent. DECISION DEL CASTILLO, J.: The liberality of the law can never be extended to the unworthy and undeserving. In several instances, the policy of social justice has compelled this Court to accord financial assistance in the form of separation pay to a legally terminated employee. This liberality, however, is not without limitations. Thus, when the manner and circumstances by which the employee committed the act constituting the ground for his dismissal show his perversity or depravity, no sympathy or mercy of the law can be invoked. This petition for review on certiorari assails the Decision dated October 28, 2005 and Resolution dated January 12, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 85332, which reversed the February 4, 2004 Decision4of the National Labor Relations Commission (NLRC) awarding petitioner Arsenio S. Quiambao separation pay in the amount of P126,875.00. Factual Antecedents On July 16, 1986, petitioner was employed as branch teller by respondent Manila Electric Company. He was assigned at respondents Mandaluyong office and was responsible for the handling and processing of payments made by respondents customers. It appears from his employment records, however, that petitioner has repeatedly violated the Company Code of Employee Discipline and has exhibited poor performance in the latter part of his employment. Thus: EMPLOYEES PROFILE
1 2 3

9. Excessive tardiness

B. PERFORMANCE RATING His merit ratings from 1995 to 1999 are as follows:

YEAR 1999 1998 1997 1996 1995 Poor

RATING

Needs Improvement Needs Improvement Satisfactory Satisfactory5

On March 10, 2000, a Notice of Investigation6 was served upon petitioner for his unauthorized and unexcused absences on November 10, 25, 26, 29, 1999; December 1, 2, 14, 15, 16, 17, 20, 21, 22, 2000; and from February 17, 2000 up to the date of such notification letter. Petitioner was likewise required to appear at the investigation and to present his evidence in support of his defense. However, despite receipt of such notice, petitioner did not participate in the investigation. Consequently, in a Memorandum7 dated March 21, 2000, the legal department recommended petitioners dismissal from employment due to excessive, unauthorized, and unexcused absences, which constitute (i) abandonment of work under the provisions of the Company Code of Employee Discipline (ii) and gross and habitual neglect of duty under Article 282 of the Labor Code of the Philippines. Through a Notice of Dismissal8 dated March 28, 2000, petitioners employment was terminated effective March 29, 2000. Proceedings before the Labor Arbiter

A. INFRACTIONS On July 3, 2001, petitioner filed a complaint before the Arbitration Branch of the NLRC against respondent assailing the legality of his dismissal. While petitioner did not dispute his absences, he nonetheless averred that the same were incurred with the corresponding approved application for leave of absence. He also claimed that he was denied due process. On November 29, 2002, the Labor Arbiter rendered a Decision9 dismissing petitioners complaint for lack of merit. The Labor Arbiter ruled that no evidence was presented to prove that the absences of petitioner were authorized; that petitioner was deprived of due process; and that petitioners habitual absenteeism without leave did not violate the companys rules and regulations which justified his termination on the ground of gross and habitual neglect of duties under Article 282(b) of the Labor Code. Proceedings before the NLRC Petitioner appealed to the NLRC which affirmed the legality of his dismissal due to habitual absenteeism. Nonetheless, the NLRC awarded separation pay in favor of petitioner citing the case of Philippine Geothermal, Inc. v. National Labor Relations Commission.10 The dispositive portion of the NLRC Decision reads:

Nature FROM 1. Excessive absences 2. Excessive absences 3. Excessive absences 4. Assaulting others with bodily harm over work 11/11/99 10/19/99 07/27/99 02/17/99

DATE TO 11/24/99 10/25/99 07/29/99 02/17/99

ACTION TAKEN

10-day suspension 5-day suspension 3-day suspension Reprimand

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WHEREFORE, the decision appealed from is hereby MODIFIED to the extent that the respondent is hereby ordered to pay the complainant separation pay amounting to P126,875.00 (P18,125.00 x 14 yrs./2 =P126,875.00).
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The Labor Arbiter, the NLRC and the Court of Appeals found petitioner guilty of gross and habitual neglect of duty. The Labor Arbiter and the NLRC are one in holding that petitioners unauthorized absences and repeated infractions of company rules on employee discipline manifest gross and habitual neglect of duty that merited the imposition of the supreme penalty of dismissal from work. The only difference in their ruling is that the NLRC awarded separation pay. The CA, after reviewing the records of the case, affirmed the findings of the labor tribunals. And, on the basis of these findings, further concluded that petitioners infractions are worse than inefficiency; they border on dishonesty constituting serious misconduct. We have examined the records which indeed show that petitioners unauthorized absences as well as tardiness are habitual despite having been penalized for past infractions. In Gustilo v. Wyeth Philippines, Inc.,16 we held that a series of irregularities when put together may constitute serious misconduct. We also held that gross neglect of duty becomes serious in character due to frequency of instances.17 Serious misconduct is said to be a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and indicative of wrongful intent and not mere error of judgment.18 Oddly, petitioner never advanced any valid reason to justify his absences. Petitioners intentional and willful violation of company rules shows his utter disregard of his work and his employers interest. Indeed, there can be no good faith in intentionally and habitually incurring unexcusable absences. Thus, the CA did not commit grave abuse of discretion amounting to lack or excess of jurisdiction in equating petitioners gross neglect of duty to serious misconduct. Petitioner is not entitled to separation pay. Besides, even assuming that the ground for petitioners dismissal is gross and habitual neglect of duty, still, he is not entitled to severance pay. In Central Philippines Bandag Retreaders, Inc. v. Diasnes,19 we discussed the parameters of awarding separation pay to dismissed employees as a measure of financial assistance, viz: To reiterate our ruling in Toyota, labor adjudicatory officials and the CA must demur the award of separation pay based on social justice when an employees dismissal is based on serious misconduct or willful disobedience;gross and habitual neglect of duty; fraud or willful breach of trust; or commission of a crime against the person of the employer or his immediate family - grounds under Art. 282 of the Labor Code that sanction dismissals of employees. They must be most judicious and circumspect in awarding separation pay or financial assistance as the constitutional policy to provide full protection to labor is not meant to be an instrument to oppress the employers. The commitment of the Court to the cause of labor should not embarrass us from sustaining the employers when they are right, as here. In fine, we should be more cautious in awarding financial assistance to the undeserving and those who are unworthy of the liberality of the law.20 (Emphasis supplied.) WHEREFORE, the petition is DENIED for lack of merit. The assailed October 28, 2005 Decision and January 12, 2006 Resolution of the Court of Appeals in CA-G.R. SP No. 85332 are AFFIRMED. SO ORDERED.

SO ORDERED.11 Respondent filed a Motion for Reconsideration12 impugning the grant of separation pay, which motion was denied by the NLRC in a Resolution13 dated May 20, 2004. Proceedings before the Court of Appeals Aggrieved, respondent filed with the CA a petition for certiorari. On October 28, 2005, the CA nullified the NLRCs Decision and reinstated the Labor Arbiters Decision dismissing the complaint. It ruled that the award of separation pay is neither justified nor warranted under the circumstances. Thus: We find, then, that the award of separation pay was capricious, whimsical, and unwarranted, both for the award being without factual and legal basis and for ignoring that the valid cause of dismissal was serious misconduct on the part of the employee. Respondent Quiambao was dismissed for excessive unauthorized absences. His dismissal was, in fact, upheld by both the Labor Arbiter and the NLRC. We should agree with their determination. But we should hold here further that Quiambao committed a serious misconduct that merited no consideration or compassion. He was guilty not of mere absenteeism only, for such absences, unexcused and habitual, reflected worse than inefficiency, but a gross and habitual neglect of duty bordering on dishonesty. He had no compelling reason to be absent from work, substantially prejudicing his employer, which was a public utility whose distribution of electricity to its customers within its franchise area was a service that was very vital and of utmost necessity to the lives of all its customers. The responsibility required of the petitioners employees was, in fact, publicly imposed by the petitioner in its Company Code On Employee Discipline, aforequoted, whereby it gave primacy to the maintenance of discipline as a matter of fundamental importance.14 Petitioner moved for a reconsideration, but to no avail. Issue Hence, this petition for review on certiorari raising the sole issue of whether or not a validly dismissed employee may be entitled to separation pay. Petitioners Arguments Petitioner contends that the CA grievously erred in concluding that he is guilty of serious misconduct and in deleting the award of separation pay. He argues that the NLRC, whose findings are entitled to great respect and finality, regarded his unauthorized absences as gross and habitual neglect of duty only. Citing Philippine Geothermal, Inc. v. National Labor Relations Commission,15 where an employee who was terminated on similar ground of gross and habitual neglect of duties because of continued and unexplained absences, and who was nonetheless granted separation pay, petitioner claims that the same accommodation should likewise be extended to him. He insists that his absences do not amount to serious misconduct considering that his infractions did not reflect on his moral character. It did not create imminent or substantial injury to the companys operation and the consuming public, and were not committed for self-interest or unlawful purpose but on account of domestic and marital problems. Taking into account all these and his 14 years of service in the company, petitioner invokes the principles of social justice and equity in justifying his entitlement to separation pay. Our Ruling The petition lacks merit.

MARIANO C. DEL CASTILLO Associate Justice

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. 128845 June 1, 2000

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INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), petitioner, vs. HON. LEONARDO A. QUISUMBING in his capacity as the Secretary of Labor and Employment; HON. CRESENCIANO B. TRAJANO in his capacity as the Acting Secretary of Labor and Employment; DR. BRIAN MACCAULEY in his capacity as the Superintendent of International School-Manila; and INTERNATIONAL SCHOOL, INC., respondents.

have to confront the uncertainty of obtaining suitable employment after along period in a foreign land. The compensation scheme is simply the School's adaptive measure to remain competitive on an international level in terms of attracting competent professionals in the field of international education.3 When negotiations for a new collective bargaining agreement were held on June 1995, petitioner International School Alliance of Educators, "a legitimate labor union and the collective bargaining representative of all faculty members"4 of the School, contested the difference in salary rates between foreign and local-hires. This issue, as well as the question of whether foreign-hires should be included in the appropriate bargaining unit, eventually caused a deadlock between the parties. On September 7, 1995, petitioner filed a notice of strike. The failure of the National Conciliation and Mediation Board to bring the parties to a compromise prompted the Department of Labor and Employment (DOLE) to assume jurisdiction over the dispute. On June 10, 1996, the DOLE Acting Secretary, Crescenciano B. Trajano, issued an Order resolving the parity and representation issues in favor of the School. Then DOLE Secretary Leonardo A. Quisumbing subsequently denied petitioner's motion for reconsideration in an Order dated March 19, 1997. Petitioner now seeks relief in this Court. Petitioner claims that the point-of-hire classification employed by the School is discriminatory to Filipinos and that the grant of higher salaries to foreign-hires constitutes racial discrimination. The School disputes these claims and gives a breakdown of its faculty members, numbering 38 in all, with nationalities other than Filipino, who have been hired locally and classified as local hires.5 The Acting Secretary of Labor found that these non-Filipino local-hires received the same benefits as the Filipino local-hires. The compensation package given to local-hires has been shown to apply to all, regardless of race. Truth to tell, there are foreigners who have been hired locally and who are paid equally as Filipino local hires.6 The Acting secretary upheld the point-of-hire classification for the distinction in salary rates:

KAPUNAN, J.: Receiving salaries less than their counterparts hired abroad, the local-hires of private respondent School, mostly Filipinos, cry discrimination. We agree. That the local-hires are paid more than their colleagues in other schools is, of course, beside the point. The point is that employees should be given equal pay for work of equal value. That is a principle long honored in this jurisdiction. That is a principle that rests on fundamental notions of justice. That is the principle we uphold today.
1wphi1.nt

Private respondent International School, Inc. (the School, for short), pursuant to Presidential Decree 732, is a domestic educational institution established primarily for dependents of foreign diplomatic personnel and other temporary residents.1 To enable the School to continue carrying out its educational program and improve its standard of instruction, Section 2(c) of the same decree authorizes the School to employ its own teaching and management personnel selected by it either locally or abroad, from Philippine or other nationalities, such personnel being exempt from otherwise applicable laws and regulations attending their employment, except laws that have been or will be enacted for the protection of employees. Accordingly, the School hires both foreign and local teachers as members of its faculty, classifying the same into two: (1) foreign-hires and (2) local-hires. The School employs four tests to determine whether a faculty member should be classified as a foreign-hire or a local hire: a. What is one's domicile? b. Where is one's home economy? c. To which country does one owe economic allegiance? d. Was the individual hired abroad specifically to work in the School and was the School responsible for bringing that individual to the Philippines?2 Should the answer to any of these queries point to the Philippines, the faculty member is classified as a local hire; otherwise, he or she is deemed a foreign-hire. The School grants foreign-hires certain benefits not accorded local-hires. These include housing, transportation, shipping costs, taxes, and home leave travel allowance. Foreign-hires are also paid a salary rate twenty-five percent (25%) more than local-hires. The School justifies the difference on two "significant economic disadvantages" foreign-hires have to endure, namely: (a) the "dislocation factor" and (b) limited tenure. The School explains: A foreign-hire would necessarily have to uproot himself from his home country, leave his family and friends, and take the risk of deviating from a promising career path all for the purpose of pursuing his profession as an educator, but this time in a foreign land. The new foreign hire is faced with economic realities: decent abode for oneself and/or for one's family, effective means of transportation, allowance for the education of one's children, adequate insurance against illness and death, and of course the primary benefit of a basic salary/retirement compensation.

The Principle "equal pay for equal work" does not find applications in the present case. The international character of the School requires the hiring of foreign personnel to deal with different nationalities and different cultures, among the student population. We also take cognizance of the existence of a system of salaries and benefits accorded to foreign hired personnel which system is universally recognized. We agree that certain amenities have to be provided to these people in order to entice them to render their services in the Philippines and in the process remain competitive in the international market. Furthermore, we took note of the fact that foreign hires have limited contract of employment unlike the local hires who enjoy security of tenure. To apply parity therefore, in wages and other benefits would also require parity in other terms and conditions of employment which include the employment which include the employment contract. A perusal of the parties' 1992-1995 CBA points us to the conditions and provisions for salary and professional compensation wherein the parties agree as follows: All members of the bargaining unit shall be compensated only in accordance with Appendix C hereof provided that the Superintendent of the School has the discretion to recruit and hire expatriate teachers from abroad, under terms and conditions that are consistent with accepted international practice. Appendix C of said CBA further provides:

Because of a limited tenure, the foreign hire is confronted again with the same economic reality after his term: that he will eventually and inevitably return to his home country where he will

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The new salary schedule is deemed at equity with the Overseas Recruited Staff (OSRS) salary schedule. The 25% differential is reflective of the agreed value of system displacement and contracted status of the OSRS as differentiated from the tenured status of Locally Recruited Staff (LRS). To our mind, these provisions demonstrate the parties' recognition of the difference in the status of two types of employees, hence, the difference in their salaries. The Union cannot also invoke the equal protection clause to justify its claim of parity. It is an established principle of constitutional law that the guarantee of equal protection of the laws is not violated by legislation or private covenants based on reasonable classification. A classification is reasonable if it is based on substantial distinctions and apply to all members of the same class. Verily, there is a substantial distinction between foreign hires and local hires, the former enjoying only a limited tenure, having no amenities of their own in the Philippines and have to be given a good compensation package in order to attract them to join the teaching faculty of the School.7 We cannot agree. That public policy abhors inequality and discrimination is beyond contention. Our Constitution and laws reflect the policy against these evils. The Constitution8 in the Article on Social Justice and Human Rights exhorts Congress to "give highest priority to the enactment of measures that protect and enhance the right of all people to human dignity, reduce social, economic, and political inequalities." The very broad Article 19 of the Civil Code requires every person, "in the exercise of his rights and in the performance of his duties, [to] act with justice, give everyone his due, and observe honesty and good faith. International law, which springs from general principles of law,9 likewise proscribes discrimination. General principles of law include principles of equity, 10 i.e., the general principles of fairness and justice, based on the test of what is reasonable. 11 The Universal Declaration of Human Rights, 12 the International Covenant on Economic, Social, and Cultural Rights, 13the International Convention on the Elimination of All Forms of Racial Discrimination, 14 the Convention against Discrimination in Education, 15 the Convention (No. 111) Concerning Discrimination in Respect of Employment and Occupation 16 all embody the general principle against discrimination, the very antithesis of fairness and justice. The Philippines, through its Constitution, has incorporated this principle as part of its national laws. In the workplace, where the relations between capital and labor are often skewed in favor of capital, inequality and discrimination by the employer are all the more reprehensible. The Constitution 17 specifically provides that labor is entitled to "humane conditions of work." These conditions are not restricted to the physical workplace the factory, the office or the field but include as well the manner by which employers treat their employees. The Constitution 18 also directs the State to promote "equality of employment opportunities for all." Similarly, the Labor Code 19 provides that the State shall "ensure equal work opportunities regardless of sex, race or creed." It would be an affront to both the spirit and letter of these provisions if the State, in spite of its primordial obligation to promote and ensure equal employment opportunities, closes its eyes to unequal and discriminatory terms and conditions of employment. 20 Discrimination, particularly in terms of wages, is frowned upon by the Labor Code. Article 135, for example, prohibits and penalizes 21 the payment of lesser compensation to a female employee as against a male employee for work of equal value. Article 248 declares it an unfair labor practice for an employer to discriminate in regard to wages in order to encourage or discourage membership in any labor organization. Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article 7 thereof, provides: The States Parties to the present Covenant recognize the right of everyone to the enjoyment of just and favourable conditions of work, which ensure, in particular:

a. Remuneration which provides all workers, as a minimum, with: (i) Fair wages and equal remuneration for work of equal value without distinction of any kind, in particular women being guaranteed conditions of work not inferior to those enjoyed by men, with equal pay for equal work; xxx xxx xxx The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal truism of "equal pay for equal work." Persons who work with substantially equal qualifications, skill, effort and responsibility, under similar conditions, should be paid similar salaries. 22 This rule applies to the School, its "international character" notwithstanding. The School contends that petitioner has not adduced evidence that local-hires perform work equal to that of foreignhires. 23 The Court finds this argument a little cavalier. If an employer accords employees the same position and rank, the presumption is that these employees perform equal work. This presumption is borne by logic and human experience. If the employer pays one employee less than the rest, it is not for that employee to explain why he receives less or why the others receive more. That would be adding insult to injury. The employer has discriminated against that employee; it is for the employer to explain why the employee is treated unfairly. The employer in this case has failed to discharge this burden. There is no evidence here that foreign-hires perform 25% more efficiently or effectively than the local-hires. Both groups have similar functions and responsibilities, which they perform under similar working conditions. The School cannot invoke the need to entice foreign-hires to leave their domicile to rationalize the distinction in salary rates without violating the principle of equal work for equal pay. "Salary" is defined in Black's Law Dictionary (5th ed.) as "a reward or recompense for services performed." Similarly, the Philippine Legal Encyclopedia states that "salary" is the "[c]onsideration paid at regular intervals for the rendering of services." In Songco v. National Labor Relations Commission, 24 we said that: "salary" means a recompense or consideration made to a person for his pains or industry in another man's business. Whether it be derived from "salarium," or more fancifully from "sal," the pay of the Roman soldier, it carries with it the fundamental idea of compensation for services rendered. (Emphasis supplied.) While we recognize the need of the School to attract foreign-hires, salaries should not be used as an enticement to the prejudice of local-hires. The local-hires perform the same services as foreign-hires and they ought to be paid the same salaries as the latter. For the same reason, the "dislocation factor" and the foreign-hires' limited tenure also cannot serve as valid bases for the distinction in salary rates. The dislocation factor and limited tenure affecting foreign-hires are adequately compensated by certain benefits accorded them which are not enjoyed by local-hires, such as housing, transportation, shipping costs, taxes and home leave travel allowances. The Constitution enjoins the State to "protect the rights of workers and promote their welfare," 25 "to afford labor full protection." 26 The State, therefore, has the right and duty to regulate the relations between labor and capital.27 These relations are not merely contractual but are so impressed with public interest that labor contracts, collective bargaining agreements included, must yield to the common good. 28 Should such contracts contain stipulations that are contrary to public policy, courts will not hesitate to strike down these stipulations. In this case, we find the point-of-hire classification employed by respondent School to justify the distinction in the salary rates of foreign-hires and local hires to be an invalid classification. There is no reasonable distinction between the services rendered by foreign-hires and local-hires. The practice of the School of according higher salaries to foreign-hires contravenes public policy and, certainly, does not deserve the sympathy of this Court. We agree, however, that foreign-hires do not belong to the same bargaining unit as the local-hires.

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A bargaining unit is "a group of employees of a given employer, comprised of all or less than all of the entire body of employees, consistent with equity to the employer, indicate to be the best suited to serve the reciprocal rights and duties of the parties under the collective bargaining provisions of the law." 29 The factors in determining the appropriate collective bargaining unit are (1) the will of the employees (Globe Doctrine); (2) affinity and unity of the employees' interest, such as substantial similarity of work and duties, or similarity of compensation and working conditions (Substantial Mutual Interests Rule); (3) prior collective bargaining history; and (4) similarity of employment status. 30 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. 31 It does not appear that foreign-hires have indicated their intention to be grouped together with local-hires for purposes of collective bargaining. The collective bargaining history in the School also shows that these groups were always treated separately. Foreign-hires have limited tenure; local-hires enjoy security of tenure. Although foreign-hires perform similar functions under the same working conditions as the local-hires, foreign-hires are accorded certain benefits not granted to local-hires. These benefits, such as housing, transportation, shipping costs, taxes, and home leave travel allowance, are reasonably related to their status as foreign-hires, and justify the exclusion of the former from the latter. To include foreign-hires in a bargaining unit with local-hires would not assure either group the exercise of their respective collective bargaining rights. WHEREFORE, the petition is GIVEN DUE COURSE. The petition is hereby GRANTED IN PART. The Orders of the Secretary of Labor and Employment dated June 10, 1996 and March 19, 1997, are hereby REVERSED and SET ASIDE insofar as they uphold the practice of respondent School of according foreign-hires higher salaries than local-hires. SO ORDERED. Puno and Pardo, JJ., concur. Davide, Jr., C.J., on official leave. Ynares-Santiago, J., is on leave.

There is a right way to do the right thing at the right time for the right reasons, 1 and in the present case, in the right forum by the right parties. While grievances against union leaders constitute legitimate complaints deserving appropriate redress, action thereon should be made in the proper forum at the proper time and after observance of proper procedures. Similarly, the election of union officers should be conducted in accordance with the provisions of the union's constitution and bylaws, as well as the Philippine Constitution and the Labor Code. Specifically, while all legitimate faculty members of the University of Santo Tomas (UST) belonging to a collective bargaining unit may take part in a duly convened certification election, only bona fide members of the UST Faculty Union (USTFU) may participate and vote in a legally called election for union officers. Mob hysteria, however well-intentioned, is not a substitute for the rule of law. The Case The Petition for Certiorari before us assails the August 15, 1997 Resolution 2 of Director Benedicto Ernesto R. Bitonio Jr. of the Bureau of Labor Relations (BLR) in BLR Case No. A-8-49-97, which affirmed the February 11, 1997 Decision of Med-Arbiter Tomas F. Falconitin. The med-arbiters Decision disposed as follows: WHEREFORE, premises considered, judgment is hereby rendered declaring the election of USTFU officers conducted on October 4, 1996 and its election results as null and void ab initio. Accordingly, respondents Gil Gamilla, et al are hereby ordered to cease and desist from acting and performing the duties and functions of the legitimate officers of [the] University of Santo Tomas Faculty Union (USTFU) pursuant to [the] union's constitution and by-laws (CBL).

The Temporary Restraining Order (TRO) issued by this Office on December 11, 1996 in connection with the instant petition, is hereby made and declared permanent.
3

Likewise challenged is the October 30, 1997 Resolution 4 of Director Bitonio, which denied petitioners' Motion for Reconsideration. Republic of the Philippines SUPREME COURT Manila THIRD DIVISION The Facts The factual antecedents of the case are summarized in the assailed Resolution as follows: Petitioners-appellees [herein Private Respondents] Marino, et. al. (appellees) are duly elected officers of the UST Faculty Union (USTFU). The union has a subsisting five-year Collective Bargaining Agreement with its employer, the University of Santo Tomas (UST). The CBA was registered with the Industrial Relations Division, DOLE-NCR, on 20 February 1995. It is set to expire on 31 May 1998. On 21 September 1996, appellee Collantes, in her capacity as Secretary General of USTFU, posted a notice addressed to all USTFU members announcing a general assembly to be held on 05 October 1996. Among others, the general assembly was called to elect USTFU's next set of officers. Through the notice, the members were also informed of the constitution of a Committee on Elections (COMELEC) to oversee the elections. (Annex "B", petition) On 01 October 1996, some of herein appellants filed a separate petition with the Med-Arbiter, DOLE-NCR, directed against herein appellees and the members of the COMELEC. Docketed as Case No. NCR-OD-M-9610-001, the petition alleged that the COMELEC was not constituted in accordance with USTFU's constitution and by-laws (CBL) and that no rules had been issued to govern the conduct of the 05 October 1996 election. On 02 October 1996, the secretary general of UST, upon the request of the various UST faculty club presidents (See paragraph VI, Respondents' Comment and Motion to Dismiss), issued notices allowing all faculty members to hold a convocation on 04 October 1996 (See Annex "C" Petition; Annexes "4" to "10", Appeal). Denominated as [a] general faculty assembly, the convocation was supposed to discuss the "state of the unratified UST-USTFU CBA" and "status and election of USTFU officers" (Annex "11", Appeal)

G.R. No. 131235 November 16, 1999 UST FACULTY UNION (USTFU), GIL Y. GAMILLA, CORAZON QUI, NORMA CALAGUAS, IRMA POTENCIANO, LUZ DE GUZMAN, REMEDIOS GARCIA, RENE ARNEJO, EDITHA OCAMPO, CESAR REYES, CELSO NIERRA, GLICERIA BALDRES, MA. LOURDES MEDINA, HIDELITA GABO, MAFEL YSRAEL, LAURA ABARA, NATIVIDAD SANTOS, FERDINAND LIMOS, CARMELITA ESPINA, ZENAIDA FAMORCA, PHILIP AGUINALDO, BENEDICTA ALAVA and LEONCIO CASAL, petitioners, vs. Dir. BENEDICTO ERNESTO R. BITONIO JR. of the Bureau of Labor Relations, Med-Arbiter TOMAS F. FALCONITIN of The National Capital Region, Department of Labor and Employment (DOLE), EDUARDO J. MARIO JR., MA. MELVYN ALAMIS, NORMA COLLANTES, URBANO ALABAGIA, RONALDO ASUNCION, ZENAIDA BURGOS, ANTHONY CURA, FULVIO M. GUERRERO, MYRNA HILARIO, TERESITA MEER, FERNANDO PEDROSA, NILDA REDOBLADO, RENE SISON, EVELYN TIROL and ROSIE ALCANTARA,respondents.

PANGANIBAN, J.:

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On 04 October 1996, the med-arbiter in Case No. NCR-OD-M-9610-001 issued a temporary restraining order against herein appellees enjoining them from conducting the election scheduled on 05 October 1996. Also on 04 October 1996, and as earlier announced by the UST secretary general, the general faculty assembly was held as scheduled. The general assembly was attended by members of the USTFU and, as admitted by the appellants, also by "non-USTFU members [who] are members in good standing of the UST Academic Community Collective Bargaining Unit" (See paragraph XI, Respondents' Comment and Motion to Dismiss). On this occasion, appellants were elected as USTFU's new set of officers by acclamation and clapping of hands (See paragraphs 40 to 50, Annex "12", Appeal). The election of the appellants came about upon a motion of one Atty. Lopez, admittedly not a member of USTFU, that the USTFU CBL and "the rules of the election be suspended and that the election be held [on] that day" (See paragraph 39, Idem.) On 11 October 1996, appellees filed the instant petition seeking injunctive reliefs and the nullification of the results of the 04 October 1996 election. Appellees alleged that the holding of the same violated the temporary restraining order issued in Case No. NCR-OD-M-9610-001. Accusing appellants of usurpation, appellees characterized the election as spurious for being violative of USTFU's CBL, specifically because the general assembly resulting in the election of appellants was not called by the Board of Officers of the USTFU; there was no compliance with the ten-day notice rule required by Section 1, Article VIII of the CBL; the supposed elections were conducted without a COMELEC being constituted by the Board of Officers in accordance with Section 1, Article IX of the CBL; the elections were not by secret balloting as required by Section 1, Article V and Section 6, Article IX of the CBL, and, the general assembly was convened by faculty members some of whom were not members of USTFU, so much so that non-USTFU members were allowed to vote in violation of Section 1, Article V of the CBL. On 24 October 1996, appellees filed another urgent ex-parte motion for a temporary restraining order, this time alleging that appellants had served the former a notice to vacate the union office. For their part, appellants moved to dismiss the original petition and the subsequent motion on jurisdictional grounds. Both the petition and the motion were captioned to be for "Prohibition, Injunction with Prayer for Preliminary Injunction and Temporary Restraining Order." According to the appellants, the med-arbiter has no jurisdiction over petitions for prohibition, "including the ancillary remedies of restraining order and/or preliminary injunction, which are merely incidental to the main petition for PROHIBITION" (Paragraph XVIII3, Respondents' Comment and Motion to Dismiss). Appellants also averred that they now constituted the new set of union officers having been elected in accordance with law after the term of office of appellees had expired. They further maintained that appellees' scheduling of the 5 October 1996 elections was illegal because no rules and regulations governing the elections were promulgated as required by USTFU's CBL and that one of the members of the COMELEC was not a registered member of USTFU. Appellants likewise noted that the elections called by the appellees should have been postponed to allow the promulgation of rules and regulations and to "insure a free, clean, honest and orderly elections and to afford at the same time the greater majority of the general membership to participate" (See paragraph V, Idem). Finally, appellants contended that the holding of the general faculty assembly on 04 October 1996 was under the control of the Council of College/Faculty Club Presidents in cooperation with the USTFU Reformist Alliance and that they received the Temporary Restraining Order issued in Case No. NCR-OD-M-9610-001 only on 07 October 1996 and were not aware of the same on 04 October 1996. Hence, this Petition. 9 On 03 December 1996, appellants and UST allegedly entered into another CBA covering the period from 01 June 1996 to 31 May 2001 (Annex 11, appellants' Rejoinder to the Reply and Opposition). Consequently, appellees again moved for the issuance of a temporary restraining order to prevent appellants from making further representations that [they] had entered into a new agreement with UST. Appellees also reiterated their earlier stand that appellants were usurping the former's duties and functions and should be stopped from continuing such acts. On 11 December 1996, over appellants' insistence that the issue of jurisdiction should first be resolved, the med-arbiter issued a temporary restraining order directing the respondents to cease and desist from performing any and all acts pertaining to the duties and functions of the officers and directors of USTFU.

In the meantime, appellants claimed that the new CBA was purportedly ratified by an overwhelming majority of UST's academic community on 12 December 1996 (Annexes 1 to 10, Idem). For this reason, appellants moved for the dismissal of what it denominated as appellees' petition for prohibition on the ground that this had become moot and academic.
5

Petitioners appealed the med-arbiter's Decision to the labor secretary, 6 who transmitted the records of the case to the Bureau of Labor Relations which, under Department Order No. 9, was authorized to resolve appeals of intra-union cases, consistent with the last paragraph of Article 241 of the Labor Code. 7 The Assailed Ruling Agreeing with the med-arbiter that the USTFU officers' purported election held on October 4, 1994 was void for having been conducted in violation of the union's Constitution and Bylaws (CBL), Public Respondent Bitonio rejected petitioners' contention that it was a legitimate exercise of their right to self-organization. He ruled that the CBL, which constituted the covenant between the union and its members, could not be suspended during the October 4, 1996 general assembly of all faculty members, since that assembly had not been convened or authorized by the USTFU. Director Bitonio likewise held that the October 4, 1996 election could not be legitimized by the recognition of the newly "elected" set of officers by UST or by the alleged ratification of the new CBA by the general membership of the USTFU. Ruled Respondent Bitonio: This submission is flawed. The issue at hand is not collective bargaining representation but union leadership, a matter that should concern only the members of USTFU. As pointed out by the appellees, the privilege of determining who the union officers will be belongs exclusively to the members of the union. Said privilege is exercised in an election proceeding in accordance with the union's CBL and applicable law.

To accept appellants' claim to legitimacy on the foregoing grounds is to invest in appellants the position, duties, responsibilities, rights and privileges of USTFU officers without the benefit of a lawful electoral exercise as defined in USTFU's CBL and Article 241(c) of the Labor Code. Not to mention the fact that labor laws prohibit the employer from interfering with the employees in the latter' exercise of their right to self-organization. To allow appellants to become USTFU officers on the strength of management's recognition of them is to concede to the employer the power of determining who should be USTFU's leaders. This is a clear case of interference in the exercise by USTFU members of their right to self-organization.
8

The Issues The main issue in this case is whether the public respondent committed grave abuse of discretion in refusing to recognize the officers "elected" during the October 4, 1996 general assembly. Specifically, petitioners in their Memorandum urge the Court to resolve the following questions: 10 (1) Whether the Collective Bargaining Unit of all the faculty members in that General Faculty Assembly had the right in that General Faculty Assembly to suspend the provisions of the Constitution and By-Laws of the USTFU regarding the elections of officers of the union[.]

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(2) Whether the suspension of the provisions of the Constitution and By-Laws of the USTFU in that General Faculty Assembly is valid pursuant to the constitutional right of the Collective Bargaining Unit to engage in "peaceful concerted activities" for the purpose of ousting the corrupt regime of the private respondents[.] (3) Whether the overwhelming ratification of the Collective Bargaining Agreement executed by the petitioners in behalf of the USTFU with the University of Santo Tomas has rendered moot and academic the issue as to the validity of the suspension of the Constitution and By-Laws and the elections of October 4, 1996 in the General Faculty Assembly[.] The Courts Ruling The petition is not meritorious. Petitioners fail to convince this Court that Director Bitonio gravely abused his discretion in affirming the med-arbiter and in refusing to recognize the binding effect of the October 4, 1996 general assembly called by the UST administration. First Issue: Right to Self-Organization and Union Membership At the outset, the Court stresses that National Federation of Labor (NFL) v. Laguesma 11 has held that challenges against rulings of the labor secretary and those acting on his behalf, like the director of labor relations, shall be acted upon by the Court of Appeals, which has concurrent jurisdiction with this Court over petitions for certiorari. However, inasmuch as the memoranda in the instant case have been filed prior to the promulgation and finality of our Decision in NFL, we deem it proper to resolve the present controversy directly, instead of remanding it to the Court of Appeals. Having disposed of the foregoing procedural matter, we now tackle the issues in the present case seriatim. Self-organization is a fundamental right guaranteed by the Philippine Constitution and the Labor Code. Employees have the right to form, join or assist labor organizations for the purpose of collective bargaining or for their mutual aid and protection. 12 Whether employed for a definite period or not, any employee shall be considered as such, beginning on his first day of service, for purposes of membership in a labor union. 13 Corollary to this right is the prerogative not to join, affiliate with or assist a labor union. 14 Therefore, to become a union member, an employee must, as a rule, not only signify the intent to become one, but also take some positive steps to realize that intent. The procedure for union membership is usually embodied in the union's constitution and bylaws. 15 An employee who becomes a union member acquires the rights and the concomitant obligations that go with this new status and becomes bound by the union's rules and regulations. When a man joins a labor union (or almost any other democratically controlled group), necessarily a portion of his individual freedom is surrendered for the benefit of all members. He accepts the will of the majority of the members in order that he may derive the advantages to be gained from the concerted action of all. Just as the enactments of the legislature bind all of us, to the constitution and by-laws of the union (unless contrary to good morals or public policy, or otherwise illegal), which are duly enacted through democratic processes, bind all of the members. If a member of a union dislikes the provisions of the by-laws, he may seek to have them amended or may withdraw from the union; otherwise, he must abide by them. It is not the function of courts to decide the wisdom or propriety of legitimate by-laws of a trade union.

agreement of a member on joining a union to abide by its laws and comply with the will of the lawfully constituted majority does not require a member to submit to the determination of the union any question involving his personal rights.
16

Petitioners claim that the numerous anomalies allegedly committed by the private respondents during the latter's incumbency impelled the October 4, 1996 election of the new set of USTFU officers. They assert that such exercise was pursuant to their right to self-organization. Petitioners' frustration over the performance of private respondents, as well as their fears of a "fraudulent" election to be held under the latter's supervision, could not justify the method they chose to impose their will on the union. Director Bitonio aptly elucidated: 17 The constitutional right to self-organization is better understood in the context of ILO Convention No. 87 (Freedom of Association and Protection of Right to Organize), to which the Philippines is signatory. Article 3 of the Convention provides that workers' organizations shall have the right to draw up their constitution and rules and to elect their representatives in full freedom, free from any interference from public authorities. The freedom conferred by the provision is expansive; the responsibility imposed on union members to respect the constitution and rules they themselves draw up equally so. The point to be stressed is that the union's CBL is the fundamental law that governs the relationship between and among the members of the union. It is where the rights, duties and obligations, powers, functions and authority of the officers as well as the members are defined. It is the organic law that determines the validity of acts done by any officer or member of the union. Without respect for the CBL, a union as a democratic institution degenerates into nothing more than a group of individuals governed by mob rule. Union Election vs. Certification Election A union election is held pursuant to the union's constitution and bylaws, and the right to vote in it is enjoyed only by union members. A union election should be distinguished from a certification election, which is the process of determining, through secret ballot, the sole and exclusive bargaining agent of the employees in the appropriate bargaining unit, for purposes of collective bargaining. 18 Specifically, the purpose of a certification election is to ascertain whether or not a majority of the employees wish to be represented by a labor organization and, in the affirmative case, by which particular labor organization. 19 In a certification election, all employees belonging to the appropriate bargaining unit can vote. 20 Therefore, aunion member who likewise belongs to the appropriate bargaining unit is entitled to vote in said election. However, the reverse is not always true; an employee belonging to the appropriate bargaining unit but who is not a member of the union cannot vote in the union election, unless otherwise authorized by the constitution and bylaws of the union. Verily, union affairs and elections cannot be decided in a non-union activity. In both elections, there are procedures to be followed. Thus, the October 4, 1996 election cannot properly be called a union election, because the procedure laid down in the USTFU's CBL for the election of officers was not followed. It could not have been a certification election either, because representation was not the issue, and the proper procedure for such election was not followed. The participation of non-union members in the election aggravated its irregularity. Second Issue: USTFU's Constitution and By Laws Violated The importance of a union's constitution and bylaws cannot be overemphasized. They embody a covenant between a union and its members and constitute the fundamental law governing the members' rights and obligations. 21 As such, the union's constitution and bylaws should be upheld, as long as they are not contrary to law, good morals or public policy.

On joining a labor union, the constitution and by-laws become a part of the member's contract of membership under which he agrees to become bound by the constitution and governing rules of the union so far as it is not inconsistent with controlling principles of law. The constitution and by-laws of an unincorporated trade union express the terms of a contract, which define the privileges and rights secured to, and duties assumed by, those who have become members. The
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We agree with the finding of Director Bitonio and Med-Arbiter Falconitin that the October 4, 1996 election was tainted with irregularities because of the following reasons. First, the October 4, 1996 assembly was not called by the USTFU. It was merely a convocation of faculty clubs, as indicated in the memorandum sent to all faculty members by Fr. Rodel Aligan, OP, the secretary general of the University of Santo Tomas. 22 It was not convened in accordance with the provision on general membership meetings as found in the USTFU's CBL, which reads: ARTICLE VIII-MEETINGS OF THE UNION

the proceedings were rendered void by the lack of due process undue haste, lack of adequate safeguards to ensure integrity of the voting, and the absence of the notice of the dates of balloting. Third Issue: Suspension of USTFU's CBL Petitioners contend that the October 4, 1996 assembly "suspended" the union's CBL. They aver that the suspension and the election that followed were in accordance with their "constituent and residual powers as members of the collective bargaining unit to choose their representatives for purposes of collective bargaining." Again they cite the numerous anomalies allegedly committed by the private respondents as USTFU officers. This argument does not persuade. First, as has been discussed, the general faculty assembly was not the proper forum to conduct the election of USTFU officers. Not all who attended the assembly were members of the union; some, apparently, were even disqualified from becoming union members, since they represented management. Thus, Director Bitonio correctly observed: Further, appellants cannot be heard to say that the CBL was effectively suspended during the 04 October 1996 general assembly. A union CBL is a covenant between the union and its members and among members (Johnson and Johnson Labor Union-FFW, et al. v. Director of Labor Relations, 170 SCRA 469). Where ILO Convention No. 87 speaks of a union's full freedom to draw up its constitution and rules, it includes freedom from interference by persons who are not members of the union. The democratic principle that governance is a matter for the governed to decide upon applies to the labor movement which, by law and constitutional mandate, must be assiduously insulated against intrusions coming from both the employer and complete strangers if the "protection to labor clause" of the constitution is to be guaranteed. By appellant's own evidence, the general faculty assembly of 04 October 1996 was not a meeting of USTFU. It was attended by members and non-members alike, and therefore was not a forum appropriate for transacting union matters. The person who moved for the suspension of USTFU's CBL was not a member of USTFU. Allowing a non-union member to initiate the suspension of a union's CBL, and non-union members to participate in a union election on the premise that the union's CBL had been suspended in the meantime, is incompatible with the freedom of association and protection of the right to organize.

Sec. 1. The Union shall hold regular general membership meetings at least once every three (3) months. Notices of the meeting shall be sent out by the Secretary-General at least ten (10) days prior to such meetings by posting in conspicuous places, preferably inside Company premises, said notices. The date, time and place for the meetings shall be determined by the Board of Officers.
23

Unquestionably, the assembly was not a union meeting. It was in fact a gathering that was called and participated in by management and non-union members. By no legal fiat was such assembly transformed into a union activity by the participation of some union members. Second, there was no commission on elections to oversee the election, as mandated by Sections 1 and 2 of Article IX of the USTFU's CBL, which provide: ARTICLE IX - UNION ELECTION Sec. 1. There shall be a Committee on Election (COMELEC) to be created by the Board of Officers at least thirty (30) days before any regular or special election. The functions of the COMELEC include the following: a) Adopt and promulgate rules and regulations that will ensure a free, clean, honest and orderly election, whether regular or special; b) Pass upon qualifications of candidates; c) Rule on any question or protest regarding the conduct of the election subject to the procedure that may be promulgated by the Board of Officers; and d) Proclaim duly elected officers. Sec. 2. The COMELEC shall be composed of a chairman and two members all of whom shall be appointed by the Board of Officers.

xxx xxx xxx

24

If there are members of the so-called "academic community collective bargaining unit" who are not USTFU members but who would nevertheless want to have a hand in USTFU's affairs, the appropriate procedure would have been for them to become members of USTFU first. The procedure for membership is very clearly spelled out in Article IV of USTFU's CBL. Having become members, they could then draw guidance from Ang Malayang Manggagawa Ng Ang Tibay v. Ang Tibay, 103 Phil. 669. Therein the Supreme Court held that "if a member of the union dislikes the provisions of the by-laws he may seek to have them amended or may withdraw from the union; otherwise he must abide by them." Under Article XVII of USTFU's CBL, there is also a specific provision for constitutional amendments. What is clear therefore is that USTFU's CBL provides for orderly procedures and remedies which appellants could have easily availed [themselves] of instead of resorting to an exercise of their so-called "residual power".
26

Third, the purported election was not done by secret balloting, in violation of Section 6, Article IX of the USTFU's CBL, as well as Article 241 (c) of the Labor Code. The foregoing infirmities considered, we cannot attribute grave abuse of discretion to Director Bitonio's finding and conclusion. In Rodriguez v. Director, Bureau of Labor Relations, 25 we invalidated the local union elections held at the wrong date without prior notice to members and conducted without regard for duly prescribed ground rules. We held that

Second, the grievances of the petitioners could have been brought up and resolved in accordance with the procedure laid down by the union's CBL 27 and by the Labor Code. 28 They contend that their sense of desperation and helplessness led to the October 4, 1996 election. However, we cannot agree with the method they used to rectify years of inaction on their part and thereby ease bottled-up frustrations, as such method was in total disregard of the USTFU's CBL and of due process. The end never justifies the means.

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We agree with the solicitor general's observation that "the act of suspending the constitution when the questioned election was held is an implied admission that the election held on that date [October 4, 1996] could not be considered valid under the existing USTFU constitution . . .." 29 The ratification of the new CBA executed between the petitioners and the University of Santo Tomas management did not validate the void October 4, 1996 election. Ratified were the terms of the new CBA, not the issue of union leadership a matter that should be decided only by union members in the proper forum at the proper time and after observance of proper procedures. Epilogue In dismissing this Petition, we are not passing upon the merits of the mismanagement allegations imputed by the petitioners to the private respondents; these are not at issue in the present case. Petitioners can bring their grievances and resolve their differences with private respondents in timely and appropriate proceedings. Courts will not tolerate the unfair treatment of union members by their own leaders. When the latter abuse and violate the rights of the former, they shall be dealt with accordingly in the proper forum after the observance of due process. WHEREFORE, the Petition is hereby DISMISSED and the assailed Resolutions AFFIRMED. Costs against petitioners. SO ORDERED. Melo, Vitug, Purisima and Gonzaga-Reyes, JJ., concur. Footnotes

13 Art. 277 (c), Labor Code. 14 Reyes v. Trajano, 209 SCRA 484, June 2, 1992. 15 For example, the following are pertinent provisions as regards membership in USTFU, as set forth in its CBL: ARTICLE IV MEMBERSHIP Sec. 1. Every faculty member of the University of Santo Tomas, not otherwise disqualified by law and without regard to sex, race, nationality, religious or political belief or affiliation, is eligible for membership in the UNION. Sec. 2. Qualified faculty members of the Company may become members of the UNION by written application approved by the President upon recommendation of the Committee on Membership and after payment in full of the required admission fee. Sec. 3. The following shall not be eligible for membership nor to election or appointment to any position in the UNION: a) Subversives or persons who profess subversive ideas; b) Persons who have been convicted of a crime involving moral turpitude; and

1 See Panganiban, Battles in the Supreme Court, 1998 ed., p. 50. 2 Rollo, pp. 74-86. 3 Rollo, pp. 72-73. 4 Rollo, pp. 87-91. 17 August 15, 1997 Resolution, pp. 9-10; rollo, pp. 82-83. 5 Rollo, pp. 75-79. 18 1 (x), Rule I, Book V, Rules and Regulations Implementing the Labor Code. 6 Rollo, pp. 112-141. The petitioners filed their appeal with the Department of Labor and Employment on March 3, 1997. 7 Assailed Resolution, p. 2; rollo, p. 75. 8 Ibid., p. 12; rollo, p. 85. 9 The case was deemed submitted for resolution upon receipt by the Court of the Memorandum for the private respondents on March 1, 1999. Petitioners' Memorandum was received on January 11, 1999, and public respondents' Memorandum on January 18, 1999. 10 Rollo, pp. 504-505. 24 Rollo, p. 290. 11 GR No. 123426, March 10, 1999. 25 165 SCRA 239, August 31, 1988. 12 See Article 244 of the Labor Code in conjunction with Executive Order No. 180, as well as Article 245 of the same Code. 26 Rollo, pp. 83-84. 19 Reyes v. Trajano, supra. 20 Airtime Specialists v. Ferrer-Calleja, 180 SCRA 749, December 29, 1989. 21 Johnson and Johnson Labor Union-FFW v. Director of Labor Relations, 170 SCRA 469, February 21, 1989. 22 See Annex "C" of private respondent's Petition filed with the med-arbiter; rollo, p. 261. 23 Rollo, p. 288. c) Persons who are not faculty members of the Company. (Rollo, p.283). 16 Ang Malayang Manggagawa ng Ang Tibay Enterprises et al. v. Ang Tibay, 102 Phil. 669, December 23, 1957, per Bautista Angelo, J.

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27 The USTFU's CBL as regards impeachment and recall reads as follows: ARTICLE XV IMPEACHMENT AND RECALL Sec. 1. Any of the following shall be grounds for the impeachment or recall of UNION officers: a) Committing or causing the commission directly or indirectly of acts against the interest and welfare of the UNION. G.R. No. 182070 b) Malicious attack against the UNION, its officers, or against a fellow UNION officer. c) Failure to comply with the obligation to turn over and return to the UNION Treasurer within three (3) days any unexpended sum or sums of money received from the UNION funds to answer for an authorized UNION purpose. d) Gross misconduct unbecoming a UNION officer. e) Misappropriation of UNION funds and property. This is without prejudice to the filing of an appropriate criminal or civil action against the responsible officer or officers by any interested party. f) Willful violation of any provision of this Constitution and By-Laws or rules, regulations, measures, resolutions or decisions of the UNION. Sec. 2. The following procedure shall govern impeachment and recall proceedings: a) Impeachment or recall proceedings shall be initiated by a formal petition or resolution signed by at least thirty (30) percent of all bonafide members of the UNION and addressed to the Chairman of the Board of Officers. b) The Board Chairman shall then convene a general membership meeting to consider the impeachment or recall of an officer or a group of officers, whether elective or appointive. c) UNION officers against whom impeachment or recall charges have been filed shall be given ample opportunity to defend themselves before any impeachment or recall vote is finally taken. d) A majority of all the members of the UNION shall be required to impeach or recall UNION officers. e) The UNION officers impeached shall ipso facto be considered resigned or ousted from office and shall no longer be elected or appointed to any position in the UNION. f) The decision of the general membership on the impeachment or recall charge shall be final and executory. 28 Art. 241. 29 Public respondent's Memorandum, p. 13; rollo, pp. 533 NACHURA, J.: Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Decision1dated October 24, 2007 and the Resolution2 dated March 3, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 02316. The factual and procedural antecedents of the case are as follows: Respondent Ananias P. Sato (Sato) was hired in October 1990 by petitioner E.G. & I. Construction Corporation as a grader operator, which is considered as technical labor. He held the position for more than thirteen (13) years. In April 2004, Sato discovered that petitioner corporation had not been remitting his premium contributions to the Social Security System (SSS). When Sato kept on telling petitioners to update his premium contributions, he was removed as a grader operator and made to perform manual labor, such as tilling the land in a private cemetery and/or digging earthworks in petitioner corporations construction projects.3 In July 2004, an inspection team from the SSS went to petitioner corporations office to check its compliance with the SSS law. On July 22, 2004, petitioners told Sato that they could no longer afford to pay his wages, and he was advised to look for employment in other construction companies.4 Sato, however, found difficulty in finding a job because he had been blacklisted in other construction companies and was prevented from entering the project sites of petitioners.5 Respondent Nilo Berdin (Berdin) was hired by petitioners in March 1991 as a steelman/laborer; respondent Anecito S. Parantar, Sr.6 (Parantar) was hired in February 1997 as a steelman; and respondent Romeo M. Lacida, Jr.7 (Lacida) was hired in March 2001 as a laborer.8 At the start of their employment, they were required by petitioners to sign several documents purporting to be employment contracts.9 They immediately signed the documents without verifying their contents for fear of forfeiting their employment.10 Respondents were required to work from 7:00 a.m. until 5:00 p.m. While in the employ of petitioners, they devoted their time exclusively in the service of petitioners and were assigned to various construction projects of petitioners. They were tasked to set up steel bars used in the building foundation, to mix cement, and to perform other tasks required of them by petitioners.11 On July 24, 2004, the project engineer of respondents Berdin, Parantar, and Lacida instructed them to affix their signatures on various documents. They refused to sign the documents because they were written in English, a language that they did not understand. Irked by their disobedience, the project engineer terminated their employment. On the same date, they were given their weekly wages. However, the wages that were paid to them were short of three (3) days worth of wages, as penalty for their refusal to sign the documents. The following day, they were not allowed to enter the work premises.12 On July 26, 2004, respondents filed their respective complaints with the Regional Arbitration Branch of Cebu City for illegal dismissal, underpayment of wages (wage differentials), holiday pay, thirteenth (13th) month pay, and service incentive leave pay.13 February 16, 2011 Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

E.G & I. CONSTRUCTION CORPORATION and EDSEL GALEOS, Petitioners, vs. ANANIAS P. SATO, NILO BERDIN, ROMEO M. LACIDA, JR., and HEIRS OF ANECITO S. PARANTAR, SR., namely: YVONNE, KIMBERLY MAE, MARYKRIS, ANECITO, JR., and JOHN BRYAN, all surnamed PARANTAR, Respondents. DECISION

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Petitioners, on the other hand, admitted that respondents were employed by them and were assigned in their various construction projects. However, they denied that they illegally terminated respondents employment. According to petitioners, respondents abandoned their work when they failed to report for work starting on July 22, 2004. Petitioner corporation sent letters advising respondents to report for work, but they refused. Petitioner corporation maintained that respondents are still welcome, if they desire to work.14 As to respondent Sato, petitioner corporation alleged that it admonished respondent for having an illicit affair with another woman; that, in retaliation, Sato complained to the SSS for alleged non-remittance of his premium contributions; that Satos work was substandard; and that he also incurred unexplained absences and was constantly reprimanded for habitual tardiness. On July 27, 2005, the Labor Arbiter rendered a decision15 finding that respondents were illegally dismissed from employment. In lieu of reinstatement, due to the strained relations of the parties and as prayed for by respondents, each of them was granted separation pay equivalent to one (1) month pay for every year of service. The Labor Arbiter likewise awarded respondents claim for wage differentials, 13th month pay, holiday pay, and service incentive leave pay. The Labor Arbiter ruled in favor of granting the monetary claims of respondents because of petitioner corporations failure to effectively controvert the said claims by not presenting proof of payment, such as payrolls or vouchers.16 The dispositive portion of the decision reads: WHEREFORE, premises considered, judgment is hereby rendered ordering respondent [petitioner] E.G. & I. Construction Corporation to pay [respondents] the following:

opted for the payment of separation pay instead of reinstatement.21 The NLRC opined that illegal dismissal was inconsistent with the prayer for separation pay instead of reinstatement. As for the monetary reliefs prayed for by respondents, the NLRC withdrew the grant of the same because of petitioner corporations submission of the copies of payrolls, annexed to its memorandum on appeal.22 Respondents filed a motion for reconsideration. However, the same was denied in a resolution23 dated October 9, 2006. Aggrieved, respondents filed a petition for certiorari under Rule 65 of the Rules of Court before the CA. On October 24, 2007, the CA rendered a Decision, the dispositive portion of which reads: WHEREFORE, premises considered, this petition is GRANTED. The Decision and Resolution of the NLRC, dated July 31, 2006 and October 9, 2006, respectively, are hereby REVERSED and SET ASIDE. The Decision of the labor arbiter, dated July 27, 2005, is REINSTATED. Costs against private respondents. SO ORDERED.24 The CA ruled that respondents were illegally dismissed. A written notice of dismissal is not a pre-requisite for a finding of illegal dismissal.25 Respondents did not abandon their work. They were refused entry into the companys project sites.26 As to the award of monetary claims, the CA decided in favor of the grant of the same. Petitioner corporation belatedly submitted copies of the weekly time record, payroll, and acknowledgement receipts of the 13th month pay. There was no explanation given why the said documents were not submitted before the Labor Arbiter in order to establish their authenticity and correctness, and to give respondents the opportunity to refute the entries therein.27 Hence, this petition. The issue to be resolved in this case is whether the CA erred in reinstating the decision of the Labor Arbiter, declaring that respondents were illegally terminated from employment by petitioner corporation, and that respondents are entitled to their monetary claims. We sustain the ruling of the CA. Petitioner corporation failed to prove that respondents were dismissed for just or authorized cause. In an illegal dismissal case, the onus probandi rests on the employer to prove that the dismissal of an employee is for a valid cause.28 For abandonment to exist, it is essential (a) that the employee must have failed to report for work or must have been absent without valid or justifiable reason; and (b) that there must have been a clear intention to sever the employeremployee relationship manifested by some overt acts.29 The employer has the burden of proof to show the employee's deliberate and unjustified refusal to resume his employment without any intention of returning. Mere absence is not sufficient. There must be an unequivocal intent on the part of the employee to discontinue his employment.30 In this case, petitioner corporation claims that respondent Sato committed unexplained absences on May 20, 24, and 25, 2004 and on June 7, 18, and 23, 2004. However, based on the findings of fact of the CA, respondent Sato worked on May 20, June 18 and 23, 2004. This was based on the weekly time record and payroll of respondent Sato that were presented by petitioner corporation in its appeal before the NLRC. On respondent Satos alleged absences on May 24 and 25 and on June 7, 2004, no time record and payroll documents were presented by petitioner corporation. With regard to respondents Berdin, Lacida, and Parantar, petitioner corporation alleges that they failed to report for work starting on July 22, 2004, and that petitioner even sent them letters advising them to report for work, but to no avail. Notwithstanding these assertions of petitioner corporation, we sustain the ruling of the CA. The reason why respondents failed to report for work was because petitioner corporation barred them from entering its construction sites. It is a settled rule that failure to report for work after a notice to return to work has been served does not necessarily constitute abandonment.31 The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified.32 Petitioner corporation failed to show overt acts committed by respondents from which it may be deduced that they had no more intention to work. Respondents filing of the case for illegal dismissal barely four (4) days from their alleged abandonment is totally inconsistent with our known concept of what constitutes abandonment.
lawphi1

1. Ananias P. Sato 2. Anecito Parantar 3. Nilo Berdin 4. Romeo M. Lacida, Jr.

P 107,250.00 120,944.00 152,144.00 138,594.00

Total Award

P 518,932.00 ==========

The other claims and the case against respondent Edsel Galeos are dismissed for lack of merit. SO ORDERED.17 On appeal, the National Labor Relations Commission (NLRC) reversed the ruling of the Labor Arbiter in a decision18 dated July 31, 2006. The fallo of the NLRC decision reads: WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET ASIDE and VACATED and a new one entered Dismissing the case. Respondents are however ordered to pay complainants proportionate 13th month [pay] for the year 2004 computed as follows:

1. Ananias Sato 3. Nilo Berdin 4. Romeo Laceda Total

- P 3,180.00 - 2,700.00 - 2,520.00 P 10,920.00

2. Anecito Parantar - 2,520.00

SO ORDERED.19 In reversing the decision of the Labor Arbiter, the NLRC ratiocinated that, other than respondents bare allegation that they were dismissed, they failed to present a written notice of dismissal,20 and that respondents individual complaints

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We sustain the ruling of the CA on respondents money claims. As a rule, one who pleads payment has the burden of proving it. Even as the employee must allege non-payment, the general rule is that the burden rests on the employer to prove payment, rather than on the employee to prove non-payment. The reason for the rule is that the pertinent personnel files, payrolls, records, remittances, and other similar documents which will show that overtime, differentials, service incentive leave, and other claims of the worker have been paid are not in the possession of the worker but in the custody and absolute control of the employer.33 In this case, the submission of petitioner corporation of the time records and payrolls of respondents only on their appeal before the NLRC is contrary to elementary precepts of justice and fair play. Respondents were not given the opportunity to check the authenticity and correctness of the same. Thus, we sustain the ruling of the CA in the grant of the monetary claims of respondents. We are guided by the time-honored principle that if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. It is the rule in controversies between a laborer and his master that doubts reasonably arising from the evidence, or in the interpretation of agreements and writing, should be resolved in the former's favor.34 WHEREFORE, in view of the foregoing, the Decision dated October 24, 2007 and the Resolution dated March 3, 2008 of the Court of Appeals in CA-G.R. SP No. 02316 are hereby AFFIRMED. Costs against the petitioners. SO ORDERED. ANTONIO EDUARDO B. NACHURA Associate Justice

On November 6, 2004, respondent staged a strike. During the pendency of the strike, petitioner declared a temporary cessation of operations. In December 2005, all the striking union members were allowed to return to work. Subsequently, petitioner declared another temporary cessation of operations for the months of April and May 2006. The suspension of operation was lifted on June 2006, but the rank-and-file employees were allowed to report for work on a fifteen (15) dayper-month rotation basis that lasted until September 2006. In December 2006, petitioner gave the employees their 13thmonth pay based on the employees total earnings during the year divided by 12.4 Respondent objected to this computation. It averred that petitioner did not adhere to the usual computation of the 13thmonth pay. It claimed that the divisor should have been eight (8) instead of 12, because the employees worked for only 8 months in 2006. It likewise asserted that petitioner did not observe the company practice of giving its employees the guaranteed amount equivalent to their one month pay, in instances where the computed 13th-month pay was less than their basic monthly pay.5 Petitioner and respondent tried to thresh out their differences in accordance with the grievance procedure as provided in their collective bargaining agreement. During the grievance meeting, the representative of petitioner explained that the change in the computation of the 13th-month pay was intended to rectify an error in the computation, particularly the concept of basic pay which should have included only the basic monthly pay of the employees.6 For failure of the parties to arrive at a settlement, respondent applied for preventive mediation before the National Conciliation and Mediation Board. However, despite four (4) conciliatory meetings, the parties still failed to settle the dispute. On March 29, 2007, respondent filed a complaint against petitioner for money claims based on the alleged diminution of benefits/erroneous computation of 13th-month pay before the Regional Arbitration Branch of the National Labor Relations Commission (NLRC).7 On October 31, 2007, the Labor Arbiter rendered a Decision8 dismissing the complaint and declaring that the petitioner had the right to rectify the error in the computation of the 13th-month pay of its employees.9 The fallo of the Decision reads:

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

WHEREFORE, premises considered, the complaint filed by the complainants against the respondents should be DISMISSED with prejudice for utter lack of merit. SO ORDERED.10

G.R. No. 188949

July 26, 2010 Respondents filed an appeal. On August 14, 2008, the NLRC rendered a Decision11 reversing the Labor Arbiter. The dispositive portion of the Decision reads:

CENTRAL AZUCARERA DE TARLAC, Petitioner, vs. CENTRAL AZUCARERA DE TARLAC LABOR UNION-NLU, Respondent. DECISION NACHURA, J.: Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Decision1dated May 28, 2009, and the Resolution2 dated July 28, 2009 of the Court of Appeals (CA) in CA-G.R. SP No. 106657. The factual antecedents of the case are as follows: Petitioner is a domestic corporation engaged in the business of sugar manufacturing, while respondent is a legitimate labor organization which serves as the exclusive bargaining representative of petitioners rank-and-file employees. The controversy stems from the interpretation of the term "basic pay," essential in the computation of the 13th-month pay. The facts of this case are not in dispute. In compliance with Presidential Decree (P.D.) No. 851, petitioner granted its employees the mandatory thirteenth (13th) - month pay since 1975. The formula used by petitioner in computing the 13th-month pay was: Total Basic Annual Salary divided by twelve (12). Included in petitioners computation of the Total Basic Annual Salary were the following: basic monthly salary; first eight (8) hours overtime pay on Sunday and legal/special holiday; night premium pay; and vacation and sick leaves for each year. Throughout the years, petitioner used this computation until 2006.3

WHEREFORE, the decision appealed is reversed and set aside and respondent-appellee Central Azucarera de Tarlac is hereby ordered to adhere to its established practice of granting 13th[-] month pay on the basis of gross annual basic which includes basic pay, premium pay for work in rest days and special holidays, night shift differential and paid vacation and sick leaves for each year. Additionally, respondent-appellee is ordered to observe the guaranteed one[-]month pay by way of 13th month pay. SO ORDERED. 12 Petitioner filed a motion for reconsideration. However, the same was denied in a Resolution dated November 27, 2008. Petitioner then filed a petition for certiorari under Rule 65 of the Rules of Court before the CA.13 On May 28, 2009, the CA rendered a Decision14 dismissing the petition, and affirming the decision and resolution of the NLRC, viz.: WHEREFORE, the foregoing considered, the petition is hereby DISMISSED and the assailed August 14, 2008 Decision and November 27, 2008 Resolution of the NLRC, are hereby AFFIRMED. No costs. SO ORDERED.15

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Aggrieved, petitioner filed the instant petition, alleging that the CA committed a reversible error in affirming the Decision of the NLRC, and praying that the Decision of the Labor Arbiter be reinstated. The petition is denied for lack of merit. The 13th-month pay mandated by Presidential Decree (P.D.) No. 851 represents an additional income based on wage but not part of the wage. It is equivalent to one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year. All rank-and-file employees, regardless of their designation or employment status and irrespective of the method by which their wages are paid, are entitled to this benefit, provided that they have worked for at least one month during the calendar year. If the employee worked for only a portion of the year, the 13th-month pay is computed pro rata.16 Petitioner argues that there was an error in the computation of the 13th-month pay of its employees as a result of its mistake in implementing P.D. No. 851, an error that was discovered by the management only when respondent raised a question concerning the computation of the employees 13th-month pay for 2006. Admittedly, it was an error that was repeatedly committed for almost thirty (30) years. Petitioner insists that the length of time during which an employer has performed a certain act beneficial to the employees, does not prove that such an act was not done in error. It maintains that for the claim of mistake to be negated, there must be a clear showing that the employer had freely, voluntarily, and continuously performed the act, knowing that he is under no obligation to do so. Petitioner asserts that such voluntariness was absent in this case.17 The Rules and Regulations Implementing P.D. No. 851, promulgated on December 22, 1975, defines 13th-month pay and basic salary as follows: Sec. 2. Definition of certain terms. - As used in this issuance: (a) "Thirteenth-month pay" shall mean one twelfth (1/12) of the basic salary of an employee within a calendar year; (b) "Basic salary" shall include all remunerations or earnings paid by an employer to an employee for services rendered but may not include cost-of-living allowances granted pursuant to Presidential Decree No. 525 or Letter of Instructions No. 174, profit-sharing payments, and all allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary of the employee at the time of the promulgation of the Decree on December 16, 1975. On January 16, 1976, the Supplementary Rules and Regulations Implementing P.D. No. 851 was issued. The Supplementary Rules clarifies that overtime pay, earnings, and other remuneration that are not part of the basic salary shall not be included in the computation of the 13th-month pay. On November 16, 1987, the Revised Guidelines on the Implementation of the 13th-Month Pay Law was issued. Significantly, under this Revised Guidelines, it was specifically stated that the minimum 13th-month pay required by law shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year.
1avvphi1

Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule, mandates that benefits given to employees cannot be taken back or reduced unilaterally by the employer because the benefit has become part of the employment contract, written or unwritten. 18 The rule against diminution of benefits applies if it is shown that the grant of the benefit is based on an express policy or has ripened into a practice over a long period of time and that the practice is consistent and deliberate. Nevertheless, the rule will not apply if the practice is due to error in the construction or application of a doubtful or difficult question of law. But even in cases of error, it should be shown that the correction is done soon after discovery of the error.19 The argument of petitioner that the grant of the benefit was not voluntary and was due to error in the interpretation of what is included in the basic salary deserves scant consideration. No doubtful or difficult question of law is involved in this case. The guidelines set by the law are not difficult to decipher. The voluntariness of the grant of the benefit was manifested by the number of years the employer had paid the benefit to its employees. Petitioner only changed the formula in the computation of the 13th-month pay after almost 30 years and only after the dispute between the management and employees erupted. This act of petitioner in changing the formula at this time cannot be sanctioned, as it indicates a badge of bad faith. Furthermore, petitioner cannot use the argument that it is suffering from financial losses to claim exemption from the coverage of the law on 13th-month pay, or to spare it from its erroneous unilateral computation of the 13th-month pay of its employees. Under Section 7 of the Rules and Regulations Implementing P.D. No. 851, distressed employers shall qualify for exemption from the requirement of the Decree only upon prior authorization by the Secretary of Labor.20 In this case, no such prior authorization has been obtained by petitioner; thus, it is not entitled to claim such exemption. WHEREFORE, the Decision dated May 28, 2009 and the Resolution dated July 28, 2009 of the Court of Appeals in CAG.R. SP No. 106657 are hereby AFFIRMED. Costs against petitioner. SO ORDERED. ANTONIO EDUARDO B. NACHURA Associate Justice

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 180866 March 2, 2010

LEPANTO CERAMICS, INC., Petitioner, vs. LEPANTO CERAMICS EMPLOYEES ASSOCIATION, Respondent. DECISION PEREZ, J.: Before this Court is a Petition for Review on Certiorari under Rule 451 of the 1997 Rules of Civil Procedure filed by petitioner Lepanto Ceramics, Inc. (petitioner), assailing the: (1) Decision2 of the Court of Appeals, dated 5 April 2006, in CA-G.R. SP No. 78334 which affirmed in toto the decision of the Voluntary Arbitrator3 granting the members of the respondent association a Christmas Bonus in the amount of Three Thousand Pesos (P3,000.00), or the balance of Two Thousand Four Hundred Pesos (P2,400.00) for the year 2002, and the (2) Resolution4 of the same court dated 13 December 2007 denying Petitioners Motion for Reconsideration. The facts are:

Furthermore, the term "basic salary" of an employee for the purpose of computing the 13th-month pay was interpreted to include all remuneration or earnings paid by the employer for services rendered, but does not include allowances and monetary benefits which are not integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime, premium, night differential and holiday pay, and cost-of-living allowances. However, these salary-related benefits should be included as part of the basic salary in the computation of the 13thmonth pay if, by individual or collective agreement, company practice or policy, the same are treated as part of the basic salary of the employees. Based on the foregoing, it is clear that there could have no erroneous interpretation or application of what is included in the term "basic salary" for purposes of computing the 13th-month pay of employees. From the inception of P.D. No. 851 on December 16, 1975, clear-cut administrative guidelines have been issued to insure uniformity in the interpretation, application, and enforcement of the provisions of P.D. No. 851 and its implementing regulations. As correctly ruled by the CA, the practice of petitioner in giving 13th-month pay based on the employees gross annual earnings which included the basic monthly salary, premium pay for work on rest days and special holidays, night shift differential pay and holiday pay continued for almost thirty (30) years and has ripened into a company policy or practice which cannot be unilaterally withdrawn.

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Petitioner Lepanto Ceramics, Incorporated is a duly organized corporation existing and operating by virtue of Philippine Laws. Its business is primarily to manufacture, make, buy and sell, on wholesale basis, among others, tiles, marbles, mosaics and other similar products.5 Respondent Lepanto Ceramics Employees Association (respondent Association) is a legitimate labor organization duly registered with the Department of Labor and Employment. It is the sole and exclusive bargaining agent in the establishment of petitioner.6 In December 1998, petitioner gave a P3,000.00 bonus to its employees, members of the respondent Association.7 Subsequently, in September 1999, petitioner and respondent Association entered into a Collective Bargaining Agreement (CBA) which provides for, among others, the grant of a Christmas gift package/bonus to the members of the respondent Association.8 The Christmas bonus was one of the enumerated "existing benefit, practice of traditional rights" which "shall remain in full force and effect." The text reads: Section 8. All other existing benefits, practice of traditional rights consisting of Christmas Gift package/bonus, reimbursement of transportation expenses in case of breakdown of service vehicle and medical services and safety devices by virtue of company policies by the UNION and employees shall remain in full force and effect. Section 1. EFFECTIVITY This agreement shall become effective on September 1, 1999 and shall remain in full force and effect without change for a period of four (4) years or up to August 31, 2004 except as to the representation aspect which shall be effective for a period of five (5) years. It shall bind each and every employee in the bargaining unit including the present and future officers of the Union. In the succeeding years, 1999, 2000 and 2001, the bonus was not in cash. Instead, petitioner gave each of the members of respondent Association Tile Redemption Certificates equivalent to P3,000.00.9 The bonus for the year 2002 is the root of the present dispute. Petitioner gave a year-end cash benefit of Six Hundred Pesos (P600.00) and offered a cash advance to interested employees equivalent to one (1) month salary payable in one year.10 The respondent Association objected to the P600.00 cash benefit and argued that this was in violation of the CBA it executed with the petitioner. The parties failed to amicably settle the dispute. The respondent Association filed a Notice of Strike with the National Conciliation Mediation Board, Regional Branch No. IV, alleging the violation of the CBA. The case was placed under preventive mediation. The efforts to conciliate failed. The case was then referred to the Voluntary Arbitrator for resolution where the Complaint was docketed as Case No. LAG-PM-12-095-02. In support of its claim, respondent Association insisted that it has been the traditional practice of the company to grant its members Christmas bonuses during the end of the calendar year, each in the amount of P3,000.00 as an expression of gratitude to the employees for their participation in the companys continued existence in the market. The bonus was either in cash or in the form of company tiles. In 2002, in a speech during the Christmas celebration, one of the companys top executives assured the employees of said bonus. However, the Human Resources Development Manager informed them that the traditional bonus would not be given as the companys earnings were intended for the payment of its bank loans. Respondent Association argued that this was in violation of their CBA. The petitioner averred that the complaint for nonpayment of the 2002 Christmas bonus had no basis as the same was not a demandable and enforceable obligation. It argued that the giving of extra compensation was based on the companys available resources for a given year and the workers are not entitled to a bonus if the company does not make profits. Petitioner adverted to the fact that it was debt-ridden having incurred net losses for the years 2001 and 2002 totaling to P1.5 billion; and since 1999, when the CBA was signed, the companys accumulated losses amounted to over P2.7 billion. Petitioner further argued that the grant of a one (1) month salary cash advance was not meant to take the place of a bonus but was meant to show the companys sincere desire to help its employees despite its precarious financial condition. Petitioner also averred that the CBA provision on a "Christmas gift/bonus" refers to alternative benefits. Finally, petitioner emphasized that even if the CBA contained an unconditional obligation to grant the bonus to the respondent Association, the present difficult economic times had already legally released it therefrom pursuant to Article 1267 of the Civil Code.11

The Voluntary Arbitrator rendered a Decision dated 2 June 2003, declaring that petitioner is bound to grant each of its workers a Christmas bonus of P3,000.00 for the reason that the bonus was given prior to the effectivity of the CBA between the parties and that the financial losses of the company is not a sufficient reason to exempt it from granting the same. It stressed that the CBA is a binding contract and constitutes the law between the parties. The Voluntary Arbitrator further expounded that since the employees had already been given P600.00 cash bonus, the same should be deducted from the claimed amount of P3,000.00, thus leaving a balance of P2,400.00. The dispositive portion of the decision states, viz: Wherefore, in view of the foregoing respondent LCI is hereby ordered to pay the members of the complainant union LCEA their respective Christmas bonus in the amount of three thousand (P3,000.00) pesos for the year 2002 less the P600.00 already given or a balance of P2,400.00.12 Petitioner sought reconsideration but the same was denied by the Voluntary Arbitrator in an Order dated 27 June 2003, in this wise: The Motion for Reconsideration filed by the respondent in the above-entitled case which was received by the Undersigned on June 26, 2003 is hereby denied pursuant to Section 7 Rule XIX on Grievance Machinery and Voluntary Arbitration; Amending The Implementing Rules of Book V of the Labor Code of the Philippines; to wit: Section 7. Finality of Award/Decision The decision, order, resolution or award of the voluntary arbitrator or panel of voluntary arbitrators shall be final and executory after ten (10) calendar days from receipt of the copy of the award or decision by the parties and it shall not be subject of a motion for reconsideration.13 Petitioner elevated the case to the Court of Appeals via a Petition for Certiorari under Rule 65 of the Rules of Court docketed as CA-G.R. SP No. 78334.14 As adverted to earlier, the Court of Appeals affirmed in toto the decision of the Voluntary Arbitrator. The appellate court also denied petitioners motion for reconsideration. In affirming respondent Associations right to the Christmas bonus, the Court of Appeals held: In the case at bar, it is indubitable that petitioner offered private respondent a Christmas bonus/gift in 1998 or before the execution of the 1999 CBA which incorporated the said benefit as a traditional right of the employees. Hence, the grant of said bonus to private respondent can be deemed a practice as the same has not been given only in the 1999 CBA. Apparently, this is the reason why petitioner specifically recognized the grant of a Christmas bonus/gift as a practice or tradition as stated in the CBA. x x x. xxxx Evidently, the argument of petitioner that the giving of a Christmas bonus is a management prerogative holds no water. There were no conditions specified in the CBA for the grant of said benefit contrary to the claim of petitioner that the same is justified only when there are profits earned by the company. As can be gleaned from the CBA, the payment of Christmas bonus was not contingent upon the realization of profits. It does not state that if the company derives no profits, there are no bonuses to be given to the employees. In fine, the payment thereof was not related to the profitability of business operations. Moreover, it is undisputed that petitioner, aside from giving the mandated 13th month pay, has further been giving its employees an additional Christmas bonus at the end of the year since 1998 or before the effectivity of the CBA in September 1999. Clearly, the grant of Christmas bonus from 1998 up to 2001, which brought about the filing of the complaint for alleged non-payment of the 2002 Christmas bonus does not involve the exercise of management prerogative as the same was given continuously on or about Christmas time pursuant to the CBA. Consequently, the giving of said bonus can no longer be withdrawn by the petitioner as this would amount to a diminution of the employees existing benefits.15 Not to be dissuaded, petitioner is now before this Court. The only issue before us is whether or not the Court of Appeals erred in affirming the ruling of the voluntary arbitrator that the petitioner is obliged to give the members of the respondent Association a Christmas bonus in the amount of P3,000.00 in 2002.16 We uphold the rulings of the voluntary arbitrator and of the Court of Appeals. Findings of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but

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even finality, and bind us when supported by substantial evidence. This is the rule particularly where the findings of both the arbitrator and the Court of Appeals coincide.17 As a general proposition, an arbitrator is confined to the interpretation and application of the CBA. He does not sit to dispense his own brand of industrial justice: his award is legitimate only in so far as it draws its essence from the CBA.18 That was done in this case. By definition, a "bonus" is a gratuity or act of liberality of the giver. It is something given in addition to what is ordinarily received by or strictly due the recipient. A bonus is granted and paid to an employee for his industry and loyalty which contributed to the success of the employers business and made possible the realization of profits.19 A bonus is also granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits.20 Generally, a bonus is not a demandable and enforceable obligation. For a bonus to be enforceable, it must have been promised by the employer and expressly agreed upon by the parties.21 Given that the bonus in this case is integrated in the CBA, the same partakes the nature of a demandable obligation. Verily, by virtue of its incorporation in the CBA, the Christmas bonus due to respondent Association has become more than just an act of generosity on the part of the petitioner but a contractual obligation it has undertaken.22 A CBA refers to a negotiated contract between a legitimate labor organization and the employer, concerning wages, hours of work and all other terms and conditions of employment in a bargaining unit. As in all other contracts, the parties to a CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided these are not contrary to law, morals, good customs, public order or public policy.23 It is a familiar and fundamental doctrine in labor law that the CBA is the law between the parties and they are obliged to comply with its provisions.24 This principle stands strong and true in the case at bar.
1avvphi1

The Court is fully aware that implementation to the letter of the subject CBA provision may further deplete petitioners resources. Petitioners remedy though lies not in the Courts invalidation of the provision but in the parties clarification of the same in subsequent CBA negotiations. Article 253 of the Labor Code is relevant: Art. 253. Duty to bargain collectively when there exists a collective bargaining agreement. - When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate nor modify such agreement during its lifetime. However, either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the sixty (60)-day period and/or until a new agreement is reached by the parties. WHEREFORE, Premises considered, the petition is DENIED for lack of merit. The Decision of the Court of Appeals dated 5 April 2006 and the Resolution of the same court dated 13 December 2007 in CA-G.R. SP No. 78334 areAFFIRMED. SO ORDERED. JOSE PORTUGAL PEREZ Associate Justice

Republic of the Philippines SUPREME COURT Baguio City FIRST DIVISION G.R. No. 182114 April 5, 2010

A reading of the provision of the CBA reveals that the same provides for the giving of a "Christmas gift package/bonus" without qualification. Terse and clear, the said provision did not state that the Christmas package shall be made to depend on the petitioners financial standing. The records are also bereft of any showing that the petitioner made it clear during CBA negotiations that the bonus was dependent on any condition. Indeed, if the petitioner and respondent Association intended that the P3,000.00 bonus would be dependent on the company earnings, such intention should have been expressed in the CBA. It is noteworthy that in petitioners 1998 and 1999 Financial Statements, it took note that "the 1997 financial crisis in the Asian region adversely affected the Philippine economy."25 From the foregoing, petitioner cannot insist on business losses as a basis for disregarding its undertaking. It is manifestly clear that petitioner was very much aware of the imminence and possibility of business losses owing to the 1997 financial crisis. In 1998, petitioner suffered a net loss of P14,347,548.00.26 Yet it gave a P3,000.00 bonus to the members of the respondent Association. In 1999, when petitioners very own financial statement reflected that "the positive developments in the economy have yet to favorably affect the operations of the company,"27 and reported a loss of P346,025,733.00,28 it entered into the CBA with the respondent Association whereby it contracted to grant a Christmas gift package/bonus to the latter. Petitioner supposedly continued to incur losses in the years 200029 and 2001. Still and all, this did not deter it from honoring the CBA provision on Christmas bonus as it continued to give P3,000.00 each to the members of the respondent Association in the years 1999, 2000 and 2001. All given, business losses are a feeble ground for petitioner to repudiate its obligation under the CBA. The rule is settled that any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on the constitutional mandate to protect the rights of workers and to promote their welfare and to afford labor full protection.30 Hence, absent any proof that petitioners consent was vitiated by fraud, mistake or duress, it is presumed that it entered into the CBA voluntarily and had full knowledge of the contents thereof and was aware of its commitments under the contract.

GENESIS TRANSPORT SERVICE, INC. and RELY L. JALBUNA, Petitioners, vs. UNYON NG MALAYANG MANGGAGAWA NG GENESIS TRANSPORT (UMMGT), and JUAN TAROY,Respondents. DECISION CARPIO MORALES, J.: Respondent Juan Taroy was hired on February 2, 1992 by petitioner Genesis Transport Service, Inc. (Genesis Transport) as driver on commission basis at 9% of the gross revenue per trip. On May 10, 2002, Taroy was, after due notice and hearing, terminated from employment after an accident on April 20, 2002 where he was deemed to have been driving recklessly. Taroy thus filed on June 7, 2002 a complaint1 for illegal dismissal and payment of service incentive leave pay, claiming that he was singled out for termination because of his union activities, other drivers who had met accidents not having been dismissed from employment. Taroy later amended2 his complaint to implead his herein co-respondent Unyon ng Malayang Manggagawa ng Genesis Transport (the union) as complainant and add as grounds of his cause of action unfair labor practice (ULP), reimbursement of illegal deductions on tollgate fees, and payment of service incentive leave pay. Respecting the claim for refund of illegal deductions, Taroy alleged that in 1997, petitioner started deducting from his weekly earnings an amount ranging from P160 to P900 representing toll fees, without his consent and written authorization as required under Article 113 of the Labor Code and contrary to company practice; and that deductions were also taken from the bus conductors earnings to thus result to double deduction. Genesis Transport countered that Taroy committed several violations of company rules for which he was given warnings or disciplined accordingly; that those violations, the last of which was the April 20, 2002 incident, included poor driving

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skills, tardiness, gambling inside the premises, use of shabu, smoking while driving, insubordination and reckless driving;3 and that Taroys dismissal was on a valid cause and after affording him due process. In support of its claim that Taroy was afforded due process, Genesis Transport cited his preventive suspension; the directive for him to explain in writing4 his involvement in the April 20, 2002 accident; and the conduct of a hearing during which the expert opinion of its Maintenance Department, as well as an independent entity the Columbian Motors Corporation,5 was considered in the determination of whether the accident was due to his reckless driving or, as he contended, to faulty brakes. Genesis Transport went on to claim that as the result of the investigation6 showed that the cause of the accident was Taroys reckless driving, and his immediate past infraction of company rules on January 25, 2001 smoking inside the bus already merited a final warning,7 it validly terminated8 his employment. By Decision9 of June 30, 2004, the Labor Arbiter found that Genesis Transport discharged the burden of proof that Taroys dismissal was on a valid cause; that while Taroys past infractions can not be used against him, still, they showed habituality; and that Genesis Transport complied with the twin requirements of notice and hearing, hence, Taroys dismissal was effected with due process. As to the charge of ULP, the Labor Arbiter ruled that the respondent union failed to prove that Taroys dismissal was due to his union membership and/or activities. On the claim for service incentive leave pay, the Labor Arbiter ruled that Taroy was not entitled thereto since he was a field personnel paid on commission basis. With respect to Taroys claim for refund, however, the Labor Arbiter ruled in his favor for if, as contended by Genesis Transport, tollgate fees form part of overhead expense, why were not expenses for fuel and maintenance also charged to overhead expense. The Labor Arbiter thus concluded that "it would appear that the tollgate fees are deducted from the gross revenues and not from the salaries of drivers and conductors, but certainly the deduction thereof diminishes the take home pay of the employees." Thus, the Labor Arbiter disposed: WHEREFORE, premises considered, judgment is hereby rendered dismissing instant complaint for illegal dismissalfor lack of merit. However, respondents are hereby ordered to refund to complainant the underpayment/differential due him as a result of the deduction of the tollgate fees from the gross receipts. Actual computation shall be based on and limited to the evidence at hand, which is in the amount of P5,273.16. For having been compelled to litigate, respondents are hereby also ordered to pay complainant 10% attorneys fees. (underscoring supplied) Both parties appealed to the National Labor Relations Commission (NLRC), petitioners questioning the order for them to refund "underpayment" and pay attorneys fees, and respondents questioning the Labor Arbiters failure to pass on the propriety of his preventive suspension, dismissal of his complaint for constructive dismissal and ULP, and failure to award him service incentive leave pay. By Resolution of December 29, 2005, the NLRC affirmed the Labor Arbiters decision with modification. It deleted the award to Taroy of attorneys fees. It brushed aside Taroys claim of having been illegally suspended, it having been raised for the first time on appeal. The parties filed their respective motions for reconsideration which were denied. On respondents appeal, the Court of Appeals, by the assailed Decision of August 24, 2007, partly granted the same, it ruling that petitioner Genesis Transport violated Taroys statutory right to due process when he was preventively suspended for more than thirty (30) days, in violation of the Implementing Rules and Regulations of the Labor Code. The appellate court thus held Taroy to be entitled to nominal damages in the amount of P30,000. And it reinstated the Labor Arbiters order for petitioners to refund Taroy "the underpayment."

On the issue of refund of "underpayment," petitioners aver that cases of similar import involving also the respondent union have been decided with finality in their favor by the NLRC, viz: UMMGT v. Genesis Transport Service, Inc. (NLRC RAB III Case No. 04-518-03) and Reyes v. Genesis Transport Service, Inc. (NLRC CA No. 04862-04); and Santos v. Genesis Transport Service, Inc. (NLRC CA No. 041869-04). Petitioners thus pray that the Court accord respect to the rulings of the NLRC in the above-cited cases and apply the principle of res judicata vis--vis the present case. On the appellate courts award of nominal damages, petitioners reiterate that Taroy was not entitled thereto, his dismissal having been based on a valid cause, and he was accorded due process. Further, petitioners note that the issue of preventive suspension, on which the appellate court based its ruling that it violated Taroys right to due process, was raised only on appeal to the NLRC, hence, it should not be considered. Finally, petitioners assert that the delay in the service of the Notice of Dismissal (dated May 10, 2002, but received by Taroy only on June 4, 2002) was due to Taroys premeditated refusal to acknowledge receipt thereof. The petition is partly meritorious. Absent proof that the NLRC cases cited by petitioners have attained finality, the Court may not consider them to constitute res judicata on petitioners claim for refund of the "underpayment" due Taroy. Neither may the Court take judicial notice of petitioners claim that the deduction of tollgate fees from the gross earnings of drivers is an accepted and long-standing practice in the transportation industry. Expertravel & Tours, Inc. v. Court of Appeals10 instructs: Generally speaking, matters of judicial notice have three material requisites: (1) the matter must be one of common and general knowledge; (2) it must be well and authoritatively settled and not doubtful or uncertain; and (3) it must be known to be within the limits of the jurisdiction of the court. The principal guide in determining what facts may be assumed to be judicially known is that of notoriety. Hence, it can be said that judicial notice is limited to facts evidenced by public records and facts of general notoriety. Moreover, a judicially noticed fact must be one not subject to a reasonable dispute in that it is either: (1) generally known within the territorial jurisdiction of the trial court; or (2) capable of accurate and ready determination by resorting to sources whose accuracy cannot reasonably be questionable. Things of "common knowledge," of which courts take judicial matters coming to the knowledge of men generally in the course of the ordinary experiences of life, or they may be matters which are generally accepted by mankind as true and are capable of ready and unquestioned demonstration. Thus, facts which are universally known, and which may be found in encyclopedias, dictionaries or other publications, are judicially noticed, provided, they are of such universal notoriety and so generally understood that they may be regarded as forming part of the common knowledge of every person. As the common knowledge of man ranges far and wide, a wide variety of particular facts have been judicially noticed as being matters of common knowledge. But a court cannot take judicial notice of any fact which, in part, is dependent on the existence or non-existence of a fact of which the court has no constructive knowledge. (emphasis supplied) None of the material requisites for the Court to take judicial notice of a particular matter was established by petitioners. Albeit the amounts representing tollgate fees were deducted from gross revenues and not directly from Taroys commissions, the labor tribunal and the appellate court correctly held that the withholding of those amounts reduced the amount from which Taroys 9% commission would be computed. Such a computation not only marks a change in the method of payment of wages, resulting in a diminution of Taroys wages in violation of Article 113 vis--vis Article 100 of the Labor Code, as amended. It need not be underlined that without Taroys written consent or authorization, the deduction is considered illegal. Besides, the invocation of the rule on "company practice" is generally used with respect to the grant of additional benefits to employees, not on issues involving diminution of benefits. Respecting the issue of statutory due process, the Court holds that Taroys right thereto was not violated. Sections 8 and 9 of Rule XXIII, Book V of the Implementing Rules and Regulations of the Labor Code provide:

Their motion for reconsideration having been denied by Resolution of March 13, 2008, petitioners filed the present recourse.

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Section 8. Preventive suspension. The employer may place the worker concerned under preventive suspension if his continued employment poses a serious and imminent threat to the life or property of the employer or his co-workers. BRION, J.: xxxx Section 9. Period of Suspension No preventive suspension shall last longer than thirty (30) days. The employer shall thereafter reinstate the worker in his former or in a substantially equivalent position or the employer may extend the period of suspension provided that during the period of extension, he pays the wages and other benefits due to the worker. In such case, the worker shall not be bound to reimburse the amount paid to him during the extension if the employer decides, after completion of the hearing, to dismiss the worker. (emphasis supplied) To the appellate court, Genesis Transports act of "placing Taroy under preventive suspension for more than thirty (30) days was a predetermined effort to dismiss [him] from employment, negating the argument that the delay in the service of the notice of dismissal was not an issue and that the same was allegedly due to Taroys inaction to receive the same." Hence, the appellate court concluded, while there was a just and valid cause for the termination of his services, his right to statutory due process was violated to entitle him to nominal damages, following Agabon v. NLRC.11 The propriety of Taroys preventive suspension was raised by respondents for the first time on appeal, however. The well-settled rule, which also applies in labor cases, is that issues not raised below cannot be raised for the first time on appeal. Points of law, theories, issues and arguments not brought to the attention of the lower court need not be, and ordinarily will not be, considered by the reviewing court, as they cannot be raised for the first time at that late stage. Basic considerations of due process impel the adoption of this rule.12 In any event, what the Rules require is that the employer act on the suspended workers status of employment within the 30-day period by concluding the investigation either by absolving him of the charges, or meting the corresponding penalty if liable, or ultimately dismissing him. If the suspension exceeds the 30-day period without any corresponding action on the part of the employer, the employer must reinstate the employee or extend the period of suspension, provided the employees wages and benefits are paid in the interim. In the present case, petitioner company had until May 20, 2002 to act on Taroys case. It did by terminating him through a notice dated May 10, 2002, hence, the 30-day requirement was not violated even if the termination notice was received only on June 4, 2002, absent any showing that the delayed service of the notice on Taroy was attributable to Genesis Transport. Taroys statutory due process not having been violated, he is not entitled to the award of nominal damages. WHEREFORE, the challenged Court of Appeals Decision of August 24, 2007 and Resolution13 of March 13, 2008 are AFFIRMED, with the MODIFICATION that the award of nominal damages to respondent Juan Taroy is DELETED.

DECISION

Before this Court is a Petition for Review on Certiorari1 filed by petitioners Albert Teng Fish Trading, its owner Albert Teng, and its manager Emilia Teng-Chua, to reverse and set aside the September 21, 2004 decision2 and the September 1, 2005 resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 78783. The CA reversed the decision of the Voluntary Arbitrator (VA), National Conciliation and Mediation Board (NCMB), Region IX, Zamboanga City, and declared that there exists an employer-employee relationship between Teng and respondents Hernan Badilles, Orlando Layese, Eddie Nipa, Alfredo Pahagac, and Roger Pahagac (collectively, respondent workers). It also found that Teng illegally dismissed the respondent workers from their employment. BACKGROUND FACTS Albert Teng Fish Trading is engaged in deep sea fishing and, for this purpose, owns boats (basnig), equipment, and other fishing paraphernalia. As owner of the business, Teng claims that he customarily enters into joint venture agreements with master fishermen (maestros) who are skilled and are experts in deep sea fishing; they take charge of the management of each fishing venture, including the hiring of the members of its complement. He avers that the maestros hired the respondent workers as checkers to determine the volume of the fish caught in every fishing voyage.4 On February 20, 2003, the respondent workers filed a complaint for illegal dismissal against Albert Teng Fish Trading, Teng, and Chua before the NCMB, Region Branch No. IX, Zamboanga City. The respondent workers alleged that Teng hired them, without any written employment contract, to serve as his "eyes and ears" aboard the fishing boats; to classify the fish caught by baera; to report to Teng via radio communication the classes and volume of each catch; to receive instructions from him as to where and when to unload the catch; to prepare the list of the provisions requested by the maestro and the mechanic for his approval; and, to procure the items as approved by him.5 They also claimed that they received regular monthly salaries, 13th month pay, Christmas bonus, and incentives in the form of shares in the total volume of fish caught. They asserted that sometime in September 2002, Teng expressed his doubts on the correct volume of fish caught in every fishing voyage.6 In December 2002, Teng informed them that their services had been terminated.7 In his defense, Teng maintained that he did not have any hand in hiring the respondent workers; the maestros, rather than he, invited them to join the venture. According to him, his role was clearly limited to the provision of the necessary capital, tools and equipment, consisting of basnig, gears, fuel, food, and other supplies.8 The VA rendered a decision9 in Tengs favor and declared that no employer-employee relationship existed between Teng and the respondent workers. The dispositive portion of the VAs May 30, 2003 decision reads:

SO ORDERED. WHEREFORE, premises considered, judgment is hereby rendered dismissing the instant complaint for lack of merit. CONCHITA CARPIO MORALES Associate Justice It follows also, that all other claims are likewise dismissed for lack of merit.10 Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. 169704 November 17, 2010 The respondent workers received the VAs decision on June 12, 2003.11 They filed a motion for reconsideration, which was denied in an order dated June 27, 2003 and which they received on July 8, 2003.12 The VA reasoned out that Section 6, Rule VII of the 1989 Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings (1989 Procedural Guidelines) does not provide the remedy of a motion for reconsideration to the party adversely affected by the VAs order or decision.13 The order states: Under Executive Order No. 126, as amended by Executive Order No. 251, and in order to implement Article 260-262 (b) of the Labor Code, as amended by R.A. No. 6715, otherwise known as the Procedural Guidelines in the Conduct of Voluntary Arbitration Proceedings, inter alia: An award or the Decision of the Voluntary Arbitrators becomes final and executory after ten (10) calendar days from receipt of copies of the award or decision by the parties (Sec. 6, Rule VII).

ALBERT TENG, doing business under the firm name ALBERT TENG FISH TRADING, and EMILIA TENGCHUA, Petitioners, vs. ALFREDO S. PAHAGAC, EDDIE D. NIPA, ORLANDO P. LAYESE, HERNAN Y. BADILLES and ROGER S. PAHAGAC, Respondents.

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Moreover, the above-mentioned guidelines do not provide the remedy of a motion for reconsideration to the party adversely affected by the order or decision of voluntary arbitrators.14 On July 21, 2003, the respondent-workers elevated the case to the CA. In its decision of September 21, 2004, the CA reversed the VAs decision after finding sufficient evidence showing the existence of employer-employee relationship: WHEREFORE, premises considered, the petition is granted. The questioned decision of the Voluntary Arbitrator dated May 30, 2003 is hereby REVERSED and SET ASIDE by ordering private respondent to pay separation pay with backwages and other monetary benefits. For this purpose, the case is REMANDED to the Voluntary Arbitrator for the computation of petitioners backwages and other monetary benefits. No pronouncement as to costs. SO ORDERED.
15

It is true that the present rule [Art. 262-A] makes the voluntary arbitration award final and executory after ten calendar days from receipt of the copy of the award or decision by the parties. Presumably, the decision may still be reconsidered by the Voluntary Arbitrator on the basis of a motion for reconsideration duly filed during that period.26 In Coca-Cola Bottlers Phil., Inc., Sales Force Union-PTGWO-Balais v. Coca-Cola Bottlers Philippines, Inc.,27 we likewise ruled that the VAs decision may still be reconsidered on the basis of a motion for reconsideration seasonably filed within 10 days from receipt thereof.28 The seasonable filing of a motion for reconsideration is a mandatory requirement to forestall the finality of such decision.29 We further cited the 1989 Procedural Guidelines which implemented Article 262-A, viz:30 [U]nder Section 6, Rule VII of the same guidelines implementing Article 262-A of the Labor Code, this Decision, as a matter of course, would become final and executory after ten (10) calendar days from receipt of copies of the decision by the parties x x x unless, in the meantime, a motion for reconsideration or a petition for review to the Court of Appeals under Rule 43 of the Rules of Court is filed within the same 10-day period. 31 These rulings fully establish that the absence of a categorical language in Article 262-A does not preclude the filing of a motion for reconsideration of the VAs decision within the 10-day period. Tengs allegation that the VAs decision had become final and executory by the time the respondent workers filed an appeal with the CA thus fails. We consequently rule that the respondent workers seasonably filed a motion for reconsideration of the VAs judgment, and the VA erred in denying the motion because no motion for reconsideration is allowed. The Court notes that despite our interpretation that Article 262-A does not preclude the filing of a motion for reconsideration of the VAs decision, a contrary provision can be found in Section 7, Rule XIX of the Department of Labors Department Order (DO) No. 40, series of 2003:32 Rule XIX Section 7. Finality of Award/Decision. The decision, order, resolution or award of the voluntary arbitrator or panel of voluntary arbitrators shall be final and executory after ten (10) calendar days from receipt of the copy of the award or decision by the parties and it shall not be subject of a motion for reconsideration. Presumably on the basis of DO 40-03, the 1989 Procedural Guidelines was revised in 2005 (2005 Procedural Guidelines),33 whose pertinent provisions provide that: Rule VII DECISIONS Section 6. Finality of Decisions. The decision of the Voluntary Arbitrator shall be final and executory after ten (10) calendar days from receipt of the copy of the decision by the parties. Section 7. Motions for Reconsideration. The decision of the Voluntary Arbitrator is not subject of a Motion for Reconsideration. We are surprised that neither the VA nor Teng cited DO 40-03 and the 2005 Procedural Guidelines as authorities for their cause, considering that these were the governing rules while the case was pending and these directly and fully supported their theory. Had they done so, their reliance on the provisions would have nevertheless been unavailing for reasons we shall now discuss. In the exercise of its power to promulgate implementing rules and regulations, an implementing agency, such as the Department of Labor,34 is restricted from going beyond the terms of the law it seeks to implement; it should neither modify nor improve the law. The agency formulating the rules and guidelines cannot exceed the statutory authority granted to it by the legislature.35 By allowing a 10-day period, the obvious intent of Congress in amending Article 263 to Article 262-A is to provide an opportunity for the party adversely affected by the VAs decision to seek recourse via a motion for reconsideration or a petition for review under Rule 43 of the Rules of Court filed with the CA. Indeed, a motion for reconsideration is the more appropriate remedy in line with the doctrine of exhaustion of administrative remedies. For this reason, an appeal from administrative agencies to the CA via Rule 43 of the Rules of Court requires exhaustion of available remedies36 as a condition precedent to a petition under that Rule.

Teng moved to reconsider the CAs decision, but the CA denied the motion in its resolution of September 1, 2005.16 He, thereafter, filed the present Petition for Review on Certiorari under Rule 45 of the Rules of Court, claiming that: a. the VAs decision is not subject to a motion for reconsideration; and b. no employer-employee relationship existed between Teng and the respondent workers. Teng contends that the VAs decision is not subject to a motion for reconsideration in the absence of any specific provision allowing this recourse under Article 262-A of the Labor Code.17 He cites the 1989 Procedural Guidelines, which, as the VA declared, does not provide the remedy of a motion for reconsideration.18 He claims that after the lapse of 10 days from its receipt, the VAs decision becomes final and executory unless an appeal is taken.19 He argues that when the respondent workers received the VAs decision on June 12, 2003,20 they had 10 days, or until June 22, 2003, to file an appeal. As the respondent workers opted instead to move for reconsideration, the 10-day period to appeal continued to run; thus, the VAs decision had already become final and executory by the time they assailed it before the CA on July 21, 2003.21 Teng further insists that the VA was correct in ruling that there was no employer-employee relationship between him and the respondent workers. What he entered into was a joint venture agreement with the maestros, where Tengs role was only to provide basnig, gears, nets, and other tools and equipment for every fishing voyage.22 THE COURTS RULING We resolve to deny the petition for lack of merit. Article 262-A of the Labor Code does not prohibit the filing of a motion for reconsideration. On March 21, 1989, Republic Act No. 6715 took effect, amending, among others, Article 263 of the Labor Code which was originally worded as: Art. 263 x x x Voluntary arbitration awards or decisions shall be final, unappealable, and executory. As amended, Article 263 is now Article 262-A, which states: Art. 262-A. x x x [T]he award or decision x x x shall contain the facts and the law on which it is based. It shall be final and executory after ten (10) calendar days from receipt of the copy of the award or decision by the parties. Notably, Article 262-A deleted the word "unappealable" from Article 263. The deliberate selection of the language in the amendatory act differing from that of the original act indicates that the legislature intended a change in the law, and the court should endeavor to give effect to such intent.24 We recognized the intent of the change of phraseology in Imperial Textile Mills, Inc. v. Sampang,25 where we ruled that:
23

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The requirement that administrative remedies be exhausted is based on the doctrine that in providing for a remedy before an administrative agency, every opportunity must be given to the agency to resolve the matter and to exhaust all opportunities for a resolution under the given remedy before bringing an action in, or resorting to, the courts of justice.37 Where Congress has not clearly required exhaustion, sound judicial discretion governs,38guided by congressional intent.39 By disallowing reconsideration of the VAs decision, Section 7, Rule XIX of DO 40-03 and Section 7 of the 2005 Procedural Guidelines went directly against the legislative intent behind Article 262-A of the Labor Code. These rules deny the VA the chance to correct himself40 and compel the courts of justice to prematurely intervene with the action of an administrative agency entrusted with the adjudication of controversies coming under its special knowledge, training and specific field of expertise. In this era of clogged court dockets, the need for specialized administrative agencies with the special knowledge, experience and capability to hear and determine promptly disputes on technical matters or intricate questions of facts, subject to judicial review, is indispensable.41 In Industrial Enterprises, Inc. v. Court of Appeals,42 we ruled that relief must first be obtained in an administrative proceeding before a remedy will be supplied by the courts even though the matter is within the proper jurisdiction of a court.43 There exists an employer-employee relationship between Teng and the respondent workers. We agree with the CAs finding that sufficient evidence exists indicating the existence of an employer-employee relationship between Teng and the respondent workers. While Teng alleged that it was the maestros who hired the respondent workers, it was his company that issued to the respondent workers identification cards (IDs) bearing their names as employees and Tengs signature as the employer. Generally, in a business establishment, IDs are issued to identify the holder as a bona fide employee of the issuing entity. For the 13 years that the respondent workers worked for Teng, they received wages on a regular basis, in addition to their shares in the fish caught.44 The worksheet showed that the respondent workers received uniform amounts within a given year, which amounts annually increased until the termination of their employment in 2002.45 Tengs claim that the amounts received by the respondent workers are mere commissions is incredulous, as it would mean that the fish caught throughout the year is uniform and increases in number each year. More importantly, the element of control which we have ruled in a number of cases to be a strong indicator of the existence of an employer-employee relationship is present in this case. Teng not only owned the tools and equipment, he directed how the respondent workers were to perform their job as checkers; they, in fact, acted as Tengs eyes and ears in every fishing expedition. Teng cannot hide behind his argument that the respondent workers were hired by the maestros. To consider the respondent workers as employees of the maestros would mean that Teng committed impermissible labor-only contracting. As a policy, the Labor Code prohibits labor-only contracting: ART. 106. Contractor or Subcontractor x x x The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting-out of labor. xxxx There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. Section 5 of the DO No. 18-02,46 which implements Article 106 of the Labor Code, provides: Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited.For this purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the following elements are present:

(i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or (ii) The contractor does not exercise the right to control over the performance of the work of the contractual employee. In the present case, the maestros did not have any substantial capital or investment. Teng admitted that he solely provided the capital and equipment, while the maestros supplied the workers. The power of control over the respondent workers was lodged not with the maestros but with Teng. As checkers, the respondent workers main tasks were to count and classify the fish caught and report them to Teng. They performed tasks that were necessary and desirable in Tengs fishing business. Taken together, these incidents confirm the existence of a labor-only contracting which is prohibited in our jurisdiction, as it is considered to be the employers attempt to evade obligations afforded by law to employees.
1avvphi1

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

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