Applicable Laws and Basic Principles

1. MATERNITY CHILDREN'S HOSPITAL, represented by ANTERA L. DORADO, President vs.

THE HONORABLE SECRETARY OF LABOR AND THE REGIONAL DlRECTOR OF LABOR,
REGION X

Petitioner is a semi-government hospital, managed by the Board of Directors of the Cagayan de

Oro Women's Club and Puericulture Center, headed by Mrs. Antera Dorado, as holdover
President. The hospital derives its finances from the club itself as well as from paying patients,
averaging 130 per month. It is also partly subsidized by the Philippine Charity Sweepstakes
Office and the Cagayan De Oro City government.
Petitioner has forty-one (41) employees. Aside from salary and living allowances, the employees
are given food, but the amount spent therefor is deducted from their respective salaries.
Ten (10) employees of the petitioner employed in different capacities/positions filed a complaint
with the Office of the Regional Director of Labor and Employment, Region X, for underpayment
of their salaries and ECOLAS.
The Labor Standard and Welfare Officers submitted their report confirming that there was
underpayment of wages and ECOLAs of all the employees by the petitioner.
Based on this inspection report and recommendation, the Regional Director issued an Order,
directing the payment of P723,888.58, representing underpayment of wages and ECOLAs to all
the petitioner's employees.
Petitioner appealed from this Order to the Minister of Labor and Employment, Hon. Augusto S.
Sanchez, who rendered a Decision modifying the said Order in that deficiency wages and
ECOLAs should be computed only from May 23, 1983 to May 23, 1986.
The petitioner filed a motion for reconsideration which was denied by the Secretary of Labor in
his Order dated May 13, 1987, for lack of merit.
The instant petition questions the all-embracing applicability of the award involving salary
differentials and ECOLAS, in that it covers not only the hospital employees who signed the
complaints, but also those (a) who are not signatories to the complaint, and (b) those who were
no longer in the service of the hospital at the time the complaints were filed. Petitioner further
questions the authority of the Regional Director to award salary differentials and ECOLAs to
private respondents, alleging that the original and exclusive jurisdiction over money claims is
properly lodged in the Labor Arbiter, based on Article 217, paragraph 3 of the Labor Code.

Issue: Whether or not the Regional Director had jurisdiction over the case and if so, the extent of
coverage of any award that should be forthcoming, arising from his visitorial and enforcement
powers under Article 128 of the Labor Code.
Held:
This is a labor standards case, and is governed by Art. 128-b of the Labor Code, as amended by
E.O. No. 111. Under the present rules, a Regional Director exercises both visitorial and enforcement
power over labor standards cases, and is therefore empowered to adjudicate money
claims, provided there still exists an employer-employee relationship, and the findings of the regional
office is not contested by the employer concerned.
Labor standards refer to the minimum requirements prescribed by existing laws, rules, and
regulations relating to wages, hours of work, cost of living allowance and other monetary and
welfare benefits, including occupational, safety, and health standards (Section 7, Rule I, Rules
on the Disposition of Labor Standards Cases in the Regional Office, dated September 16, 1987).

Petition DISMISSED, as regards all persons still employed in the Hospital at the time of the filing of
the complaint, but GRANTED as regards those employees no longer employed at that time.

ER-EE Relationship
10. PHILIPPINE FUJI XEROX CORPORATION, JENNIFER A. BERNARDO, and ATTY.
VICTORINO LUIS vs. NATIONAL LABOR RELATIONS COMMISSION (First Division),
PAMBANSANG KILUSAN NG PAG-GAWA, (KILUSAN)-TUCP, PHILIPPINE XEROX EMPLOYEES
UNION-KILUSAN and PEDRO GARADO
Facts:

Petitioner Fuji Xerox entered into an agreement under which Skillpower, Inc. supplied workers to
operate copier machines of Fuji Xerox as part of the latter's "Xerox Copier Project" in its sales
offices. Private respondent Pedro Garado was assigned as key operator at Fuji Xerox's branch.
at Buendia, Makati, Metro Manila.

Three years after, Garado went on leave and his place was taken over by a substitute. Upon his
return in March, he discovered that there was a spoilage of over 600 copies. Afraid that he might
be blamed for the spoilage, he tried to talk a service technician of Fuji Xerox into stopping the
meter of the machine.

The technician refused Garado's request, but this incident came to the knowledge of Fuji Xerox
which reported the matter to Skillpower, Inc. The next day, Skillpower, Inc. wrote Garado,
ordering him to explain. In the meantime, it suspended him from work. Garado filed a complaint
for illegal dismissal.

The Labor Arbiter found that Garado applied for work to Skillpower, Inc.; that in 1980 he was
employed and made to sign a contract; that although he received his salaries regularly from Fuji
Xerox, it was Skillpower, Inc. which exercised control and supervision over his work; that
Skillpower, Inc. had substantial capital and investments in machinery, equipment, and service
vehicles, and assets. On the basis of these findings the Labor Arbiter held in a decision that
Garado was an employee of Skillpower, Inc., and that he had merely been assigned by
Skillpower, Inc. to Fuji Xerox. Hence, the Labor Arbiter dismissed Garado's complaint.

The NLRC found Garado to be infact an employee of petitioner Fuji Xerox and by it to have been
illegally dismissed. The NLRC held that although Skillpower, Inc. had substantial capital assets,
the fact was that the copier machines, which Garado operated, belonged to petitioner Fuji Xerox,
and that although it was Skillpower, Inc. which had suspended Garado, the latter merely acted at
the behest of Fuji Xerox. The NLRC found that Garado worked under the control and supervision
of Fuji Xerox, which paid his salaries, and that Skillpower, Inc. merely acted as paymaster-agent
of Fuji Xerox. The NLRC held that Skillpower, Inc. was a labor-only contractor and Garado
should be deemed to have been directly employed by Fuji Xerox, regardless of the agreement
between it and Skillpower, Inc.

Issue: whether private respondent is an employee of Fuji Xerox (as the NLRC found) or of
Skillpower, Inc. (as the Labor Arbiter found).
Held: The contentions of the petitioner are without merit. The court held that private respondent is an
employee of Fuji Xerox and accordingly dismiss the petition for review of Fuji Xerox.
1. Fuji Xerox argues that Skillpower, Inc. is an independent contractor and that Garado is its
employee. Fuji Xerox contends that Garado was actually recruited by Skillpower, Inc. as part
of its personnel pool and later merely assigned to it (petitioner). Petitioners claim that
Skillpower, Inc. has other clients to whom it provided "temporary" services. That, however, is
irrelevant. What is important is that once employed, Garado was never assigned to any other
client of Skillpower, Inc. In fact, although under the agreement Skillpower, Inc. was supposed
to provide only "temporary" services, Skillpower, Inc. actually supplied Fuji Xerox the labor
which the latter needed for its Xerox Copier Project for seven (7) years, from 1977 to 1984.
2. Petitioner contends that the service provided by Skillpower, Inc., namely, operating
petitioners' xerox machine, is not directly related nor necessary to the business of selling and
leasing copier machines of petitioner. The Court disagreed. As correctly held by the NLRC, at
the very least, the Xerox Copier Project of petitioners promotes goodwill for the company . It
may not generate income for the company but there are activities which a company may find
necessary to engage in because they ultimately redound to its benefit. Operating the
company's copiers at its branches advertises the quality of their products and promotes the
company's reputation and public image. It also advertises the utility and convenience of
having a copier machine. It is noteworthy that while not operated for profit the copying
service is not intended either to be "promotional," as, indeed, petitioner charged a fee for the
copies made. It is wrong to say that if a task is not directly related to the employer's
business, or it falls under what may be considered "housekeeping activities," the one
performing the task is a job contractor. The determination of the existence of an
employer-employee relationship is defined by law according to the facts of each case,
regardless of the nature of the activities involved.
3. Petitioners contend that it never exercised control over the conduct of private respondent. It
is also contended that it was Skillpower, Inc. which twice required private respondent to
explain why he should not be dismissed for the spoilage in Fuji Xerox's Buendia branch and
suspended him pending the result of the investigation. According to petitioners, although
they conducted an administrative investigation, the purpose was only to determine the
complicity of their own employees in the incident, if any, and any criminal liability of private
respondent. They dispel any doubt that Fuji Xerox exercised disciplinary authority over
Garado and that Skillpower, Inc. issued the order of dismissal merely in obedience to the
decision of petitioner.
4. Petitioner avers that Skillpower, Inc. is a highly-capitalized business venture, registered as
an "independent employer" with the Securities and Exchange Commission as well as the
Department of Labor and Employment. Petitioner Fuji Xerox argues that Skillpower, Inc. had
typewriters and service vehicles for the conduct of its business independently of the
petitioner. But typewriters and vehicles bear no direct relationship to the job for which

Skillpower, Inc. contracted its service of operating copier machines and offering copying
services to the public. The fact is that Skillpower, Inc. did not have copying machines of its
own. What it did was simply to supply manpower to Fuji Xerox. The phrase "substantial
capital and investment in the form of tools, equipment, machineries, work premises, and
other materials which are necessary in the conduct of his business," in the Implementing
Rules clearly contemplates tools, equipment, etc., which are directly related to the service it
is being contracted to render. One who does not have an independent business for
undertaking the job contracted for is just an agent of the employer.
5. The Agreement between petitioner Fuji Xerox and Skillpower, Inc. provides that Skillpower,
Inc. is an independent contractor and that the workers hired by it "shall not, in any manner
and under any circumstances, be considered employees of [the] Company, and that the
Company has no control or supervision whatsoever over the conduct of the Contractor or
any of its workers in respect to how they accomplish their work or perform the Contractor's
obligations under this AGREEMENT."
Skillpower, Inc. is, therefore, a "labor-only" contractor and Garado is not its employee. No grave
abuse of discretion can thus be imputed to the NLRC for declaring petitioner Fuji Xerox guilty of
illegal dismissal of private respondent.
The petition for certiorari is DISMISSED for lack of merit.

ER-EE Relationship
19. VICENTE SY, TRINIDAD PAULINO, 6BS TRUCKING CORPORATION, and SBT1 TRUCKING
CORPORATION vs. HON. COURT OF APPEALS and JAIME SAHOT
Facts:

Sometime in 1958, private respondent Jaime Sahot5 started working as a truck helper for
petitioners family-owned trucking business named Vicente Sy Trucking. In 1965, he became a
truck driver of the same family business, renamed T. Paulino Trucking Service, later 6Bs
Trucking Corporation in 1985, and thereafter known as SBT Trucking Corporation since 1994.
Throughout all these changes in names and for 36 years, private respondent continuously
served the trucking business of petitioners.

In April 1994, Sahot was already 59 years old. He had been incurring absences as he was
suffering from various ailments. Particularly causing him pain was his left thigh, which greatly
affected the performance of his task as a driver. He inquired about his medical and retirement
benefits with the Social Security System (SSS) but discovered that his premium payments had
not been remitted by his employer.

Sahot had filed a week-long leave sometime in May 1994. He was medically examined and
treated for EOR, presleyopia, hypertensive retinopathy G II and heart enlargement. On said

grounds, Belen Paulino of the SBT Trucking Service management told him to file a formal
request for extension of his leave. At the end of his week-long absence, Sahot applied for
extension of his leave for the whole month of June. It was at this time when petitioners allegedly
threatened to terminate his employment should he refuse to go back to work.

Petitioners dismissed Sahot from work, effective June 30. He ended up sick, jobless and
penniless.

Sahot filed with the NLRC NCR Arbitration Branch, a complaint for illegal dismissal. He prayed
for the recovery of separation pay and attorneys fees against Vicente Sy and Trinidad PaulinoSy, Belen Paulino, Vicente Sy Trucking, T. Paulino Trucking Service, 6Bs Trucking and SBT
Trucking, herein petitioners.

Petitioners contend that private respondent was not illegally dismissed as a driver because he
was in fact petitioners industrial partner. They add that it was not until the year 1994, when SBT
Trucking Corporation was established, and only then did respondent Sahot become an
employee of the company, with a monthly salary that reached P4,160.00 at the time of his
separation.

The NLRC NCR Arbitration Branch, through Labor Arbiter Ariel Cadiente Santos, ruled that there
was no illegal dismissal in Sahots case. Moreover, said the Labor Arbiter, petitioners and private
respondent were industrial partners before January 1994. The Labor Arbiter concluded by
ordering petitioners to pay "financial assistance" of P15,000 to Sahot for having served the
company as a regular employee since January 1994 only.

On appeal, the National Labor Relations Commission modified the judgment of the Labor Arbiter.
It declared that private respondent was an employee, not an industrial partner, since the start.

Petitioners assailed the decision of the NLRC before the Court of Appeals. The appellate court
affirmed with modification the judgment of the NLRC.

Issue: Whether or not an employer-employee relationship existed between petitioners and

respondent Sahot
Held: Yes.
The Court agrees with complainant that there was error committed by the Labor Arbiter when he
concluded that complainant was an industrial partner prior to 1994.
Private respondent, for his part, denies that he was ever an industrial partner of petitioners. There
was no written agreement, no proof that he received a share in petitioners profits, nor was there
anything to show he had any participation with respect to the running of the business.
The elements to determine the existence of an employment relationship are: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the

employers power to control the employees conduct. The most important element is the employers
control of the employees conduct, not only as to the result of the work to be done, but also as to the
means and methods to accomplish it.
As found by the appellate court, petitioners owned and operated a trucking business since the 1950s
and by their own allegations, they determined private respondents wages and rest day. Records of
the case show that private respondent actually engaged in work as an employee. During the entire
course of his employment he did not have the freedom to determine where he would go, what he
would do, and how he would do it. He merely followed instructions of petitioners and was content to
do so, as long as he was paid his wages. Indeed, said the CA, private respondent had worked as a
truck helper and driver of petitioners not for his own pleasure but under the latters control.
Article 1767 of the Civil Code states that in a contract of partnership two or more persons bind
themselves to contribute money, property or industry to a common fund, with the intention of dividing
the profits among themselves. Not one of these circumstances is present in this case. Thus, the
NLRC and the CA did not err in reversing the finding of the Labor Arbiter that private respondent was
an industrial partner from 1958 to 1994.
On this point, we affirm the findings of the appellate court and the NLRC. Private respondent Jaime
Sahot was not an industrial partner but an employee of petitioners from 1958 to 1994. The existence
of an employer-employee relationship is ultimately a question of fact and the findings thereon by the
NLRC, as affirmed by the Court of Appeals, deserve not only respect but finality when supported by
substantial evidence. Substantial evidence is such amount of relevant evidence which a reasonable
mind might accept as adequate to justify a conclusion.
Time and again this Court has said that "if doubt exists between the evidence presented by the
employer and the employee, the scales of justice must be tilted in favor of the latter." Here, we
entertain no doubt. Private respondent since the beginning was an employee of, not an industrial
partner in, the trucking business.

Right to Self-Organization
28. PAMANTASAN NG LUNGSOD NG MAYNILA (PLM) vs.CIVIL SERVICE COMMISSION (CSC),
PAMANTASAN NG LUNGSOD NG MAYNILA FACULTY ORGANIZATION (PLMFO), ROBERTO
AMORES, ROLANDO AUSTRIA, VICENTE BANAGALE, NEMENCIO CABATUANDO, MANOLO
HINA, ELEANOR JIMENEZ, ANITA LEYSON, JONATHAN MANZANO, JOSE MEJIA, ESTELITA
PINEDA, LORDEO POQUIZ, ALFREDO RAZON, MA. ZELDA REYES, SALVACION RODRIGUEZ,
BELINDA SANTOS, and VIRGILIO ZAMORA

The sixteen (16) individual private respondents were full-time instructors of PLM under
"temporary contracts" of employment renewable on a yearly basis. They, among other
instructors, joined the PLMFO.

Uniform notices of termination, were individually sent to private respondents informing them of
"the expiration of their temporary appointments at the close of office hours on 31 May 1990" and
the non-renewal of their appointments for the school year (SY) 1990-1991. A series of lettercomplaints addressed to the CSC by private respondents evoked a letter-response from PLM
traversing the complainants' right to compel a renewal of the appointments. They were advised
that their retention was not recommended by their respective Deans.

Private respondents, through PLMFO, filed with the CSC a verified complaint for illegal dismissal
and unfair labor practice against petitioner and its officers.

Petitioner denied having committed any unfair labor practice or having illegally dismissed private
respondents. In its defense, PLM interposed (1) the temporary nature of private respondents'
contracts of employment and (2) reasons that could justify the non- renewal of the contracts.

Public respondent CSC referred the case to the Public Sector Labor-Management
Council ("PSLMC"). In a Resolution the PSLMC found petitioner guilty of "Unfair Labor Practice" and
held that private respondents "should be reinstated."

Petitioner's request for reconsideration was denied in PSLMC's Order. Forthwith, the PSLMC
transmitted the case to the CSC for appropriate action.

Public respondent CSC, acting on the case forwarded to it by the PSLMC, issued a resolution
sustaining the findings of the PSLMC. The CSC, accordingly, directed the reinstatement, with
back salaries, of private respondents.

The request for the reconsideration of the order was denied by the CSC. Respondent CSC, in
denying petitioner's motion, held, among other things, that the findings of fact by the PSLMC
deserved the respect of the Commission and that there was no further need for it, to conduct a
hearing of its own.

PLM filed an instant petition for certiorari before the SC.

Issue: WON the Civil Service Commission acted with grave abuse of discretion tantamount to lack of
jurisdiction and denial of due process when it adopted entirely, without according the petitioner the
opportunity to be heard, the findings of facts and resolutions of the Public Sector Labor and
Management Council, a body separate and distinct and with different jurisdiction from that of the
Commission
WON the CSC committed grave abuse of discretion in directing reinstatement and payment of
backwages to private respondents whose temporary contracts of employment had already expired.
Held: NO.
Petitioner stresses that the CSC and the PSLMC both exercise quasi-judicial functions but not on
identical issues and subject matter; that the PSLMC possesses jurisdiction only over the unfair labor

practice aspect of private respondents' complaint but that it is the CSC which alone can take
cognizance over the question of illegal dismissal; and that, therefore, when the CSC has simply
adopted the recommendations of the PSLMC in the unfair labor practice case in resolving the issue
of illegal dismissal and ordering the reinstatement of private respondents without conducting further
proceedings of its own, it has effectively denied petitioner of its right to due process.
PSLMC's jurisdiction over the unfair labor practice case filed by private respondents against
petitioner is not disputed. The PSLMC, in case No. 00-06-91, has conducted its proceedings in
accordance with its legal mandate.
Petitioner insists that when CSC has ruled on the matter of illegal dismissal without conducting any
further hearing of its own, relying, instead, on PSLMC's finding of unfair labor practice on the part of
petitioner, the latter has thereby been denied due process. Unfortunately for petitioner, however, the
two supposed independent issues, i.e., the unfair labor practice charge and the complaint for illegal
dismissal both filed by private respondents, are, in fact, here unavoidably interlinked. The nonrenewal of an employment contract with a term, it is true, is ordinarily a valid mode of removal at the
end of each period. This rule, however, must yield to the superior constitutional right of employees,
permanent or temporary, to self-organization. While, a temporary employment may be ended with or
without cause, it certainly may not, however, be terminated for an illegal cause.
Petitioner claims that it was denied "due process." It itself admitted, however, that "it manifested
(before the PSLMC) its intention to submit evidence (that it had other valid grounds for not renewing
private respondents' temporary contracts of employment) which, inadvertently or otherwise, it failed
to present . . . This supposed evidence, if true and being material to substantiate its defense against the
unfair labor charge, should have been duly presented, but it did not. Petitioner should not now be heard to
complain that it was denied due process. The court ruled, time and again, that "due process" was
designed to afford an opportunity to be heard, not that an actual hearing should always and indispensably
be held.
The finding of the PSLMC that the non-renewal by petitioner of the questioned contracts of
employment had been motivated by private respondents' union activities is conclusive on the parties.
Indeed, this Court's resolution in G.R. No. 105157 (PLM vs. PSLMC et al.) which has long become
final and executory should now render that matter a fait accompli.
When the case was thus referred to the CSC by the PSLMC to take "appropriate action" it
understandably meant that the CSC should take the necessary steps of reinstating the illegally
dismissed employees.
WHEREFORE, the petition for certiorari is DISMISSED and the appealed resolutions of the Civil
Service Commission are AFFIRMED.

37. DELA SALLE UNIVERSITY vs. DELA SALLE UNIVERSITY EMPLOYEES ASSOCIATION
(DLSUEA) and BUENAVENTURA MAGSALIN
Facts:

Dela Salle University (hereinafter referred to as UNIVERSITY) and Dela Salle University
Employees Association National Federation of Teachers and Employees Union (DLSUEANAFTEU), which is composed of regular non-academic rank and file employees, (hereinafter
referred to as UNION) entered into a collective bargaining agreement with a life span of three (3)
years.
During the freedom period, or 60 days before the expiration of the said collective bargaining
agreement, the Union initiated negotiations with the University for a new collective bargaining
agreement which, however, turned out to be unsuccessful, hence, the Union filed a Notice of
Strike with the National Conciliation and Mediation Board, National Capital Region.
After several conciliation-mediation meetings, five (5) out of the eleven (11) issues raised in the
Notice of Strike were resolved by the parties. A partial collective bargaining agreement was
thereafter executed by the parties. The parties entered into a Submission Agreement, identifying
the remaining six (6) unresolved issues for arbitration, namely: "(1) scope of the bargaining unit,
(2) union security clause, (3) security of tenure, (4) salary increases for the third and fourth years
[this should properly read second and third years] of the collective bargaining agreement, (5)
indefinite union leave, reduction of the union president's workload, special leave, and finally, (6)
duration of the agreement."
The parties appointed Buenaventura Magsalin as voluntary arbitrator. The voluntary arbitrator
rendered a decision the first issue involving the scope of the bargaining unit, ruled that ". . . the
Computer Operators assigned at the CSC [Computer Services Center], just like any other
Computer Operators in other units, [should be] included as members of the bargaining
unit," 13 after finding that "[e]vidently, the Computer Operators are presently doing clerical and
routinary work and had nothing to do with [the] setting of management policies for the University,
as [may be] gleaned from the duties and responsibilities attached to the position and embodied
in the CSC [Computer Services Center] brochure. They may have, as argued by the University,
access to vital information regarding the University's operations but they are not necessarily
confidential." 14 Regarding the discipline officers, the voluntary arbitrator ". . . believes that this
type of employees belong (sic) to the rank-and-file on the basis of the nature of their job." 15 With
respect to the employees of the College of St. Benilde, the voluntary arbitrator found that the
College of St. Benilde has a personality separate and distinct from the University and thus, held
". . . that the employees therein are outside the bargaining unit of the University's rank-and-file
employees." 16

On the second issue regarding the propriety of the inclusion of a union shop clause in the collective
bargaining agreement, in addition to the existing maintenance of membership clause, the voluntary
arbitrator opined that a union shop clause ". . . is not a restriction on the employee's right of (sic)
freedom of association but rather a valid form of union security while the CBA is in force and in
accordance with the Constitutional policy to promote unionism and collective bargaining and
negotiations. The parties therefore should incorporate such union shop clause in their CBA." 17
On the third issue with respect to the use of the "last-in-first-out" method in case of retrenchment and
transfer to other schools or units, the voluntary arbitrator upheld the ". . . elementary right and
prerogative of the management of the University to select and/or choose its employees, a right
equally recognized by the Constitution and the law. The employer, in the exercise of this right, can
adopt valid and equitable grounds as basis for lay-off or separation, like performance, qualifications,
competence, etc. Similarly, the right to transfer or reassign an employee is an employer's exclusive
right and prerogative." 18
Regarding the fourth issue concerning salary increases for the second and third years of the
collective bargaining agreement, the voluntary arbitrator opined that the ". . .proposed budget of the
University for SY 1992-93 could not sufficiently cope up with the demand for increases by the
Union. . . . . . . . With the present financial condition of the University, it cannot now be required to

grant another round of increases through collective bargaining without exhausting its coffers for
other legitimate needs of the University as an institution," 19 thus, he ruled that ". . . the University can
no longer be required to grant a second round of increase for the school years under consideration
and charge the same to the incremental proceeds." 20
On the fifth issue as to the Union's demand for a reduction of the workload of the union president,
special leave benefits and indefinite union leave with pay, the voluntary arbitrator rejected the same,
ruling that unionism ". . . is no valid reason for the reduction of the workload of its President," 21 and
that there is ". . . no sufficient justification to grant an indefinite leave." 22 Finding that the Union and
the Faculty Association are not similarly situated, technically and professionally, 23 and that "[w]hile
professional growth is highly encouraged on the part of the rank-and-file employees, this educational
advancement would not serve in the same degree as demanded of the faculty members," 24 the
voluntary arbitrator denied the Union's demand for special leave benefits.
On the last issue regarding the duration of the collective bargaining agreement, the voluntary
arbitrator ruled that ". . . when the parties forged their CBA and signed it on 19 November 1990,
where a provision on duration was explicitly included, the same became a binding agreement
between them. Notwithstanding the Submission Agreement, thereby reopening this issue for
resolution, this Voluntary Arbitrator is constrained to respect the original intention of the parties, the
same being not contrary to law, morals or public policy." 25 As to the economic aspect of the
collective bargaining agreement, the voluntary arbitrator opined that the ". . . economic provisions of
the CBA shall be re-opened after the third year in compliance with the mandate of the Labor Code,
as amended."26
Subsequently, both parties filed their respective motions for reconsideration which, however, were
not entertained by the voluntary arbitrator "pursuant to existing rules and jurisprudence governing
voluntary arbitration cases." 27
On March 5, 1993, the University filed with the Second Division of this Court, a petition
for certiorari with temporary restraining order and/or preliminary injunction assailing the decision of
the voluntary arbitrator, as having been rendered "in excess of jurisdiction and/or with grave abuse of
discretion." 28 Subsequently, on May 24, 1993, the Union also filed a petition for certiorari with the
First Division. 29 Without giving due course to the petition pending before each division, the First and
Second Divisions separately resolved to require the respondents in each petition, including the
Solicitor General on behalf of the voluntary arbitrator, to file their respective Comments. 30 Upon
motion by the Solicitor General dated July 29, 1993, both petitions were consolidated and
transferred to the Second Division. 31
In his consolidated Comment 32 filed on September 9, 1993 on behalf of voluntary arbitrator
Buenaventura C. Magsalin, the Solicitor General agreed with the voluntary arbitrator's assailed
decision on all points except that involving the employees of the College of St. Benilde. According to
the Solicitor General, the employees of the College of St. Benilde should have been included in the
bargaining unit of the rank-and-file employees of the University. 33 The Solicitor General came to this
conclusion after finding ". . . sufficient evidence to justify the Union's proposal to consider the
University and the CSB [College of St. Benilde] as only one entity because the latter is but a mere
integral part of the University," to wit: 34
1. One of the duties and responsibilities of the CSB's Director of Academic Services is to
coordinate with the University's Director of Admissions regarding the admission of freshmen,
shiftees and transferees (Annex "3" of the University's Reply);
2. Some of the duties and responsibilities of the CSB's Administrative Officer are as follows:

A. xxx xxx xxx

4. Recommends and implements personnel policies and guidelines (in accordance with the
Staff Manual) as well as pertinent existing general policies of the university as a whole. . . . .
12. Conducts and establishes liaison with all the offices concerned at the Main Campus as
well (sic) with other government agencies on all administrative-related matters. . . .
B. xxx xxx xxx
7. Handles processing, canvassing and direct purchasing of all requisitions worth more than
P10,000 or less. Coordinates and canvasses with the Main Campus all requisitions worth
more than P10,000. . . .
C. xxx xxx xxx
7. Plans and coordinates with the Security and Safety Committee at the Main Campus the
development of a security and safety program during times of emergency or occurrence of
fire or other natural calamities. . . . (Annex "4" of the University's Reply).
3. The significant role which the University assumes in the admission of students at the CSB
is revealed in the following provisions of the CSB's Bulletin for Arts and Business Studies
Department for the schoolyear 1992-1993, thus:
Considered in the process of admission for a (sic) high school graduate applicants are the
following criteria: results of DLSU College Entrance Examination . . . .
Admission requirements for transferees are: . . . and an acceptable score in the DLSU
admission test. . . .
Shiftees from DLSU who are still eligible to enroll may be admitted in accordance with the
DLSU policy on shifting. Considering that there sometimes exist exceptional cases where a
very difficult but temporary situation renders a DLSU student falling under this category a last
chance to be re-admitted provided he meets the cut-off scores required in the qualifying
examination administered by the university. . . .
He may not be remiss in his study obligations nor incur any violation whatsoever, as such will
be taken by the University to be an indication of his loss of initiative to pursue further studies
at DLSU. In sch (sic) a case, he renders himself ineligible to continue studying at DLSU.
DLSU thus reserves the right to the discontinuance of the studies of any enrolee whose
presence is inimical to the objectives of the CSB/DLSU. . . .
As a college within the university, the College of St. Benilde subscribes to the De La Salle
Mission." (Annexes "C-1," "C-2," and "C-3" of the Union's Consolidated Reply and Rejoinder)
4. The academic programs offered at the CSB are likewise presented in the University's
Undergraduate Prospectus for schoolyear 1992-1993 (Annex "D" of the Union's
Consolidated Reply and Rejoinder).
5. The Leave Form Request (Annex "F" of the Union's Position Paper) at the CSB requires
prior permission from the University anent leaves of CSB employees, to wit:

AN EMPLOYEE WHO GOES ON LEAVE WITHOUT PRIOR PERMISSION FROM THE

UNIVERSITY OR WHO OVEREXTENDS THE PERIOD OF HIS APPROVED LEAVE
WITHOUT SECURING AUTHORITY FROM THE UNIVERSITY, OR WHO REFUSE TO BE
RECALLED FROM AN APPROVED LEAVE SHALL BE CONSIDERED ABSENT WITHOUT
LEAVE AND SHALL BE SUBJECT TO DISCIPLINARY ACTION.
6. The University officials themselves claimed during the 1990 University Athletic Association
of the Philippines (UAAP) meet that the CSB athletes represented the University since the
latter and the CSB comprise only one entity.
On February 9, 1994, this Court resolved to give due course to these consolidated petitions and to
require the parties to submit their respective memoranda. 35
In its memorandum filed on April 28, 1994, 36 pursuant to the above-stated Resolution,
University raised the following issues for the consideration of the Court: 38

37

the

I.
WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE
VOLUNTARY ARBITRATOR WHEN HE INCLUDED, WITHIN THE BARGAINING UNIT
COMPRISING THE UNIVERSITY'S RANK-AND-FILE EMPLOYEES, THE COMPUTER
OPERATORS ASSIGNED AT THE UNIVERSITY'S COMPUTER SERVICES CENTER AND
THE UNIVERSITY'S DISCIPLINE OFFICERS, AND WHEN HE EXCLUDED THE COLLEGE
OF SAINT BENILDE EMPLOYEES FROM THE SAID BARGAINING UNIT.
II.
WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE
VOLUNTARY ARBITRATOR WHEN HE UPHELD THE UNION'S DEMAND FOR THE
INCLUSION OF A UNION SHOP CLAUSE IN THE PARTIES' COLLECTIVE BARGAINING
AGREEMENT.
III.
WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE
VOLUNTARY ARBITRATOR WHEN HE DENIED THE UNION'S PROPOSAL FOR THE
"LAST-IN-FIRST-OUT" METHOD OF LAY-OFF IN CASES OF RETRENCHMENT.
IV.
WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE
VOLUNTARY ARBITRATOR WHEN HE RULED THAT THE UNIVERSITY CAN NO
LONGER BE REQUIRED TO GRANT A SECOND ROUND OF WAGE INCREASES FOR
THE SCHOOL YEARS 1991-92 AND 1992-93 AND CHARGE THE SAME TO THE
INCREMENTAL PROCEEDS.
V.
WHETHER OR NOT GRAVE ABUSE OF DISCRETION WAS COMMITTED BY THE
VOLUNTARY ARBITRATOR WHEN HE DENIED THE UNION'S PROPOSALS ON THE

DELOADING OF THE UNION PRESIDENT, IMPROVED LEAVE BENEFITS AND

INDEFINITE UNION LEAVE WITH PAY.
The Union, on the other hand, raised the following issues, in its memorandum, 39 filed pursuant to
Supreme Court Resolution dated February 9, 1994, 40 to wit; that the voluntary arbitrator committed
grave abuse of discretion in:
(1) FAILING AND/OR REFUSING TO PIERCE THE VEIL OF CORPORATE FICTION OF
THE COLLEGE OF ST. BENILDE-DLSU DESPITE THE PRESENCE OF SUFFICIENT
BASIS TO DO SO AND IN FINDING THAT THE EMPLOYEES THEREAT ARE OUTSIDE OF
THE BARGAINING UNIT OF THE DLSU'S RANK-AND-FILE EMPLOYEES. HE ALSO
ERRED IN HIS INTERPRETATION OF THE APPLICATION OF THE DOCTRINE;
(2) DENYING THE PETITIONER'S PROPOSAL FOR THE "LAST-IN FIRST-OUT" METHOD
OF LAY-OFF IN CASE OF RETRENCHMENT AND IN UPHOLDING THE ALLEGED
MANAGEMENT PREROGATIVE TO SELECT AND CHOOSE ITS EMPLOYEES
DISREGARDING THE BASIC TENETS OF SOCIAL JUSTICE AND EQUITY UPON WHICH
THIS PROPOSAL WAS FOUNDED;
(3) FINDING THAT THE MULTISECTORAL COMMITTEE IN THE RESPONDENT
UNIVERSITY IS THE LEGITIMATE GROUP WHICH DETERMINES AND SCRUTINIZES
ANNUAL SALARY INCREASES AND FRINGE BENEFITS OF THE EMPLOYEES;
(4) HOLDING THAT THE 70% SHARE IN THE INCREMENTAL TUITION PROCEEDS IS
THE ONLY SOURCE OF SALARY INCREASES AND FRINGE BENEFITS OF THE
EMPLOYEES;
(5) FAILING/REFUSING/DISREGARDING TO CONSIDER THE RESPONDENT
UNIVERSITY'S FINANCIAL STATEMENTS FACTUALLY TO DETERMINE THE FORMER'S
CAPABILITY TO GRANT THE PROPOSED SALARY INCREASES OVER AND ABOVE THE
70% SHARE IN THE INCREMENTAL TUITION PROCEEDS AND IN GIVING WEIGHT AND
CONSIDERATION TO THE RESPONDENT UNIVERSITY'S PROPOSED BUDGET WHICH
IS MERELY AN ESTIMATE.
(6) FAILING TO EQUATE THE POSITION AND RESPONSIBILITIES OF THE UNION
PRESIDENT WITH THOSE OF THE PRESIDENT OF THE FACULTY ASSOCIATION
WHICH IS NOT EVEN A LEGITIMATE LABOR ORGANIZATION AND IN SPECULATING
THAT THE PRESIDENT OF THE FACULTY ASSOCIATION SUFFERS A
CORRESPONDING REDUCTION IN SALARY ON THE ACCOUNT OF THE REDUCTION
OF HIS WORKLOAD; IN FAILING TO APPRECIATE THE EQUAL RIGHTS OF THE
MEMBERS OF THE UNION AND OF THE FACULTY FOR PROFESSIONAL
ADVANCEMENT AS WELL AS THE DESIRABLE EFFECTS OF THE
INSTITUTIONALIZATION OF THE SPECIAL LEAVE AND WORKLOAD REDUCTION
BENEFITS. 41
The question which now confronts us is whether or not the voluntary arbitrator committed grave
abuse of discretion in rendering the assailed decision, particularly, in resolving the following issues:
(1) whether the computer operators assigned at the University's Computer Services Center and the
University's discipline officers may be considered as confidential employees and should therefore be
excluded from the bargaining unit which is composed of rank and file employees of the University,
and whether the employees of the College of St. Benilde should also be included in the same
bargaining unit; (2) whether a union shop clause should be included in the parties' collective

bargaining agreement, in addition to the existing maintenance of membership clause; (3) whether
the denial of the Union's proposed "last-in-first-out" method of laying-off employees, is proper; (4)
whether the ruling that on the basis of the University's proposed budget, the University can no longer
be required to grant a second round of wage increases for the school years 1991-92 and 1992-93
and charge the same to the incremental proceeds, is correct; (5) whether the denial of the Union's
proposals on the deloading of the union president, improved leave benefits and indefinite union
leave with pay, is proper; (6) whether the finding that the multi-sectoral committee in the University is
the legitimate group which determines and scrutinizes the annual salary increases and fringe
benefits of the employees of the University, is correct; and (7) whether the ruling that the 70% share
in the incremental tuition proceeds is the only source of salary increases and fringe benefits of the
employees, is proper.
Now, before proceeding to the discussion and resolution of the issues raised in the pending
petitions, certain preliminary matters call for disposition. As we reiterated in the case of Caltex
Refinery Employees Association(CREA) vs. Jose S. Brillantes, 42 the following are the well-settled
rules in a petition for certiorari involving labor cases. "First, the factual findings of quasi-judicial
agencies (such as the Department of Labor and Employment), when supported by substantial
evidence, are binding on this Court and entitled to great respect, considering the expertise of these
agencies in their respective fields. It is well-established that findings of these administrative agencies
are generally accorded not only respect but even finality. 43
Second, substantial evidence in labor cases is such amount of relevant evidence which a
reasonable mind will accept as adequate to justify a conclusion. 44
Third, in Flores vs. National Labor Relations Commission, 45 we explained the role and function of
Rule 65 as an extraordinary remedy:
It should be noted, in the first place, that the instant petition is a special civil action
for certiorari under Rule 65 of the Revised Rules of Court. An extraordinary remedy, its use is
available only and restrictively in truly exceptional cases those wherein the action of an
inferior court, board or officer performing judicial or quasi-judicial acts is challenged for being
wholly void on grounds of jurisdiction. The sole office of the writ ofcertiorari is the correction
of errors of jurisdiction including the commission of grave abuse of discretion amounting to
lack or excess of jurisdiction. It does not include correction of public respondent NLRC's
evaluation of the evidence and factual findings based thereon, which are generally accorded
not only great respect but even finality.
No question of jurisdiction whatsoever is being raised and/or pleaded in the case at bench.
Instead, what is being sought is a judicial re-evaluation of the adequacy or inadequacy of the
evidence on record, which is certainly beyond the province of the extraordinary writ
of certiorari. Such demand is impermissible for it would involve this Court in determining what
evidence is entitled to belief and the weight to be assigned it. As we have reiterated
countless times, judicial review by this Court in labor cases does not go so far as to evaluate
the sufficiency of the evidence upon which the proper labor officer or office based his or its
determination but is limited only to issues of jurisdiction or grave abuse of discretion
amounting to lack of jurisdiction. (emphasis supplied).
With the foregoing rules in mind, we shall now proceed to discuss the merit of these consolidated
petitions.
We affirm in part and modify in part.

On the first issue involving the classification of the computer operators assigned at the University's
Computer Services Center and discipline officers, the University argues that they are confidential
employees and that the Union has already recognized the confidential nature of their functions when
the latter agreed in the parties' 1986 collective bargaining agreement to exclude the said employees
from the bargaining unit of rank-and-file employees. As far as the said computer operators are
concerned, the University contends that ". . . the parties have already previously agreed to exclude
all positions in the University's Computer Services Center (CSC), which include the positions of
computer operators, from the collective bargaining unit. . . . . . . . " 46 The University further contends
that ". . . the nature of the work done by these Computer Operators is enough justification for their
exclusion from the coverage of the bargaining unit of the University's rank-and-file
employees. . . . . . . ." 47According to the University, the Computer Services Center, where these
computer operators work, ". . . processes data that are needed by management for strategic
planning and evaluation of systems. It also houses the University's confidential records and
information [e.g. student records, faculty records, faculty and staff payroll data, and budget allocation
and expenditure related data] which are contained in computer files and computer-generated
reports. . . . . . . . Moreover, the Computer Operators are in fact the repository of the University's
confidential information and data, including those involving and/or pertinent to labor relations. . . . . . .
." 48
As to the discipline officers, the University maintains that " . . . they are likewise excluded from the
bargaining unit of the rank-and-file employees under the parties' 1986 CBA. The Discipline Officers
are clearly alter egos of management as they perform tasks which are inherent in management [e.g.
enforce discipline, act as peace officers, secure peace and safety of the students inside the campus,
conduct investigations on violations of University regulations, or of existing criminal laws, committed
within the University or by University employees] . . . . . . . " 49 The University also alleges that "the
Discipline Officers are privy to highly confidential information ordinarily accessible only to
management." 50
With regard to the employees of the College of St. Benilde, the Union, supported by the Solicitor
General at this point, asserts that the veil of corporate fiction should be pierced, thus, according to
the Union, the University and the College of St. Benilde should be considered as only one entity
because the latter is but a mere integral part of the University. 51
The University's arguments on the first issue fail to impress us. The Court agrees with the Solicitor
General that the express exclusion of the computer operators and discipline officers from the
bargaining unit of rank-and-file employees in the 1986 collective bargaining agreement does not bar
any re-negotiation for the future inclusion of the said employees in the bargaining unit. During the
freedom period, the parties may not only renew the existing collective bargaining agreement but may
also propose and discuss modifications or amendments thereto. With regard to the alleged
confidential nature of the said employees' functions, after a careful consideration of the pleadings
filed before this Court, we rule that the said computer operators and discipline officers are not
confidential employees. As carefully examined by the Solicitor General, the service record of a
computer operator reveals that his duties are basically clerical and non-confidential in nature. 52 As to
the discipline officers, we agree with the voluntary arbitrator that based on the nature of their duties,
they are not confidential employees and should therefore be included in the bargaining unit of rankand-file employees.
The Court also affirms the findings of the voluntary arbitrator that the employees of the College of St.
Benilde should be excluded from the bargaining unit of the rank-and-file employees of Dela Salle
University, because the two educational institutions have their own separate juridical personality and
no sufficient evidence was shown to justify the piercing of the veil of corporate fiction. 53

On the second issue involving the inclusion of a union shop clause in addition to the existing
maintenance of membership clause in the collective bargaining agreement, the University avers that
". . . it is in the spirit of the exercise of the constitutional right to self-organization that every individual
should be able to freely choose whether to become a member of the Union or not. The right to join a
labor organization should carry with it the corollary right not to join the same. This position of the
University is but in due recognition of the individual's free will and capability for judgment." 54 The
University assails the Union's demand for a union shop clause as ". . . definitely unjust and amounts
to oppression. Moreover, such a demand is repugnant to democratic principles and the
constitutionally guaranteed freedom of individuals to join or not to join an association as well as their
right to security of tenure, particularly, on the part of present employees." 55
The Union, on the other hand, counters that the Labor Code, as amended, recognizes the validity of
a union shop agreement in Article 248 thereof which reads:
Art. 248. Unfair labor practices of employers.
xxx

xxx

xxx

(e) To discriminate in regard to hire or tenure of employment or any term or condition

of employment in order to encourage or discourage membership in any labor
organization. Nothing in this Code or in any other law shall prevent the parties from
requiring membership in a recognized collective bargaining agent as a condition for
employment, except of those employees who are already members of another union
at the time of the signing of the collective bargaining agreement. . . . . . . ." (emphasis
supplied)
We affirm the ruling of the voluntary arbitrator for the inclusion of a union shop provision in
addition to the existing maintenance of membership clause in the collective bargaining
agreement. As the Solicitor General asserted in his consolidated Comment, the University's
reliance on the case of Victoriano vs. Elizalde Rope Workers' Union 56 is clearly misplaced. In
that case, we ruled that ". . . the right to join a union includes the right to abstain from joining
any union. . . . . . . . The right to refrain from joining labor organizations recognized by
Section 3 of the Industrial Peace Act is, however, limited. The legal protection granted to
such right to refrain from joining is withdrawn by operation of law, where a labor union and an
employer have agreed on a closed shop, by virtue of which the employer may employ only
members of the collective bargaining union, and the employees must continue to be
members of the union for the duration of the contract in order to keep their jobs. . . . . . . ." 57
On the third issue regarding the Union's proposal for the use of the "last-in-first-out" method
in case of lay-off, termination due to retrenchment and transfer of employees, the Union
relies on social justice and equity to support its proposition, and submits that the University's
prerogative to select and/or choose the employees it will hire is limited, either by law or
agreement, especially where the exercise of this prerogative might result in the loss of
employment. 58 The Union further insists that its proposal is ". . . in keeping with the avowed
State policy '(q) To ensure the participation of workers in decision and policy-making
processes affecting their rights, duties and welfare' (Art. 211, Labor Code, as amended)." 59
On the other hand, the University asserts its management prerogative and counters that
"[w]hile it is recognized that this right of employees and workers to 'participate in policy and
decision-making processes affecting their rights and benefits as may be provided by law' has
been enshrined in the Constitution (Article III, [should be Article XIII], Section 3, par. 2), said
participation, however, does not automatically entitle the Union to dictate as to how an

employer should choose the employees to be affected by a retrenchment program. The

employer still retains the prerogative to determine the reasonable basis for selecting such
employees." 60
We agree with the voluntary arbitrator that as an exercise of management prerogative, the
University has the right to adopt valid and equitable grounds as basis for terminating or
transferring employees. As we ruled in the case of Autobus Workers' Union (AWU) and
Ricardo Escanlar vs. National Labor Relations Commission, 61 "[a] valid exercise of
management prerogative is one which, among others, covers: work assignment, working
methods, time, supervision of workers, transfer of employees, work supervision, and the
discipline, dismissal and recall of workers. Except as provided for, or limited by special laws,
an employer is free to regulate, according to his own discretion and judgment, all aspects of
employment." (emphasis supplied)
On the fourth issue involving the voluntary arbitrator's ruling that on the basis of the
University's proposed budget, the University can no longer be required to grant a second
round of wage increases for the school years 1991-92 and 1992-93 and charge the same to
the incremental proceeds, we find that the voluntary arbitrator committed grave abuse of
discretion amounting to lack or excess of jurisdiction. As we ruled in the case of Caltex
Refinery Employees Association (CREA) vs. Jose S. Brillantes, 62 ". . . . . . . [w]e believe that
the standard proof of a company's financial standing is its financial statements duly audited
by independent and credible external auditors." 63 Financial statements audited by
independent external auditors constitute the normal method of proof of profit and loss
performance of a company. 64 The financial capability of a company cannot be based on its
proposed budget because a proposed budget does not reflect the true financial condition of
a company, unlike audited financial statements, and more importantly, the use of a proposed
budget as proof of a company's financial condition would be susceptible to abuse by
scheming employers who might be merely feigning dire financial condition in their business
ventures in order to avoid granting salary increases and fringe benefits to their employees.
On the fifth issue involving the Union's proposals on the deloading of the union president,
improved leave benefits and indefinite union leave with pay, we agree with the voluntary
arbitrator's rejection of the said demands, there being no justifiable reason for the granting of
the same.
On the sixth issue regarding the finding that the multi-sectoral committee in the University is
the legitimate group which determines and scrutinizes the annual salary increases and fringe
benefits of the employees of the University, the Court finds that the voluntary arbitrator did
not gravely abuse his discretion on this matter. From our reading of the assailed decision, it
appears that during the parties' negotiations for a new collective bargaining agreement, the
Union demanded for a 25% and 40% salary increase for the second and third years,
respectively, of the collective bargaining agreement. 65 The University's counter-proposal was
for a 10% increase for the third year. 66 After the meeting of the multi-sectoral committee on
budget, which is composed of students, parents, faculty, administration and union, the
University granted across-the-board salary increases of 11.3% and 19% for the second and
third years, respectively. 67 While the voluntary arbitrator found that the said committee ". . .
decided to grant the said increases based on the University's viability which were exclusively
sourced from the tuition fees. . . . . . . .," no finding was made as to the basis of the
committee's decision. Be that as it may, assuming for the sake of argument that the said
committee is the group responsible for determining wage increases and fringe benefits, as
ruled by the voluntary arbitrator, the committee's determination must still be based on duly
audited financial statements following our ruling on the fourth issue.
1wphi1

On the seventh and last issue involving the ruling that the 70% share in the incremental
tuition proceeds is the only source of salary increases and fringe benefits of the employees,
the Court deems that any determination of this alleged error is unnecessary and irrelevant, in
view of our rulings on the fourth and preceding issues and there being no evidence
presented before the voluntary arbitrator that the University held incremental tuition fee
proceeds from which any wage increase or fringe benefit may be satisfied.
WHEREFORE, premises considered, the petitions in these consolidated cases, G.R. No.
109002 and G.R. No. 110072 are partially GRANTED. The assailed decision dated January
19, 1993 of voluntary arbitrator Buenaventura Magsalin is hereby AFFIRMED with the
modification that the issue on salary increases for the second and third years of the
collective bargaining agreement be REMANDED to the voluntary arbitrator for definite
resolution within one month from the finality of this Decision, on the basis of the externally
audited financial statements of the University already submitted by the Union before the
voluntary arbitrator and forming part of the records.
1wphi1.nt

SO ORDERED.
Bellosillo, Mendoza, Quisumbing and De Leon, Jr., JJ., concur.

47. HOLY CROSS OF DAVAO COLLEGE, INC., petitioner,

vs.
HON. JEROME JOAQUIN, in his capacity as Voluntary Arbitrator, and HOLY CROSS OF
DAVAO COLLEGE UNION-KALIPUNAN NG MANGGAGAWANG PILIPINO
(KAMAPI), respondents.

NARVASA, C.J.:p
A collective bargaining agreement, effective from June 1, 1986 to May 31, 1989 was entered into
between petitioner Holy Cross of Davao College, Inc. (hereafter Holy Cross), an educational
institution, and the affiliate labor organization representing its employees, respondent Holy Cross of
Davao College Union-KAMAPI (hereafter KAMAPI). Shortly before the expiration of the agreement,
KAMAPI President, Jose Lagahit, wrote Holy Cross under date of April 12, 1989 expressing his
union's desire to renew the agreement, withal seeking its extension for two months, or until July 31,
1989, on the ground that the teachers were still on summer vacation and union activities necessary
or incident to the negotiation of a new agreement could not yet be conducted. 1 Holy Cross President
Emilio P. Palma-Gil replied that he had no objection to the extension sought, it being allowable under the
collective bargaining agreement. 2
On July 24, 1989, Jose Lagahit convoked a meeting of the KAMAPI membership for the purpose of
electing a new set of union officers, at which Rodolfo Gallera won election as president. To the
surprise of many, and with resultant dissension among the membership, Gallera forthwith initiated
discussions for the union's disaffiliation from the KAMAPI Federation.

Gallera's group subsequently formed a separate organization known as the Holy Cross of Davao
College Teachers Union, and elected its own officers. For its part, the existing union, KAMAPI, sent
to the School its proposals for a new collective bargaining contract; this it did on July 31, 1989, the
expiry date of the two-month extension it had sought. 3
Holy Cross thereafter stopped deducting from the salaries and wages of its teachers and employees
the corresponding union dues and special assessments (payable by union members), and agency
fees (payable by non-members), in accordance with the check-off clause of the CBA, 4 prompting
KAMAPI, on September 1, 1989, to demand an explanation.
In the meantime, there ensued between the two unions a full-blown action on the basic issue of
representation, which was to last for some two years. It began with the filing by the new union
(headed by Gallera) of a petition for certification election in the Office of the Med-Arbiter. 5 KAMAPI
responded by filing a motion asking the Med-Arbiter to dismiss the petition. On August 31, 1989, KAMAPI
also advised Holy Cross of the election of a new set officers who would also comprise its negotiating
panel. 6
The Med-Arbiter denied KAMAPI's motion to dismiss, and ordered the holding of a certification
election. On appeal, however, the Secretary of Labor reversed the Med-Arbiter's ruling and ordered
the dismissal of the petition for certification election, which action was eventually sustained by this
Court in appropriate proceedings.
After its success in the certification election case KAMAPI presented, on April 11, 1991, revised
bargaining proposals to Holy Cross; 7 and on July 11, 1991, it sent a letter to the School asking for its
counter-proposals. The School replied, that it did not know if the Supreme Court had in fact affirmed the
Labor Secretary's decision in favor of KAMAPI as the exclusive bargaining representative of the School
employees, whereupon KAMAPI's counsel furnished it with a copy of the Court's resolution to that effect;
and on September 7, 1991, KAMAPI again wrote to Holy Cross asking for its counter-proposals as
regards the terms of a new CBA.
In response, Holy Cross declared that it would take no action towards a new CBA without a
"definitive ruling" on the proper interpretation of Article I of the old CBA which should have expired on
May 31, 1989 (but, as above stated, had been extended for two months at the KAMAPI's request).
Said Article provides inter alia for the automatic extension of the CBA for another period of three (3)
years counted from its expiration, if the parties fail to agree on a renewal, modification or
amendment thereof. It appears, in fact, that the opinion of the DOLE Regional Director on the
meaning and import of said Article I had earlier been sought by the College president, Emilio Palma
Gil. 8
KAMAPI then sent another letter to Holy Cross, this time accusing it of unfair labor practice for
refusing to bargain despite the former's repeated demands; and on the following day, it filed a notice
of strike with the National Mediation and Conciliation Board. 9
KAMAPI and Holy Cross were ordered to appear before Conciliator-Mediator Agapito J. Adipen on
October 2, 1991. Several conciliation meetings were thereafter held between them, and when these
failed to bring about any amicable settlement, the parties agreed to submit the case to voluntary
arbitration. 10 Both parties being of the view that the dispute did indeed revolve around the interpretation

of 1 and 2 of Article I of the CBA, they submitted position papers explicitly dealing with the following
issues presented by them for resolution to the voluntary arbitrator:

a. Whether or not the CBA which expired on May 31, 1989 was automatically
renewed and did not serve merely as a holdover CBA; and
b. Whether or not there was refusal to negotiate on the part of the Holy Cross of
Davao College.
On both issues, Voluntary Arbitrator Jerome C. Joaquin found in favor of KAMAPI.
Respecting the matter of the automatic renewal of the bargaining agreement, the Voluntary Arbitrator
ruled that the request for extension filed by KAMAPI constituted seasonable notice of its intention to
renew, modify or amend the agreement, which it could not however pursue because of the absence
of the teachers who were then on summer vacation. 11 He rejected the contention of Holy Cross that
KAMAPI had unreasonably delayed (until July 31, 1989) the submission of bargaining proposals, opining
that the delay was partly attributable to the School's prolonged inaction on KAMAPI's request for
extension of the CBA. He also ruled that Holy Cross was estopped from claiming automatic renewal of the
CBA because it ceased to implement the check-off provision embodied in the CBA, declaring said
School's argument that a "definitive ruling" by the DOLE on the correct interpretation of the automaticextension clause of the old CBA was a condition precedent to negotiations for a new CBA to be a mere
afterthought set up to justify its refusal to bargain with KAMAPI after the latter had proven that it was the
legally-empowered bargaining agent of the school employees. In the dispositive portion of his award, the
Voluntary Arbitrator ordered Holy Cross to:
1. sit down, negotiate and conclude (an agreement) with the Holy Cross of Davao
College Faculty Union-KAMAPI, which, by Resolution of the Supreme Court, remains
the collective bargaining agent of the permanent and regular teachers of said
educational institution; (and)
2. pay to the Union the amount equivalent to the uncollected union dues from August
1989 up to the time respondent shall have concluded a new CBA with the Union, it
appearing that respondent stopped complying with the CBA's check-off provisions as
of said date. 12
The Voluntary Arbitrator also requested the Fiscal Examiner of the NLRC, Region XI, Davao
City, to make the proper computation of the union dues to be paid by management to the
complainant union.
Dissatisfied, Holy Cross filed the petition at bar, challenging the Voluntary Arbitrator's decision on the
following grounds, viz.: 13
1. That the voluntary arbitrator erred and acted in grave abuse of discretion
amounting to lack or excess of jurisdiction in ordering petitioner to pay the union the
uncollected union dues to private respondent which was not even an issue submitted
for voluntary arbitration, resulting in serious violation of due process.

2. That the voluntary arbitrator erred in considering that petitioner refused to

negotiate with (the) Union, contrary to the records and evidence presented in the
case.
The Voluntary Arbitrator's conclusion that petitioner Holy Cross had, in light of the evidence on
record, failed to negotiate with KAMAPI, adjudged as the collective bargaining agent of the school's
permanent and regular
teachers is a conclusion of fact that the Court will not review, the inquiry at bar being limited to the
issue of whether or not said Voluntary Arbitrator had acted without or in excess of his jurisdiction, or
with grave abuse of discretion; nor does the Court see its way clear, after analyzing the record, to
pronouncing that reasoned conclusion to have been made so whimsically, capriciously, oppressively,
or unjustifiably in other words, attended by grave abuse of discretion amounting to lack or excess
of jurisdiction as to call for extension of the Court's correcting hand through the extraordinary writ
of certiorari. Said finding should therefore be, and is hereby, sustained.
Now, concerning its alleged failure to observe the check-off provisions of the collective bargaining
agreement, Holy Cross contends that this was not one of the issues raised in the arbitration
proceedings; that said issue was therefore extraneous and improper; and that even assuming the
contrary, it (Holy Cross) had not in truth violated the CBA.
Holy Cross asserts that it could not comply with the check-off provision because contrary to
established practice prior to August, 1989, KAMAPI failed to submit to the college comptroller every
8th day of the month, a list of employees from whom union dues and the corresponding agency fees
were to be deducted; further, that there was an uncertainty as to the recognized bargaining agent
with whom it would deal a matter settled only upon its receipt of a copy of this Court's Resolution
on July 18, 1991 and in any case, the Voluntary Arbitrator's order for it to pay to the union the
uncollected employees' dues or agency fees would amount to the union's unjust enrichment. 14
KAMAPI maintains, on the other hand, that the check-off issue was raised in the position paper it
submitted in the voluntary arbitration proceedings; and that in any case, the issue was intimately
connected with those submitted for resolution and necessary for complete adjudication of the rights
and obligations of the parties; 15 and that said position paper had alleged the manifest bad faith of
management in not providing information as to who were regular employees, thereby precluding
determination of teachers eligible for union membership.
Disregarding the objection of failure to seasonably set up the check-off question the factual
premises thereof not being indisputable, and technical objections of this sort being generally
inconsequential in quasi-judicial proceedings the issues here ultimately boil down to whether or
not an employer is liable to pay to the union of its employees, the amounts it failed to deduct from
their salaries as union dues (with respect to union members) or agency fees (as regards those
not union members) in accordance with the check-off provisions of the collective bargaining
contract (CBA) which it claims to have been automatically extended.
A check-off is a process or device whereby the employer, on agreement with the union recognized
as the proper bargaining representative, or on prior authorization from its employees, deducts union
dues or agency fees from the latter's wages and remits them directly to the union. 16 Its desirability to

a labor organization is quite evident; by it, it is assured of continuous funding. Indeed, this Court has
acknowledged that the system of check-off is primarily for the benefit of the union and, only indirectly, of
the individual laborers. 17 When so stipulated in a collective bargaining agreement, or authorized in
writing by the employees concerned the Labor Code and its Implementing Rules recognize it to be the
duty of the employer to deduct sums equivalent to the amount of union dues from the employees' wages
for direct remittance to the union, in order to facilitate the collection of funds vital to the role of the union
as representative of employees in a bargaining unit if not, indeed, to its very existence. And it may be
mentioned in this connection that the right to union dues deducted pursuant to a check-off, pertains to the
local union which continues to represent the employees under the terms of a CBA, and not to the parent
association from which it has disaffiliated. 18

The legal basis of check-off is thus found in statute or in contract. 19 Statutory limitations on check-offs
generally require written authorization from each employee to deduct wages; however, a resolution
approved and adopted by a majority to the union members at a general meeting will suffice when the right
to check-off has been recognized by the employer, including collection of reasonable assessments in
connection with mandatory activities of the union, or other special assessments and extraordinary fees. 20
Authorization to effect a check-off of union dues is co-terminous with the union affiliation or
membership of employees. 21 On the other hand, the collection of agency fees in an amount equivalent
to union dues and fees, from employees who are not union members, is recognized by Article 248 (e) of
the Labor Code. No requirement of written authorization from the non-union employee is imposed. The
employee's acceptance of benefits resulting from a collective bargaining agreement justifies the deduction
of agency fees from his pay and the union's entitlement thereto. In this aspect, the legal basis of the
union's right to agency fees is neither contractual nor statutory, but quasi-contractual, deriving from the
established principle that non-union employees may not unjustly enrich themselves by benefiting from
employment conditions negotiated by the bargaining union. 22
No provision of law makes the employer directly liable for the payment to the labor organization of
union dues and assessments that the former fails to deduct from its employees' salaries and wages
pursuant to a check-off stipulation. The employer's failure to make the requisite deductions may
constitute a violation of a contractual commitment for which it may incur liability for unfair labor
practice. 23 But it does not by that omission, incur liability to the union for the aggregate of dues or
assessments uncollected from the union members, or agency fees for non-union employees.
Check-offs in truth impose an extra burden on the employer in the form of additional administrative
and bookkeeping costs. It is a burden assumed by management at the instance of the union and for
its benefit, in order to facilitate the collection of dues necessary for the latter's life and sustenance.
But the obligation to pay union dues and agency fees obviously devolves not upon the employer, but
the individual employee. It is a personal obligation not demandable from the employer upon default
or refusal of the employee to consent to a check-off. The only obligation of the employer under a
check-off is to effect the deductions and remit the collections to the union. The principle of unjust
enrichment necessarily precludes recovery of union dues or agency fees from the employer,
these being, to repeat, obligations pertaining to the individual worker in favor of the bargaining union.
Where the employer fails or refuses to implement a check-off agreement, logic and prudence dictate
that the union itself undertake the collection of union dues and assessments from its members (and
agency fees from non-union employees); this, of course, without prejudice to suing the employer for
unfair labor practice.

There was thus no basis for the Voluntary Arbitrator to require Holy Cross to assume liability for the
union dues and assessments, and agency fees that it had failed to deduct from its employees'
salaries on the proffered plea that contrary to established practice, KAMAPI had failed to submit to
the college comptroller every 8th day of the month, a list of employees from whose pay union dues
and the corresponding agency fees were to be deducted.
WHEREFORE, the requirement imposed on petitioner Holy Cross by the challenged decision of the
Voluntary Arbitrator, to pay respondent KAMAPI the amount equivalent to the uncollected union dues
and agency fees from August 1989 up to the time a new collective bargaining agreement is
concluded, is NULLIFIED and SET ASIDE; but in all other respects, the decision of the Voluntary
Arbitrator is hereby AFFIRMED.
SO ORDERED.
Narvasa, C.J., Davide, Jr., Melo, Francisco and Panganiban, JJ., concur.

38. PROGRESSIVE DEVELOPMENT CORPORATION-PIZZA HUT vs.

HON. BIENVENIDO LAGUESMA, in his capacity as Undersecretary of Labor, and
NAGKAKAISANG LAKAS NG MANGGAGAWA (NLM)-KATIPUNAN
Facts:

Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan (respondent Union) filed a petition for

certification election with the Department of Labor (National Capital Region) in behalf of the rank
and file employees of the Progressive Development Corporation (Pizza Hut)

Petitioner filed a verified Motion to Dismiss the petition alleging fraud, falsification and
misrepresentation in the respondent. Union's registration making it void and invalid. The motion
specifically alleged that: a) respondent Union's registration was tainted with false, forged, double
or multiple signatures of those who allegedly took part in the ratification of the respondent
Union's constitution and by-laws and in the election of its officers that there were two sets of
supposed attendees to the alleged organizational meeting; that the alleged chapter is claimed to
have been supported by 318 members when in fact the persons who actually signed their names
were much less; and b) while the application for registration of the charter was supposed to have
been approved in the organizational meeting held on June 27, 1993, the charter certification
issued by the federation KATIPUNAN was dated June 26, 1993 or one (1) day prior to the
formation of the chapter, thus, there were serious falsities in the dates of the issuance of the
charter certification and the organization meeting of the alleged chapter.

Citing other instances of misrepresentation and fraud, petitioner filed a Supplement to its Motion
to Dismiss

Petitioner filed a Petition seeking the cancellation of the Union's registration on the grounds of fraud
and falsification. Motion was likewise filed by petitioner with the Med-Arbiter requesting suspension

of proceedings in the certification election case until after the prejudicial question of the Union's legal
personality is determined in the proceedings for cancellation of registration.

However, in an Order, Med-Arbiter Rasidali C. Abdullah directed the holding of a certification election
among petitioner's rank and file employees. The Order explained that Sumasaklaw sa Manggagawa
ng Pizza Hut is a legitimate labor organization and that the alleged misrepresentation, fraud and
false statement in connection with the issuance of the charter certificate are collateral issues
which could be properly ventilated in the cancellation proceedings.

On appeal to the office of the Secretary of Labor, Labor Undersecretary Bienvenido E.

Laguesma in a Resolution denied the same. A motion for reconsideration of the public
respondent's resolution was denied in his Order.

Issue: whether or not the public respondent committed grave abuse of discretion in affirming the MedArbiter's order to conduct a certification election among petitioner's rank and file employees, considering
that: (1) respondent Union's legal personality was squarely put in issue; (2) allegations of fraud and
falsification, supported by documentary evidence were made; and (3) a petition to cancel respondent
Union's registration is pending with the regional office of the Department of Labor and Employment.
Held: Petition GRANTED.
In the public respondent's assailed Resolution the suggestion is made that once a labor
organization has filed the necessary documents and papers and the same have been certified under
oath and attested to, said organization necessarily becomes clothed with the character of a
legitimate labor organization.
The Court disagrees.
In the first place, the public respondent's views miss the entire point behind the nature and purpose
of proceedings leading to the recognition of unions as legitimate labor organizations. Article 234 of
the Labor Code provides:
Art. 234. Requirements of registration. Any applicant labor organization,
association or group of unions or workers shall acquire legal personality and shall be
entitled to the rights and privileges granted by law to legitimate labor organizations
upon issuance of the certificate of registration based on the following requirements:
(a) Fifty pesos (P50.00) registration fee;
(b) The names of its officers, their addresses, the principal address of the labor
organization, the minutes of the organizational meetings and the list of the workers
who participated in such meetings;
(c) The names of all its members comprising at least twenty percent (20%) of all the
employees in the bargaining unit where it seeks to operate;

(d) If the applicant union has been in existence for one or more years, copies of its
annual financial reports; and
(e) Four (4) copies of the constitution and by-laws of the applicant union, minutes of
its adoption or ratification, and the list of the members who participated in it.
A more than cursory reading of the aforecited provisions clearly indicates that the requirements
embodied therein are intended as preventive measures against the commission of fraud. After a
labor organization has filed the necessary papers and documents for registration, it becomes
mandatory for the Bureau of Labor Relations to check if the requirements under Article 234 have
been sedulously complied with. If its application for registration is vitiated by falsification and serious
irregularities, especially those appearing on the face of the application and the supporting
documents, a labor organization should be denied recognition as a legitimate labor organization. And
if a certificate of recognition has been issued, the propriety of the labor organization's registration
could be assailed directly through cancellation of registration proceedings in accordance with Articles
238 and 239 of the Labor Code, or indirectly, by challenging its petition for the issuance of an order
for certification election.
Such requirements are a valid exercise of the police power, because the activities in which labor
organizations, associations and unions of workers are engaged directly affect the public interest and
should be protected.
Thus, in Progressive Development Corporation vs. Secretary of Labor and Employment, 14 we held:
The controversy in this case centers on the requirements before a local or chapter of
a federation may file a petition for certification election and be certified as the sole
and exclusive bargaining agent of the petitioner's employees.
xxx xxx xxx
But while Article 257 cited by the Solicitor General directs the automatic conduct of a
certification election in an unorganized establishment, it also requires that the petition
for certification election must be filed by a legitimate labor organization . . .
xxx xxx xxx
. . . The employer naturally needs assurance that the union it is dealing with is a
bona-fide organization, one which has not submitted false statements or
misrepresentations to the Bureau. The inclusion of the certification and attestation
requirements will in a marked degree allay these apprehensions of management. Not
only is the issuance of any false statement and misrepresentation or ground for
cancellation of registration (see Article 239 (a), (c) and (d)); it is also a ground for a
criminal charge of perjury.
The certification and attestation requirements are preventive measures against the
commission of fraud. They likewise afford a measure of protection to unsuspecting

employees who may be lured into joining unscrupulous or fly-by-night unions whose
sole purpose is to control union funds or to use the union for dubious ends.
xxx xxx xxx
. . . It is not this Court's function to augment the requirements prescribed by law in
order to make them wiser or to allow greater protection to the workers and even their
employer. Our only recourse is, as earlier discussed, to exact strict compliance with
what the law provides as requisites for local or chapter formation.
xxx xxx xxx
The Court's conclusion should not be misconstrued as impairing the local union's
right to be certified as the employees' bargaining agent in the petitioner's
establishment. We are merely saying that the local union must first comply with the
statutory requirements in order to exercise this right. Big federations and national
unions of workers should take the lead in requiring their locals and chapters to
faithfully comply with the law and the rules instead of merely snapping union after
union into their folds in a furious bid with rival federations to get the most number of
members
Furthermore, the Labor Code itself grants the Bureau of Labor Relations a period of thirty (30) days
within which to review all applications for registration. Article 235 provides:
Art. 235. Action on application. The Bureau shall act on all applications for
registration within thirty (30) days from filing.
All requisite documents and papers shall be certified under oath by the secretary or
the treasurer of the organization, as the case may be, and attested to by its
president.
The thirty-day period in the aforecited provision ensures that any action taken by the Bureau of
Labor Relations is made in consonance with the mandate of the Labor Code, which, it bears
emphasis, specifically requires that the basis for the issuance of a certificate of registration should
be compliance with the requirements for recognition under Article 234. Since, obviously, recognition
of a labor union or labor organization is not merely a ministerial function, the question now arises as
to whether or not the public respondent committed grave abuse of discretion in affirming the MedArbiter's order in spite of the fact that the question of the Union's legitimacy was squarely put in
issue and that the allegations of fraud and falsification were adequately supported by documentary
evidence.
The Labor Code requires that in organized and unorganized 15 establishments, a petition for
certification electionmust be filed by a legitimate labor organization. The acquisition of rights by any union
or labor organization, particularly the right to file a petition for certification election, first and foremost,
depends on whether or not the labor organization has attained the status of a legitimate labor
organization.

In the case before us, the Med-Arbiter summarily disregarded the petitioner's prayer that the former
look into the legitimacy of the respondent. Union by a sweeping declaration that the union was in the
possession of a charter certificate so that "for all intents and purposes, Sumasaklaw sa
Manggagawa sa Pizza Hut (was) a legitimate labor organization." 16 Glossing over the transcendental
issue of fraud and misrepresentation raised by herein petitioner, Med-Arbiter Rasidali Abdullah held that:
The alleged misrepresentation, fraud and false statement in connection with the
issuance of the charter certificate are collateral issues which could be ventilated in
the cancellation proceedings. 17
It cannot be denied that the grounds invoked by petitioner for the cancellation of respondent Union's
registration fall under paragraph (a) and (c) of Article 239 of the Labor Code, to wit:
(a) Misrepresentation, false statement or fraud in connection with the adoption or
ratification of the constitution and by-laws or amendments thereto, the minutes of
ratification, the list of members who took part in the ratification of the constitution and
by-laws or amendments thereto, the minutes of ratification, the list of members who
took part in the ratification;
xxx xxx xxx
(c) Misrepresentation, false statements or fraud in connection with the election of
officers, minutes of the election of officers, the list of voters, or failure to submit these
documents together with the list of the newly elected-appointed officers and their
postal addresses within thirty (30) days from election.
xxx xxx xxx
The grounds ventilated in cancellation proceedings in accordance with Article 239 of the Labor Code
constitute a grave challenge to the right of respondent Union to ask for certification election. The
Med-Arbiter should have looked into the merits of the petition for cancellation before issuing an order
calling for certification election. Registration based on false and fraudulent statements and
documents confer no legitimacy upon a labor organization irregularly recognized, which, at best,
holds on to a mere scrap of paper. Under such circumstances, the labor organization, not being a
legitimate labor organization, acquires no rights, particularly the right to ask for certification election
in a bargaining unit.
As we laid emphasis in Progressive Development Corporation Labor, 18 "[t]he employer needs the
assurance that the union it is dealing with is a bona fide organization, one which has not submitted false
statements or misrepresentations to the Bureau." Clearly, fraud, falsification and misrepresentation in
obtaining recognition as a legitimate labor organization are contrary to the Med-Arbiter's conclusion not
merely collateral issues. The invalidity of respondent Union's registration would negate its legal
personality to participate in certification election.
Once a labor organization attains the status of a legitimate labor organization it begins to possess all
of the rights and privileges granted by law to such organizations. As such rights and privileges
ultimately affect areas which are constitutionally protected, the activities in which labor organizations,

associations and unions are engaged directly affect the public interest and should be zealously
protected. A strict enforcement of the Labor Code's requirements for the acquisition of the status of a
legitimate labor organization is in order.
Inasmuch as the legal personality of respondent Union had been seriously challenged, it would have
been more prudent for the Med-Arbiter and public respondent to have granted petitioner's request for
the suspension of proceedings in the certification election case, until the issue of the legality of the
Union's registration shall have been resolved. Failure of the Med-Arbiter and public respondent to
heed the request constituted a grave abuse of discretion.
WHEREFORE, PREMISES CONSIDERED, the instant petition is GRANTED and the Resolution and
Order of the public respondent dated December 29, 1993 and January 24, 1994, respectively, are
hereby SET ASIDE.
The case is REMANDED to the Med-Arbiter to resolve with reasonable dispatch petitioner's petition
for cancellation of respondent Union's registration.
SO ORDERED.
Padilla, Bellosillo and Vitug, JJ., concur.
Hermosisima, Jr., J., is on leave.

39. JOHNSON AND JOHNSON LABOR UNION-FFW, DANTE JOHNSON MORANTE, MYRNA
OLOVEJA AND ITS OTHER INDIVIDUAL UNION MEMBERS vs. DIRECTOR OF LABOR
RELATIONS, AND OSCAR PILI
Facts:

The private respondent, a member of the petitioner-union was dismissed from his employment
by employer Johnson & Johnson (Phil.) Inc., for non-disclosure in his job application form of the
fact that he had a relative in the company in violation of company policies.

The provision for the grant of financial aid in favor of a union member is embodied in the
petitioner-union's Constitution and By-laws, Article XIII, Section 5, of which reads:
A member who have (sic) been suspended or terminated without reasonable cause shall be
extended a financial aid from the compulsory contributions in the amount of SEVENTY FIVE
CENTAVOS (P0. 75) from each member weekly.

A complaint was filed by the private respondent against the officers of the petitioner-union
alleging, among others, that the union officers had refused to provide the private respondent the
financial aid as provided in the union constitution despite demands for payment thereof The
petitioner-union and its officers counter-alleged, in their answer, that the said financial aid was to

be given only in cases of termination or suspension without any reasonable cause; that the
union's executive board had the prerogative to determine whether the suspension or termination
was for a reasonable cause or not; and that the union, in a general membership meeting, had
resolved not to extend financial aid to the private respondent.

While the grievance procedure as contained in the union's collective bargaining agreement was
being undertaken, the private respondent filed a case for unfair labor practice and illegal
dismissal against his employer.

Med-Arbiter Anastacio L. Bactin issued an order dismissing for lack of merit the complaint of the
private respondent against the petitioners for alleged violation of the union constitution and bylaws.

On appeal, the then public respondent Director Cresenciano B. Trajano rendered the decision
granting the appeal of private respondent and ordered the union was ordered to pay complainant
(Oscar Pili).

Both parties moved for reconsideration. The petitioners reiterated that since the private
respondent's termination was for a reasonable cause, it would be unjust and unfair if financial aid
were to be given in the event that the latter's case for illegal dismissal is decided against him.
The private respondent, on the other hand, prayed for the amendment of the dispositive portion
in order that the grant of financial aid be made without any qualifications.

A Manifestation and/or Opposition to the Motion for Reconsideration filed by the petitioners was
filed by the private respondent stating that he was being discriminated against considering that
one Jerwin Taguba, another union member, was terminated for dishonesty and loss of
confidence but was granted financial aid by the petitioners while Taguba's complaint against the
company was still pending with the National Labor Relation Commission.

An order was issued denying the petitioners' motion for reconsideration.

Meanwhile, a motion for issuance of a writ of execution was filed by the private respondent in
order to collect from the petitioners the amount of financial aid to which the former was entitled.

The petitioners moved for a reconsideration of the public respondent's resolution on the grounds
that Taguba's affidavit cannot support the private respondent's claim that he is also entitled to the
financial aid provided in the union's constitution and that the union cannot be compelled to grant
the said aid in the absence of a special fund for the purpose.

The public respondent through Director Pura Ferrer-Calleja denied the petitioners' motion for
reconsideration stating that Article XIII, Section 5 of the union's constitution and by-laws does not
require a special fund so that all union members similarly situated as the private respondent
must be entitled to the same right and privilege regarding the grant of financial aid as therein
provided.

Later, a writ of execution was issued by the public respondent

The instant petition was filed with prayer for a preliminary injunction. The temporary restraining
order issued by the Chief Justice was confirmed.

I.

Principal Issue: Whether or not the public respondent committed grave abuse of discretion in
ruling that the private respondent is entitled to the financial aid from the compulsory
contributions of the petitioner-union afforded to its members who have been suspended or
terminated from work without reasonable cause.

II.

Ancillary Issue: Whether or not the petitioning union members have been deprived of their
right to due process of law because they were never made parties to the case under
consideration

Held: I. The Court find unmeritorious the contention of the petitioners that the questioned decision
and order are contrary to law for being tantamount to compelling the union to disburse it funds
without the authority of the general membership and to collect from its members without the benefit
of individual payroll authorization.
Section 5, Article XIII of the petitioner-union's constitution and by-laws earlier aforequoted is selfexecutory. The financial aid extended to any suspended or terminated union member is realized from
the contributions declared to be compulsory under the said provision in the amount of seventy-five
centavos due weekly from each union member. The nature of the said contributions being
compulsory and the fact that the purpose as stated is for financial aid clearly indicate that individual
payroll authorizations of the union members are not necessary. The petitioner-union's
constitution and by-laws govern the relationship between and among its members. As in the
interpretation of contracts, if the terms are clear and leave no doubt as to the intention of the
parties, the literal meaning of the stipulations shall control. The petitioner-union can be ordered
to release its funds intended for the promotion of mutual assistance in favor of the private
respondent.
The Court likewise find untenable the argument of the petitioners that the public respondent, in
granting financial aid to the private respondent, in effect, substituted the decision of the petitionerunion to do otherwise and that in so doing, the public respondent gravely abused its discretion
amounting to lack of jurisdiction. The union constitution is a covenant between the union and its
members and among the members. There is nothing in their constitution which leaves the legal
interpretation of its terms unilaterally to the union or its officers or even the general membership. An
aggrieved member has to resort to a government agency or tribunal. Considering that quasi-judicial
agencies like the public respondent's office have acquired expertise since their jurisdiction is
confined to specific matter, their findings of fact in connection with their rulings are generally
accorded not only respect but at times even finality if supported by substantial evidence.
II.

The court rule that the fact that the union officers impleaded since the inception of the
case acted in a representative capacity on behalf of the entire union's membership
substantially meets the requirements of due process with respect to the said union
members. Moreover, the complaint filed against the union involves the interpretation of

its constitution favoring an aggrieved member. The members are bound by the terms of
their own constitution. A suit to enforce a union constitution does not have to be brought
against each individual member, especially where several thousand members form the
membership. If there is any violation of the right to due process in the case at bar it is as
regards the private respondent since the petitioners-union has dispensed with due
process in deciding not to extend financial aid to the private respondent in the absence
yet of a ruling by the labor arbiter on whether his dismissal was for a reasonable cause
or not.
The remedy of the petitioners is to strike out or amend the objectionable features of their
constitution. They cannot expect the public respondent to assist them in its non- enforcement or
violation.
The instant petition is h

ereby DISMISSED.