Labor Law Review Cases

CASE 1
Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 180866
March 2, 2010
LEPANTO CERAMICS, INC., Petitioner,

vs.
LEPANTO CERAMICS EMPLOYEES ASSOCIATION, Respondent.
DECISION
PEREZ, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 1 of the 1997 Rules of Civil Procedure filed by
petitioner Lepanto Ceramics, Inc. (petitioner), assailing the: (1) Decision 2 of the Court of Appeals, dated 5 April 2006, in
CA-G.R. SP No. 78334 which affirmed in toto the decision of the Voluntary Arbitrator 3 granting the members of the
respondent association a Christmas Bonus in the amount of Three Thousand Pesos (P3,000.00), or the balance of Two
Thousand Four Hundred Pesos (P2,400.00) for the year 2002, and the (2) Resolution 4 of the same court dated 13
December 2007 denying Petitioners Motion for Reconsideration.
The facts are:
Petitioner Lepanto Ceramics, Incorporated is a duly organized corporation existing and operating by virtue of Philippine
Laws. Its business is primarily to manufacture, make, buy and sell, on wholesale basis, among others, tiles, marbles,
mosaics and other similar products.5
Respondent Lepanto Ceramics Employees Association (respondent Association) is a legitimate labor organization duly
registered with the Department of Labor and Employment. It is the sole and exclusive bargaining agent in the
establishment of petitioner.6
In December 1998, petitioner gave a P3,000.00 bonus to its employees, members of the respondent Association. 7
Subsequently, in September 1999, petitioner and respondent Association entered into a Collective Bargaining Agreement
(CBA) which provides for, among others, the grant of a Christmas gift package/bonus to the members of the respondent
Association.8 The Christmas bonus was one of the enumerated "existing benefit, practice of traditional rights" which "shall
remain in full force and effect."
The text reads:
Section 8. All other existing benefits, practice of traditional rights consisting of Christmas Gift package/bonus,
reimbursement of transportation expenses in case of breakdown of service vehicle and medical services and
safety devices by virtue of company policies by the UNION and employees shall remain in full force and effect.
Section 1. EFFECTIVITY
This agreement shall become effective on September 1, 1999 and shall remain in full force and effect without
change for a period of four (4) years or up to August 31, 2004 except as to the representation aspect which shall
be effective for a period of five (5) years. It shall bind each and every employee in the bargaining unit including
the present and future officers of the Union.
Cases in Labor Law Review Volume I
Bachelor of Laws IV-A
In the succeeding years, 1999, 2000 and 2001, the bonus was not in cash. Instead, petitioner gave each of the members
of respondent Association Tile Redemption Certificates equivalent to P3,000.00.9 The bonus for the year 2002 is the root
of the present dispute. Petitioner gave a year-end cash benefit of Six Hundred Pesos ( P600.00) and offered a cash
advance to interested employees equivalent to one (1) month salary payable in one year. 10 The respondent Association
objected to the P600.00 cash benefit and argued that this was in violation of the CBA it executed with the petitioner.
The parties failed to amicably settle the dispute. The respondent Association filed a Notice of Strike with the National
Conciliation Mediation Board, Regional Branch No. IV, alleging the violation of the CBA. The case was placed under
preventive mediation. The efforts to conciliate failed. The case was then referred to the Voluntary Arbitrator for resolution
where the Complaint was docketed as Case No. LAG-PM-12-095-02.
In support of its claim, respondent Association insisted that it has been the traditional practice of the company to grant its
members Christmas bonuses during the end of the calendar year, each in the amount of P3,000.00 as an expression of
gratitude to the employees for their participation in the companys continued existence in the market. The bonus was
either in cash or in the form of company tiles. In 2002, in a speech during the Christmas celebration, one of the companys
top executives assured the employees of said bonus. However, the Human Resources Development Manager informed
them that the traditional bonus would not be given as the companys earnings were intended for the payment of its bank
loans. Respondent Association argued that this was in violation of their CBA.
The petitioner averred that the complaint for nonpayment of the 2002 Christmas bonus had no basis as the same was not
a demandable and enforceable obligation. It argued that the giving of extra compensation was based on the companys
available resources for a given year and the workers are not entitled to a bonus if the company does not make profits.
Petitioner adverted to the fact that it was debt-ridden having incurred net losses for the years 2001 and 2002 totaling
to P1.5 billion; and since 1999, when the CBA was signed, the companys accumulated losses amounted to over P2.7
billion. Petitioner further argued that the grant of a one (1) month salary cash advance was not meant to take the place of
a bonus but was meant to show the companys sincere desire to help its employees despite its precarious financial
condition. Petitioner also averred that the CBA provision on a "Christmas gift/bonus" refers to alternative benefits. Finally,
petitioner emphasized that even if the CBA contained an unconditional obligation to grant the bonus to the respondent
Association, the present difficult economic times had already legally released it therefrom pursuant to Article 1267 of the
Civil Code.11
The Voluntary Arbitrator rendered a Decision dated 2 June 2003, declaring that petitioner is bound to grant each of its
workers a Christmas bonus of P3,000.00 for the reason that the bonus was given prior to the effectivity of the CBA
between the parties and that the financial losses of the company is not a sufficient reason to exempt it from granting the
same. It stressed that the CBA is a binding contract and constitutes the law between the parties. The Voluntary Arbitrator
further expounded that since the employees had already been given P600.00 cash bonus, the same should be deducted
from the claimed amount of P3,000.00, thus leaving a balance of P2,400.00. The dispositive portion of the decision states,
viz:
Wherefore, in view of the foregoing respondent LCI is hereby ordered to pay the members of the complainant union LCEA
their respective Christmas bonus in the amount of three thousand (P3,000.00) pesos for the year 2002 less the P600.00
already given or a balance of P2,400.00.12
Petitioner sought reconsideration but the same was denied by the Voluntary Arbitrator in an Order dated 27 June 2003, in
this wise:
The Motion for Reconsideration filed by the respondent in the above-entitled case which was received by the Undersigned
on June 26, 2003 is hereby denied pursuant to Section 7 Rule XIX on Grievance Machinery and Voluntary Arbitration;
Amending The Implementing Rules of Book V of the Labor Code of the Philippines; to wit:
Section 7. Finality of Award/Decision The decision, order, resolution or award of the voluntary arbitrator or panel of
voluntary arbitrators shall be final and executory after ten (10) calendar days from receipt of the copy of the award or
decision by the parties and it shall not be subject of a motion for reconsideration. 13
Petitioner elevated the case to the Court of Appeals via a Petition for Certiorari under Rule 65 of the Rules of Court
docketed as CA-G.R. SP No. 78334. 14 As adverted to earlier, the Court of Appeals affirmed in toto the decision of the
Voluntary Arbitrator. The appellate court also denied petitioners motion for reconsideration.
In affirming respondent Associations right to the Christmas bonus, the Court of Appeals held:
In the case at bar, it is indubitable that petitioner offered private respondent a Christmas bonus/gift in 1998 or before the
execution of the 1999 CBA which incorporated the said benefit as a traditional right of the employees. Hence, the grant of
said bonus to private respondent can be deemed a practice as the same has not been given only in the 1999 CBA.
Apparently, this is the reason why petitioner specifically recognized the grant of a Christmas bonus/gift as a practice or
tradition as stated in the CBA. x x x.
xxxx
Evidently, the argument of petitioner that the giving of a Christmas bonus is a management prerogative holds no water.
There were no conditions specified in the CBA for the grant of said benefit contrary to the claim of petitioner that the same
is justified only when there are profits earned by the company. As can be gleaned from the CBA, the payment of
Christmas bonus was not contingent upon the realization of profits. It does not state that if the company derives no profits,
there are no bonuses to be given to the employees. In fine, the payment thereof was not related to the profitability of
business operations.
Moreover, it is undisputed that petitioner, aside from giving the mandated 13th month pay, has further been giving its
employees an additional Christmas bonus at the end of the year since 1998 or before the effectivity of the CBA in
September 1999. Clearly, the grant of Christmas bonus from 1998 up to 2001, which brought about the filing of the
complaint for alleged non-payment of the 2002 Christmas bonus does not involve the exercise of management
prerogative as the same was given continuously on or about Christmas time pursuant to the CBA. Consequently, the
giving of said bonus can no longer be withdrawn by the petitioner as this would amount to a diminution of the employees
existing benefits.15
Not to be dissuaded, petitioner is now before this Court. The only issue before us is whether or not the Court of Appeals
erred in affirming the ruling of the voluntary arbitrator that the petitioner is obliged to give the members of the respondent
Association a Christmas bonus in the amount of P3,000.00 in 2002.16
We uphold the rulings of the voluntary arbitrator and of the Court of Appeals. Findings of labor officials, who are deemed
to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even
finality, and bind us when supported by substantial evidence. This is the rule particularly where the findings of both the
arbitrator and the Court of Appeals coincide.17
As a general proposition, an arbitrator is confined to the interpretation and application of the CBA. He does not sit to
dispense his own brand of industrial justice: his award is legitimate only in so far as it draws its essence from the
CBA.18 That was done in this case.
By definition, a "bonus" is a gratuity or act of liberality of the giver. It is something given in addition to what is ordinarily
received by or strictly due the recipient. A bonus is granted and paid to an employee for his industry and loyalty which
contributed to the success of the employers business and made possible the realization of profits. 19
A bonus is also granted by an enlightened employer to spur the employee to greater efforts for the success of the
business and realization of bigger profits.20
Generally, a bonus is not a demandable and enforceable obligation. For a bonus to be enforceable, it must have been
promised by the employer and expressly agreed upon by the parties. 21 Given that the bonus in this case is integrated in
the CBA, the same partakes the nature of a demandable obligation. Verily, by virtue of its incorporation in the CBA, the
Christmas bonus due to respondent Association has become more than just an act of generosity on the part of the
petitioner but a contractual obligation it has undertaken. 22
A CBA refers to a negotiated contract between a legitimate labor organization and the employer, concerning wages, hours
of work and all other terms and conditions of employment in a bargaining unit. As in all other contracts, the parties to a
CBA may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided these are not
contrary to law, morals, good customs, public order or public policy.23
It is a familiar and fundamental doctrine in labor law that the CBA is the law between the parties and they are obliged to
comply with its provisions.24 This principle stands strong and true in the case at bar.1avvphi1
A reading of the provision of the CBA reveals that the same provides for the giving of a "Christmas gift package/bonus"
without qualification. Terse and clear, the said provision did not state that the Christmas package shall be made to depend
on the petitioners financial standing. The records are also bereft of any showing that the petitioner made it clear during
CBA negotiations that the bonus was dependent on any condition. Indeed, if the petitioner and respondent Association
intended that the P3,000.00 bonus would be dependent on the company earnings, such intention should have been
expressed in the CBA.
It is noteworthy that in petitioners 1998 and 1999 Financial Statements, it took note that "the 1997 financial crisis in the
Asian region adversely affected the Philippine economy." 25
From the foregoing, petitioner cannot insist on business losses as a basis for disregarding its undertaking. It is manifestly
clear that petitioner was very much aware of the imminence and possibility of business losses owing to the 1997 financial
crisis. In 1998, petitioner suffered a net loss of P14,347,548.00.26 Yet it gave a P3,000.00 bonus to the members of the
respondent Association. In 1999, when petitioners very own financial statement reflected that "the positive developments
in the economy have yet to favorably affect the operations of the company," 27 and reported a loss of P346,025,733.00,28 it
entered into the CBA with the respondent Association whereby it contracted to grant a Christmas gift package/bonus to
the latter. Petitioner supposedly continued to incur losses in the years 2000 29 and 2001. Still and all, this did not deter it
from honoring the CBA provision on Christmas bonus as it continued to give P3,000.00 each to the members of the
respondent Association in the years 1999, 2000 and 2001.
All given, business losses are a feeble ground for petitioner to repudiate its obligation under the CBA. The rule is settled
that any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or
eliminated by the employer. The principle of non-diminution of benefits is founded on the constitutional mandate to protect
the rights of workers and to promote their welfare and to afford labor full protection. 30
Hence, absent any proof that petitioners consent was vitiated by fraud, mistake or duress, it is presumed that it entered
into the CBA voluntarily and had full knowledge of the contents thereof and was aware of its commitments under the
contract.
The Court is fully aware that implementation to the letter of the subject CBA provision may further deplete petitioners
resources. Petitioners remedy though lies not in the Courts invalidation of the provision but in the parties clarification of
the same in subsequent CBA negotiations. Article 253 of the Labor Code is relevant:
Art. 253. Duty to bargain collectively when there exists a collective bargaining agreement. - When there is a collective
bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate nor modify such
agreement during its lifetime. However, either party can serve a written notice to terminate or modify the agreement at
least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in
full force and effect the terms and conditions of the existing agreement during the sixty (60)-day period and/or until a new
agreement is reached by the parties.
WHEREFORE, Premises considered, the petition is DENIED for lack of merit. The Decision of the Court of Appeals dated
5 April 2006 and the Resolution of the same court dated 13 December 2007 in CA-G.R. SP No. 78334 areAFFIRMED.
SO ORDERED.
CASE 2
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 168757
January 19, 2011
RENATO REAL, Petitioner,

vs.
SANGU PHILIPPINES, INC. and/ or KIICHI ABE, Respondents.
DECISION
DEL CASTILLO, J.:
The perennial question of whether a complaint for illegal dismissal is intra-corporate and thus beyond the jurisdiction of
the Labor Arbiter is the core issue up for consideration in this case.
This Petition for Review on Certiorari assails the Decision1 dated June 28, 2005 of the Court of Appeals (CA) in CA-G.R.
SP. No. 86017 which dismissed the petition for certiorari filed before it.
Factual Antecedents
Petitioner Renato Real was the Manager of respondent corporation Sangu Philippines, Inc., a corporation engaged in the
business of providing manpower for general services, like janitors, janitresses and other maintenance personnel, to
various clients. In 2001, petitioner, together with 29 others who were either janitors, janitresses, leadmen and
maintenance men, all employed by respondent corporation, filed their respective Complaints 2 for illegal dismissal against
the latter and respondent Kiichi Abe, the corporations Vice-President and General Manager. These complaints were later
on consolidated.
With regard to petitioner, he was removed from his position as Manager through Board Resolution 2001-03 3adopted by
respondent corporations Board of Directors. Petitioner complained that he was neither notified of the Board Meeting
during which said board resolution was passed nor formally charged with any infraction. He just received from
respondents a letter4 dated March 26, 2001 stating that he has been terminated from service effective March 25, 2001 for
the following reasons: (1) continuous absences at his post at Ogino Philippines Inc. for several months which was
detrimental to the corporations operation; (2) loss of trust and confidence; and, (3) to cut down operational expenses to
reduce further losses being experienced by respondent corporation.
Respondents, on the other hand, refuted petitioners claim of illegal dismissal by alleging that after petitioner was
appointed Manager, he committed gross acts of misconduct detrimental to the company since 2000. According to them,
petitioner would almost always absent himself from work without informing the corporation of his whereabouts and that he
would come to the office only to collect his salaries. As he was almost always absent, petitioner neglected to supervise the
employees resulting in complaints from various clients about employees performance. In one instance, petitioner together
with a few others, while apparently drunk, went to the premises of one of respondents clients, Epson Precision (Phils.)
Inc., and engaged in a heated argument with the employees therein. Because of this, respondent Abe allegedly received a
complaint from Epsons Personnel Manager concerning petitioners conduct. Respondents likewise averred that petitioner
established a company engaged in the same business as respondent corporations and even submitted proposals for
janitorial services to two of the latters clients. Because of all these, the Board of Directors of respondent corporation met
on March 24, 2001 and adopted Board Resolution No. 2001-03 removing petitioner as Manager. Petitioner was thereafter
informed of his removal through a letter dated March 26, 2001 which he, however, refused to receive.
Further, in what respondents believed to be an act of retaliation, petitioner allegedly encouraged the employees who had
been placed in the manpower pool to file a complaint for illegal dismissal against respondents. Worse, he later incited
those assigned in Epson Precision (Phils.) Inc., Ogino Philippines Corporation, Hitachi Cable Philippines Inc. and
Philippine TRC Inc. to stage a strike on April 10 to 16, 2001. Not satisfied, petitioner together with other employees also
barricaded the premises of respondent corporation. Such acts respondents posited constitute just cause for petitioners
dismissal and that same was validly effected.
Rulings of the Labor Arbiter and the National Labor Relations Commission
The Labor Arbiter in a Decision5 dated June 5, 2003 declared petitioner and his co-complainants as having been illegally
dismissed and ordered respondents to reinstate complainants to their former positions without loss of seniority rights and
other privileges and to pay their full backwages from the time of their dismissal until actually reinstated and furthermore, to
pay them attorneys fees. The Labor Arbiter found no convincing proof of the causes for which petitioner was terminated
and noted that there was complete absence of due process in the manner of his termination.
Respondents thus appealed to the National Labor Relations Commission (NLRC) and raised therein as one of the issues
the lack of jurisdiction of the Labor Arbiter over petitioners complaint. Respondents claimed that petitioner is both a
stockholder and a corporate officer of respondent corporation, hence, his action against respondents is an intra-corporate
controversy over which the Labor Arbiter has no jurisdiction.
The NLRC found such contention of respondents to be meritorious. Aside from petitioners own admission in the pleadings
that he is a stockholder and at the same time occupying a managerial position, the NLRC also gave weight to the
corporations General Information Sheet6 (GIS) dated October 27, 1999 listing petitioner as one of its stockholders,
consequently his termination had to be effected through a board resolution. These, the NLRC opined, clearly established
petitioners status as a stockholder and as a corporate officer and hence, his action against respondent corporation is an
intra-corporate controversy over which the Labor Arbiter has no jurisdiction. As to the other complainants, the NLRC ruled
that there was no dismissal. The NLRC however, modified the appealed decision of the Labor Arbiter in a Decision 7 dated
February 13, 2004, the dispositive portion of which reads:
WHEREFORE, all foregoing premises considered, the appealed Decision dated June 5, 2003 is hereby MODIFIED.
Accordingly, judgment is hereby rendered DISMISSING the complaint of Renato Real for lack of jurisdiction. As to the rest
of the complainants, they are hereby ordered to immediately report back to work but without the payment of backwages.
All other claims against respondents including attorneys fees are DISMISSED for lack of merit.
SO ORDERED.
Still joined by his co-complainants, petitioner brought the case to the CA by way of petition for certiorari.
Ruling of the Court of Appeals
Before the CA, petitioner imputed upon the NLRC grave abuse of discretion amounting to lack or excess of jurisdiction in
declaring him a corporate officer and in holding that his action against respondents is an intra-corporate controversy and
thus beyond the jurisdiction of the Labor Arbiter.
While admitting that he is indeed a stockholder of respondent corporation, petitioner nevertheless disputed the declaration
of the NLRC that he is a corporate officer thereof. He posited that his being a stockholder and his being a managerial
employee do not ipso facto confer upon him the status of a corporate officer. To support this contention, petitioner called
the CAs attention to the same GIS relied upon by the NLRC when it declared him to be a corporate officer. He pointed out
that although said information sheet clearly indicates that he is a stockholder of respondent corporation, he is not an
officer thereof as shown by the entry "N/A" or "not applicable" opposite his name in the officer column. Said column
requires that the particular position be indicated if the person is an officer and if not, the entry "N/A". Petitioner further
argued that the fact that his dismissal was effected through a board resolution does not likewise mean that he is a
corporate officer. Otherwise, all that an employer has to do in order to avoid compliance with the requisites of a valid
dismissal under the Labor Code is to dismiss a managerial employee through a board resolution. Moreover, he insisted
that his action for illegal dismissal is not an intra-corporate controversy as same stemmed from employee-employer
relationship which is well within the jurisdiction of the Labor Arbiter. This can be deduced and is bolstered by the last
paragraph of the termination letter sent to him by respondents stating that he is entitled to benefits under the Labor Code,
to wit:
In this connection (his dismissal) you are entitled to separation pay and other benefits provided for under the Labor Code
of the Philippines.8 (Emphasis supplied)
In contrast, respondents stood firm that the action against them is an intra-corporate controversy. It cited Tabang v.
National Labor Relations Commission 9 wherein this Court declared that "an intra-corporate controversy is one which
arises between a stockholder and the corporation;" that "[t]here is no distinction, qualification, nor any exemption
whatsoever;" and that it is "broad and covers all kinds of controversies between stockholders and corporations." In view of
this ruling and since petitioner is undisputedly a stockholder of the corporation, respondents contended that the action
instituted by petitioner against them is an intra-corporate controversy cognizable only by the appropriate regional trial
court. Hence, the NLRC correctly dismissed petitioners complaint for lack of jurisdiction.
In the assailed Decision10 dated June 28, 2005, the CA sided with respondents and affirmed the NLRCs finding that aside
from being a stockholder of respondent corporation, petitioner is also a corporate officer thereof and consequently, his
complaint is an intra-corporate controversy over which the labor arbiter has no jurisdiction. Said court opined that if it was
true that petitioner is a mere employee, the respondent corporation would not have called a board meeting to pass a
resolution for petitioners dismissal considering that it was very tedious for the Board of Directors to convene and to adopt
a resolution every time they decide to dismiss their managerial employees. To support its finding, the CA likewise
cited Tabang. As to petitioners co-complainants, the CA likewise affirmed the NLRCS finding that they were never
dismissed from the service. The dispositive portion of the CA Decision reads:
WHEREFORE, the instant petition is hereby DISMISSED. Accordingly, the assailed decision and resolution of the public
respondent National Labor Relations Commission in NLRC NCR CA No. 036128-03 NLRC SRAB-IV-05-6618-01-B/056619-02-B/05-6620-02-B/10-6637-01-B/10-6833-01-B, STANDS.
SO ORDERED.
Now alone but still undeterred, petitioner elevated the case to us through this Petition for Review on Certiorari.
The Parties Arguments
Petitioner continues to insist that he is not a corporate officer. He argues that a corporate officer is one who holds an
elective position as provided in the Articles of Incorporation or one who is appointed to such other positions by the Board
of Directors as specifically authorized by its By-Laws. And, since he was neither elected nor is there any showing that he
was appointed by the Board of Directors to his position as Manager, petitioner maintains that he is not a corporate officer
contrary to the findings of the NLRC and the CA.
Petitioner likewise contends that his complaint for illegal dismissal against respondents is not an intra-corporate
controversy. He avers that for an action or suit between a stockholder and a corporation to be considered an intracorporate controversy, same must arise from intra-corporate relations, i.e., an action involving the status of a stockholder
as such. He believes that his action against the respondents does not arise from intra-corporate relations but rather from
employer-employee relations. This, according to him, was even impliedly recognized by respondents as shown by the
earlier quoted portion of the termination letter they sent to him.
For their part, respondents posit that what petitioner is essentially assailing before this Court is the finding of the NLRC
and the CA that he is a corporate officer of respondent corporation. To the respondents, the question of whether petitioner
is a corporate officer is a question of fact which, as held in a long line of jurisprudence, cannot be the subject of review
under this Petition for Review on Certiorari. At any rate, respondents insist that petitioner who is undisputedly a
stockholder of respondent corporation is likewise a corporate officer and that his action against them is an intra-corporate
dispute beyond the jurisdiction of the labor tribunals. To support this, they cited several jurisprudence such as Pearson &
George (S.E. Asia), Inc. v. National Labor Relations Commission, 11Philippine School of Business Administration v.
Leano,12 Fortune Cement Corporation v. National Labor Relations Commission 13 and again, Tabang v. National Labor
Relations Commission.14
Moreover, in an attempt to demolish petitioners claim that the present controversy concerns employer-employee
relations, respondents enumerated the following facts and circumstances: (1) Petitioner was an incorporator, stockholder
and manager of respondent company; (2) As an incorporator, he was one of only seven incorporators of respondent
corporation and one of only four Filipino members of the Board of Directors; (3) As stockholder, he has One Thousand
(1,000) of the Ten Thousand Eight Hundred (10,800) common shares held by Filipino stockholders, with a par-value of
One Hundred Thousand Pesos (P100,000.00); (4) His appointment as manager was by virtue of Section 1, Article IV of
respondent corporations By-Laws; (5) As manager, he had direct management and authority over all of respondent
corporations skilled employees; (6) Petitioner has shown himself to be an incompetent manager, unable to properly
supervise the employees and even causing friction with the corporations clients by engaging in unruly behavior while in
clients premises; (7) As if his incompetence was not enough, in a blatant and palpable act of disloyalty, he established
another company engaged in the same line of business as respondent corporation; (8) Because of these acts of
incompetence and disloyalty, respondent corporation through a Resolution adopted by its Board of Directors was finally
constrained to remove petitioner as Manager and declare his office vacant; (9) After his removal, petitioner urged the
employees under him to stage an unlawful strike by leading them to believe that they have been illegally dismissed from
employment.15Apparently, respondents intended to show from this enumeration that petitioners removal pertains to his
relationship with respondent corporation, that is, his utter failure to advance its interest and the prejudice caused by his
acts of disloyalty. For this reason, respondents see the action against them not as a case between an employer and an
employee as what petitioner alleges, but one by an officer and at same time a major stockholder seeking to be reinstated
to his former office against the corporation that declared his position vacant.
Finally, respondents state that the fact that petitioner is being given benefits under the Labor Code as stated in his
termination letter does not mean that they are recognizing the employer-employee relations between them. They explain
that the benefits provided under the Labor Code were merely made by respondent corporation as the basis in determining
petitioners compensation package and that same are merely part of the perquisites of petitioners office as a director and
manager. It does not and it cannot change the intra-corporate nature of the controversy. Hence, respondents pray that this
petition be dismissed for lack of merit.
Issues
From the foregoing and as earlier mentioned, the core issue to be resolved in this case is whether petitioners complaint
for illegal dismissal constitutes an intra-corporate controversy and thus, beyond the jurisdiction of the Labor Arbiter.
Our Ruling
Two-tier test in determining the existence of intra-corporate controversy
Respondents strongly rely on this Courts pronouncement in the 1997 case of Tabang v. National Labor Relations
Commission, to wit:
[A]n intra-corporate controversy is one which arises between a stockholder and the corporation. There is no distinction,
qualification nor any exemption whatsoever. The provision is broad and covers all kinds of controversies between
stockholders and corporations.16
In view of this, respondents contend that even if petitioner challenges his being a corporate officer, the present case still
constitutes an intra-corporate controversy as petitioner is undisputedly a stockholder and a director of respondent
corporation.
It is worthy to note, however, that before the promulgation of the Tabang case, the Court provided in Mainland
Construction Co., Inc. v. Movilla 17 a "better policy" in determining which between the Securities and Exchange
Commission (SEC) and the Labor Arbiter has jurisdiction over termination disputes, 18 or similarly, whether they are intracorporate or not, viz:
The fact that the parties involved in the controversy are all stockholders or that the parties involved are the stockholders
and the corporation does not necessarily place the dispute within the ambit of the jurisdiction of the SEC (now the
Regional Trial Court19). The better policy to be followed in determining jurisdiction over a case should be to
consider concurrent factors such as the status or relationship of the parties or the nature of the question that is
subject of their controversy. In the absence of any one of these factors, the SEC will not have jurisdiction. Furthermore,
it does not necessarily follow that every conflict between the corporation and its stockholders would involve such
corporate matters as only SEC (now the Regional Trial Court 20) can resolve in the exercise of its adjudicatory or quasijudicial powers. (Emphasis ours)
And, while Tabang was promulgated later than Mainland Construction Co., Inc., the "better policy" enunciated in the latter
appears to have developed into a standard approach in classifying what constitutes an intra-corporate controversy. This is
explained lengthily in Reyes v. Regional Trial Court of Makati, Br. 142,21 to wit:
Intra-Corporate Controversy
A review of relevant jurisprudence shows a development in the Courts approach in classifying what constitutes an intracorporate controversy. Initially, the main consideration in determining whether a dispute constitutes an intra-corporate
controversy was limited to a consideration of the intra-corporate relationship existing between or among the parties. The
types of relationships embraced under Section 5(b) x x x were as follows:
a) between the corporation, partnership or association and the public;
b) between the corporation, partnership or association and its stockholders, partners, members or officers;
c) between the corporation, partnership or association and the State as far as its franchise, permit or license to
operate is concerned; and
d) among the stockholders, partners or associates themselves.
The existence of any of the above intra-corporate relations was sufficient to confer jurisdiction to the SEC (now the RTC),
regardless of the subject matter of the dispute. This came to be known as the relationship test.
However, in the 1984 case of DMRC Enterprises v. Esta del Sol Mountain Reserve, Inc., the Court introduced the nature
of the controversy test. We declared in this case that it is not the mere existence of an intra-corporate relationship that
gives rise to an intra-corporate controversy; to rely on the relationship test alone will divest the regular courts of their
jurisdiction for the sole reason that the dispute involves a corporation, its directors, officers, or stockholders. We saw that
there is no legal sense in disregarding or minimizing the value of the nature of the transactions which gives rise to the
dispute.
Under the nature of the controversy test, the incidents of that relationship must also be considered for the purpose of
ascertaining whether the controversy itself is intra-corporate. The controversy must not only be rooted in the existence of
an intra-corporate relationship, but must as well pertain to the enforcement of the parties correlative rights and obligations
under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation. If the relationship and
its incidents are merely incidental to the controversy or if there will still be conflict even if the relationship does not exist,
then no intra-corporate controversy exists.
The Court then combined the two tests and declared that jurisdiction should be determined by considering not only the
status or relationship of the parties, but also the nature of the question under controversy. This two-tier test was adopted
in the recent case of Speed Distribution Inc. v. Court of Appeals:
To determine whether a case involves an intra-corporate controversy, and is to be heard and decided by the branches of
the RTC specifically designated by the Court to try and decide such cases, two elements must concur: (a) the status or
relationship of the parties, and (2) the nature of the question that is the subject of their controversy.
The first element requires that the controversy must arise out of intra-corporate or partnership relations between any or all
of the parties and the corporation, partnership, or association of which they are not stockholders, members or associates,
between any or all of them and the corporation, partnership or association of which they are stockholders, members or
associates, respectively; and between such corporation, partnership, or association and the State insofar as it concerns
the individual franchises. The second element requires that the dispute among the parties be intrinsically connected with
the regulation of the corporation. If the nature of the controversy involves matters that are purely civil in character,
necessarily, the case does not involve an intra-corporate controversy. [Citations omitted.]
Guided by this recent jurisprudence, we thus find no merit in respondents contention that the fact alone that petitioner is a
stockholder and director of respondent corporation automatically classifies this case as an intra-corporate controversy. To
reiterate, not all conflicts between the stockholders and the corporation are classified as intra-corporate. There are other
factors to consider in determining whether the dispute involves corporate matters as to consider them as intra-corporate
controversies.
What then is the nature of petitioners Complaint for Illegal Dismissal? Is it intra-corporate and thus beyond the jurisdiction
of the Labor Arbiter? We shall answer this question by using the standards set forth in the Reyes case.
No intra-corporate relationship between the parties
As earlier stated, petitioners status as a stockholder and director of respondent corporation is not disputed. What the
parties disagree on is the finding of the NLRC and the CA that petitioner is a corporate officer. An examination of the
complaint for illegal dismissal, however, reveals that the root of the controversy is petitioners dismissal as Manager of
respondent corporation, a position which respondents claim to be a corporate office. Hence, petitioner is involved in this
case not in his capacity as a stockholder or director, but as an alleged corporate officer. In applying the relationship test,
therefore, it is necessary to determine if petitioner is a corporate officer of respondent corporation so as to establish the
intra-corporate relationship between the parties. And albeit respondents claim that the determination of whether petitioner
is a corporate officer is a question of fact which this Court cannot pass upon in this petition for review on certiorari, we
shall nonetheless proceed to consider the same because such question is not the main issue to be resolved in this case
but is merely collateral to the core issue earlier mentioned.
Petitioner negates his status as a corporate officer by pointing out that although he was removed as Manager through a
board resolution, he was never elected to said position nor was he appointed thereto by the Board of Directors. While the
By-Laws of respondent corporation provides that the Board may from time to time appoint such officers as it may deem
necessary or proper, he avers that respondents failed to present any board resolution that he was appointed pursuant to
said By-Laws. He instead alleges that he was hired as Manager of respondent corporation solely by respondent Abe. For
these reasons, petitioner claims to be a mere employee of respondent corporation rather than as a corporate officer.
We find merit in petitioners contention.
"Corporate officers in the context of Presidential Decree No. 902-A are those officers of the corporation who are given
that character by the Corporation Code or by the corporations by-laws. There are three specific officers whom a
corporation must have under Section 25 of the Corporation Code. These are the president, secretary and the treasurer.
The number of officers is not limited to these three. A corporation may have such other officers as may be provided for by
its by-laws like, but not limited to, the vice-president, cashier, auditor or general manager. The number of corporate
officers is thus limited by law and by the corporations by-laws." 22
Respondents claim that petitioner was appointed Manager by virtue of Section 1, Article IV of respondent corporations
By-Laws which provides:
10
ARTICLE
OFFICER
IV
Section 1. Election/Appointment Immediately after their election, the Board of Directors shall formally organize by
electing the President, Vice-President, the Secretary at said meeting.
The Board, may from time to time, appoint such other officers as it may determine to be necessary or proper. Any
two (2) or more positions may be held concurrently by the same person, except that no one shall act as President and
Treasurer or Secretary at the same time.
x x x x23 (Emphasis ours)
We have however examined the records of this case and we find nothing to prove that petitioners appointment was made
pursuant to the above-quoted provision of respondent corporations By-Laws. No copy of board resolution appointing
petitioner as Manager or any other document showing that he was appointed to said position by action of the board was
submitted by respondents. What we found instead were mere allegations of respondents in their various pleadings 24 that
petitioner was appointed as Manager of respondent corporation and nothing more. "The Court has stressed time and
again that allegations must be proven by sufficient evidence because mere allegation is definitely not evidence." 25
It also does not escape our attention that respondents made the following conflicting allegations in their Memorandum on
Appeal26 filed before the NLRC which cast doubt on petitioners status as a corporate officer, to wit:
xxxx
24. Complainant-appellee Renato Real was appointed as the manager of respondent-appellant Sangu on November 6,
1998. Priorly [sic], he was working at Atlas Ltd. Co. at Mito-shi, Ibaraki-ken Japan. He was staying in Japan as an illegal
alien for the past eleven (11) years. He had a problem with his family here in the Philippines which prompted him to
surrender himself to Japans Bureau of Immigration and was deported back to the Philippines. His former employer, Mr.
Tsutomo Nogami requested Mr. Masahiko Shibata, one of respondent-appellant Sangus Board of Directors, if
complainant-appellee Renato Real could work as one of its employees here in the Philippines because he had been
blacklisted at Japans Immigration Office and could no longer go back to Japan. And so it was arranged that he would
serve as respondent-appellant Sangus manager, receiving a salary of P25,000.00. As such, he was tasked to
oversee the operations of the company. x x x (Emphasis ours)
xxxx
As earlier stated, complainant-appellee Renato Real was hired as the manager of respondent-appellant Sangu. As such,
his position was reposed with full trust and confidence. x x x
While respondents repeatedly claim that petitioner was appointed as Manager pursuant to the corporations By-Laws, the
above-quoted inconsistencies in their allegations as to how petitioner was placed in said position, coupled by the fact that
they failed to produce any documentary evidence to prove that petitioner was appointed thereto by action or with approval
of the board, only leads this Court to believe otherwise. It has been consistently held that "[a]n office is created by the
charter of the corporation and the officer is elected (or appointed) by the directors or stockholders." 27 Clearly here,
respondents failed to prove that petitioner was appointed by the board of directors. Thus, we cannot subscribe to their
claim that petitioner is a corporate officer. Having said this, we find that there is no intra-corporate relationship between
the parties insofar as petitioners complaint for illegal dismissal is concerned and that same does not satisfy the
relationship test.
Present controversy does not relate to intra-corporate dispute
We now go to the nature of controversy test. As earlier stated, respondents terminated the services of petitioner for the
following reasons: (1) his continuous absences at his post at Ogino Philippines, Inc; (2) respondents loss of trust and
confidence on petitioner; and, (3) to cut down operational expenses to reduce further losses being experienced by the
corporation. Hence, petitioner filed a complaint for illegal dismissal and sought reinstatement, backwages, moral damages
and attorneys fees. From these, it is not difficult to see that the reasons given by respondents for dismissing petitioner
11
have something to do with his being a Manager of respondent corporation and nothing with his being a director or
stockholder. For one, petitioners continuous absences in his post in Ogino relates to his performance as Manager.
Second, respondents loss of trust and confidence in petitioner stemmed from his alleged acts of establishing a company
engaged in the same line of business as respondent corporations and submitting proposals to the latters clients while he
was still serving as its Manager. While we note that respondents also claim these acts as constituting acts of disloyalty of
petitioner as director and stockholder, we, however, think that same is a mere afterthought on their part to make it appear
that the present case involves an element of intra-corporate controversy. This is because before the Labor Arbiter,
respondents did not see such acts to be disloyal acts of a director and stockholder but rather, as constituting willful breach
of the trust reposed upon petitioner as Manager. 28 It was only after respondents invoked the Labor Arbiters lack of
jurisdiction over petitioners complaint in the Supplemental Memorandum of Appeal 29 filed before the NLRC that
respondents started considering said acts as such. Third, in saying that they were dismissing petitioner to cut operational
expenses, respondents actually want to save on the salaries and other remunerations being given to petitioner as its
Manager. Thus, when petitioner sought for reinstatement, he wanted to recover his position as Manager, a position which
we have, however, earlier declared to be not a corporate position. He is not trying to recover a seat in the board of
directors or to any appointive or elective corporate position which has been declared vacant by the board. Certainly, what
we have here is a case of termination of employment which is a labor controversy and not an intra-corporate dispute. In
sum, we hold that petitioners complaint likewise does not satisfy the nature of controversy test.
With the elements of intra-corporate controversy being absent in this case, we thus hold that petitioners complaint for
illegal dismissal against respondents is not intra-corporate. Rather, it is a termination dispute and, consequently, falls
under the jurisdiction of the Labor Arbiter pursuant to Section 217 30 of the Labor Code.
We take note of the cases cited by respondents and find them inapplicable to the case at bar. Fortune Cement
Corporation v. National Labor Relations Commission 31 involves a member of the board of directors and at the same time a
corporate officer who claims he was illegally dismissed after he was stripped of his corporate position of Executive VicePresident because of loss of trust and confidence. On the other hand, Philippine School of Business Administration v.
Leano32 and Pearson & George v. National Labor Relations Commission 33 both concern a complaint for illegal dismissal
by corporate officers who were not re-elected to their respective corporate positions. The Court declared all these cases
as involving intra-corporate controversies and thus affirmed the jurisdiction of the SEC (now the RTC) 34 over them
precisely because they all relate to corporate officers and their removal or non-reelection to their respective corporate
positions. Said cases are by no means similar to the present case because as discussed earlier, petitioner here is not a
corporate officer.
With the foregoing, it is clear that the CA erred in affirming the decision of the NLRC which dismissed petitioners
complaint for lack of jurisdiction. In cases such as this, the Court normally remands the case to the NLRC and directs it to
properly dispose of the case on the merits. "However, when there is enough basis on which a proper evaluation of the
merits of petitioners case may be had, the Court may dispense with the time-consuming procedure of remand in order to
prevent further delays in the disposition of the case." 35 "It is already an accepted rule of procedure for us to strive to settle
the entire controversy in a single proceeding, leaving no root or branch to bear the seeds of litigation. If, based on the
records, the pleadings, and other evidence, the dispute can be resolved by us, we will do so to serve the ends of justice
instead of remanding the case to the lower court for further proceedings." 36 We have gone over the records before us and
we are convinced that we can now altogether resolve the issue of the validity of petitioners dismissal and hence, we shall
proceed to do so.
Petitioners dismissal not in accordance with law
"In an illegal dismissal case, the onus probandi rests on the employer to prove that [the] dismissal of an employee is for a
valid cause."37 Here, as correctly observed by the Labor Arbiter, respondents failed to produce any convincing proof to
support the grounds for which they terminated petitioner. Respondents contend that petitioner has been absent for several
months, yet they failed to present any proof that petitioner was indeed absent for such a long time. Also, the fact that
petitioner was still able to collect his salaries after his alleged absences casts doubts on the truthfulness of such charge.
Respondents likewise allege that petitioner engaged in a heated argument with the employees of Epson, one of
respondents clients. But just like in the charge of absenteeism, there is no showing that an investigation on the matter
was done and that disciplinary action was imposed upon petitioner. At any rate, we have reviewed the records of this case
and we agree with the Labor Arbiter that under the circumstances, said charges are not sufficient bases for petitioners
termination. As to the charge of breach of trust allegedly committed by petitioner when he established a new company
engaged in the same line of business as respondent corporations and submitted proposals to two of the latters clients
12
while he was still a Manager, we again observe that these are mere allegations without sufficient proof. To reiterate,
allegations must be proven by sufficient evidence because mere allegation is definitely not evidence. 38
Moreover, petitioners dismissal was effected without due process of law.lawphi1 "The twin requirements of notice and
hearing constitute the essential elements of due process. The law requires the employer to furnish the employee sought to
be dismissed with two written notices before termination of employment can be legally effected: (1) a written notice
apprising the employee of the particular acts or omissions for which his dismissal is sought in order to afford him an
opportunity to be heard and to defend himself with the assistance of counsel, if he desires, and (2) a subsequent notice
informing the employee of the employers decision to dismiss him. This procedure is mandatory and its absence taints the
dismissal with illegality."39 Since in this case, petitioners dismissal was effected through a board resolution and all that
petitioner received was a letter informing him of the boards decision to terminate him, the abovementioned procedure was
clearly not complied with. All told, we agree with the findings of the Labor Arbiter that petitioner has been illegally
dismissed. And, as an illegally dismissed employee is entitled to the two reliefs of backwages and reinstatement, 40 we
affirm the Labor Arbiters judgment ordering petitioners reinstatement to his former position without loss of seniority rights
and other privileges and awarding backwages from the time of his dismissal until actually reinstated. Considering that
petitioner has to secure the services of counsel to protect his interest and necessarily has to incur expenses, we likewise
affirm the award of attorneys fees which is equivalent to 10% of the total backwages that respondents must pay petitioner
in accordance with this Decision.
WHEREFORE, the petition is hereby GRANTED. The assailed June 28, 2005 Decision of the Court of Appeals insofar as
it affirmed the National Labor Relations Commissions dismissal of petitioners complaint for lack of jurisdiction, is hereby
REVERSED and SET ASIDE. The June 5, 2003 Decision of the Labor Arbiter with respect to petitioner Renato Real is
AFFIRMED and this case is ordered REMANDED to the National Labor Relations Commission for the computation of
petitioners backwages and attorneys fees in accordance with this Decision.
SO ORDERED.
CASE 3
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 181146
January 26, 2011
THE UNIVERSITY OF THE IMMACULATE CONCEPTION and MO. MARIA ASSUMPTA DAVID, RVM, Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and TEODORA AXALAN, Respondents.
DECISION
CARPIO, J.:
The Case
13
This is a petition for review on certiorari 1 of the 13 December 2007 Decision2 of the Court of Appeals in CA-G.R. SP No.
00812 affirming the 15 August 2005 and the 24 October 2005 Resolutions 3 of the National Labor Relations Commission in
NLRC CA No. M-008333-2005, which sustained the 11 October 2004 Decision 4 of the Labor Arbiter in RAB-11-12-0118703 ordering petitioner to reinstate private respondent to her former position without loss of seniority rights and to pay her
backwages, salary differentials, damages, and attorneys fees.
The Facts
Petitioner University of the Immaculate Conception is a private educational institution located in Davao City. Private
respondent Teodora C. Axalan is a regular faculty member in the university holding the position of Associate Professor II.
Aside from being a regular faculty member, Axalan is the elected president of the employees union. 5
From 18 November to 22 November 2002, Axalan attended a seminar in Quezon City on website development. Axalan
then received a memorandum 6 from Dean Maria Rosa Celestial asking her to explain in writing why she should not be
dismissed for having been absent without official leave.
In her letter,7 Axalan claimed that she held online classes while attending the seminar. She explained that she was under
the impression that faculty members would not be marked absent even if they were not physically present in the
classroom as long as they conducted online classes.
In reply,8 Dean Celestial relayed to Axalan the message of the university president that no administrative charge would be
filed if Axalan would admit having been absent without official leave and write a letter of apology seeking forgiveness.
Convinced that she could not be deemed absent since she held online classes, Axalan opted not to write the letter of
admission and contrition the university president requested. 9 The Dean wrote Axalan that the university president had
created an ad hoc grievance committee to investigate the AWOL charge. 10
From 28 January to 3 February 2003, Axalan attended a seminar in Baguio City on advanced paralegal training. Dean
Celestial wrote Axalan informing her that her participation in the paralegal seminar in Baguio City was the subject of a
second AWOL charge.11 The dean asked Axalan to explain in writing why no disciplinary action should be taken against
her.12
In her letter,13 Axalan explained that before going to Baguio City for the seminar, she sought the approval of VicePresident for Academics Alicia Sayson. In a letter,14 VP Sayson denied having approved Axalans application for official
leave. The VP stated in her letter that it was the university president, Maria Assumpta David, who must approve the
application.
After conducting hearings and receiving evidence, the ad hoc grievance committee found Axalan to have incurred AWOL
on both instances and recommended that Axalan be suspended without pay for six months on each AWOL charge. 15 The
university president approved the committees recommendation.
The university president then wrote Axalan informing her that she incurred absences without official leave when she
attended the seminars on website development in Quezon City and on advanced paralegal training in Baguio City on 1822 November 2002 and on 28 January-3 February 2003, respectively. In the same letter, the university president informed
Axalan that the total penalty of one-year suspension without pay for both AWOL charges would be effective immediately. 16
On 1 December 2003, Axalan filed a complaint 17 against the university for illegal suspension, constructive dismissal,
reinstatement with backwages, and unfair labor practice with prayer for damages and attorneys fees.
The university moved to dismiss the complaint on the ground that the Labor Arbiter had no jurisdiction over the subject
matter of the complaint. The university maintained that jurisdiction lay in the voluntary arbitrator. 18
In denying the universitys motion to dismiss, the Labor Arbiter held that there being no existing collective bargaining
agreement between the parties, no grievance machinery was constituted, which barred resort to voluntary arbitration. 19
14
Meanwhile, upon the expiration of the one-year suspension, Axalan promptly resumed teaching at the university on 1
October 2004.
The Ruling of the Labor Arbiter
On 11 October 2004, the Labor Arbiter rendered a Decision holding that the suspension of Axalan amounted to
constructive dismissal entitling her to reinstatement and payment of backwages, salary differentials, damages, and
attorneys fees, thus:
WHEREFORE, premises laid, judgment is hereby rendered declaring that the suspension of complainant amounted to
constructive dismissal, and as such, she is entitled to reinstatement and payment of her full backwages reckoned from the
time it was withheld from her up to the time of reinstatement. Accordingly, Respondent University of the Immaculate
Conception acting through its President, Respondent Mo. Maria Assumpta David, RVM, is directed to reinstate the
complainant to her former position without loss of seniority rights and to pay her the sum of Five Hundred Forty Three
Thousand Four Hundred Fifty Two Pesos (P543,452.00) representing her backwages, salary differentials (diminution) and
damages plus ten percent (10%) thereof as attorneys fees or the sum of P54,345.20.
The Respondent UIC and its President are hereby directed to inform this Office of the mode of compliance it will avail itself
by reason of the Order of reinstatement.
SO ORDERED.20
The university appealed the Labor Arbiters Decision to the National Labor Relations Commission (NLRC). It challenged
the jurisdiction of the Labor Arbiter insisting that the voluntary arbitrator had jurisdiction over the labor dispute. The
university pointed out that when the Labor Arbiter rendered his Decision on 11 October 2004, Axalan had returned to work
on 1 October 2004 upon the expiration of the one-year suspension.
The Ruling of the NLRC
The NLRC held that the Labor Arbiter, not the voluntary arbitrator, had jurisdiction as the controversy did not pertain to a
dispute involving the union and the university. In its 15 August 2005 Resolution, the NLRC ruled:
WHEREFORE, for want of merit, the instant appeal is hereby DISMISSED.
SO ORDERED.21
NLRC Commissioner Jovito C. Cagaanan, in his dissenting opinion, 22 stressed that the parties previously agreed to submit
the dispute to voluntary arbitration, which cast doubt on the jurisdiction of the Labor Arbiter.
The university moved for reconsideration of the NLRC Resolution. But the NLRC, in its 24 October 2005
Resolution,23 denied the motion for reconsideration for lack of merit. The university challenged both Resolutions of the
NLRC before the Court of Appeals via a petition for certiorari.
The Ruling of the Court of Appeals
The Court of Appeals affirmed the findings of the Labor Arbiter and the NLRC. In its 13 December 2007 Decision, the
Court of Appeals dismissed the universitys petition for certiorari, thus:
We find no grave abuse of discretion amounting to lack or excess of jurisdiction on the part of public respondent in
affirming the Labor Arbiter. Respondent Commissions ruling finds more than ample support in statutory and case law. It
cannot, therefore, be characterized as whimsical, arbitrary, or oppressive.
WHEREFORE, the instant petition is hereby DISMISSED.
SO ORDERED.24
15
Dissatisfied, the university filed in this Court the instant petition for review on certiorari.
The Issues
The issues for resolution are (1) whether the voluntary arbitrator had jurisdiction over the labor dispute; (2) whether Axalan
was constructively dismissed; and (3) whether the Labor Arbiters computation of backwages, damages, and attorneys
fees was correct.
The Courts Ruling
The petition is impressed with merit.
The university contends that based on the transcript of stenographic notes from the ad hoc grievance committee hearing
held on 20 February 2003, the parties agreed that the voluntary arbitrator would have jurisdiction over the labor dispute.
The university maintains that Axalans suspension does not constitute constructive dismissal and that the Labor Arbiters
decision treating it as such is an attempt to make it appear that the voluntary arbitrator has no jurisdiction. The university
points out that for constructive dismissal to exist, there must be severance of employment by the employee because of
unbearable act of discrimination, insensibility, or disdain on the part of the employer leaving the employee with no choice
but to forego continued employment. The university claims that on the contrary, Axalan eagerly reported for work as soon
as the one-year suspension was over. The university further argues that assuming Axalan is entitled to backwages, it
should have been based on Axalans average gross monthly income at the time she was suspended in SY2003-2004,
which was P14,145.00, not on her average gross monthly income in SY2002-2003, which was P18,502.00.
Private respondent Axalan counters that the university raises the same factual issues already decided unanimously by the
Labor Arbiter, the NLRC, and the Court of Appeals. On the issue of jurisdiction, Axalan stresses that the present labor
case, being a complaint for constructive dismissal and unfair labor practice, is within the jurisdiction of the Labor Arbiter.
On the finding of constructive dismissal, Axalan points out that the Labor Arbiters factual finding of constructive dismissal,
when affirmed by the NLRC and the Court of Appeals, binds this Court. Axalan claims that both AWOL charges against
her were without basis and were only a form of harassment amounting to unfair labor practice. As to the computation of
the award of backwages, Axalan points out that her average gross monthly income in SY2002-2003 was reduced in
SY2003-2004 precisely because she was not given an overload of two extra assignments resulting in the diminution of her
income. Axalan maintains that the award of damages was just proper considering that her suspension was without basis
and amounted to unfair labor practice.
Well-settled is the rule that the jurisdiction of this Court in a petition for review on certiorari is limited to reviewing only
errors of law, not of fact, unless the factual findings being assailed are not supported by the evidence on record or the
impugned judgment is based on a misapprehension of facts. Patently erroneous findings of the Labor Arbiter, even when
affirmed by the NLRC and the Court of Appeals, are not binding on this Court. 25
As to the first issue, Article 217 of the Labor Code states that unfair labor practices and termination disputes fall within the
original and exclusive jurisdiction of the Labor Arbiter:
ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise provided under this
Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide x x x the following cases
involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
x x x x (Emphasis supplied)
Article 262 of the same Code provides the exception:
16
ART. 262. Jurisdiction over other labor disputes. The Voluntary Arbitrator or panel of Voluntary Arbitrators,upon
agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and
bargaining deadlocks. (Emphasis supplied)
In San Miguel Corp. v. NLRC,26 the Court ruled that for the exception to apply, there must be agreement between the
parties clearly conferring jurisdiction to the voluntary arbitrator. Such agreement may be stipulated in a collective
bargaining agreement. However, in the absence of a collective bargaining agreement, it is enough that there is evidence
on record showing the parties have agreed to resort to voluntary arbitration. 27
As can be gleaned from the transcript of stenographic notes of the administrative hearing held on 20 February 2003, the
parties in this case clearly agreed to resort to voluntary arbitration. To quote the exact words of the parties counsels:
Atty. Dante Sandiego: x x x So, are we to understand that the decision of the President shall be without prejudice to the
right of the employees to contest the validity or legality of his dismissal or of the disciplinary action imposed upon him by
asking for voluntary arbitration under the Labor Code or when applicable availing himself of the grievance machinery
under the Labor Code which ends in voluntary arbitration. That will be the steps that we will have to follow.
Atty. Sabino Padilla, Jr.: Yes, agreed.28
Thus, the Labor Arbiter should have immediately disposed of the complaint and referred the same to the voluntary
arbitrator when the university moved to dismiss the complaint for lack of jurisdiction.
No less than Section 3, Article XIII of the Constitution declares as state policy the preferential use of voluntary modes in
settling disputes, to wit:
Sec. 3. x x x x The State shall promote the principle of shared responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace. (Emphasis supplied)
As to the second issue, constructive dismissal occurs when there is cessation of work because continued employment is
rendered impossible, unreasonable, or unlikely as when there is a demotion in rank or diminution in pay or when a clear
discrimination, insensibility, or disdain by an employer becomes unbearable to the employee leaving the latter with no
other option but to quit.29
In this case however, there was no cessation of employment relations between the parties. It is unrefuted that Axalan
promptly resumed teaching at the university right after the expiration of the suspension period. In other words, Axalan
never quit. Hence, Axalan cannot claim that she was left with no choice but to quit, a crucial element in a finding of
constructive dismissal. Thus, Axalan cannot be deemed to have been constructively dismissed.
Significantly, at the time the Labor Arbiter rendered his Decision on 11 October 2004, Axalan had already returned to her
teaching job at the university on 1 October 2004. The Labor Arbiters Decision ordering the reinstatement of Axalan, who
at the time had already returned to work, is thus absurd.
There being no constructive dismissal, there is no legal basis for the Labor Arbiters order of reinstatement as well as
payment of backwages, salary differentials, damages, and attorneys fees. 30 Thus, the third issue raised in the petition is
now moot.
Note that on the first AWOL incident, the university even offered to drop the AWOL charge against Axalan if she would only
write a letter of contrition. But Axalan adamantly refused knowing fully well that the administrative case would take its
course leading to possible sanctions. She cannot now be heard that the imposition of the penalty of six-month suspension
without pay for each AWOL charge is unreasonable. We are convinced that Axalan was validly suspended for cause and
in accord with procedural due process.
The Court recognizes the right of employers to discipline its employees for serious violations of company rules after
affording the latter due process and if the evidence warrants. The university, after affording Axalan due process and
17
finding her guilty of incurring AWOL on two separate occasions, acted well within the bounds of labor laws in imposing the
penalty of six-month suspension without pay for each incidence of AWOL.
As a learning institution, the university cannot be expected to take lightly absences without official leave among its
employees, more so among its faculty members even if they happen to be union officers. To do so would send the wrong
signal to the studentry and the rest of its teaching staff that irresponsibility is widely tolerated in the academe.
The law protects both the welfare of employees and the prerogatives of management. 31 Courts will not interfere with
prerogatives of management on the discipline of employees, as long as they do not violate labor laws, collective
bargaining agreements if any, and general principles of fairness and justice. 32
WHEREFORE, we GRANT the petition. The 13 December 2007 Decision of the Court of Appeals in CA-G.R. SP No.
00812 affirming the 15 August 2005 and the 24 October 2005 Resolutions of the National Labor Relations Commission in
NLRC CA No. M-008333-2005, which sustained the 11 October 2004 Decision of the Labor Arbiter in RAB-11-12-0118703, is SET ASIDE.
No pronouncement as to costs.
SO ORDERED.
CASE 4
18

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 178296
January 12, 2011
THE HERITAGE HOTEL MANILA, acting through its owner, GRAND PLAZA HOTEL CORPORATION,Petitioner,
vs.
NATIONAL UNION OF WORKERS IN THE HOTEL, RESTAURANT AND ALLIED INDUSTRIES-HERITAGE HOTEL
MANILA SUPERVISORS CHAPTER (NUWHRAIN-HHMSC), Respondent.
DECISION
NACHURA, J.:
Before the Court is a petition for review on certiorari of the Decision 1 of the Court of Appeals (CA) dated May 30, 2005 and
Resolution dated June 4, 2007. The assailed Decision affirmed the dismissal of a petition for cancellation of union
registration filed by petitioner, Grand Plaza Hotel Corporation, owner of Heritage Hotel Manila, against respondent,
National Union of Workers in the Hotel, Restaurant and Allied Industries-Heritage Hotel Manila Supervisors Chapter
(NUWHRAIN-HHMSC), a labor organization of the supervisory employees of Heritage Hotel Manila.
The case stemmed from the following antecedents:
On October 11, 1995, respondent filed with the Department of Labor and Employment-National Capital Region (DOLENCR) a petition for certification election. 2 The Med-Arbiter granted the petition on February 14, 1996 and ordered the
holding of a certification election. 3 On appeal, the DOLE Secretary, in a Resolution dated August 15, 1996, affirmed the
Med-Arbiters order and remanded the case to the Med-Arbiter for the holding of a preelection conference on February 26,
1997. Petitioner filed a motion for reconsideration, but it was denied on September 23, 1996.
The preelection conference was not held as initially scheduled; it was held a year later, or on February 20, 1998.
Petitioner moved to archive or to dismiss the petition due to alleged repeated non-appearance of respondent. The latter
agreed to suspend proceedings until further notice. The preelection conference resumed on January 29, 2000.
Subsequently, petitioner discovered that respondent had failed to submit to the Bureau of Labor Relations (BLR) its
annual financial report for several years and the list of its members since it filed its registration papers in 1995.
Consequently, on May 19, 2000, petitioner filed a Petition for Cancellation of Registration of respondent, on the ground of
the non-submission of the said documents. Petitioner prayed that respondents Certificate of Creation of Local/Chapter be
cancelled and its name be deleted from the list of legitimate labor organizations. It further requested the suspension of the
certification election proceedings.4
On June 1, 2000, petitioner reiterated its request by filing a Motion to Dismiss or Suspend the [Certification Election]
Proceedings,5 arguing that the dismissal or suspension of the proceedings is warranted, considering that the legitimacy of
respondent is seriously being challenged in the petition for cancellation of registration. Petitioner maintained that the
resolution of the issue of whether respondent is a legitimate labor organization is crucial to the issue of whether it may
exercise rights of a legitimate labor organization, which include the right to be certified as the bargaining agent of the
covered employees.
Nevertheless, the certification election pushed through on June 23, 2000. Respondent emerged as the winner. 6
On June 28, 2000, petitioner filed a Protest with Motion to Defer Certification of Election Results and Winner, 7stating that
the certification election held on June 23, 2000 was an exercise in futility because, once respondents registration is
cancelled, it would no longer be entitled to be certified as the exclusive bargaining agent of the supervisory employees.
Petitioner also claimed that some of respondents members were not qualified to join the union because they were either
confidential employees or managerial employees. It then prayed that the certification of the election results and winner be
19
deferred until the petition for cancellation shall have been resolved, and that respondents members who held confidential
or managerial positions be excluded from the supervisors bargaining unit.
Meanwhile, respondent filed its Answer 8 to the petition for the cancellation of its registration. It averred that the petition
was filed primarily to delay the conduct of the certification election, the respondents certification as the exclusive
bargaining representative of the supervisory employees, and the commencement of bargaining negotiations. Respondent
prayed for the dismissal of the petition for the following reasons: (a) petitioner is estopped from questioning respondents
status as a legitimate labor organization as it had already recognized respondent as such during the preelection
conferences; (b) petitioner is not the party-in-interest, as the union members are the ones who would be disadvantaged by
the non-submission of financial reports; (c) it has already complied with the reportorial requirements, having submitted its
financial statements for 1996, 1997, 1998, and 1999, its updated list of officers, and its list of members for the years 1995,
1996, 1997, 1998, and 1999; (d) the petition is already moot and academic, considering that the certification election had
already been held, and the members had manifested their will to be represented by respondent.
Citing National Union of Bank Employees v. Minister of Labor, et al. 9 and Samahan ng Manggagawa sa Pacific Plastic v.
Hon. Laguesma,10 the Med-Arbiter held that the pendency of a petition for cancellation of registration is not a bar to the
holding of a certification election. Thus, in an Order 11 dated January 26, 2001, the Med-Arbiter dismissed petitioners
protest, and certified respondent as the sole and exclusive bargaining agent of all supervisory employees.
Petitioner subsequently appealed the said Order to the DOLE Secretary. 12 The appeal was later dismissed by DOLE
Secretary Patricia A. Sto. Tomas (DOLE Secretary Sto. Tomas) in the Resolution of August 21, 2002. 13Petitioner moved
for reconsideration, but the motion was also denied. 14
In the meantime, Regional Director Alex E. Maraan (Regional Director Maraan) of DOLE-NCR finally resolved the petition
for cancellation of registration. While finding that respondent had indeed failed to file financial reports and the list of its
members for several years, he, nonetheless, denied the petition, ratiocinating that freedom of association and the
employees right to self-organization are more substantive considerations. He took into account the fact that respondent
won the certification election and that it had already been certified as the exclusive bargaining agent of the supervisory
employees. In view of the foregoing, Regional Director Maraanwhile emphasizing that the non-compliance with the law
is not viewed with favorconsidered the belated submission of the annual financial reports and the list of members as
sufficient compliance thereof and considered them as having been submitted on time. The dispositive portion of the
decision15 dated December 29, 2001 reads:
WHEREFORE, premises considered, the instant petition to delist the National Union of Workers in the Hotel, Restaurant
and Allied Industries-Heritage Hotel Manila Supervisors Chapter from the roll of legitimate labor organizations is hereby
DENIED.
SO ORDERED.16
Aggrieved, petitioner appealed the decision to the BLR. 17 BLR Director Hans Leo Cacdac inhibited himself from the case
because he had been a former counsel of respondent.
In view of Director Cacdacs inhibition, DOLE Secretary Sto. Tomas took cognizance of the appeal. In a resolution 18 dated
February 21, 2003, she dismissed the appeal, holding that the constitutionally guaranteed freedom of association and
right of workers to self-organization outweighed respondents noncompliance with the statutory requirements to maintain
its status as a legitimate labor organization.
Petitioner filed a motion for reconsideration, 19 but the motion was likewise denied in a resolution 20 dated May 30, 2003.
DOLE Secretary Sto. Tomas admitted that it was the BLR which had jurisdiction over the appeal, but she pointed out that
the BLR Director had voluntarily inhibited himself from the case because he used to appear as counsel for respondent. In
order to maintain the integrity of the decision and of the BLR, she therefore accepted the motion to inhibit and took
cognizance of the appeal.
Petitioner filed a petition for certiorari with the CA, raising the issue of whether the DOLE Secretary acted with grave
abuse of discretion in taking cognizance of the appeal and affirming the dismissal of its petition for cancellation of
respondents registration.
20
In a Decision dated May 30, 2005, the CA denied the petition. The CA opined that the DOLE Secretary may legally
assume jurisdiction over an appeal from the decision of the Regional Director in the event that the Director of the BLR
inhibits himself from the case. According to the CA, in the absence of the BLR Director, there is no person more
competent to resolve the appeal than the DOLE Secretary. The CA brushed aside the allegation of bias and partiality on
the part of the DOLE Secretary, considering that such allegation was not supported by any evidence.
The CA also found that the DOLE Secretary did not commit grave abuse of discretion when she affirmed the dismissal of
the petition for cancellation of respondents registration as a labor organization. Echoing the DOLE Secretary, the CA held
that the requirements of registration of labor organizations are an exercise of the overriding police power of the State,
designed for the protection of workers against potential abuse by the union that recruits them. These requirements, the
CA opined, should not be exploited to work against the workers constitutionally protected right to self-organization.
Petitioner filed a motion for reconsideration, invoking this Courts ruling in Abbott Labs. Phils., Inc. v. Abbott Labs.
Employees Union,21 which categorically declared that the DOLE Secretary has no authority to review the decision of the
Regional Director in a petition for cancellation of union registration, and Section 4, 22 Rule VIII, Book V of the Omnibus
Rules Implementing the Labor Code.
In its Resolution23 dated June 4, 2007, the CA denied petitioners motion, stating that the BLR Directors inhibition from the
case was a peculiarity not present in the Abbott case, and that such inhibition justified the assumption of jurisdiction by the
DOLE Secretary.
In this petition, petitioner argues that:
I.
The Court of Appeals seriously erred in ruling that the Labor Secretary properly assumed jurisdiction over Petitioners
appeal of the Regional Directors Decision in the Cancellation Petition x x x.
A. Jurisdiction is conferred only by law. The Labor Secretary had no jurisdiction to review the decision of the
Regional Director in a petition for cancellation. Such jurisdiction is conferred by law to the BLR.
B. The unilateral inhibition by the BLR Director cannot justify the Labor Secretarys exercise of jurisdiction over the
Appeal.
C. The Labor Secretarys assumption of jurisdiction over the Appeal without notice violated Petitioners right to
due process.
II.
The Court of Appeals gravely erred in affirming the dismissal of the Cancellation Petition despite the mandatory and
unequivocal provisions of the Labor Code and its Implementing Rules. 24
The petition has no merit.
Jurisdiction to review the decision of the Regional Director lies with the BLR. This is clearly provided in the Implementing
Rules of the Labor Code and enunciated by the Court in Abbott. But as pointed out by the CA, the present case involves a
peculiar circumstance that was not present or covered by the ruling in Abbott. In this case, the BLR Director inhibited
himself from the case because he was a former counsel of respondent. Who, then, shall resolve the case in his place?
In Abbott, the appeal from the Regional Directors decision was directly filed with the Office of the DOLE Secretary, and
we ruled that the latter has no appellate jurisdiction. In the instant case, the appeal was filed by petitioner with the BLR,
which, undisputedly, acquired jurisdiction over the case. Once jurisdiction is acquired by the court, it remains with it until
the full termination of the case.25
21
Thus, jurisdiction remained with the BLR despite the BLR Directors inhibition. When the DOLE Secretary resolved the
appeal, she merely stepped into the shoes of the BLR Director and performed a function that the latter could not himself
perform. She did so pursuant to her power of supervision and control over the BLR. 26
Expounding on the extent of the power of control, the Court, in Araneta, et al. v. Hon. M. Gatmaitan, et al., 27pronounced
that, if a certain power or authority is vested by law upon the Department Secretary, then such power or authority may be
exercised directly by the President, who exercises supervision and control over the departments. This principle was
incorporated in the Administrative Code of 1987, which defines "supervision and control" as including the authority to act
directly whenever a specific function is entrusted by law or regulation to a subordinate. 28 Applying the foregoing to the
present case, it is clear that the DOLE Secretary, as the person exercising the power of supervision and control over the
BLR, has the authority to directly exercise the quasi-judicial function entrusted by law to the BLR Director.
It is true that the power of control and supervision does not give the Department Secretary unbridled authority to take over
the functions of his or her subordinate. Such authority is subject to certain guidelines which are stated in Book IV, Chapter
8, Section 39(1)(a) of the Administrative Code of 1987. 29 However, in the present case, the DOLE Secretarys act of taking
over the function of the BLR Director was warranted and necessitated by the latters inhibition from the case and the
objective to "maintain the integrity of the decision, as well as the Bureau itself." 30
Petitioner insists that the BLR Directors subordinates should have resolved the appeal, citing the provision under the
Administrative Code of 1987 which states, "in case of the absence or disability of the head of a bureau or office, his duties
shall be performed by the assistant head." 31 The provision clearly does not apply considering that the BLR Director was
neither absent nor suffering from any disability; he remained as head of the BLR. Thus, to dispel any suspicion of bias, the
DOLE Secretary opted to resolve the appeal herself.
Petitioner was not denied the right to due process when it was not notified in advance of the BLR Directors inhibition and
the DOLE Secretarys assumption of the case. Well-settled is the rule that the essence of due process is simply an
opportunity to be heard, or, as applied to administrative proceedings, an opportunity to explain ones side or an
opportunity to seek a reconsideration of the action or ruling complained of. 32 Petitioner had the opportunity to question the
BLR Directors inhibition and the DOLE Secretarys taking cognizance of the case when it filed a motion for
reconsideration of the latters decision. It would be well to state that a critical component of due process is a hearing
before an impartial and disinterested tribunal, for all the elements of due process, like notice and hearing, would be
meaningless if the ultimate decision would come from a partial and biased judge. 33 It was precisely to ensure a fair trial
that moved the BLR Director to inhibit himself from the case and the DOLE Secretary to take over his function.
Petitioner also insists that respondents registration as a legitimate labor union should be cancelled. Petitioner posits that
once it is determined that a ground enumerated in Article 239 of the Labor Code is present, cancellation of registration
should follow; it becomes the ministerial duty of the Regional Director to cancel the registration of the labor organization,
hence, the use of the word "shall." Petitioner points out that the Regional Director has admitted in its decision that
respondent failed to submit the required documents for a number of years; therefore, cancellation of its registration should
have followed as a matter of course.
We are not persuaded.
Articles 238 and 239 of the Labor Code read:
ART. 238. CANCELLATION OF REGISTRATION; APPEAL
The certificate of registration of any legitimate labor organization, whether national or local, shall be canceled by the
Bureau if it has reason to believe, after due hearing, that the said labor organization no longer meets one or more of the
requirements herein prescribed.34
ART. 239. GROUNDS FOR CANCELLATION OF UNION REGISTRATION.
The following shall constitute grounds for cancellation of union registration:
xxxx
22
(d) Failure to submit the annual financial report to the Bureau within thirty (30) days after the closing of every fiscal year
and misrepresentation, false entries or fraud in the preparation of the financial report itself;
xxxx
(i) Failure to submit list of individual members to the Bureau once a year or whenever required by the Bureau. 35
These provisions give the Regional Director ample discretion in dealing with a petition for cancellation of a unions
registration, particularly, determining whether the union still meets the requirements prescribed by law. It is sufficient to
give the Regional Director license to treat the late filing of required documents as sufficient compliance with the
requirements of the law. After all, the law requires the labor organization to submit the annual financial report and list of
members in order to verify if it is still viable and financially sustainable as an organization so as to protect the employer
and employees from fraudulent or fly-by-night unions. With the submission of the required documents by respondent, the
purpose of the law has been achieved, though belatedly.
We cannot ascribe abuse of discretion to the Regional Director and the DOLE Secretary in denying the petition for
cancellation of respondents registration. The union members and, in fact, all the employees belonging to the appropriate
bargaining unit should not be deprived of a bargaining agent, merely because of the negligence of the union officers who
were responsible for the submission of the documents to the BLR.
Labor authorities should, indeed, act with circumspection in treating petitions for cancellation of union registration, lest
they be accused of interfering with union activities. In resolving the petition, consideration must be taken of the
fundamental rights guaranteed by Article XIII, Section 3 of the Constitution, i.e., the rights of all workers to selforganization, collective bargaining and negotiations, and peaceful concerted activities. Labor authorities should bear in
mind that registration confers upon a union the status of legitimacy and the concomitant right and privileges granted by
law to a legitimate labor organization, particularly the right to participate in or ask for certification election in a bargaining
unit.36 Thus, the cancellation of a certificate of registration is the equivalent of snuffing out the life of a labor organization.
For without such registration, it loses - as a rule - its rights under the Labor Code. 37
It is worth mentioning that the Labor Codes provisions on cancellation of union registration and on reportorial
requirements have been recently amended by Republic Act (R.A.) No. 9481, An Act Strengthening the Workers
Constitutional Right to Self-Organization, Amending for the Purpose Presidential Decree No. 442, As Amended, Otherwise
Known as the Labor Code of the Philippines, which lapsed into law on May 25, 2007 and became effective on June 14,
2007. The amendment sought to strengthen the workers right to self-organization and enhance the Philippines
compliance with its international obligations as embodied in the International Labour Organization (ILO) Convention No.
87,38 pertaining to the non-dissolution of workers organizations by administrative authority. 39 Thus, R.A. No. 9481
amended Article 239 to read:
ART. 239. Grounds for Cancellation of Union Registration.The following may constitute grounds for cancellation of union
registration:
(a) Misrepresentation, false statement or fraud in connection with the adoption or ratification of the constitution
and by-laws or amendments thereto, the minutes of ratification, and the list of members who took part in the
ratification;
(b) Misrepresentation, false statements or fraud in connection with the election of officers, minutes of the election
of officers, and the list of voters;
(c) Voluntary dissolution by the members.
R.A. No. 9481 also inserted in the Labor Code Article 242-A, which provides:
ART. 242-A. Reportorial Requirements.The following are documents required to be submitted to the Bureau by the
legitimate labor organization concerned:
23
(a) Its constitution and by-laws, or amendments thereto, the minutes of ratification, and the list of members who
took part in the ratification of the constitution and by-laws within thirty (30) days from adoption or ratification of the
constitution and by-laws or amendments thereto;
(b) Its list of officers, minutes of the election of officers, and list of voters within thirty (30) days from election;
(c) Its annual financial report within thirty (30) days after the close of every fiscal year; and
(d) Its list of members at least once a year or whenever required by the Bureau.
Failure to comply with the above requirements shall not be a ground for cancellation of union registration but shall subject
the erring officers or members to suspension, expulsion from membership, or any appropriate penalty.
ILO Convention No. 87, which we have ratified in 1953, provides that "workers and employers organizations shall not be
liable to be dissolved or suspended by administrative authority." The ILO has expressed the opinion that the cancellation
of union registration by the registrar of labor unions, which in our case is the BLR, is tantamount to dissolution of the
organization by administrative authority when such measure would give rise to the loss of legal personality of the union or
loss of advantages necessary for it to carry out its activities, which is true in our jurisdiction. Although the ILO has allowed
such measure to be taken, provided that judicial safeguards are in place, i.e., the right to appeal to a judicial body, it has
nonetheless reminded its members that dissolution of a union, and cancellation of registration for that matter, involve
serious consequences for occupational representation. It has, therefore, deemed it preferable if such actions were to be
taken only as a last resort and after exhausting other possibilities with less serious effects on the organization. 40
The aforesaid amendments and the ILOs opinion on this matter serve to fortify our ruling in this case. We therefore quote
with approval the DOLE Secretarys rationale for denying the petition, thus:
It is undisputed that appellee failed to submit its annual financial reports and list of individual members in accordance with
Article 239 of the Labor Code. However, the existence of this ground should not necessarily lead to the cancellation of
union registration. Article 239 recognizes the regulatory authority of the State to exact compliance with reporting
requirements. Yet there is more at stake in this case than merely monitoring union activities and requiring periodic
documentation thereof.
The more substantive considerations involve the constitutionally guaranteed freedom of association and right of workers
to self-organization. Also involved is the public policy to promote free trade unionism and collective bargaining as
instruments of industrial peace and democracy.1avvphi1 An overly stringent interpretation of the statute governing
cancellation of union registration without regard to surrounding circumstances cannot be allowed. Otherwise, it would lead
to an unconstitutional application of the statute and emasculation of public policy objectives. Worse, it can render nugatory
the protection to labor and social justice clauses that pervades the Constitution and the Labor Code.
Moreover, submission of the required documents is the duty of the officers of the union. It would be unreasonable for this
Office to order the cancellation of the union and penalize the entire union membership on the basis of the negligence of its
officers. In National Union of Bank Employees vs. Minister of Labor, L-53406, 14 December 1981, 110 SCRA 296, the
Supreme Court ruled:
As aptly ruled by respondent Bureau of Labor Relations Director Noriel: "The rights of workers to self-organization finds
general and specific constitutional guarantees. x x x Such constitutional guarantees should not be lightly taken much less
nullified. A healthy respect for the freedom of association demands that acts imputable to officers or members be not
easily visited with capital punishments against the association itself."
At any rate, we note that on 19 May 2000, appellee had submitted its financial statement for the years 1996-1999. With
this submission, appellee has substantially complied with its duty to submit its financial report for the said period. To rule
differently would be to preclude the union, after having failed to meet its periodic obligations promptly, from taking
appropriate measures to correct its omissions. For the record, we do not view with favor appellees late submission.
Punctuality on the part of the union and its officers could have prevented this petition. 41
24
WHEREFORE, premises considered, the Court of Appeals Decision dated May 30, 2005 and Resolution dated June 4,
2007 are AFFIRMED.
SO ORDERED.
CASE 5
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 169754
February 23, 2011
LEGEND
INTERNATIONAL
RESORTS
vs.
KILUSANG MANGGAGAWA NG LEGENDA (KML-INDEPENDENT), Respondent.
LIMITED, Petitioner,
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari assails the September 18, 2003 Decision of the Court of Appeals in CA-G.R. SP No.
72848 which found no grave abuse of discretion on the part of the Office of the Secretary of the Department of Labor and
Employment (DOLE) which ruled in favor of Kilusang Manggagawa ng Legenda (KML). Also assailed is the September
14, 2005 Resolution denying petitioners motion for reconsideration.
Factual Antecedents
On June 6, 2001, KML filed with the Med-Arbitration Unit of the DOLE, San Fernando, Pampanga, a Petition for
Certification Election1 docketed as Case No. RO300-0106-RU-001. KML alleged that it is a legitimate labor organization of
the rank and file employees of Legend International Resorts Limited (LEGEND). KML claimed that it was issued its
Certificate of Registration No. RO300-0105-UR-002 by the DOLE on May 18, 2001.
LEGEND moved to dismiss2 the petition alleging that KML is not a legitimate labor organization because its membership is
a mixture of rank and file and supervisory employees in violation of Article 245 of the Labor Code. LEGEND also claimed
that KML committed acts of fraud and misrepresentation when it made it appear that certain employees attended its
general membership meeting on April 5, 2001 when in reality some of them were either at work; have already resigned as
of March 2001; or were abroad.
In its Comment,3 KML argued that even if 41 of its members are indeed supervisory employees and therefore excluded
from its membership, the certification election could still proceed because the required number of the total rank and file
employees necessary for certification purposes is still sustained. KML also claimed that its legitimacy as a labor union
could not be collaterally attacked in the certification election proceedings but only through a separate and independent
action for cancellation of union registration. Finally, as to the alleged acts of misrepresentation, KML asserted that
LEGEND failed to substantiate its claim.
25
Ruling of the Med-Arbiter

On September 20, 2001, the Med-Arbiter 4 rendered judgment5 dismissing for lack of merit the petition for certification
election. The Med-Arbiter found that indeed there were several supervisory employees in KMLs membership. Since
Article 245 of the Labor Code expressly prohibits supervisory employees from joining the union of rank and file
employees, the Med-Arbiter concluded that KML is not a legitimate labor organization. KML was also found to have
fraudulently procured its registration certificate by misrepresenting that 70 employees were among those who attended its
organizational meeting on April 5, 2001 when in fact they were either at work or elsewhere.
KML thus appealed to the Office of the Secretary of the DOLE.
Ruling of the Office of the Secretary of DOLE
On May 22, 2002, the Office of the Secretary of DOLE rendered its Decision 6 granting KMLs appeal thereby reversing
and setting aside the Med-Arbiters Decision. The Office of the Secretary of DOLE held that KMLs legitimacy as a union
could not be collaterally attacked, citing Section 5, 7 Rule V of Department Order No. 9, series of 1997.
The Office of the Secretary of DOLE also opined that Article 245 of the Labor Code merely provides for the prohibition on
managerial employees to form or join a union and the ineligibility of supervisors to join the union of the rank and file
employees and vice versa. It declared that any violation of the provision of Article 245 does not ipso facto render the
existence of the labor organization illegal. Moreover, it held that Section 11, paragraph II of Rule XI which provides for the
grounds for dismissal of a petition for certification election does not include mixed membership in one union.
The dispositive portion of the Office of the Secretary of DOLEs Decision reads:
WHEREFORE, the appeal is hereby GRANTED and the order of the Med-Arbiter dated 20 September 2001 is
REVERSED and SET ASIDE.
Accordingly, let the entire record of the case be remanded to the regional office of origin for the immediate conduct of the
certification election, subject to the usual pre-election conference, among the rank and file employees of LEGEND
INTERNATIONAL RESORTS LIMITED with the following choices:
1. KILUSANG MANGGAGAWA NG LEGENDA (KML-INDEPENDENT); and
2. NO UNION.
Pursuant to Rule XI, Section II.1 of D.O. No. 9, the employer is hereby directed to submit to the office of origin, within ten
days from receipt of the decision, the certified list of employees in the bargaining unit for the last three (3) months prior to
the issuance of this decision.
SO DECIDED.8
LEGEND filed its Motion for Reconsideration9 reiterating its earlier arguments. It also alleged that on August 24, 2001, it
filed a Petition10 for Cancellation of Union Registration of KML docketed as Case No. RO300-0108-CP-001 which was
granted11 by the DOLE Regional Office No. III of San Fernando, Pampanga in its Decision 12 dated November 7, 2001.
In a Resolution13 dated August 20, 2002, the Office of the Secretary of DOLE denied LEGENDs motion for
reconsideration. It opined that Section 11, paragraph II(a), Rule XI of Department Order No. 9 requires a final order of
cancellation before a petition for certification election may be dismissed on the ground of lack of legal personality.
Besides, it noted that the November 7, 2001 Decision of DOLE Regional Office No. III of San Fernando, Pampanga in
Case No. RO300-0108-CP-001 was reversed by the Bureau of Labor Relations in a Decision dated March 26, 2002.
26
Undeterred, LEGEND filed a Petition for Certiorari 14 with the Court of Appeals docketed as CA-G.R. SP No. 72848.
LEGEND alleged that the Office of the Secretary of DOLE gravely abused its discretion in reversing and setting aside the
Decision of the Med-Arbiter despite substantial and overwhelming evidence against KML.
For its part, KML alleged that the Decision dated March 26, 2002 of the Bureau of Labor Relations in Case No. RO3000108-CP-001 denying LEGENDs petition for cancellation and upholding KMLs legitimacy as a labor organization has
already become final and executory, entry of judgment having been made on August 21, 2002. 15
The Office of the Secretary of DOLE also filed its Comment 16 asserting that KMLs legitimacy cannot be attacked
collaterally. Finally, the Office of the Secretary of DOLE stressed that LEGEND has no legal personality to participate in
the certification election proceedings.
On September 18, 2003, the Court of Appeals rendered its Decision 17 finding no grave abuse of discretion on the part of
the Office of the Secretary of DOLE. The appellate court held that the issue on the legitimacy of KML as a labor
organization has already been settled with finality in Case No. RO300-0108-CP-001. The March 26, 2002 Decision of the
Bureau of Labor Relations upholding the legitimacy of KML as a labor organization had long become final and executory
for failure of LEGEND to appeal the same. Thus, having already been settled that KML is a legitimate labor organization,
the latter could properly file a petition for certification election. There was nothing left for the Office of the Secretary of
DOLE to do but to order the holding of such certification election.
The dispositive portion of the Decision reads:
WHEREFORE, in view of the foregoing, and finding that no grave abuse of discretion amounting to lack or excess of
jurisdiction has been committed by the Department of Labor and Employment, the assailed May 22, 2002 Decision and
August 20, 2002 Resolution in Case No. RO300-106-RU-001 are UPHELD and AFFIRMED. The instant petition is
DENIED due course and, accordingly, DISMISSED for lack of merit. 18
LEGEND filed a Motion for Reconsideration19 alleging, among others, that it has appealed to the Court of Appeals the
March 26, 2002 Decision in Case No. RO300-0108-CP-001 denying its petition for cancellation and that it is still pending
resolution.
On September 14, 2005, the appellate court denied LEGENDs motion for reconsideration.
Hence, this Petition for Review on Certiorari raising the lone assignment of error, viz:
WHETHER X X X THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERRORS IN THE APPLICATION
OF LAW IN DENYING THE PETITIONERS PETITION FOR CERTIORARI. 20
Petitioners Arguments
LEGEND submits that the Court of Appeals grievously erred in ruling that the March 26, 2002 Decision denying its Petition
for Cancellation of KMLs registration has already become final and executory. It asserts that it has seasonably filed a
Petition for Certiorari21 before the CA docketed as CA-G.R. SP No. 72659 assailing said Decision. In fact, on June 30,
2005, the Court of Appeals granted the petition, reversed the March 26, 2002 Decision of the Bureau of Labor Relations
and reinstated the November 7, 2001 Decision of the DOLE Regional Office III ordering the cancellation of KMLs
registration.
Finally, LEGEND posits that the cancellation of KMLs certificate of registration should retroact to the time of its
issuance.22 It thus claims that the petition for certification election and all of KMLs activities should be nullified because it
has no legal personality to file the same, much less demand collective bargaining with LEGEND. 23
LEGEND thus prays that the September 20, 2001 Decision of the Med-Arbiter dismissing KMLs petition for certification
election be reinstated.24
Respondents Arguments
27
In its Comment filed before this Court dated March 21, 2006, KML insists that the Decision of the Bureau of Labor
Relations upholding its legitimacy as a labor organization has already attained finality 25 hence there was no more
hindrance to the holding of a certification election. Moreover, it claims that the instant petition has become moot because
the certification election sought to be prevented had already been conducted.
Our Ruling
The petition is partly meritorious.
LEGEND has timely appealed the March 26, 2002 Decision of the Bureau of Labor Relations to the Court of Appeals.
We cannot understand why the Court of Appeals totally disregarded LEGENDs allegation in its Motion for
Reconsideration that the March 26, 2002 Decision of the Bureau of Labor Relations has not yet attained finality
considering that it has timely appealed the same to the Court of Appeals and which at that time is still pending resolution.
The Court of Appeals never bothered to look into this allegation and instead dismissed outright LEGENDs motion for
reconsideration. By doing so, the Court of Appeals in effect maintained its earlier ruling that the March 26, 2002 Decision
of the Bureau of Labor Relations upholding the legitimacy of KML as a labor organization has long become final and
executory for failure of LEGEND to appeal the same.
This is inaccurate. Records show that (in the cancellation of registration case) LEGEND has timely filed on September 6,
2002 a petition for certiorari26 before the Court of Appeals which was docketed as CA-G.R. SP No. 72659 assailing the
March 26, 2002 Decision of the Bureau of Labor Relations. In fact, KML received a copy of said petition on September 10,
200227 and has filed its Comment thereto on December 2, 2002. 28 Thus, we find it quite interesting for KML to claim in its
Comment (in the certification petition case) before this Court dated March 21, 2006 29 that the Bureau of Labor Relations
Decision in the petition for cancellation case has already attained finality. Even in its Memorandum 30 dated March 13,
2007 filed before us, KML is still insisting that the Bureau of Labor Relations Decision has become final and executory.
Our perusal of the records shows that on June 30, 2005, the Court of Appeals rendered its Decision 31 in CA-G.R. SP No.
72659 reversing the March 26, 2002 Decision of the Bureau of Labor Relations and reinstating the November 7, 2001
Decision of the Med-Arbiter which canceled the certificate of registration of KML. 32 On September 30, 2005, KMLs motion
for reconsideration was denied for lack of merit. 33 On November 25, 2005, KML filed its Petition for Review on
Certiorari34 before this Court which was docketed as G.R. No. 169972. However, the same was denied in a
Resolution35 dated February 13, 2006 for having been filed out of time. KML moved for reconsideration but it was denied
with finality in a Resolution 36 dated June 7, 2006. Thereafter, the said Decision canceling the certificate of registration of
KML as a labor organization became final and executory and entry of judgment was made on July 18, 2006. 37
The cancellation of KMLs certificate of registration should not retroact to the time of its issuance.
Notwithstanding the finality of the Decision canceling the certificate of registration of KML, we cannot subscribe to
LEGENDs proposition that the cancellation of KMLs certificate of registration should retroact to the time of its issuance.
LEGEND claims that KMLs petition for certification election filed during the pendency of the petition for cancellation and
its demand to enter into collective bargaining agreement with LEGEND should be dismissed due to KMLs lack of legal
personality.
This issue is not new or novel. In Pepsi-Cola Products Philippines, Inc. v. Secretary of Labor,38 we already ruled that:
Anent the issue of whether or not the Petition to cancel/revoke registration is a prejudicial question to the petition for
certification election, the following ruling in the case of Association of the Court of Appeals Employees (ACAE) v. Hon.
Pura Ferrer-Calleja, x x x is in point, to wit:
x x x It is well-settled rule that a certification proceedings is not a litigation in the sense that the term is ordinarily
understood, but an investigation of a non-adversarial and fact finding character. (Associated Labor Unions (ALU) v.
Ferrer-Calleja, 179 SCRA 127 [1989]; Philippine Telegraph and Telephone Corporation v. NLRC, 183 SCRA 451 [1990].
Thus, the technical rules of evidence do not apply if the decision to grant it proceeds from an examination of the
sufficiency of the petition as well as a careful look into the arguments contained in the position papers and other
documents.
28
At any rate, the Court applies the established rule correctly followed by the public respondent that an order to hold a
certification election is proper despite the pendency of the petition for cancellation of the registration certificate of the
respondent union. The rationale for this is that at the time the respondent union filed its petition, it still had the legal
personality to perform such act absent an order directing the cancellation. 39 (Emphasis supplied.)
In Capitol Medical Center, Inc. v. Hon. Trajano, 40 we also held that "the pendency of a petition for cancellation of union
registration does not preclude collective bargaining." 41 Citing the Secretary of Labor, we held viz:
That there is a pending cancellation proceedings against the respondent Union is not a bar to set in motion the mechanics
of collective bargaining. If a certification election may still be ordered despite the pendency of a petition to cancel the
unions registration certificate x x x more so should the collective bargaining process continue despite its
pendency. 42 (Emphasis supplied.)
In Association of Court of Appeals Employees v. Ferrer-Calleja, 43 this Court was tasked to resolve the issue of whether
"the certification proceedings should be suspended pending [the petitioners] petition for the cancellation of union
registration of the UCECA44."45 The Court resolved the issue in the negative holding that "an order to hold a certification
election is proper despite the pendency of the petition for cancellation of the registration certificate of the respondent
union. The rationale for this is that at the time the respondent union filed its petition, it still had the legal personality to
perform such act absent an order directing a cancellation." 46 We reiterated this view in Samahan ng Manggagawa sa
Pacific Plastic v. Hon. Laguesma 47 where we declared that "a certification election can be conducted despite pendency of
a petition to cancel the union registration certificate. For the fact is that at the time the respondent union filed its petition
for certification, it still had the legal personality to perform such act absent an order directing its cancellation." 48
Based on the foregoing jurisprudence, it is clear that a certification election may be conducted during the pendency of the
cancellation proceedings. This is because at the time the petition for certification was filed, the petitioning union is
presumed to possess the legal personality to file the same. There is therefore no basis for LEGENDs assertion that the
cancellation of KMLs certificate of registration should retroact to the time of its issuance or that it effectively nullified all of
KMLs activities, including its filing of the petition for certification election and its demand to collectively bargain.
The legitimacy of the legal personality of KML cannot be collaterally attacked in a petition for certification election.
We agree with the ruling of the Office of the Secretary of DOLE that the legitimacy of the legal personality of KML cannot
be collaterally attacked in a petition for certification election proceeding. This is in consonance with our ruling in Laguna
Autoparts Manufacturing Corporation v. Office of the Secretary, Department of Labor and Employment 49 that "such legal
personality may not be subject to a collateral attack but only through a separate action instituted particularly for the
purpose of assailing it."50 We further held therein that:
This is categorically prescribed by Section 5, Rule V of the Implementing Rules of Book V, which states as follows:
SEC. 5.51 Effect of registration. The labor organization or workers association shall be deemed registered and vested
with legal personality on the date of issuance of its certificate of registration. Such legal personality cannot thereafter be
subject to collateral attack but may be questioned only in an independent petition for cancellation in accordance with
these Rules.
Hence, to raise the issue of the respondent unions legal personality is not proper in this case. 1avvphi1 The
pronouncement of the Labor Relations Division Chief, that the respondent union acquired a legal personality x x x cannot
be challenged in a petition for certification election.
The discussion of the Secretary of Labor and Employment on this point is also enlightening, thus:
. . . Section 5, Rule V of D.O. 9 is instructive on the matter. It provides that the legal personality of a union cannot be the
subject of collateral attack in a petition for certification election, but may be questioned only in an independent petition for
cancellation of union registration. This has been the rule since NUBE v. Minister of Labor, 110 SCRA 274 (1981). What
applies in this case is the principle that once a union acquires a legitimate status as a labor organization, it continues as
such until its certificate of registration is cancelled or revoked in an independent action for cancellation.
29
Equally important is Section 11, Paragraph II, Rule IX of D.O. 9, which provides for the dismissal of a petition for
certification election based on the lack of legal personality of a labor organization only in the following instances: (1)
appellant is not listed by the Regional Office or the BLR in its registry of legitimate labor organizations; or (2) appellants
legal personality has been revoked or cancelled with finality. Since appellant is listed in the registry of legitimate labor
organizations, and its legitimacy has not been revoked or cancelled with finality, the granting of its petition for certification
election is proper.52
"[T]he legal personality of a legitimate labor organization x x x cannot be subject to a collateral attack. The law is very
clear on this matter. x x x The Implementing Rules stipulate that a labor organization shall be deemed registered and
vested with legal personality on the date of issuance of its certificate of registration. Once a certificate of registration is
issued to a union, its legal personality cannot be subject to a collateral attack. In may be questioned only in an
independent petition for cancellation in accordance with Section 5 of Rule V, Book V of the Implementing Rules." 53
WHEREFORE, in view of the foregoing, the petition is PARTLY GRANTED. The Decision of the Court of Appeals dated
September 18, 2003 in CA-G.R. SP No. 72848 insofar as it affirms the May 22, 2002 Decision and August 20, 2002
Resolution of the Office of the Secretary of Department of Labor and Employment is AFFIRMED. The Decision of the
Court of Appeals insofar as it declares that the March 26, 2002 Decision of the Bureau of Labor Relations in Case No.
RO300-0108-CP-001 upholding that the legitimacy of KML as a labor organization has long become final and executory
for failure of LEGEND to appeal the same, is REVERSED and SET ASIDE.
SO ORDERED.
CASE 6
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 167332
February 7, 2011
FILIPINAS PALMOIL PROCESSING, INC. and DENNIS T. VILLAREAL, Petitioners,

vs.
JOEL P. DEJAPA, represented by his Attorney-in-Fact MYRNA MANZANO, Respondent.
DECISION
PERALTA, J.:
Assailed in this petition for review on certiorari are the Resolutions dated December 10, 2004 1 and February 17,
20052 issued by the Court of Appeals (CA) in CA-G.R. SP No. 60562.
The antecedent facts are as follows:
On May 27, 1997, respondent Joey Dejapa filed a Complaint for illegal dismissal and money claims against petitioner
Asian Plantation Phils., Inc. (formerly Veg. Oil Phils. Inc.), now Filipinas Palmoil Processing, Inc., Dennis T. Villareal and
Tom Madula.
On July 14, 1999, the Labor Arbiter (LA) dismissed respondent's complaint for lack of merit.
Respondent filed his appeal with the National Labor Relations Commission (NLRC) which, in a Decision dated December
29, 1999, affirmed the LA decision. Respondent's motion for reconsideration was denied in a Resolution dated April 28,
2000.
30
Aggrieved, respondent filed with the CA a petition for certiorari. Petitioners filed their Comment thereto.
On August 29, 2002, the CA reversed and set aside the NLRC decision and resolution. The decretal portion of the
decision states:
WHEREFORE, premises considered, the assailed Decision dated December 29, 1999, as well as the Resolution dated
April 28, 2000 in NLRC NCR CASE No. 0005-03748-97 (NLRC NCR CA No. 016505-98) are hereby REVERSED and
SET ASIDE.
Petitioner (herein respondent) is ordered REINSTATED without loss of seniority rights with payment of backwages,
including his salary differentials, overtime pay, 13th month pay, service incentive leave pay and other benefits from the
time his salary was withheld, or from December 1, 1997 until actual reinstatement. However, if reinstatement is no longer
feasible, private respondent company is ordered to pay separation pay equivalent to one (1) month for every year of
service where a fraction of six (6) months shall be considered as one whole year. Private respondent company is likewise
ordered to pay P10,000.00 as moral damages and P10,000.00 as exemplary damages. In addition, private respondent
company is ordered to pay attorneys fees in the amount equivalent to 10% of the total monetary award.
SO ORDERED.3
The CA found that petitioner company was respondent's employer and that Tom Madula was not really an independent
contractor, but petitioner company's Operations Manager. It ruled that respondent was illegally dismissed by petitioner
company. We quote the pertinent portions of the Decision, thus:
It must be borne in mind that private respondent company's claim is principally anchored on the assertion that petitioner
was not its employee but that of private respondent Madula who is allegedly an independent contractor. 4
xxxx
In this petition, there is no showing that private respondent Madula is an independent contractor. We reiterate that private
respondent company failed to show any evidence to support such claim.
Hence, it is fair to conclude that private respondent Madula is an employee of private respondent company. He is the
operations manager of private respondent company. This fact was not refuted by either private respondent Madula or
private respondent company."5
xxxx
In fine, it is evident that private respondent Madula is indeed an employee of private respondent company. As its
operations manager, he is deemed an agent of private respondent company.6
Petitioners' motion for reconsideration was denied in a Resolution 7 dated July 14, 2003.
Petitioners filed with Us a petition for review on certiorari, docketed as G.R. No. 159142, which We denied in a
Resolution8 dated October 1, 2003 for petitioners' failure to take the appeal within the reglementary period. Petitioners'
motion for reconsideration was denied in a Resolution 9 dated January 21, 2004; thus, the decision became final and
executory on February 27, 2004, and an entry of judgment was subsequently made.
Respondent, through his representative, filed with the LA a Motion for Execution and Computation of the Award. The LA
issued a Writ of Execution10 dated July 12, 2004 for the implementation of the CA Decision dated August 29, 2002.
Pursuant to the said writ of execution, petitioners' deposit in the United Coconut Planters Bank (UCPB) in the amount
of P736,910.10 was garnished.
On July 21, 2004, petitioners filed a Motion to Quash Writ of Execution 11 on the ground that it can be held liable only
insofar as the reinstatement aspect and/or the monetary award were concerned, pursuant to the CA Decision dated
August 29, 2002, but not to backwages. Respondent filed his Comment/Opposition thereto.
31
On August 6, 2004, respondent filed an Ex-Parte Motion for Order of Release praying for the immediate release of the
garnished amount in the UCPB.
On September 14, 2004, the LA issued its Order12 partially granting petitioners' Motion to Quash Writ of Execution, the
decretal portion of which reads:
WHEREFORE, the Motion to Quash Writ of Execution filed by Asian Plantation is partially granted in so far as the liability
for backwages and reinstatement is concerned such that the same is adjudged against respondent Tom Madula. The
respondents are solidarily liable to the rest of the award, except damages, which are for the sole account of respondent
company. The garnished account of Filipinas Palm Oil Processing, Inc. with United Coconut Planters Bank is hereby
ordered released to the extent of TWO HUNDRED SIXTY-SIX THOUSAND SEVEN HUNDRED FIFTY-SEVEN & 85/100
PESOS (P266,757.85).
SO ORDERED.13
Dissatisfied, both parties filed their respective appeals with the NLRC.
On October 19, 2004, respondent then filed before the CA a Very Urgent Motion for Clarification of Judgment, praying that
the CA Decision dated August 29, 2002 be clarified to the effect that petitioner be made solely liable to the judgment
award and, as a consequence thereof, to order the NLRC and the LA to implement the same and to direct the UCPB to
release the garnished amount of P736,910.10 to the NLRC Sheriff and for the latter to deposit the same to the NLRC
cashier for further disposition.
On December 10, 2004, the CA rendered the assailed Resolution granting respondent's motion for clarificatory judgment,
the pertinent portion of which provides:
Obviously, the confusion was brought about by the September 14, 2004 Order of Labor Arbiter Savari. It is immediately
apparent that the order is devoid of any legal basis since the ground relied upon by private respondent Filipinas Palmoil
(Asian Plantation) is not among those grounds upon which a writ of execution may be quashed. As jurisprudentially
settled, quashal of the writ of execution was held to be proper in the following instances: (a) when it was improvidently
issued, (b) when it is defective in substance, (c) when it is issued against the wrong party, (d) where the judgment was
already satisfied, (e) when it was issued without authority, (f) when a change in the situation of the parties renders
execution inequitable, and (g) when the controversy was never validly submitted to the court, The ground invoked by
private respondent Filipinas Palmoil (Asian Plantation) to quash the writ of execution is patently improper as it actually
sought to vary the final judgment of this Court. Despite this, Labor Arbiter Savari "partially granted" the motion to quash.
Worst, Labor Arbiter Savari even went to the extent of making her own findings of fact and ruling on the merits, and came
out with an entirely new disposition different from that decreed by this Court in the August 29, 2002 decision. Such action
on the part of Labor Arbiter Savari betrays sheer ignorance of settled precepts, and amounts to a clear encroachment and
interference on the final judgment of this Court.
Ordinarily, the recourse against such an order of the Labor Arbiter is to challenge the same on appeal or via the
extraordinary remedies of certiorari, prohibition or mandamus. However, requiring petitioner to undergo such litigious
process once again would not be in keeping with the protection to labor mandate of the Constitution. Thus, in order to
write finis to this controversy, which has tarried for some time now, and in order to forestall the offshoot of another
prolonged litigation, this Court, in the exercise of equity jurisdiction, hereby grants petitioner's motion for clarification. It is,
of course, stressed that the Court is not amending its August 29, 2002 decision or rectifying a perceived error therein.
With this clarification, this Court only states the obvious by explicitly articulating what should have been necessarily
implied by the application of basic principles under our labor law.14
Thus, the dispositive portion of the assailed CA Resolution reads:
WHEREFORE, in view of the foregoing, in accordance with petitioner's supplications, this Court renders, nunc pro tunc,
the following clarification to the decretal portion of this Court's August 29, 2002 decision.
32
WHEREFORE, premises considered, the assailed Decision dated December 29, 1999 as well as the Resolution dated
April 28, 2000 in NLRC NCR CASE NO. 0005-03748-97 (NLRC NCR CA NO. 016505-98) are hereby REVERSED and
SET ASIDE.
Private respondent Filipinas Palmoil Processing Inc. (Asian Plantation Phils., Inc.) is hereby ordered to REINSTATE
petitioner Joey Dejapa without loss of seniority rights and to pay him his backwages including his salary differentials,
overtime pay, 13th month pay, service incentive leave pay and other benefits from the time his salary was withheld or from
December 1, 1997 until actual reinstatement. If reinstatement is no longer feasible, private respondent Filipinas Palmoil
Processing, Inc. (Asian Plantation Phils., Inc.) is likewise ordered to pay separation pay in addition to the payment of
backwages and other benefits equivalent to one (1) month pay for every year of service, where a fraction of six (6) months
shall be considered as one whole year.
Private respondent Filipinas Palmoil Processing Inc. (Asian Plantation Phils., Inc.) is likewise ordered to pay
petitioner P10,000.00 as moral damages, P10,000.00 as exemplary damages, and attorney's fees in the amount
equivalent to 10% of the total monetary award.
Private respondent Tom Madula is hereby relieved from any liability under the judgment.
Labor Arbiter Lilia S. Savari is hereby directed to implement the final judgment of this Court strictly in accordance with the
foregoing, and to order the UCPB to release the garnished amount of P736,910.10 to the NLRC Sheriff for further
disposition.15
Petitioners' motion for reconsideration was denied in a Resolution dated February 17, 2005.
Hence this Petition for review on certiorari raising the following grounds:
THE HONORABLE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE CONTRARY TO LAW AND
SETTLED RULINGS OF THE SUPREME COURT WHEN IT ORDERED THE COMPANY TO REINSTATE THE
RESPONDENT AND PAY HIM BACKWAGES, SALARY DIFFERENTIALS, OVERTIME PAY, 13TH MONTH PAY,
SERVICE INCENTIVE LEAVE PAY AND OTHER BENEFITS, AND IF REINSTATEMENT IS NOT POSSIBLE, TO PAY
RESPONDENT SEPARATION PAY IN ADDITION TO BACKWAGES AND OTHER BENEFITS, PLUS DAMAGES AND
ATTORNEY'S FEES CONSIDERING THAT:
A. RESPONDENT WAS NEVER DISMISSED AND WAS NEVER UNDER THE EMPLOY OF THE COMPANY,
[AND]
B. QUASHAL OF THE WRIT OF EXECUTION IS PROPER UNDER THE FACTS AND CIRCUMSTANCES OF
THE CASE.16
Petitioners insist that: (1) it engaged the services of Tom Madula to provide it with manning services and delivery of liquid
cargo; (2) Madula assigned respondent to work as barge patron in the company's Butuan depot; (3) the terms of the
contract between Madula and petitioner were clear and categorical, which negate the existence of an employment
relationship between respondent and petitioner; and (4) Madula's obligation to provide the services contracted and which
were performed by respondent were among the functions expressly allowed by law to be contractible. Petitioners claim
that the CA Decision dated August 29, 2002 did not even provide for the circumstances surrounding the alleged dismissal
and how the same was effected; that even respondent's narration of facts in his position paper filed before the LA negated
the existence of the fact of dismissal. Considering that petitioner company was not, at any time, the employer of
respondent and that since there was no dismissal to speak of, it is but proper to order the quashal of the writ of execution.
In his Comment, respondent claims that (1) petitioner seeks to reverse or set aside the CA Decision dated August 29,
2002, which had already attained finality and an entry of judgment had already been made; (2) the issues which
petitioners raised have already been passed upon by the CA in its 2002 decision; and (3) the CA Resolution which is
being assailed in this petition was merely a clarification of the final and executory CA Decision dated August 29, 2002,
where the CA did not modify its earlier decision but only interpreted the same, which was well within its authority to do so.
Respondent informs Us that the amount of P736,910.10 in the UCPB had already been released to the NLRC Sheriff and
was deposited to the Cashier, who in turn had released the said amount to respondent through his attorney-in-fact.
33
In their Reply, petitioners contend that it is not precluded from assailing the Resolutions issued by the CA via a petition for
review under Rule 45 of the Rules of Court and reiterated the arguments raised in the petition.
We find the petition unmeritorious.
In the Decision dated August 29, 2002, the CA found petitioner as the employer of respondent; that Tom Madula was not
really an independent contractor, but was only an employee of petitioner company being its operations manager; and that
respondent was illegally dismissed by petitioner company. The CA Decision became final and executory on February 27,
2004 after we denied petitioners' petition for review on certiorari, and an entry of judgment was subsequently made.
The instant petition for review filed with Us by petitioners assails the CA Resolutions dated December 10, 2004 and
February 17, 2005, which the CA issued upon respondent's filing of a Very Urgent Motion for Clarificatory Judgment
praying that the CA clarify its Decision dated August 29, 2002 declaring petitioner company solely liable to the judgment
award and, as a consequence thereof, to order the NLRC and the LA to implement the same and for the UCPB to release
the garnished amount of P736,910.10 to the Sheriff for further disposition. Notably, the CA Resolutions sought to be
annulled in this petition were only issued to clarify the CA Decision dated August 29, 2002, which had already become
final and executory in 2004.
As a general rule, final and executory judgments are immutable and unalterable, except under these recognized
exceptions, to wit: (a) clerical errors; (b) nunc pro tunc entries which cause no prejudice to any party; and (c) void
judgments.17 What the CA rendered on December 10, 2004 was a nunc pro tunc order clarifying the decretal portion of the
August 29, 2002 Decision.
In Briones-Vazquez v. Court of Appeals,18 nunc pro tunc judgments have been defined and characterized as follows:
The object of a judgment nunc pro tunc is not the rendering of a new judgment and the ascertainment and determination
of new rights, but is one placing in proper form on the record, the judgment that had been previously rendered, to make it
speak the truth, so as to make it show what the judicial action really was, not to correct judicial errors, such as to render a
judgment which the court ought to have rendered, in place of the one it did erroneously render, nor to supply nonaction by
the court, however erroneous the judgment may have been. 19
By filing the instant petition for review with Us, petitioners would like to appeal anew the merits of the illegal dismissal
case filed by respondent against petitioners raising the same arguments which had long been passed upon and decided
in the August 29, 2002 CA Decision which had already attained finality. As the CA said in denying petitioners' motion for
reconsideration of the assailed December 10, 2004 Resolution, to wit:
It is basic that once a decision becomes final and executory, it is immutable and unalterable.1avvphi1 Private
respondents' (herein petitioners) motion for reconsideration seeks a modification or reversal of this Court's August 29,
2002 decision, which has long become final and executory, as in fact, it is already in its execution stage. It may no longer
be modified by this Court or even by the Highest Court of the land.
It should be sufficiently clear to private respondents (herein petitioners) that the December 10, 2004 Resolution was
issued merely to clarify a seeming ambiguity in the decision but as stressed therein, it is neither an amendment nor a
rectification of a perceived error therein. The instant motion for reconsideration has, therefore, no merit at all. 20
We find that petitioners' action is merely a subterfuge to alter or modify the final and executory Decision of the CA which
we cannot countenance without violating procedural rules and jurisprudence.
In Navarro v. Metropolitan Bank and Trust Company,21 We discussed the rule on immutability of judgment and said:
No other procedural law principle is indeed more settled than that once a judgment becomes final, it is no longer subject
to change, revision, amendment or reversal, except only for correction of clerical errors, or the making of nunc pro tunc
entries which cause no prejudice to any party, or where the judgment itself is void. The underlying reason for the rule is
two-fold: (1) to avoid delay in the administration of justice and thus make orderly the discharge of judicial business, and
(2) to put judicial controversies to an end, at the risk of occasional errors, inasmuch as controversies cannot be allowed to
34
drag on indefinitely and the rights and obligations of every litigant must not hang in suspense for an indefinite period of
time. As the Court declared in Yau v. Silverio,
Litigation must end and terminate sometime and somewhere, and it is essential to an effective and efficient administration
of justice that, once a judgment has become final, the winning party be, not through a mere subterfuge, deprived of the
fruits of the verdict. Courts must therefore guard against any scheme calculated to bring about that result. Constituted as
they are to put an end to controversies, courts should frown upon any attempt to prolong them.
Indeed, just as a losing party has the right to file an appeal within the prescribed period, the winning party also has the
correlative right to enjoy the finality of the resolution of his case by the execution and satisfaction of the judgment. Any
attempt to thwart this rigid rule and deny the prevailing litigant his right to savor the fruit of his victory must immediately be
struck down. Thus, in Heirs of Wenceslao Samper v. Reciproco-Noble, we had occasion to emphasize the significance of
this rule, to wit:
It is an important fundamental principle in our Judicial system that every litigation must come to an end x x x Access to the
courts is guaranteed. But there must be a limit thereto. Once a litigant's rights have been adjudicated in a valid final
judgment of a competent court, he should not be granted an unbridled license to come back for another try. The prevailing
party should not be harassed by subsequent suits. For, if endless litigations were to be encouraged, then unscrupulous
litigants will multiply in number to the detriment of the administration of justice. 22
WHEREFORE, the petition is DENIED. The Resolutions of the Court of Appeals, dated December 10, 2004 and February
17, 2005, in CA-G.R. SP No. 60562, are AFFIRMED.
SO ORDERED.
CASE 7
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 165381
February 9, 2011
NELSON A. CULILI, Petitioner,

vs.
EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., SALVADOR HIZON (President and Chief Executive
Officer), EMILIANO JURADO (Chairman of the Board), VIRGILIO GARCIA (Vice President) and STELLA GARCIA
(Assistant Vice President), Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
35
Before Us is a petition for review on certiorari1 of the February 5, 2004 Decision2 and September 13, 2004 Resolution3 of
the Court of Appeals in CA-G.R. SP No. 75001, wherein the Court of Appeals set aside the March 1, 2002 Decision 4 and
September 24, 2002 Resolution5 of the National Labor Relations Commission (NLRC), which affirmed the Labor Arbiters
Decision6 dated April 30, 2001.
Respondent Eastern Telecommunications Philippines, Inc. (ETPI) is a telecommunications company engaged mainly in
the business of establishing commercial telecommunications systems and leasing of international datalines or circuits that
pass through the international gateway facility (IGF). 7 The other respondents are ETPIs officers: Salvador Hizon,
President and Chief Executive Officer; Emiliano Jurado, Chairman of the Board; Virgilio Garcia, Vice President; and Stella
Garcia, Assistant Vice President.
Petitioner Nelson A. Culili (Culili) was employed by ETPI as a Technician in its Field Operations Department on January
27, 1981. On December 12, 1996, Culili was promoted to Senior Technician in the Customer Premises Equipment
Management Unit of the Service Quality Department and his basic salary was increased. 8
As a telecommunications company and an authorized IGF operator, ETPI was required, under Republic Act. No. 7925 and
Executive Order No. 109, to establish landlines in Metro Manila and certain provinces. 9 However, due to interconnection
problems with the Philippine Long Distance Telephone Company (PLDT), poor subscription and cancellation of
subscriptions, and other business difficulties, ETPI was forced to halt its roll out of one hundred twenty-nine thousand
(129,000) landlines already allocated to a number of its employees. 10
In 1998, due to business troubles and losses, ETPI was compelled to implement a Right-Sizing Program which consisted
of two phases: the first phase involved the reduction of ETPIs workforce to only those employees that were necessary
and which ETPI could sustain; the second phase entailed a company-wide reorganization which would result in the
transfer, merger, absorption or abolition of certain departments of ETPI. 11
As part of the first phase, ETPI, on December 10, 1998, offered to its employees who had rendered at least fifteen years
of service, the Special Retirement Program, which consisted of the option to voluntarily retire at an earlier age and a
retirement package equivalent to two and a half (2) months salary for every year of service. 12 This offer was initially
rejected by the Eastern Telecommunications Employees Union (ETEU), ETPIs duly recognized bargaining agent, which
threatened to stage a strike. ETPI explained to ETEU the exact details of the Right-Sizing Program and the Special
Retirement Program and after consultations with ETEUs members, ETEU agreed to the implementation of both
programs.13 Thus, on February 8, 1999, ETPI re-offered the Special Retirement Program and the corresponding
retirement package to the one hundred two (102) employees who qualified for the program. 14 Of all the employees who
qualified to avail of the program, only Culili rejected the offer.15
After the successful implementation of the first phase of the Right-Sizing Program, ETPI, on March 1, 1999 proceeded
with the second phase which necessitated the abolition, transfer and merger of a number of ETPIs departments. 16
Among the departments abolished was the Service Quality Department. The functions of the Customer Premises
Equipment Management Unit, Culilis unit, were absorbed by the Business and Consumer Accounts Department. The
abolition of the Service Quality Department rendered the specialized functions of a Senior Technician unnecessary. As a
result, Culilis position was abolished due to redundancy and his functions were absorbed by Andre Andrada, another
employee already with the Business and Consumer Accounts Department. 17
On March 5, 1999, Culili discovered that his name was omitted in ETPIs New Table of Organization. Culili, along with
three of his co-employees who were similarly situated, wrote their union president to protest such omission. 18
In a letter dated March 8, 1999, ETPI, through its Assistant Vice President Stella Garcia, informed Culili of his termination
from employment effective April 8, 1999. The letter reads:
March 8, 1999
To: N. Culili
Thru: S. Dobbin/G. Ebue
36
From: AVP-HRD
-----------------------------------------------------------------------------------------As you are aware, the current economic crisis has adversely affected our operations and undermined our earlier plans to
put in place major work programs and activities. Because of this, we have to implement a Rightsizing Program in order to
cut administrative/operating costs and to avoid losses. In line with this program, your employment with the company shall
terminate effective at the close of business hours on April 08, 1999. However, to give you ample time to look for other
employment, provided you have amply turned over your pending work and settled your accountabilities, you are no longer
required to report to work starting tomorrow. You will be considered on paid leave until April 08, 1999.
You will likewise be paid separation pay in compliance with legal requirements (see attached), as well as other benefits
accruing to you under the law, and the CBA. We take this opportunity to thank you for your services and wish you well in
your future endeavors.
(Signed)
Stella J. Garcia19
This letter was similar to the memo shown to Culili by the union president weeks before Culili was dismissed. The memo
was dated December 7, 1998, and was advising him of his dismissal effective January 4, 1999 due to the Right-Sizing
Program ETPI was going to implement to cut costs and avoid losses. 20
Culili alleged that neither he nor the Department of Labor and Employment (DOLE) were formally notified of his
termination. Culili claimed that he only found out about it sometime in March 1999 when Vice President Virgilio Garcia
handed him a copy of the March 8, 1999 letter, after he was barred from entering ETPIs premises by its armed security
personnel when he tried to report for work. 21 Culili believed that ETPI had already decided to dismiss him even prior to the
March 8, 1999 letter as evidenced by the December 7, 1998 version of that letter. Moreover, Culili asserted that ETPI had
contracted out the services he used to perform to a labor-only contractor which not only proved that his functions had not
become unnecessary, but which also violated their Collective Bargaining Agreement (CBA) and the Labor Code. Aside
from these, Culili also alleged that he was discriminated against when ETPI offered some of his co-employees an
additional benefit in the form of motorcycles to induce them to avail of the Special Retirement Program, while he was
not.22
ETPI denied singling Culili out for termination. ETPI claimed that while it is true that they offered the Special Retirement
Package to reduce their workforce to a sustainable level, this was only the first phase of the Right-Sizing Program to
which ETEU agreed. The second phase intended to simplify and streamline the functions of the departments and
employees of ETPI. The abolition of Culilis department - the Service Quality Department - and the absorption of its
functions by the Business and Consumer Accounts Department were in line with the programs goals as the Business and
Consumer Accounts Department was more economical and versatile and it was flexible enough to handle the limited
functions of the Service Quality Department. ETPI averred that since Culili did not avail of the Special Retirement Program
and his position was subsequently declared redundant, it had no choice but to terminate Culili. 23 Culili, however, continued
to report for work. ETPI said that because there was no more work for Culili, it was constrained to serve a final notice of
termination24 to Culili, which Culili ignored. ETPI alleged that Culili informed his superiors that he would agree to his
termination if ETPI would give him certain special work tools in addition to the benefits he was already offered. ETPI
claimed that Culilis counter-offer was unacceptable as the work tools Culili wanted were worth almost a million pesos.
Thus, on March 26, 1999, ETPI tendered to Culili his final pay check of Eight Hundred Fifty-Nine Thousand Thirty-Three
and 99/100 Pesos (P859,033.99) consisting of his basic salary, leaves, 13th month pay and separation pay. 25 ETPI
claimed that Culili refused to accept his termination and continued to report for work. 26 ETPI denied hiring outside
contractors to perform Culilis work and denied offering added incentives to its employees to induce them to retire early.
ETPI also explained that the December 7, 1998 letter was never given to Culili in an official capacity. ETPI claimed that it
really needed to reduce its workforce at that time and that it had to prepare several letters in advance in the event that
none of the employees avail of the Special Retirement Program. However, ETPI decided to wait for a favorable response
from its employees regarding the Special Retirement Program instead of terminating them. 27
On February 8, 2000, Culili filed a complaint against ETPI and its officers for illegal dismissal, unfair labor practice, and
money claims before the Labor Arbiter.
37
On April 30, 2001, the Labor Arbiter rendered a decision finding ETPI guilty of illegal dismissal and unfair labor practice, to
wit:
WHEREFORE, decision is hereby rendered declaring the dismissal of complainant Nelson A. Culili illegal for having been
made through an arbitrary and malicious declaration of redundancy of his position and for having been done without due
process for failure of the respondent to give complainant and the DOLE written notice of such termination prior to the
effectivity thereof.
In view of the foregoing, respondents Eastern Telecommunications Philippines and the individual respondents are hereby
found guilty of unfair labor practice/discrimination and illegal dismissal and ordered to pay complainant backwages and
such other benefits due him if he were not illegally dismissed, including moral and exemplary damages and 10%
attorneys fees. Complainant likewise is to be reinstated to his former position or to a substantially equivalent position in
accordance with the pertinent provisions of the Labor Code as interpreted in the case of Pioneer texturing [Pioneer
Texturizing Corp. v. National Labor Relations Commission], G.R. No. 11865[1], 16 October 1997. Hence, Complainant
must be paid the total amount of TWO MILLION SEVEN HUNDRED FORTY[-]FOUR THOUSAND THREE [HUNDRED]
SEVENTY[-] NINE and 41/100 (P2,744,379.41), computed as follows:
I. Backwages (from 16 March 1999 to 16 March 2001)
a. Basic Salary (P29,030 x 24 mos.)
P696,720.96
b. 13th Month Pay (P692,720.96/12)
58,060.88
c. Leave Benefits
d.
1. Vacation Leave (30 days/annum) P1,116.54 x 60 days
66,992.40
2. Sick Leave (30 days/annum) P1,116.54 x 60 days
66,992.40
3. Birthday Leave (1 day/annum) P1,116.54 x 2 days
2,233.08
Rice
and
Meal
(P1,750 x 4.5 mos. = P7,875.00)
Subsidy
01
August
(P1,850 x 12 mos = P22,200.00)
1991
01
August
2000
(P1,950 x 7.5 mos. = P14,625.00)
16
March
16
31
31
March
July
1999
July
2001
2000
44,700.00
e. Uniform Allowance
P7,000/annum x 2 years
14,000.00
P949,699.72
II. Damages
a. Moral P500,000.00
b. Exemplary P250,000.00
38
III. Attorneys Fees (10% of award)
94,969.97
GRAND TOTAL:
P2,744,379.4128
The Labor Arbiter believed Culilis claim that ETPI intended to dismiss him even before his position was declared
redundant. He found the December 7, 1998 letter to be a telling sign of this intention. The Labor Arbiter held that a reading
of the termination letter shows that the ground ETPI was actually invoking was retrenchment and not redundancy, but
ETPI stuck to redundancy because it was easier to prove than retrenchment. He also did not believe that Culilis functions
were as limited as ETPI made it appear to be, and held that ETPI failed to present any reasonable criteria to justify the
declaration of Culilis position as redundant. On the issue of unfair labor practice, the Labor Arbiter agreed that the
contracting out of Culilis functions to non-union members violated Culilis rights as a union member. Moreover, the Labor
Arbiter said that ETPI was not able to dispute Culilis claims of discrimination and subcontracting, hence, ETPI was guilty
of unfair labor practice.
On appeal, the NLRC affirmed the Labor Arbiters decision but modified the amount of moral and exemplary damages
awarded, viz:
WHEREFORE, the Decision appealed from is AFFIRMED granting complainant the money claims prayed for including full
backwages, allowances and other benefits or their monetary equivalent computed from the time of his illegal dismissal on
16 March 1999 up to his actual reinstatement except the award of moral and exemplary damages which is modified
to P200,000.00 for moral and P100,000.00 for exemplary damages. For this purpose, this case is REMANDED to the
Labor Arbiter for computation of backwages and other monetary awards to complainant. 29
ETPI filed a Petition for Certiorari under Rule 65 of the Rules of Civil Procedure before the Court of Appeals on the ground
of grave abuse of discretion. ETPI prayed that a Temporary Restraining Order be issued against the NLRC from
implementing its decision and that the NLRC decision and resolution be set aside.
The Court of Appeals, on February 5, 2004, partially granted ETPIs petition. The dispositive portion of the decision reads
as follows:
WHEREFORE, all the foregoing considered, the petition is PARTIALLY GRANTED. The assailed Decision of public
respondent National Labor Relations Commission is MODIFIED in that petitioner Eastern Telecommunications Philippines
Inc. (ETPI) is hereby ORDERED to pay respondent Nelson Culili full backwages from the time his salaries were not paid
until the finality of this Decision plus separation pay in an amount equivalent to one (1) month salary for every year of
service. The awards for moral and exemplary damages are DELETED. The Writ of Execution issued by the Labor Arbiter
dated September 8, 2003 is DISSOLVED.30
The Court of Appeals found that Culilis position was validly abolished due to redundancy. The Court of Appeals said that
ETPI had been very candid with its employees in implementing its Right-Sizing Program, and that it was highly unlikely
that ETPI would effect a company-wide reorganization simply for the purpose of getting rid of Culili. The Court of Appeals
also held that ETPI cannot be held guilty of unfair labor practice as mere contracting out of services being performed by
union members does not per se amount to unfair labor practice unless it interferes with the employees right to selforganization. The Court of Appeals further held that ETPIs officers cannot be held liable absent a showing of bad faith or
malice. However, the Court of Appeals found that ETPI failed to observe the standards of due process as required by our
laws when it failed to properly notify both Culili and the DOLE of Culilis termination. The Court of Appeals maintained its
position in its September 13, 2004 Resolution when it denied Culilis Motion for Reconsideration and Urgent Motion to
Reinstate the Writ of Execution issued by the Labor Arbiter, and ETPIs Motion for Partial Reconsideration.
Culili is now before this Court praying for the reversal of the Court of Appeals decision and the reinstatement of the
NLRCs decision based on the following grounds:
I
39
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH THE APPLICABLE LAW
AND JURISPRUDENCE WHEN IT REVERSED THE DECISIONS OF THE NLRC AND THE LABOR ARBITER HOLDING
THE DISMISSAL OF PETITIONER ILLEGAL IN THAT:
A. CONTRARY TO THE FINDINGS OF THE COURT OF APPEALS, RESPONDENTS CHARACTERIZATION OF
PETITIONERS POSITION AS REDUNDANT WAS TAINTED BY BAD FAITH.
B. THERE WAS NO ADEQUATE JUSTIFICATION TO DECLARE PETITIONERS POSITION AS REDUNDANT.
II
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND
JURISPRUDENCE IN FINDING THAT NO UNFAIR LABOR PRACTICE ACTS WERE COMMITTED AGAINST THE
PETITIONER.
III
JURISPRUDENCE IN DELETING THE AWARD OF MORAL AND EXEMPLARY DAMAGES AND ATTORNEYS FEES IN
FAVOR OF PETITIONER AND IN DISSOLVING THE WRIT OF EXECUTION DATED 8 SEPTEMBER 2003 ISSUED BY
THE LABOR ARBITER.
IV
JURISPRUDENCE IN ABSOLVING THE INDIVIDUAL RESPONDENTS OF PERSONAL LIABILITY.
V
CONTRARY TO APPLICABLE LAW AND JURISPRUDENCE, THE COURT OF APPEALS, IN A CERTIORARI
PROCEEDING, REVIEWED THE FACTUAL FINDINGS OF THE NLRC WHICH AFFIRMED THAT OF THE LABOR
ARBITER AND, THEREAFTER, ISSUED A WRIT OF CERTIORARI REVERSING THE DECISIONS OF THE NLRC AND
THE LABOR ARBITER EVEN IN THE ABSENCE OF GRAVE ABUSE OF DISCRETION. 31
Procedural Issue:
Court
Power
to
Review
For Certiorari under Rule 65
of
Facts
in
Appeals'
Petition
Culili argued that the Court of Appeals acted in contravention of applicable law and jurisprudence when it reexamined the
facts in this case and reversed the factual findings of the Labor Arbiter and the NLRC in a special civil action for certiorari.
This Court has already confirmed the power of the Court of Appeals, even on a Petition for Certiorari under Rule 65,32 to
review the evidence on record, when necessary, to resolve factual issues:
The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition for Certiorari has been settled as
early as in our decision in St. Martin Funeral Home v. National Labor Relations Commission. This Court held that the
proper vehicle for such review was a Special Civil Action for Certiorari under Rule 65 of the Rules of Court, and that this
action should be filed in the Court of Appeals in strict observance of the doctrine of the hierarchy of courts. Moreover, it is
already settled that under Section 9 of Batas Pambansa Blg. 129, as amended by Republic Act No. 7902[10] (An Act
Expanding the Jurisdiction of the Court of Appeals, amending for the purpose of Section Nine of Batas Pambansa Blg.
129 as amended, known as the Judiciary Reorganization Act of 1980), the Court of Appeals pursuant to the exercise of
its original jurisdiction over Petitions for Certiorari is specifically given the power to pass upon the evidence, if and
when necessary, to resolve factual issues.33
40
While it is true that factual findings made by quasi-judicial and administrative tribunals, if supported by substantial
evidence, are accorded great respect and even finality by the courts, this general rule admits of exceptions. When there is
a showing that a palpable and demonstrable mistake that needs rectification has been committed 34 or when the factual
findings were arrived at arbitrarily or in disregard of the evidence on record, these findings may be examined by the
courts.35
In the case at bench, the Court of Appeals found itself unable to completely sustain the findings of the NLRC thus, it was
compelled to review the facts and evidence and not limit itself to the issue of grave abuse of discretion.
With the conflicting findings of facts by the tribunals below now before us, it behooves this Court to make an independent
evaluation of the facts in this case.
Main Issue: Legality of Dismissal
Culili asserted that he was illegally dismissed because there was no valid cause to terminate his employment. He claimed
that ETPI failed to prove that his position had become redundant and that ETPI was indeed incurring losses. Culili further
alleged that his functions as a Senior Technician could not be considered a superfluity because his tasks were crucial and
critical to ETPIs business.
Under our laws, an employee may be terminated for reasons involving measures taken by the employer due to business
necessities. Article 283 of the Labor Code provides:
Art. 283. Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any
employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Department of Labor and Employment at least
one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or
redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay
or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses
and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for
every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.
There is redundancy when the service capability of the workforce is greater than what is reasonably required to meet the
demands of the business enterprise. A position becomes redundant when it is rendered superfluous by any number of
factors such as over-hiring of workers, decrease in volume of business, or dropping a particular product line or service
activity previously manufactured or undertaken by the enterprise. 36
This Court has been consistent in holding that the determination of whether or not an employees services are still needed
or sustainable properly belongs to the employer. Provided there is no violation of law or a showing that the employer was
prompted by an arbitrary or malicious act, the soundness or wisdom of this exercise of business judgment is not subject to
the discretionary review of the Labor Arbiter and the NLRC. 37
However, an employer cannot simply declare that it has become overmanned and dismiss its employees without
producing adequate proof to sustain its claim of redundancy. 38 Among the requisites of a valid redundancy program are:
(1) the good faith of the employer in abolishing the redundant position; and (2) fair and reasonable criteria in ascertaining
what positions are to be declared redundant,39 such as but not limited to: preferred status, efficiency, and seniority.40
This Court also held that the following evidence may be proffered to substantiate redundancy: the new staffing pattern,
feasibility studies/ proposal on the viability of the newly created positions, job description and the approval by the
management of the restructuring.41
In the case at bar, ETPI was upfront with its employees about its plan to implement a Right-Sizing Program. Even in the
face of initial opposition from and rejection of the said program by ETEU, ETPI patiently negotiated with ETEUs officers to
make them understand ETPIs business dilemma and its need to reduce its workforce and streamline its organization.
This evidently rules out bad faith on the part of ETPI.
41
In deciding which positions to retain and which to abolish, ETPI chose on the basis of efficiency, economy, versatility and
flexibility. It needed to reduce its workforce to a sustainable level while maintaining functions necessary to keep it
operating. The records show that ETPI had sufficiently established not only its need to reduce its workforce and
streamline its organization, but also the existence of redundancy in the position of a Senior Technician. ETPI explained
how it failed to meet its business targets and the factors that caused this, and how this necessitated it to reduce its
workforce and streamline its organization. ETPI also submitted its old and new tables of organization and sufficiently
described how limited the functions of the abolished position of a Senior Technician were and how it decided on whom to
absorb these functions.
In his affidavit dated April 10, 2000, 42 Mr. Arnel D. Reyel, the Head of both the Business Services Department and the
Finance Department of ETPI, described how ETPI went about in reorganizing its departments. Mr. Reyel said that in the
course of ETPIs reorganization, new departments were created, some were transferred, and two were abolished. Among
the departments abolished was the Service Quality Department. Mr. Reyel said that ETPI felt that the functions of the
Service Quality Department, which catered to both corporate and small and medium-sized clients, overlapped and were
too large for a single department, thus, the functions of this department were split and simplified into two smaller but more
focused and efficient departments. In arriving at the decision to abolish the position of Senior Technician, Mr. Reyel
explained:
11.3. Thus, in accordance with the reorganization of the different departments of ETPI, the Service Quality Department
was abolished and its functions were absorbed by the Business and Consumer Accounts Department and the Corporate
and Major Accounts Department.
11.4. With the abolition and resulting simplification of the Service Quality Department, one of the units thereunder, the
Customer Premises Equipment Maintenance ("CPEM") unit was transferred to the Business and Consumer Accounts
Department. Since the Business and Consumer Accounts Department had to remain economical and focused yet
versatile enough to meet all the needs of its small and medium sized clients, it was decided that, in the judgment of ETPI
management, the specialized functions of a Senior Technician in the CPEM unit whose sole function was essentially the
repair and servicing of ETPIs telecommunications equipment was no longer needed since the Business and Consumer
[Accounts] Department had to remain economical and focused yet versatile enough to meet all the multifarious needs of
its small and medium sized clients.
11.5. The business reason for the abolition of the position of Senior Technician was because in ETPIs judgment, what
was needed in the Business and Consumer Accounts Department was a versatile, yet economical position with functions
which were not limited to the mere repair and servicing of telecommunications equipment. It was determined that what
was called for was a position that could also perform varying functions such as the actual installation of
telecommunications products for medium and small scale clients, handle telecommunications equipment inventory
monitoring, evaluation of telecommunications equipment purchased and the preparation of reports on the daily and
monthly activation of telecommunications equipment by these small and medium scale clients.
11.6. Thus, for the foregoing reasons, ETPI decided that the position of Senior Technician was to be abolished due to
redundancy. The functions of a Senior Technician was to be abolished due to redundancy. The functions of a Senior
Technician would then be absorbed by an employee assigned to the Business and Consumer Accounts Department who
was already performing the functions of actual installation of telecommunications products in the field and handling
telecommunications equipment inventory monitoring, evaluation of telecommunications equipment purchased and the
preparation of reports on the daily and monthly activation of telecommunications equipment. This employee would then
simply add to his many other functions the duty of repairing and servicing telecommunications equipment which had been
previously performed by a Senior Technician.43
In the new table of organization that the management approved, one hundred twelve (112) employees were redeployed
and nine (9) positions were declared redundant. 44 It is inconceivable that ETPI would effect a company-wide
reorganization of this scale for the mere purpose of singling out Culili and terminating him. If Culilis position were indeed
indispensable to ETPI, then it would be absurd for ETPI, which was then trying to save its operations, to abolish that one
position which it needed the most. Contrary to Culilis assertions that ETPI could not do away with his functions as long as
it is in the telecommunications industry, ETPI did not abolish the functions performed by Culili as a Senior Technician.
What ETPI did was to abolish the position itself for being too specialized and limited. The functions of that position were
then added to another employee whose functions were broad enough to absorb the tasks of a Senior Technician.
42
Culili maintains that ETPI had already decided to dismiss him even before the second phase of the Right-Sizing Program
was implemented as evidenced by the December 7, 1998 letter.
The December 7, 1998 termination letter signed by ETPIs AVP Stella Garcia hardly suffices to prove bad faith on the part
of the company. The fact remains that the said letter was never officially transmitted and Culili was not terminated at the
end of the first phase of ETPIs Right-Sizing Program. ETPI had given an adequate explanation for the existence of the
letter and considering that it had been transparent with its employees, through their union ETEU, so much so that ETPI
even gave ETEU this unofficial letter, there is no reason to speculate and attach malice to such act. That Culili would be
subsequently terminated during the second phase of the Right-Sizing Program is not evidence of undue discrimination or
"singling out" since not only Culilis position, but his entire unit was abolished and absorbed by another department.
Unfair Labor Practice
Culili also alleged that ETPI is guilty of unfair labor practice for violating Article 248(c) and (e) of the Labor Code, to wit:
Art. 248. Unfair labor practices of employers. - It shall be unlawful for an employer to commit any of the following unfair
labor practice:
xxxx
c. To contract out services or functions being performed by union members when such will interfere with, restrain or
coerce employees in the exercise of their rights to self-organization;
e. To discriminate in regard to wages, hours of work, and other terms and conditions of employment in order to encourage
or discourage membership in any labor organization. Nothing in this Code or in any other law shall stop the parties from
requiring membership in a recognized collective bargaining agent as a condition for employment, except those employees
who are already members of another union at the time of the signing of the collective bargaining agreement. Employees
of an appropriate collective bargaining unit who are not members of the recognized collective bargaining agent may be
assessed a reasonable fee equivalent to the dues and other fees paid by members of the recognized collective bargaining
agent, if such non-union members accept the benefits under the collective agreement: Provided, that the individual
authorization required under Article 242, paragraph (o) of this Code shall not apply to the non-members of the recognized
collective bargaining agent.
Culili asserted that ETPI is guilty of unfair labor practice because his functions were sourced out to labor-only contractors
and he was discriminated against when his co-employees were treated differently when they were each offered an
additional motorcycle to induce them to avail of the Special Retirement Program. ETPI denied hiring outside contractors
and averred that the motorcycles were not given to his co-employees but were purchased by them pursuant to their
Collective Bargaining Agreement, which allowed a retiring employee to purchase the motorcycle he was assigned during
his employment.
The concept of unfair labor practice is provided in Article 247 of the Labor Code which states:
Article 247. Concept of unfair labor practice and procedure for prosecution thereof. -- Unfair labor practices violate the
constitutional right of workers and employees to self-organization, are inimical to the legitimate interest of both labor and
management, including their right to bargain collectively and otherwise deal with each other in an atmosphere of freedom
and mutual respect, disrupt industrial peace and hinder the promotion of healthy and stable labor-management relations.
In the past, we have ruled that "unfair labor practice refers to acts that violate the workers' right to organize. The
prohibited acts are related to the workers' right to self-organization and to the observance of a CBA." 45 We have likewise
declared that "there should be no dispute that all the prohibited acts constituting unfair labor practice in essence relate to
the workers' right to self-organization." 46 Thus, an employer may only be held liable for unfair labor practice if it can be
shown that his acts affect in whatever manner the right of his employees to self-organize. 47
There is no showing that ETPI, in implementing its Right-Sizing Program, was motivated by ill will, bad faith or malice, or
that it was aimed at interfering with its employees right to self-organize. In fact, ETPI negotiated and consulted with ETEU
before implementing its Right-Sizing Program.
43
Both the Labor Arbiter and the NLRC found ETPI guilty of unfair labor practice because of its failure to dispute Culilis
allegations.
According to jurisprudence, "basic is the principle that good faith is presumed and he who alleges bad faith has the duty to
prove the same."48 By imputing bad faith to the actuations of ETPI, Culili has the burden of proof to present substantial
evidence to support the allegation of unfair labor practice. Culili failed to discharge this burden and his bare allegations
deserve no credit.
Observance of Procedural Due Process
Although the Court finds Culilis dismissal was for a lawful cause and not an act of unfair labor practice, ETPI, however,
was remiss in its duty to observe procedural due process in effecting the termination of Culili.
We have previously held that "there are two aspects which characterize the concept of due process under the Labor
Code: one is substantive whether the termination of employment was based on the provision of the Labor Code or in
accordance with the prevailing jurisprudence; the other is procedural the manner in which the dismissal was effected." 49
Section 2(d), Rule I, Book VI of the Rules Implementing the Labor Code provides:
(d) In all cases of termination of employment, the following standards of due process shall be substantially observed:
For termination of employment as defined in Article 283 of the Labor Code, the requirement of due process shall be
deemed complied with upon service of a written notice to the employee and the appropriate Regional Office of the
Department of Labor and Employment at least thirty days before effectivity of the termination, specifying the ground or
grounds for termination.
In Mayon Hotel & Restaurant v. Adana,50 we observed:
The requirement of law mandating the giving of notices was intended not only to enable the employees to look for another
employment and therefore ease the impact of the loss of their jobs and the corresponding income, but more importantly, to
give the Department of Labor and Employment (DOLE) the opportunity to ascertain the verity of the alleged authorized
cause of termination.51
ETPI does not deny its failure to provide DOLE with a written notice regarding Culilis termination. It, however, insists that
it has complied with the requirement to serve a written notice to Culili as evidenced by his admission of having received it
and forwarding it to his union president.
In Serrano v. National Labor Relations Commission, 52 we noted that "a job is more than the salary that it carries." There is
a psychological effect or a stigma in immediately finding ones self laid off from work. 53 This is exactly why our labor laws
have provided for mandating procedural due process clauses. Our laws, while recognizing the right of employers to
terminate employees it cannot sustain, also recognize the employees right to be properly informed of the impending
severance of his ties with the company he is working for. In the case at bar, ETPI, in effecting Culilis termination, simply
asked one of its guards to serve the required written notice on Culili. Culili, on one hand, claims in his petition that this was
handed to him by ETPIs vice president, but previously testified before the Labor Arbiter that this was left on his
table.54 Regardless of how this notice was served on Culili, this Court believes that ETPI failed to properly notify Culili
about his termination. Aside from the manner the written notice was served, a reading of that notice shows that ETPI
failed to properly inform Culili of the grounds for his termination.
The Court of Appeals, in finding that Culili was not afforded procedural due process, held that Culilis dismissal was
ineffectual, and required ETPI to pay Culili full backwages in accordance with our decision in Serrano v. National Labor
Relations Commission.55 Over the years, this Court has had the opportunity to reexamine the sanctions imposed upon
employers who fail to comply with the procedural due process requirements in terminating its employees. In Agabon v.
National Labor Relations Commission, 56 this Court reverted back to the doctrine in Wenphil Corporation v. National Labor
Relations Commission57 and held that where the dismissal is due to a just or authorized cause, but without observance of
the due process requirements, the dismissal may be upheld but the employer must pay an indemnity to the employee.
44
The sanctions to be imposed however, must be stiffer than those imposed in Wenphil to achieve a result fair to both the
employers and the employees.58
In Jaka Food Processing Corporation v. Pacot, 59 this Court, taking a cue from Agabon, held that since there is a clear-cut
distinction between a dismissal due to a just cause and a dismissal due to an authorized cause, the legal implications for
employers who fail to comply with the notice requirements must also be treated differently:
Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under Article 282 but the employer failed to
comply with the notice requirement, the sanction to be imposed upon him should be tempered because the dismissal
process was, in effect, initiated by an act imputable to the employee; and (2) if the dismissal is based on an authorized
cause under Article 283 but the employer failed to comply with the notice requirement, the sanction should be stiffer
because the dismissal process was initiated by the employer's exercise of his management prerogative. 60
Hence, since it has been established that Culilis termination was due to an authorized cause and cannot be considered
unfair labor practice on the part of ETPI, his dismissal is valid. However, in view of ETPIs failure to comply with the notice
requirements under the Labor Code, Culili is entitled to nominal damages in addition to his separation pay.1avvphi1
Personal
And Award of Damages
Liability
of
ETPIs
Officers
Culili asserts that the individual respondents, Salvador Hizon, Emiliano Jurado, Virgilio Garcia, and Stella Garcia, as
ETPIs officers, should be held personally liable for the acts of ETPI which were tainted with bad faith and arbitrariness.
Furthermore, Culili insists that he is entitled to damages because of the sufferings he had to endure and the malicious
manner he was terminated.
As a general rule, a corporate officer cannot be held liable for acts done in his official capacity because a corporation, by
legal fiction, has a personality separate and distinct from its officers, stockholders, and members. To pierce this fictional
veil, it must be shown that the corporate personality was used to perpetuate fraud or an illegal act, or to evade an existing
obligation, or to confuse a legitimate issue. In illegal dismissal cases, corporate officers may be held solidarily liable with
the corporation if the termination was done with malice or bad faith. 61
In illegal dismissal cases, moral damages are awarded only where the dismissal was attended by bad faith or fraud, or
constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public
policy.62 Exemplary damages may avail if the dismissal was effected in a wanton, oppressive or malevolent manner to
warrant an award for exemplary damages.63
It is our considered view that Culili has failed to prove that his dismissal was orchestrated by the individual respondents
herein for the mere purpose of getting rid of him. In fact, most of them have not even dealt with Culili personally. Moreover,
it has been established that his termination was for an authorized cause, and that there was no bad faith on the part of
ETPI in implementing its Right-Sizing Program, which involved abolishing certain positions and departments for
redundancy. It is not enough that ETPI failed to comply with the due process requirements to warrant an award of
damages, there being no showing that the companys and its officers acts were attended with bad faith or were done
oppressively.
WHEREFORE, the instant petition is DENIED and the assailed February 5, 2004 Decision and September 13, 2004
Resolution of the Court of Appeals in CA-G.R. SP No. 75001 are AFFIRMED with the MODIFICATION that petitioner
Nelson A. Culilis dismissal is declared valid but respondent Eastern Telecommunications Philippines, Inc. is ordered to
pay petitioner Nelson A. Culili the amount of Fifty Thousand Pesos (P50,000.00) representing nominal damages for noncompliance with statutory due process, in addition to the mandatory separation pay required under Article 283 of the
Labor Code.
SO ORDERED.
CASE 8
45

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 169717
March 16, 2011
SAMAHANG MANGGAGAWA SA CHARTER CHEMICAL SOLIDARITY OF UNIONS IN THE PHILIPPINES FOR

EMPOWERMENT AND REFORMS (SMCC-SUPER), ZACARRIAS JERRY VICTORIO-Union President,Petitioner,
vs.
CHARTER CHEMICAL and COATING CORPORATION, Respondent.
DECISION
DEL CASTILLO, J.:
The right to file a petition for certification election is accorded to a labor organization provided that it complies with the
requirements of law for proper registration. The inclusion of supervisory employees in a labor organization seeking to
represent the bargaining unit of rank-and-file employees does not divest it of its status as a legitimate labor organization.
We apply these principles to this case.
This Petition for Review on Certiorari seeks to reverse and set aside the Court of Appeals March 15, 2005 Decision 1 in
CA-G.R. SP No. 58203, which annulled and set aside the January 13, 2000 Decision 2 of the Department of Labor and
Employment (DOLE) in OS-A-6-53-99 (NCR-OD-M-9902-019) and the September 16, 2005 Resolution 3 denying petitioner
unions motion for reconsideration.
Factual Antecedents
On February 19, 1999, Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the Philippines for
Empowerment and Reforms (petitioner union) filed a petition for certification election among the regular rank-and-file
employees of Charter Chemical and Coating Corporation (respondent company) with the Mediation Arbitration Unit of the
DOLE, National Capital Region.
On April 14, 1999, respondent company filed an Answer with Motion to Dismiss 4 on the ground that petitioner union is not
a legitimate labor organization because of (1) failure to comply with the documentation requirements set by law, and (2)
the inclusion of supervisory employees within petitioner union. 5
Med-Arbiters Ruling
On April 30, 1999, Med-Arbiter Tomas F. Falconitin issued a Decision 6 dismissing the petition for certification election. The
Med-Arbiter ruled that petitioner union is not a legitimate labor organization because the Charter Certificate, "Samasamang Pahayag ng Pagsapi at Authorization," and "Listahan ng mga Dumalo sa Pangkalahatang Pulong at mga
Sumang-ayon at Nagratipika sa Saligang Batas" were not executed under oath and certified by the union secretary and
attested to by the union president as required by Section 235 of the Labor Code 7 in relation to Section 1, Rule VI of
Department Order (D.O.) No. 9, series of 1997. The union registration was, thus, fatally defective.
The Med-Arbiter further held that the list of membership of petitioner union consisted of 12 batchman, mill operator and
leadman who performed supervisory functions. Under Article 245 of the Labor Code, said supervisory employees are
prohibited from joining petitioner union which seeks to represent the rank-and-file employees of respondent company.
As a result, not being a legitimate labor organization, petitioner union has no right to file a petition for certification election
for the purpose of collective bargaining.
Department of Labor and Employments Ruling
46
On July 16, 1999, the DOLE initially issued a Decision 8 in favor of respondent company dismissing petitioner unions
appeal on the ground that the latters petition for certification election was filed out of time. Although the DOLE ruled,
contrary to the findings of the Med-Arbiter, that the charter certificate need not be verified and that there was no
independent evidence presented to establish respondent companys claim that some members of petitioner union were
holding supervisory positions, the DOLE sustained the dismissal of the petition for certification after it took judicial notice
that another union, i.e., Pinag-isang Lakas Manggagawa sa Charter Chemical and Coating Corporation, previously filed a
petition for certification election on January 16, 1998. The Decision granting the said petition became final and executory
on September 16, 1998 and was remanded for immediate implementation. Under Section 7, Rule XI of D.O. No. 9, series
of 1997, a motion for intervention involving a certification election in an unorganized establishment should be filed prior to
the finality of the decision calling for a certification election. Considering that petitioner union filed its petition only on
February 14, 1999, the same was filed out of time.
On motion for reconsideration, however, the DOLE reversed its earlier ruling. In its January 13, 2000 Decision, the DOLE
found that a review of the records indicates that no certification election was previously conducted in respondent
company. On the contrary, the prior certification election filed by Pinag-isang Lakas Manggagawa sa Charter Chemical
and Coating Corporation was, likewise, denied by the Med-Arbiter and, on appeal, was dismissed by the DOLE for being
filed out of time. Hence, there was no obstacle to the grant of petitioner unions petition for certification election, viz:
WHEREFORE, the motion for reconsideration is hereby GRANTED and the decision of this Office dated 16 July 1999
is MODIFIED to allow the certification election among the regular rank-and-file employees of Charter Chemical and
Coating Corporation with the following choices:
1. Samahang Manggagawa sa Charter Chemical-Solidarity of Unions in the Philippines for Empowerment and
Reform (SMCC-SUPER); and
2. No Union.
Let the records of this case be remanded to the Regional Office of origin for the immediate conduct of a certification
election, subject to the usual pre-election conference.
SO DECIDED.9
Court of Appeals Ruling
On March 15, 2005, the CA promulgated the assailed Decision, viz:
WHEREFORE, the petition is hereby GRANTED. The assailed Decision and Resolution dated January 13, 2000 and
February 17, 2000 are hereby [ANNULLED] and SET ASIDE.
SO ORDERED.10
In nullifying the decision of the DOLE, the appellate court gave credence to the findings of the Med-Arbiter that petitioner
union failed to comply with the documentation requirements under the Labor Code. It, likewise, upheld the Med-Arbiters
finding that petitioner union consisted of both rank-and-file and supervisory employees. Moreover, the CA held that the
issues as to the legitimacy of petitioner union may be attacked collaterally in a petition for certification election and the
infirmity in the membership of petitioner union cannot be remedied through the exclusion-inclusion proceedings in a preelection conference pursuant to the ruling in Toyota Motor Philippines v. Toyota Motor Philippines Corporation Labor
Union.11 Thus, considering that petitioner union is not a legitimate labor organization, it has no legal right to file a petition
for certification election.
Issues
I
47
Whether x x x the Honorable Court of Appeals committed grave abuse of discretion tantamount to lack of jurisdiction in
granting the respondent [companys] petition for certiorari (CA G.R. No. SP No. 58203) in spite of the fact that the issues
subject of the respondent company[s] petition was already settled with finality and barred from being re-litigated.
II
holding that the alleged mixture of rank-and-file and supervisory employee[s] of petitioner [unions] membership is [a]
ground for the cancellation of petitioner [unions] legal personality and dismissal of [the] petition for certification election.
III
holding that the alleged failure to certify under oath the local charter certificate issued by its mother federation and list of
the union membership attending the organizational meeting [is a ground] for the cancellation of petitioner [unions] legal
personality as a labor organization and for the dismissal of the petition for certification election. 12
Petitioner Unions Arguments
Petitioner union claims that the litigation of the issue as to its legal personality to file the subject petition for certification
election is barred by the July 16, 1999 Decision of the DOLE. In this decision, the DOLE ruled that petitioner union
complied with all the documentation requirements and that there was no independent evidence presented to prove an
illegal mixture of supervisory and rank-and-file employees in petitioner union. After the promulgation of this Decision,
respondent company did not move for reconsideration, thus, this issue must be deemed settled.
Petitioner union further argues that the lack of verification of its charter certificate and the alleged illegal composition of its
membership are not grounds for the dismissal of a petition for certification election under Section 11, Rule XI of D.O. No.
9, series of 1997, as amended, nor are they grounds for the cancellation of a unions registration under Section 3, Rule
VIII of said issuance. It contends that what is required to be certified under oath by the local unions secretary or treasurer
and attested to by the local unions president are limited to the unions constitution and by-laws, statement of the set of
officers, and the books of accounts.
Finally, the legal personality of petitioner union cannot be collaterally attacked but may be questioned only in an
independent petition for cancellation pursuant to Section 5, Rule V, Book IV of the Rules to Implement the Labor Code
and the doctrine enunciated in Tagaytay Highlands International Golf Club Incoprorated v. Tagaytay Highlands Empoyees
Union-PTGWO.13
Respondent Companys Arguments
Respondent company asserts that it cannot be precluded from challenging the July 16, 1999 Decision of the DOLE. The
said decision did not attain finality because the DOLE subsequently reversed its earlier ruling and, from this decision,
respondent company timely filed its motion for reconsideration.
On the issue of lack of verification of the charter certificate, respondent company notes that Article 235 of the Labor Code
and Section 1, Rule VI of the Implementing Rules of Book V, as amended by D.O. No. 9, series of 1997, expressly
requires that the charter certificate be certified under oath.
It also contends that petitioner union is not a legitimate labor organization because its composition is a mixture of
supervisory and rank-and-file employees in violation of Article 245 of the Labor Code. Respondent company maintains
that the ruling in Toyota Motor Philippines vs. Toyota Motor Philippines Labor Union 14 continues to be good case law.
Thus, the illegal composition of petitioner union nullifies its legal personality to file the subject petition for certification
election and its legal personality may be collaterally attacked in the proceedings for a petition for certification election as
was done here.
Our Ruling
48
The petition is meritorious.

The issue as to the legal personality of petitioner union is not barred by the July 16, 1999 Decision of the DOLE.
A review of the records indicates that the issue as to petitioner unions legal personality has been timely and consistently
raised by respondent company before the Med-Arbiter, DOLE, CA and now this Court. In its July 16, 1999 Decision, the
DOLE found that petitioner union complied with the documentation requirements of the Labor Code and that the evidence
was insufficient to establish that there was an illegal mixture of supervisory and rank-and-file employees in its
membership. Nonetheless, the petition for certification election was dismissed on the ground that another union had
previously filed a petition for certification election seeking to represent the same bargaining unit in respondent company.
Upon motion for reconsideration by petitioner union on January 13, 2000, the DOLE reversed its previous ruling. It upheld
the right of petitioner union to file the subject petition for certification election because its previous decision was based on
a mistaken appreciation of facts.15 From this adverse decision, respondent company timely moved for reconsideration by
reiterating its previous arguments before the Med-Arbiter that petitioner union has no legal personality to file the subject
petition for certification election.
The July 16, 1999 Decision of the DOLE, therefore, never attained finality because the parties timely moved for
reconsideration. The issue then as to the legal personality of petitioner union to file the certification election was properly
raised before the DOLE, the appellate court and now this Court.
The charter certificate need not be certified under oath by the local unions secretary or treasurer and attested to by its
president.
Preliminarily, we must note that Congress enacted Republic Act (R.A.) No. 9481 16 which took effect on June 14,
2007.17 This law introduced substantial amendments to the Labor Code. However, since the operative facts in this case
occurred in 1999, we shall decide the issues under the pertinent legal provisions then in force (i.e., R.A. No.
6715,18 amending Book V of the Labor Code, and the rules and regulations 19 implementing R.A. No. 6715, as amended by
D.O. No. 9,20
series of 1997) pursuant to our ruling in Republic v. Kawashima Textile Mfg., Philippines, Inc.21
In the main, the CA ruled that petitioner union failed to comply with the requisite documents for registration under Article
235 of the Labor Code and its implementing rules. It agreed with the Med-Arbiter that the Charter Certificate, Samasamang Pahayag ng Pagsapi at Authorization, and Listahan ng mga Dumalo sa Pangkalahatang Pulong at mga Sumangayon at Nagratipika sa Saligang Batas were not executed under oath. Thus, petitioner union cannot be accorded the
status of a legitimate labor organization.
We disagree.
The then prevailing Section 1, Rule VI of the Implementing Rules of Book V, as amended by D.O. No. 9, series of 1997,
provides:
Section 1. Chartering and creation of a local chapter A duly registered federation or national union may directly create a
local/chapter by submitting to the Regional Office or to the Bureau two (2) copies of the following:
(a) A charter certificate issued by the federation or national union indicating the creation or establishment of the
local/chapter;
(b) The names of the local/chapters officers, their addresses, and the principal office of the local/chapter; and
(c) The local/chapters constitution and by-laws provided that where the local/chapters constitution and by-laws
[are] the same as [those] of the federation or national union, this fact shall be indicated accordingly.
49
All the foregoing supporting requirements shall be certified under oath by the Secretary or the Treasurer of the
local/chapter and attested to by its President.
As readily seen, the Sama-samang Pahayag ng Pagsapi at Authorization and Listahan ng mga Dumalo sa
Pangkalahatang Pulong at mga Sumang-ayon at Nagratipika sa Saligang Batas are not among the documents that need
to be submitted to the Regional Office or Bureau of Labor Relations in order to register a labor organization. As to the
charter certificate, the above-quoted rule indicates that it should be executed under oath. Petitioner union concedes and
the records confirm that its charter certificate was not executed under oath. However, in San Miguel Corporation
(Mandaue Packaging Products Plants) v. Mandaue Packing Products Plants-San Miguel Corporation Monthlies Rankand-File Union-FFW (MPPP-SMPP-SMAMRFU-FFW),22 which was decided under the auspices of D.O. No. 9, Series of
1997, we ruled
In San Miguel Foods-Cebu B-Meg Feed Plant v. Hon. Laguesma, 331 Phil. 356 (1996), the Court ruled that it wasnot
necessary for the charter certificate to be certified and attested by the local/chapter officers. Id. While this ruling was
based on the interpretation of the previous Implementing Rules provisions which were supplanted by the 1997
amendments, we believe that the same doctrine obtains in this case. Considering that the charter certificate is
prepared and issued by the national union and not the local/chapter, it does not make sense to have the
local/chapters officers x x x certify or attest to a document which they had no hand in the preparation
of.23 (Emphasis supplied)
In accordance with this ruling, petitioner unions charter certificate need not be executed under oath. Consequently, it
validly acquired the status of a legitimate labor organization upon submission of (1) its charter certificate, 24 (2) the names
of its officers, their addresses, and its principal office, 25 and (3) its constitution and by-laws 26 the last two requirements
having been executed under oath by the proper union officials as borne out by the records.
The mixture of rank-and-file and supervisory employees in petitioner union does not nullify its legal personality as a
legitimate labor organization.
The CA found that petitioner union has for its membership both rank-and-file and supervisory employees. However,
petitioner union sought to represent the bargaining unit consisting of rank-and-file employees. Under Article 245 27 of the
Labor Code, supervisory employees are not eligible for membership in a labor organization of rank-and-file employees.
Thus, the appellate court ruled that petitioner union cannot be considered a legitimate labor organization pursuant
to Toyota Motor Philippines v. Toyota Motor Philippines Corporation Labor Union 28(hereinafter Toyota).
Preliminarily, we note that petitioner union questions the factual findings of the Med-Arbiter, as upheld by the appellate
court, that 12 of its members, consisting of batchman, mill operator and leadman, are supervisory employees. However,
petitioner union failed to present any rebuttal evidence in the proceedings below after respondent company submitted in
evidence the job descriptions29 of the aforesaid employees. The job descriptions indicate that the aforesaid employees
exercise recommendatory managerial actions which are not merely routinary but require the use of independent
judgment, hence, falling within the definition of supervisory employees under Article 212(m) 30 of the Labor Code. For this
reason, we are constrained to agree with the Med-Arbiter, as upheld by the appellate court, that petitioner union consisted
of both rank-and-file and supervisory employees.
Nonetheless, the inclusion of the aforesaid supervisory employees in petitioner union does not divest it of its status as a
legitimate labor organization. The appellate courts reliance on Toyota is misplaced in view of this Courts subsequent
ruling in Republic v. Kawashima Textile Mfg., Philippines, Inc. 31 (hereinafter Kawashima). InKawashima, we explained at
length how and why the Toyota doctrine no longer holds sway under the altered state of the law and rules applicable to
this case, viz:
R.A. No. 6715 omitted specifying the exact effect any violation of the prohibition [on the co-mingling of
supervisory and rank-and-file employees] would bring about on the legitimacy of a labor organization.
It was the Rules and Regulations Implementing R.A. No. 6715 (1989 Amended Omnibus Rules) which supplied the
deficiency by introducing the following amendment to Rule II (Registration of Unions):
50
"Sec. 1. Who may join unions. - x x x Supervisory employees and security guards shall not be eligible for
membership in a labor organization of the rank-and-file employees but may join, assist or form separate labor
organizations of their own; Provided, that those supervisory employees who are included in an existing rank-and-file
bargaining unit, upon the effectivity of Republic Act No. 6715, shall remain in that unit x x x. (Emphasis supplied) and Rule
V (Representation Cases and Internal-Union Conflicts) of the Omnibus Rules, viz:
"Sec. 1. Where to file. - A petition for certification election may be filed with the Regional Office which has jurisdiction over
the principal office of the employer. The petition shall be in writing and under oath.
Sec. 2. Who may file. - Any legitimate labor organization or the employer, when requested to bargain collectively, may file
the petition.
The petition, when filed by a legitimate labor organization, shall contain, among others:
xxxx
(c) description of the bargaining unit which shall be the employer unit unless circumstances otherwise require;
and provided further, that the appropriate bargaining unit of the rank-and-file employees shall not include
supervisory employees and/or security guards. (Emphasis supplied)
By that provision, any questioned mingling will prevent an otherwise legitimate and duly registered labor organization from
exercising its right to file a petition for certification election.
Thus, when the issue of the effect of mingling was brought to the fore in Toyota, the Court, citing Article 245 of the Labor
Code, as amended by R.A. No. 6715, held:
"Clearly, based on this provision, a labor organization composed of both rank-and-file and supervisory employees is no
labor organization at all. It cannot, for any guise or purpose, be a legitimate labor organization. Not being one, an
organization which carries a mixture of rank-and-file and supervisory employees cannot possess any of the
rights of a legitimate labor organization, including the right to file a petition for certification election for the
purpose of collective bargaining. It becomes necessary, therefore, anterior to the granting of an order allowing a
certification election, to inquire into the composition of any labor organization whenever the status of the labor
organization is challenged on the basis of Article 245 of the Labor Code.
xxxx
In the case at bar, as respondent union's membership list contains the names of at least twenty-seven (27) supervisory
employees in Level Five positions, the union could not, prior to purging itself of its supervisory employee members, attain
the status of a legitimate labor organization. Not being one, it cannot possess the requisite personality to file a petition for
certification election." (Emphasis supplied)
In Dunlop, in which the labor organization that filed a petition for certification election was one for supervisory employees,
but in which the membership included rank-and-file employees, the Court reiterated that such labor organization had no
legal right to file a certification election to represent a bargaining unit composed of supervisors for as long as it counted
rank-and-file employees among its members.
It should be emphasized that the petitions for certification election involved in Toyota and Dunlop were filed on November
26, 1992 and September 15, 1995, respectively; hence, the 1989 Rules was applied in both cases.
But then, on June 21, 1997, the 1989 Amended Omnibus Rules was further amended by Department Order No. 9, series
of 1997 (1997 Amended Omnibus Rules). Specifically, the requirement under Sec. 2(c) of the 1989 Amended Omnibus
Rules that the petition for certification election indicate that the bargaining unit of rank-and-file employees has not been
mingled with supervisory employees was removed. Instead, what the 1997 Amended Omnibus Rules requires is a plain
description of the bargaining unit, thus:
51
Rule
Certification Elections
XI
xxxx
Sec. 4. Forms and contents of petition. - The petition shall be in writing and under oath and shall contain, among others,
the following: x x x (c) The description of the bargaining unit.
In Pagpalain Haulers, Inc. v. Trajano, the Court had occasion to uphold the validity of the 1997 Amended Omnibus Rules,
although the specific provision involved therein was only Sec. 1, Rule VI, to wit:
"Section. 1. Chartering and creation of a local/chapter.- A duly registered federation or national union may directly create a
local/chapter by submitting to the Regional Office or to the Bureau two (2) copies of the following: a) a charter certificate
issued by the federation or national union indicating the creation or establishment of the local/chapter; (b) the names of
the local/chapter's officers, their addresses, and the principal office of the local/chapter; and (c) the local/ chapter's
constitution and by-laws; provided that where the local/chapter's constitution and by-laws is the same as that of the
federation or national union, this fact shall be indicated accordingly.
All the foregoing supporting requirements shall be certified under oath by the Secretary or the Treasurer of the
local/chapter and attested to by its President."
which does not require that, for its creation and registration, a local or chapter submit a list of its members.
Then came Tagaytay Highlands Int'l. Golf Club, Inc. v. Tagaytay Highlands Employees Union-PGTWO in which the core
issue was whether mingling affects the legitimacy of a labor organization and its right to file a petition for certification
election. This time, given the altered legal milieu, the Court abandoned the view in Toyota and Dunlopand reverted to its
pronouncement in Lopez that while there is a prohibition against the mingling of supervisory and rank-and-file employees
in one labor organization, the Labor Code does not provide for the effects thereof. Thus, the Court held that after a labor
organization has been registered, it may exercise all the rights and privileges of a legitimate labor organization. Any
mingling between supervisory and rank-and-file employees in its membership cannot affect its legitimacy for that is not
among the grounds for cancellation of its registration, unless such mingling was brought about by misrepresentation, false
statement or fraud under Article 239 of the Labor Code.
In San Miguel Corp. (Mandaue Packaging Products Plants) v. Mandaue Packing Products Plants-San Miguel Packaging
Products-San Miguel Corp. Monthlies Rank-and-File Union-FFW, the Court explained that since the 1997 Amended
Omnibus Rules does not require a local or chapter to provide a list of its members, it would be improper for the DOLE to
deny recognition to said local or chapter on account of any question pertaining to its individual members.
More to the point is Air Philippines Corporation v. Bureau of Labor Relations, which involved a petition for cancellation of
union registration filed by the employer in 1999 against a rank-and-file labor organization on the ground of mixed
membership: the Court therein reiterated its ruling in Tagaytay Highlands that the inclusion in a union of disqualified
employees is not among the grounds for cancellation, unless such inclusion is due to misrepresentation, false statement
or fraud under the circumstances enumerated in Sections (a) and (c) of Article 239 of the Labor Code.
All said, while the latest issuance is R.A. No. 9481, the 1997 Amended Omnibus Rules, as interpreted by the Court
in Tagaytay Highlands, San Miguel and Air Philippines, had already set the tone for it. Toyota and Dunlop no longer hold
sway in the present altered state of the law and the rules.32 [Underline supplied]
The applicable law and rules in the instant case are the same as those in Kawashima because the present petition for
certification election was filed in 1999 when D.O. No. 9, series of 1997, was still in effect. Hence, Kawashimaapplies with
equal force here. As a result, petitioner union was not divested of its status as a legitimate labor organization even if some
of its members were supervisory employees; it had the right to file the subject petition for certification election.
The legal personality of petitioner union cannot be collaterally attacked by respondent company in the certification election
proceedings.
52
Petitioner union correctly argues that its legal personality cannot be collaterally attacked in the certification election
proceedings. As we explained in Kawashima:
Except when it is requested to bargain collectively, an employer is a mere bystander to any petition for certification
election; such proceeding is non-adversarial and merely investigative, for the purpose thereof is to determine which
organization will represent the employees in their collective bargaining with the employer. The choice of their
representative is the exclusive concern of the employees; the employer cannot have any partisan interest therein; it
cannot interfere with, much less oppose, the process by filing a motion to dismiss or an appeal from it; not even a mere
allegation that some employees participating in a petition for certification election are actually managerial employees will
lend an employer legal personality to block the certification election. The employer's only right in the proceeding is to be
notified or informed thereof.
The amendments to the Labor Code and its implementing rules have buttressed that policy even more. 33
WHEREFORE, the petition is GRANTED. The March 15, 2005 Decision and September 16, 2005 Resolution of the Court
of Appeals in CA-G.R. SP No. 58203 are REVERSED and SET ASIDE. The January 13, 2000 Decision of the Department
of Labor and Employment in OS-A-6-53-99 (NCR-OD-M-9902-019) is REINSTATED.
CASE 9
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 177467
March 9, 2011
PFIZER, INC. AND/OR REY GERARDO BACARRO, AND/OR FERDINAND CORTES, AND/OR ALFRED MAGALLON,
AND/OR ARISTOTLE ARCE, Petitioners,
vs.
GERALDINE VELASCO, Respondent.
DECISION
This is a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure to annul and set aside the
Resolution1 dated October 23, 2006 as well as the Resolution 2 dated April 10, 2007 both issued by the Court of Appeals in
CA-G.R. SP No. 88987 entitled, "Pfizer, Inc. and/or Rey Gerardo Bacarro, and/or Ferdinand Cortes, and/or Alfred
Magallon, and/or Aristotle Arce v. National Labor Relations Commission Second Division and Geraldine Velasco ." The
October 23, 2006 Resolution modified upon respondents motion for reconsideration the Decision 3 dated November 23,
2005 of the Court of Appeals by requiring PFIZER, Inc. (PFIZER) to pay respondents wages from the date of the Labor
Arbiters Decision4 dated December 5, 2003 until it was eventually reversed and set aside by the Court of Appeals. The
April 10, 2007 Resolution, on the other hand, denied PFIZERs motion for partial reconsideration.
The facts of this case, as stated in the Court of Appeals Decision dated November 23, 2005, are as follows:
Private respondent Geraldine L. Velasco was employed with petitioner PFIZER, INC. as Professional Health Care
Representative since 1 August 1992. Sometime in April 2003, Velasco had a medical work up for her high-risk pregnancy
and was subsequently advised bed rest which resulted in her extending her leave of absence. Velasco filed her sick leave
for the period from 26 March to 18 June 2003, her vacation leave from 19 June to 20 June 2003, and leave without pay
from 23 June to 14 July 2003.
53
On 26 June 2003, while Velasco was still on leave, PFIZER through its Area Sales Manager, herein petitioner Ferdinand
Cortez, personally served Velasco a "Show-cause Notice" dated 25 June 2003. Aside from mentioning about an
investigation on her possible violations of company work rules regarding "unauthorized deals and/or discounts in money
or samples and unauthorized withdrawal and/or pull-out of stocks" and instructing her to submit her explanation on the
matter within 48 hours from receipt of the same, the notice also advised her that she was being placed under "preventive
suspension" for 30 days or from that day to 6 August 2003 and consequently ordered to surrender the following
"accountabilities;" 1) Company Car, 2) Samples and Promats, 3) CRF/ER/VEHICLE/SOA/POSAP/MPOA and other
related Company Forms, 4) Cash Card, 5) Caltex Card, and 6) MPOA/TPOA Revolving Travel Fund. The following day,
petitioner Cortez together with one Efren Dariano retrieved the above-mentioned "accountabilities" from Velascos
residence.
In response, Velasco sent a letter addressed to Cortez dated 28 June 2003 denying the charges. In her letter, Velasco
claimed that the transaction with Mercury Drug, Magsaysay Branch covered by her check (no. 1072) in the amount
of P23,980.00 was merely to accommodate two undisclosed patients of a certain Dr. Renato Manalo. In support thereto,
Velasco attached the Doctors letter and the affidavit of the latters secretary.
On 12 July 2003, Velasco received a "Second Show-cause Notice" informing her of additional developments in their
investigation. According to the notice, a certain Carlito Jomen executed an affidavit pointing to Velasco as the one who
transacted with a printing shop to print PFIZER discount coupons. Jomen also presented text messages originating from
Velascos company issued cellphone referring to the printing of the said coupons. Again, Velasco was given 48 hours to
submit her written explanation on the matter. On 16 July 2003, Velasco sent a letter to PFIZER via Aboitiz courier service
asking for additional time to answer the second Show-cause Notice.
That same day, Velasco filed a complaint for illegal suspension with money claims before the Regional Arbitration Branch.
The following day, 17 July 2003, PFIZER sent her a letter inviting her to a disciplinary hearing to be held on 22 July 2003.
Velasco received it under protest and informed PFIZER via the receiving copy of the said letter that she had lodged a
complaint against the latter and that the issues that may be raised in the July 22 hearing "can be tackled during the
hearing of her case" or at the preliminary conference set for 5 and 8 of August 2003. She likewise opted to withhold
answering the Second Show-cause Notice. On 25 July 2003, Velasco received a "Third Show-cause Notice," together with
copies of the affidavits of two Branch Managers of Mercury Drug, asking her for her comment within 48 hours. Finally, on
29 July 2003, PFIZER informed Velasco of its "Management Decision" terminating her employment.
On 5 December 2003, the Labor Arbiter rendered its decision declaring the dismissal of Velasco illegal, ordering her
reinstatement with backwages and further awarding moral and exemplary damages with attorneys fees. On appeal, the
NLRC affirmed the same but deleted the award of moral and exemplary damages. 5
The dispositive portion of the Labor Arbiters Decision dated December 5, 2003 is as follows:
WHEREFORE, judgment is hereby rendered declaring that complainant was illegally dismissed. Respondents are ordered
to reinstate the complainant to her former position without loss of seniority rights and with full backwages and to pay the
complainant the following:
1.
2.
Full
backwages
(basic
salary,
as of December 5, 2003 in the amount of
13th
Month
in the amount of
Pay,
Midyear,
company
benefits,
all
allowances
P572,780.00);
Christmas
and
performance
bonuses
P105,300.00;
3.
Moral damages of
P50,000.00;
4.
Exemplary damages in the amount of
P30,000.00;
5.
Attorneys
amount of
Fees
of
10%
of
the
award
excluding
damages
in
the
P67,808.00.
54
P758,080.00.6
The total award is in the amount of
PFIZER appealed to the National Labor Relations Commission (NLRC) but its appeal was denied via the NLRC
Decision7 dated October 20, 2004, which affirmed the Labor Arbiters ruling but deleted the award for damages, the
dispositive portion of which is as follows:
WHEREFORE, premises considered, the instant appeal and the motion praying for the deposit in escrow of complainants
payroll reinstatement are hereby denied and the Decision of the Labor Arbiter is affirmed with the modification that the
award of moral and exemplary damages is deleted and attorneys fees shall be based on the award of 13th month pay
pursuant to Article III of the Labor Code.8
PFIZER moved for reconsideration but its motion was denied for lack of merit in a NLRC Resolution 9 dated December 14,
2004.
Undaunted, PFIZER filed with the Court of Appeals a special civil action for the issuance of a writ of certiorariunder Rule
65 of the Rules of Court to annul and set aside the aforementioned NLRC issuances. In a Decision dated November 23,
2005, the Court of Appeals upheld the validity of respondents dismissal from employment, the dispositive portion of which
reads as follows:
WHEREFORE, the instant petition is GRANTED. The assailed Decision of the NLRC dated 20 October 2004 as well as its
Resolution of 14 December 2004 is hereby ANNULED and SET ASIDE. Having found the termination of Geraldine L.
Velascos employment in accordance with the two notice rule pursuant to the due process requirement and with just
cause, her complaint for illegal dismissal is hereby DISMISSED. 10
Respondent filed a Motion for Reconsideration which the Court of Appeals resolved in the assailed Resolution dated
October 23, 2006 wherein it affirmed the validity of respondents dismissal from employment but modified its earlier ruling
by directing PFIZER to pay respondent her wages from the date of the Labor Arbiters Decision dated December 5, 2003
up to the Court of Appeals Decision dated November 23, 2005, to wit:
IN VIEW WHEREOF, the dismissal of private respondent Geraldine Velasco is AFFIRMED, but petitioner PFIZER, INC. is
hereby ordered to pay her the wages to which she is entitled to from the time the reinstatement order was issued until
November 23, 2005, the date of promulgation of Our Decision. 11
Respondent filed with the Court a petition for review under Rule 45 of the Rules of Civil Procedure, which assailed the
Court of Appeals Decision dated November 23, 2005 and was docketed as G.R. No. 175122. Respondents petition,
questioning the Court of Appeals dismissal of her complaint, was denied by this Courts Second Division in a minute
Resolution12 dated December 5, 2007, the pertinent portion of which states:
Considering the allegations, issues and arguments adduced in the petition for review on certiorari, the Court resolves to
DENY the petition for failure to sufficiently show any reversible error in the assailed judgment to warrant the exercise of
this Courts discretionary appellate jurisdiction, and for raising substantially factual issues.
On the other hand, PFIZER filed the instant petition assailing the aforementioned Court of Appeals Resolutions and
offering for our resolution a single legal issue, to wit:
Whether or not the Court of Appeals committed a serious but reversible error when it ordered Pfizer to pay Velasco wages
from the date of the Labor Arbiters decision ordering her reinstatement until November 23, 2005, when the Court of
Appeals rendered its decision declaring Velascos dismissal valid. 13
The petition is without merit.
PFIZER argues that, contrary to the Court of Appeals pronouncement in its assailed Decision dated November 23, 2005,
the ruling in Roquero v. Philippine Airlines, Inc.14 is not applicable in the case at bar, particularly with regard to the nature
and consequences of an order of reinstatement, to wit:
55
The order of reinstatement is immediately executory. The unjustified refusal of the employer to reinstate a dismissed
employee entitles him to payment of his salaries effective from the time the employer failed to reinstate him despite the
issuance of a writ of execution. Unless there is a restraining order issued, it is ministerial upon the Labor Arbiter to
implement the order of reinstatement. In the case at bar, no restraining order was granted. Thus, it was mandatory on PAL
to actually reinstate Roquero or reinstate him in the payroll. Having failed to do so, PAL must pay Roquero the salary he is
entitled to, as if he was reinstated, from the time of the decision of the NLRC until the finality of the decision of the
Court.15 (Emphases supplied.)
It is PFIZERs contention in its Memorandum 16 that "there was no unjustified refusal on [its part] to reinstate [respondent]
Velasco during the pendency of the appeal," 17 thus, the pronouncement in Roquero cannot be made to govern this case.
During the pendency of the case with the Court of Appeals and prior to its November 23, 2005 Decision, PFIZER claimed
that it had already required respondent to report for work on July 1, 2005. However, according to PFIZER, it was
respondent who refused to return to work when she wrote PFIZER, through counsel, that she was opting to receive her
separation pay and to avail of PFIZERs early retirement program.
In PFIZERs view, it should no longer be required to pay wages considering that (1) it had already previously paid an
enormous sum to respondent under the writ of execution issued by the Labor Arbiter; (2) it was allegedly ready to
reinstate respondent as of July 1, 2005 but it was respondent who unjustifiably refused to report for work; (3) it would
purportedly be tantamount to allowing respondent to choose "payroll reinstatement" when by law it was the employer
which had the right to choose between actual and payroll reinstatement; (4) respondent should be deemed to have
"resigned" and therefore not entitled to additional backwages or separation pay; and (5) this Court should not
mechanically apply Roquero but rather should follow the doctrine in Genuino v. National Labor Relations
Commission18 which was supposedly "more in accord with the dictates of fairness and justice." 19
We do not agree.
At the outset, we note that PFIZERs previous payment to respondent of the amount of P1,963,855.00 (representing her
wages from December 5, 2003, or the date of the Labor Arbiter decision, until May 5, 2005) that was successfully
garnished under the Labor Arbiters Writ of Execution dated May 26, 2005 cannot be considered in its favor. Not only was
this sum legally due to respondent under prevailing jurisprudence but also this circumstance highlighted PFIZERs
unreasonable delay in complying with the reinstatement order of the Labor Arbiter. A perusal of the records, including
PFIZERs own submissions, confirmed that it only required respondent to report for work on July 1, 2005, as shown by its
Letter20 dated June 27, 2005, which is almost two years from the time the order of reinstatement was handed down in the
Labor Arbiters Decision dated December 5, 2003.
As far back as 1997 in the seminal case of Pioneer Texturizing Corporation v. National Labor Relations Commission,21 the
Court held that an award or order of reinstatement is immediately self-executory without the need for the issuance of a
writ of execution in accordance with the third paragraph of Article 223 22 of the Labor Code. In that case, we discussed in
length the rationale for that doctrine, to wit:
The provision of Article 223 is clear that an award [by the Labor Arbiter] for reinstatement shall be immediately executory
even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement . The
legislative intent is quite obvious, i.e., to make an award of reinstatement immediately enforceable, even pending appeal.
To require the application for and issuance of a writ of execution as prerequisites for the execution of a reinstatement
award would certainly betray and run counter to the very object and intent of Article 223, i.e., the immediate execution of a
reinstatement order. The reason is simple. An application for a writ of execution and its issuance could be delayed for
numerous reasons. A mere continuance or postponement of a scheduled hearing, for instance, or an inaction on the part
of the Labor Arbiter or the NLRC could easily delay the issuance of the writ thereby setting at naught the strict mandate
and noble purpose envisioned by Article 223. In other words, if the requirements of Article 224 [including the issuance of a
writ of execution] were to govern, as we so declared in Maranaw, then the executory nature of a reinstatement order or
award contemplated by Article 223 will be unduly circumscribed and rendered ineffectual. In enacting the law, the
legislature is presumed to have ordained a valid and sensible law, one which operates no further than may be necessary
to achieve its specific purpose. Statutes, as a rule, are to be construed in the light of the purpose to be achieved and the
evil sought to be prevented. x x x In introducing a new rule on the reinstatement aspect of a labor decision under Republic
Act No. 6715, Congress should not be considered to be indulging in mere semantic exercise. x x x 23 (Italics in the original;
emphasis and underscoring supplied.)
56
In the case at bar, PFIZER did not immediately admit respondent back to work which, according to the law, should have
been done as soon as an order or award of reinstatement is handed down by the Labor Arbiter without need for the
issuance of a writ of execution. Thus, respondent was entitled to the wages paid to her under the aforementioned writ of
execution. At most, PFIZERs payment of the same can only be deemed partial compliance/execution of the Court of
Appeals Resolution dated October 23, 2006 and would not bar respondent from being paid her wages from May 6, 2005
to November 23, 2005.
It would also seem that PFIZER waited for the resolution of its appeal to the NLRC and, only after it was ordered by the
Labor Arbiter to pay the amount of P1,963,855.00 representing respondents full backwages from December 5, 2003 up to
May 5, 2005, did PFIZER decide to require respondent to report back to work via the Letter dated June 27, 2005.
PFIZER makes much of respondents non-compliance with its return- to-work directive by downplaying the reasons
forwarded by respondent as less than sufficient to justify her purported refusal to be reinstated. In PFIZERs view, the
return-to-work order it sent to respondent was adequate to satisfy the jurisprudential requisites concerning the
reinstatement of an illegally dismissed employee.
It would be useful to reproduce here the text of PFIZERs Letter dated June 27, 2005:
Dear Ms. Velasco:
Please be informed that, pursuant to the resolutions dated 20 October 2004 and 14 December 2004 rendered by the
National Labor Relations Commission and the order dated 24 May 2005 issued by Executive Labor Arbiter Vito C. Bose,
you are required to report for work on 1 July 2005, at 9:00 a.m., at Pfizers main office at the 23rd Floor, Ayala LifeFGU
Center, 6811 Ayala Avenue, Makati City, Metro Manila.
Please report to the undersigned for a briefing on your work assignments and other responsibilities, including the
appropriate relocation benefits.
For your information and compliance.
Very truly yours,
(Sgd.)
Ma. Eden Grace Sagisi
Labor and Employee Relations Manager24
To reiterate, under Article 223 of the Labor Code, an employee entitled to reinstatement "shall either be admitted back to
work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the
employer, merely reinstated in the payroll."
It is established in jurisprudence that reinstatement means restoration to a state or condition from which one had been
removed or separated. The person reinstated assumes the position he had occupied prior to his dismissal. Reinstatement
presupposes that the previous position from which one had been removed still exists, or that there is an unfilled position
which is substantially equivalent or of similar nature as the one previously occupied by the employee. 25
Applying the foregoing principle to the case before us, it cannot be said that with PFIZERs June 27, 2005 Letter, in
belated fulfillment of the Labor Arbiters reinstatement order, it had shown a clear intent to reinstate respondent to her
former position under the same terms and conditions nor to a substantially equivalent position. To begin with, the returnto-work order PFIZER sent respondent is silent with regard to the position or the exact nature of employment that it
wanted respondent to take up as of July 1, 2005. Even if we assume that the job awaiting respondent in the new location
is of the same designation and pay category as what she had before, it is plain from the text of PFIZERs June 27, 2005
letter that such reinstatement was not "under the same terms and conditions" as her previous employment, considering
that PFIZER ordered respondent to report to its main office in Makati City while knowing fully well that respondents
previous job had her stationed in Baguio City (respondents place of residence) and it was still necessary for respondent
to be briefed regarding her work assignments and responsibilities, including her relocation benefits.
57
The Court is cognizant of the prerogative of management to transfer an employee from one office to another within the
business establishment, provided that there is no demotion in rank or diminution of his salary, benefits and other privileges
and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion
without sufficient cause.26 Likewise, the management prerogative to transfer personnel must be exercised without grave
abuse of discretion and putting to mind the basic elements of justice and fair play. There must be no showing that it is
unnecessary, inconvenient and prejudicial to the displaced employee. 27
The June 27, 2005 return-to-work directive implying that respondent was being relocated to PFIZERs Makati main office
would necessarily cause hardship to respondent, a married woman with a family to support residing in Baguio City.
However, PFIZER, as the employer, offered no reason or justification for the relocation such as the filling up of
respondents former position and the unavailability of substantially equivalent position in Baguio City. A transfer of work
assignment without any justification therefor, even if respondent would be presumably doing the same job with the same
pay, cannot be deemed faithful compliance with the reinstatement order. In other words, in this instance, there was no
real, bona fide reinstatement to speak of prior to the reversal by the Court of Appeals of the finding of illegal dismissal.
In view of PFIZERs failure to effect respondent's actual or payroll reinstatement, it is indubitable that the Roqueroruling is
applicable to the case at bar. The circumstance that respondent opted for separation pay in lieu of reinstatement as
manifested in her counsels Letter28 dated July 18, 2005 is of no moment. We do not see respondents letter as taking
away the option from management to effect actual or payroll reinstatement but, rather under the factual milieu of this case,
where the employer failed to categorically reinstate the employee to her former or equivalent position under the same
terms, respondent was not obliged to comply with PFIZERs ambivalent return-to-work order. To uphold PFIZERs view
that it was respondent who unjustifiably refused to work when PFIZER did not reinstate her to her former position, and
worse, required her to report for work under conditions prejudicial to her, is to open the doors to potential employer abuse.
Foreseeably, an employer may circumvent the immediately enforceable reinstatement order of the Labor Arbiter by
crafting return-to-work directives that are ambiguous or meant to be rejected by the employee and then disclaim liability
for backwages due to non-reinstatement by capitalizing on the employees purported refusal to work. In sum, the option of
the employer to effect actual or payroll reinstatement must be exercised in good faith.
Moreover, while the Court has upheld the employers right to choose between actually reinstating an employee or merely
reinstating him in the payroll, we have also in the past recognized that reinstatement might no longer be possible under
certain circumstances. In F.F. Marine Corporation v. National Labor Relations Commission, 29 we had the occasion to state:
It is well-settled that when a person is illegally dismissed, he is entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages. In the event, however, that reinstatement is no longer feasible, or if the
employee decides not be reinstated, the employer shall pay him separation pay in lieu of reinstatement. Such a rule is
likewise observed in the case of a strained employer-employee relationship or when the work or position formerly held by
the dismissed employee no longer exists. In sum, an illegally dismissed employee is entitled to: (1) either reinstatement if
viable or separation pay if reinstatement is no longer viable, and (2) backwages. 30 (Emphasis supplied.)
Similarly, we have previously held that an employees demand for separation pay may be indicative of strained relations
that may justify payment of separation pay in lieu of reinstatement. 31 This is not to say, however, that respondent is entitled
to separation pay in addition to backwages. We stress here that a finding of strained relations must nonetheless still be
supported by substantial evidence.32
In the case at bar, respondents decision to claim separation pay over reinstatement had no legal effect, not only because
there was no genuine compliance by the employer to the reinstatement order but also because the employer chose not to
act on said claim. If it was PFIZERs position that respondents act amounted to a "resignation" it should have informed
respondent that it was accepting her resignation and that in view thereof she was not entitled to separation pay. PFIZER
did not respond to respondents demand at all. As it was, PFIZERs failure to effect reinstatement and accept respondents
offer to terminate her employment relationship with the company meant that, prior to the Court of Appeals reversal in the
November 23, 2005 Decision, PFIZERs liability for backwages continued to accrue for the period not covered by the writ
of execution dated May 24, 2005 until November 23, 2005.
Lastly, PFIZER exhorts the Court to re-examine the application of Roquero with a view that a mechanical application of
the same would cause injustice since, in the present case, respondent was able to gain pecuniary benefit notwithstanding
the circumstance of reversal by the Court of Appeals of the rulings of the Labor Arbiter and the NLRC thereby allowing
58
respondent to profit from the dishonesty she committed against PFIZER which was the basis for her termination. In its
stead, PFIZER proposes that the Court apply the ruling in Genuino v. National Labor Relations Commission 33 which it
believes to be more in accord with the dictates of fairness and justice. In that case, we canceled the award of salaries
from the date of the decision of the Labor Arbiter awarding reinstatement in light of our subsequent ruling finding that the
dismissal is for a legal and valid ground, to wit:
Anent the directive of the NLRC in its September 3, 1994 Decision ordering Citibank "to pay the salaries due to the
complainant from the date it reinstated complainant in the payroll (computed at P60,000.00 a month, as found by the
Labor Arbiter) up to and until the date of this decision," the Court hereby cancels said award in view of its finding that the
dismissal of Genuino is for a legal and valid ground.
Ordinarily, the employer is required to reinstate the employee during the pendency of the appeal pursuant to Art. 223,
paragraph 3 of the Labor Code, which states:
xxxx
If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for dismissal is valid, then
the employer has the right to require the dismissed employee on payroll reinstatement to refund the salaries s/he received
while the case was pending appeal, or it can be deducted from the accrued benefits that the dismissed employee was
entitled to receive from his/her employer under existing laws, collective bargaining agreement provisions, and company
practices. However, if the employee was reinstated to work during the pendency of the appeal, then the employee is
entitled to the compensation received for actual services rendered without need of refund.
Considering that Genuino was not reinstated to work or placed on payroll reinstatement, and her dismissal is based on a
just cause, then she is not entitled to be paid the salaries stated in item no. 3 of the fallo of the September 3, 1994 NLRC
Decision.34 (Emphases supplied.)
Thus, PFIZER implores the Court to annul the award of backwages and separation pay as well as to require respondent
to refund the amount that she was able to collect by way of garnishment from PFIZER as her accrued salaries.
The contention cannot be given merit since this question has been settled by the Court en banc.
In the recent milestone case of Garcia v. Philippine Airlines, Inc.,35 the Court wrote finis to the stray posture
inGenuino requiring the dismissed employee placed on payroll reinstatement to refund the salaries in case a final decision
upholds the validity of the dismissal. In Garcia, we clarified the principle of reinstatement pending appeal due to the
emergence of differing rulings on the issue, to wit:
On this score, the Court's attention is drawn to seemingly divergent decisions concerning reinstatement pending appeal
or, particularly, the option of payroll reinstatement. On the one hand is the jurisprudential trend as expounded in a line of
cases including Air Philippines Corp. v. Zamora, while on the other is the recent case ofGenuino v. National Labor
Relations Commission. At the core of the seeming divergence is the application of paragraph 3 of Article 223 of the Labor
Code x x x.
xxxx
The view as maintained in a number of cases is that:
x x x [E]ven if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of
the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal
by the higher court. On the other hand, if the employee has been reinstated during the appeal period and such
reinstatement order is reversed with finality, the employee is not required to reimburse whatever salary he received for he
is entitled to such, more so if he actually rendered services during the period.(Emphasis in the original; italics and
underscoring supplied)
59
In other words, a dismissed employee whose case was favorably decided by the Labor Arbiter is entitled to receive wages
pending appeal upon reinstatement, which is immediately executory. Unless there is a restraining order, it is ministerial
upon the Labor Arbiter to implement the order of reinstatement and it is mandatory on the employer to comply therewith.
The opposite view is articulated in Genuino which states:
If the decision of the labor arbiter is later reversed on appeal upon the finding that the ground for dismissal is valid,
then the employer has the right to require the dismissed employee on payroll reinstatement to refund the salaries
[he] received while the case was pending appeal, or it can be deducted from the accrued benefits that the dismissed
employee was entitled to receive from [his] employer under existing laws, collective bargaining agreement provisions, and
company practices. However, if the employee was reinstated to work during the pendency of the appeal, then the
employee is entitled to the compensation received for actual services rendered without need of refund.
Considering that Genuino was not reinstated to work or placed on payroll reinstatement, and her dismissal is based on a
just cause, then she is not entitled to be paid the salaries stated in item no. 3 of the fallo of the September 3, 1994 NLRC
Decision. (Emphasis, italics and underscoring supplied)
It has thus been advanced that there is no point in releasing the wages to petitioners since their dismissal was found to be
valid, and to do so would constitute unjust enrichment.
Prior to Genuino, there had been no known similar case containing a dispositive portion where the employee was required
to refund the salaries received on payroll reinstatement. In fact, in a catena of cases, the Court did not order the refund of
salaries garnished or received by payroll-reinstated employees despite a subsequent reversal of the reinstatement order.
The dearth of authority supporting Genuino is not difficult to fathom for it would otherwise render inutile the rationale of
reinstatement pending appeal.
xxxx
x x x Then, by and pursuant to the same power (police power), the State may authorize an immediate implementation,
pending appeal, of a decision reinstating a dismissed or separated employee since that saving act is designed to stop,
although temporarily since the appeal may be decided in favor of the appellant, a continuing threat or danger to the
survival or even the life of the dismissed or separated employee and his family.36
Furthermore, in Garcia, the Court went on to discuss the illogical and unjust effects of the "refund doctrine" erroneously
espoused in Genuino:
Even outside the theoretical trappings of the discussion and into the mundane realities of human experience, the "refund
doctrine" easily demonstrates how a favorable decision by the Labor Arbiter could harm, more than help, a dismissed
employee. The employee, to make both ends meet, would necessarily have to use up the salaries received during the
pendency of the appeal, only to end up having to refund the sum in case of a final unfavorable decision. It is mirage of a
stop-gap leading the employee to a risky cliff of insolvency.1avvphi1
Advisably, the sum is better left unspent. It becomes more logical and practical for the employee to refuse payroll
reinstatement and simply find work elsewhere in the interim, if any is available. Notably, the option of payroll reinstatement
belongs to the employer, even if the employee is able and raring to return to work. Prior to Genuino, it is unthinkable for
one to refuse payroll reinstatement. In the face of the grim possibilities, the rise of concerned employees declining payroll
reinstatement is on the horizon.
Further, the Genuino ruling not only disregards the social justice principles behind the rule, but also institutes a scheme
unduly favorable to management. Under such scheme, the salaries dispensed pendente lite merely serve as a bond
posted in installment by the employer. For in the event of a reversal of the Labor Arbiter's decision ordering reinstatement,
the employer gets back the same amount without having to spend ordinarily for bond premiums. This circumvents, if not
directly contradicts, the proscription that the "posting of a bond [even a cash bond] by the employer shall not stay the
execution for reinstatement."
60
In playing down the stray posture in Genuino requiring the dismissed employee on payroll reinstatement to refund the
salaries in case a final decision upholds the validity of the dismissal, the Court realigns the proper course of the prevailing
doctrine on reinstatement pending appeal vis--vis the effect of a reversal on appeal.
xxxx
The Court reaffirms the prevailing principle that even if the order of reinstatement of the Labor Arbiter is reversed
on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee
during the period of appeal until reversal by the higher court. x x x.37 (Emphasis supplied.)
In sum, the Court reiterates the principle that reinstatement pending appeal necessitates that it must be immediately selfexecutory without need for a writ of execution during the pendency of the appeal, if the law is to serve its noble purpose,
and any attempt on the part of the employer to evade or delay its execution should not be allowed. Furthermore, we
likewise restate our ruling that an order for reinstatement entitles an employee to receive his accrued backwages from the
moment the reinstatement order was issued up to the date when the same was reversed by a higher court without fear of
refunding what he had received. It cannot be denied that, under our statutory and jurisprudential framework, respondent is
entitled to payment of her wages for the period after December 5, 2003 until the Court of Appeals Decision dated
November 23, 2005, notwithstanding the finding therein that her dismissal was legal and for just cause. Thus, the payment
of such wages cannot be deemed as unjust enrichment on respondents part.
WHEREFORE, the petition is DENIED and the assailed Resolution dated October 23, 2006 as well as the Resolution
dated April 10, 2007 both issued by the Court of Appeals in CA-G.R. SP No. 88987 are hereby AFFIRMED.
SO ORDERED.
CASE 10
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 178903
May 30, 2011
JULIET G. APACIBLE, Petitioner,

vs.
MULTIMED INDUSTRIES INCORPORATED and THE BOARD OF DIRECTORS OF MULTIMED INDUSTRIES, The
President MR. JOSELITO TAMBUNTING, Managers MARLENE L. OROZCO, VERONICA C. TIMOG, OLGA F.
MARINO and MA. LUZ B. YAN, Respondents.
61
DECISION
CARPIO MORALES, J.:
Petitioner Juliet Apacible was hired sometime in 1994 by respondent Multimed Industries Incorporated (the company) as
Hospital Sales Representative. She rose from the ranks to become Assistant Area Sales Manager for Cebu Operations,
the position she held at the time she was separated from the service in 2003.
On August 4, 2003, petitioner was informed by respondent Marlene Orozco (Marlene), her immediate superior, that she
would be transferred to the companys main office in Pasig City on account of the ongoing reorganization. As the transfer
would entail major adjustments, petitioner requested that her transfer be made effective in October or November 2003 and
that she be given time to discuss it with her husband and daughter.
A week later, however, or on August 11, 2003, petitioner was informed that her transfer would be effective August 18,
2003. On even date, she was placed under investigation for the delayed released of BCRs (cash budget for customer
representation in sealed envelopes which are given to loyal clients) which she received for distribution earlier in July 2003.
In her written explanation,1 petitioner, admitting that the delay constituted a violation of company policies, averred that she
forgot to endorse the BCRs because she was thinking about her impending transfer; and that she did not misappropriate
the money as she had already released the BCRs.
Finding that the delay in releasing the BCRs amounted to loss of trust and confidence, petitioner was given the option to
resign. She thereupon reported to the head office in Pasig City where she met on August 23, 2003 with Marlene and
respondent Ma. Luz B. Yan (referred to as Jig Blanco Yan [Jig] in the Decision and letters), respondent companys Human
Resources Manager.
In the meeting with Marlene and Jig, petitioner claims that Jig gave her four options: resignation, termination, availment of
an early retirement package worth P40,000, or transfer to Pasig City. Without availing of any option, petitioner took a leave
of absence on August 28, 29 and September 1, 2003.
On September 1, 2003, petitioner, through her counsel Atty. Leo Montenegro, sent letters 2 to respondent Olga Mario
(Olga) and Jig denouncing their August 23 meeting as "illegal," "insensitive," "inhumane" and petitioners dismissals a
"unilateral arrangement and ruthless display of power." In the same letter, Atty. Montenegro demanded payment of
separation pay and stated that he had advised petitioner to remain in her current position in Cebu.
On September 3, 2003, respondent company sent petitioner a memorandum-directive 3 for her to immediately report to the
head office in Pasig City and to return the company vehicle assigned to her to the Cebu Office within 24 hours. Petitioner
did not heed the directive, however. She instead filed an application for sick leave until September 11, 2003, and another
until September 27, 2003.
By Memorandum4 of October 1, 2003, respondent reiterated its directive to petitioner, but her counsel Atty. Montenegro
sent another letter to Jig, faulting her for pressuring petitioner to resign and reiterating the demand for separation pay.
Again Atty. Montenegro stated that he had advised petitioner to remain in Cebu.
On October 6, 2003, petitioner requested that she be given her daily work assignment in Cebu, which request was later to
be denied by Olga by letter 5 dated October 8, 2003. On October 7, 2003, petitioner was given a show cause notice 6 for
her to explain in writing why she should not be sanctioned for insubordination for failure to comply with the transfer order.
Again, petitioner, through Atty. Montenegro, wrote 7 respondent company, maintaining that she was "not transferring to
Manila" and that if the company "want[ed] petitioner out of the company," separation pay must be paid.
By letter8 of October 14, 2003 to Atty. Montenegro, respondent company denied having pressured petitioner as it stressed
that the transfer was based on business demands and did not entail a demotion in rank nor diminution of benefits.
On November 4, 2002, respondent company sent petitioner a notice of termination 9 effective November 7, 2003 for
insubordination, prompting petitioner to file a complaint 10 for illegal dismissal, non-payment of overtime pay, 13th month
pay, service incentive leave pay, separation pay, damages and attorneys fees before the Labor Arbiter.
62
By Decision11 of March 22, 2005, the Labor Arbiter dismissed petitioners complaint, ruling that she was dismissed for just
cause, i.e., fraud or loss or trust and confidence under Article 282 (a) and (c) of the Labor Code.
On appeal, the National Labor Relations Commission (NLRC), by Decision 12 of March 22, 2005, affirmed the Labor
Arbiters decision but on a different ground petitioners refusal to obey the transfer orders which amounted to
insubordination. The NLRC, however, granted petitioner separation pay by way of financial assistance amounting
to P282,370, 13th month pay of P23,530.833, and P5,430.1925 representing salary for five unpaid days in November.
In granting separation pay, the NLRC noted that petitioners refusal to comply with the transfer orders was upon advice of
her counsel, hence, there was a "modicum of good faith" on her part. Respondent company moved for partial
reconsideration of this ruling which petitioner, in her comment, opposed and even sought the award of moral and
exemplary damages.
By Resolution13 of February 22, 2006, the NLRC denied respondent companys motion, and glossed over petitioners
comment as it was not under oath.
By Decision14 of February 27, 2007, the Court of Appeals granted respondent companys appeal by modifying the NLRC
Decision. It ruled that petitioner was not entitled to separation pay because, contrary to the NLRCs finding, she "lacked
good faith." It noted that petitioner, from the start, knew and accepted the company policy on transfers whenever so
required, and could not thus refuse "another valid reassignment by treating it as an imposition and burden."
The appellate court further held that as an Assistant Area Sales Manager, petitioner was expected to "show more exacting
work ethics, a higher degree of loyalty and respect as opposed to her subordinate employees," yet she "openly and
continually defied" the transfer orders; and that her belligerent attitude became even more pronounced when her counsel
sent several insulting and threatening letters to respondent company and its officers.
The appellate court went on to find that petitioners acts were "highly insolent, impertinent and lacking in good faith,"
hence, not entitled to separation pay by way of financial assistance.
Petitioners motion for reconsideration having been denied by Resolution 15 of June 28, 2007, she instituted the present
petition in which she prays for the restoration of the award of the separation pay by way of financial assistance.
The only issue thus proffered is whether petitioner is entitled separation pay by way of financial assistance.
As found by the Labor Arbiter, the NLRC and the appellate court, petitioner was justly dismissed from employment. The
NLRC awarded separation pay as financial assistance, however, noting that petitioners obstinacy was upon the advice of
her counsel, Atty. Montenegro and, therefore, there was a modicum of good faith on her part. The appellate court
demurred to this ruling, noting that petitioners actuations reeked of bad faith, hence, undeserving of separation pay.
The petition fails.
Reno Foods, Inc. v. Nagkakaisang Lakas ng Manggagawa (NLM))-Katipunan 16 explains the propriety of granting
separation pay in termination cases in this wise:
The law is clear. Separation pay is only warranted when the cause for termination is not attributable to the employees
fault, such as those provided in Articles 283 and 284 of the Labor Code, as well as in cases of illegal dismissal in which
reinstatement is no longer feasible. It is not allowed when an employee is dismissed for just cause, such as serious
misconduct.
xxxx
It is true that there have been instances when the Court awarded financial assistance to employees who were terminated
for just causes, on grounds of equity and social justice. The same, however, has been curbed and rationalized in
Philippine Long Distance Telephone Company v. National Labor Relations Commission. In that case, we recognized the
harsh realities faced by employees that forced them, despite their good intentions, to violate company policies, for which
63
the employer can rightly terminate their employment. For these instances, the award of financial assistance was allowed.
But, in clear and unmistakable language, we also held that the award of financial assistance shall not be given to validly
terminated employees, whose offenses are iniquitous or reflective of some depravity in their moral character . When the
employee commits an act of dishonesty, depravity, oriniquity, the grant of financial assistance is misplaced compassion. It
is tantamount not only to condoning a patently illegal or dishonest act, but an endorsement thereof. It will be an insult to all
the laborers who despite their economic difficulties, strive to maintain good values and moral conduct.
In fact, in the recent case of Toyota Motors Philippines, Corp. Workers Association (TMPCWA) v. National Labor Relations
Commission, we ruled that separation pay shall not be granted to all employees who are dismissed on any of the four
grounds provided in Article 282 of the Labor Code. Such ruling was reiterated and further explained in Central Philippines
Bandag Retreaders, Inc. v. Diasnes:
To reiterate our ruling in Toyota, labor adjudicatory officials and the CA must demur the award of separation pay based on
social justice when an employees dismissal is based on serious misconduct or wilful disobedience; gross and habitual
neglect of duty; fraud or wilful breach of trust; or commission of a crime against the person of the employer or his
immediate familygrounds under Art. 282 of the Labor Code that sanction dismissals of employees. They must be most
judicious and circumspect in awarding separation pay or financial assistance as the constitutional policy to provide full
protection to labor is not meant to be an instrument to oppress the employers. The commitment of the Court to the cause
of labor should not embarrass us from sustaining the employers when they are right, as assistance to the undeserving
and those who are unworthy of the liberality of the law. (italics in the original, emphasis and underscoring supplied)
Petitioner was, it bears reiteration, dismissed for wilfully disobeying the lawful order of her employer to transfer from Cebu
to Pasig City. As correctly noted by the appellate court, petitioner knew and accepted respondent companys policy on
transfers when she was hired and was in fact even transferred many times from one area of operations to another
Bacolod City, Iloilo City and Cebu.
Bascon v. Court of Appeals17 outlines the elements of gross insubordination as follows:
As regards the appellate courts finding that petitioners were justly terminated for gross insubordination or wilful
disobedience, Article 282 of the Labor Code provides in part:
An employer may terminate an employment for any of the following causes:
(a) Serious misconduct or wilful disobedience by the employee of the lawful orders of his employer or representative in
connection with his work.
However, wilful disobedience of the employers lawful orders, as a just cause for dismissal of an employee, envisages the
concurrence of at least two requisites: (1) the employees assailed conduct must have been wilful, that is, characterized by
a wrongful and perverse attitude; and (2) the order violated must have been reasonable, lawful, made known to the
employee and must pertain to the duties which he had been engaged to discharge. (emphasis and underscoring supplied)
Clearly, petitioners adamant refusal to transfer, coupled with her failure to heed the order for her return the company
vehicle assigned to her and, more importantly, allowing her counsel to write letters couched in harsh language to her
superiors unquestionably show that she was guilty of insubordination, hence, not entitled to the award of separation pay.
WHEREFORE, the petition is denied and the Decision of the Court of Appeals dated February 27, 2007 and Resolution of
June 28, 2007 are AFFIRMED.
CASE 11
SUPREME COURT
Manila
THIRD DIVISION
64
G.R. No. 189314
June 15, 2011
MIGUEL DELA PENA BARAIRO, Petitioner,

vs.
OFFICE OF THE PRESIDENT and MST MARINE SERVICES (PHILS.), INC. Respondent.
DECISION
CARPIO MORALES, J.:
Miguel Barairo (petitioner) was hired 1 on June 29, 2004 by respondent MST Marine Services (Phils.) Inc., (MST) for its
principal, TSM International, Ltd., as Chief Mate of the vessel Maritina, for a contract period of six months. He boarded the
vessel and discharged his duties on July 23, 2004, but was relieved 2 on August 28, 2004 ostensibly for transfer to another
vessel, Solar. Petitioner thus disembarked in Manila on August 29, 2004.
Petitioner was later to claim that he was not paid the promised "stand-by fee" in lieu of salary that he was to receive while
awaiting transfer to another vessel as in fact the transfer never materialized.
On October 20, 2004, petitioner signed a new Contract of Employment 3 for a six-month deployment as Chief Mate in a
newly-built Japanese vessel, M/T Haruna. He was paid a one-month "standby fee" in connection with the Maritina
contract.
Petitioner boarded the M/T Haruna on October 31, 2004 but he disembarked a week later as MST claimed that his
boarding of M/T Haruna was a "sea trial" which, MST maintains, was priorly made known to him on a "stand-by" fee. MST
soon informed petitioner that he would be redeployed to the M/T Haruna on November 30, 2004, but petitioner refused,
prompting MST to file a complaint4 for breach of contract against him before the Philippine Overseas Employment
Administration (POEA).
Petitioner claimed, however, that he was placed on "forced vacation" when he was made to disembark from the M/T
Haruna, and that not wanting to experience a repetition of the previous "termination" of his employment aboard the
Maritina, he refused to be redeployed to the M/T Haruna.
By Order5 of April 5, 2006, then POEA Administrator Rosalinda D. Baldoz penalized petitioner with one year suspension
from overseas deployment upon a finding that his refusal to complete his contract aboard the M/T Haruna constituted a
breach thereof.
On appeal by petitioner, the Secretary of Labor, by Order 6 of September 22, 2006, noting that it was petitioners first
offense, modified the POEA Order by shortening the period of suspension from one year to six months.
The Office of the President (OP), by Decision 7 of November 26, 2007, dismissed petitioners appeal for lack of jurisdiction,
citing National Federation of Labor v. Laguesma.8
The OP held that appeals to it in labor cases, except those involving national interest, have been eliminated. Petitioners
motion for partial reconsideration was denied by Resolution 9 of June 26, 2009, hence, the present petition.
Following settled jurisprudence, the proper remedy to question the decisions or orders of the Secretary of Labor is via
Petition for Certiorari under Rule 65, not via an appeal to the OP. For appeals to the OP in labor cases have indeed been
eliminated, except those involving national interest over which the President may assume jurisdiction. The rationale
behind this development is mirrored in the OPs Resolution of June 26, 2009 the pertinent portion of which reads:
. . . [T] he assailed DOLEs Orders were both issued by Undersecretary Danilo P. Cruz under the authority of theDOLE
Secretary who is the alter ego of the President. Under the "Doctrine of Qualified Political Agency," a corollary rule to the
control powers of the President, all executive and administrative organizations are adjuncts of the Executive Department,
the heads of the various executive departments are assistants and agents of the Chief Executive, and, except in cases
where the Chief Executive is required by Constitution or law to act in person or the exigencies of the situation demand that
65
he act personally, the multifarious executive and administrative functions of the Chief Executive are performed by and
through the executive departments, and the acts of the Secretaries of such departments, performed and promulgated in
the regular course of business are, unless disapproved or reprobated by the Chief Executive presumptively the acts of the
Chief Executive.10 (emphasis and underscoring supplied)
It cannot be gainsaid that petitioners case does not involve national interest.
Petitioners appeal of the Secretary of Labors Decision to the Office of the President did not toll the running of the period,
hence, the assailed Decisions of the Secretary of Labor are deemed to have attained finality.
Although appeal is an essential part of our judicial process, it has been held, time and again, that the right thereto is not a
natural right or a part of due process but is merely a statutory privilege. Thus, the perfection of an appeal in the manner
and within the period prescribed by law is not only mandatory but also jurisdictional and failure of a party to conform to the
rules regarding appeal will render the judgment final and executory. Once a decision attains finality, it becomes the law of
the case irrespective of whether the decision is erroneous or not and no court - not even the Supreme Court - has the
power to revise, review, change or alter the same. The basic rule of finality of judgment is grounded on the fundamental
principle of public policy and sound practice that, at the risk of occasional error, the judgment of courts and the award of
quasi-judicial agencies must become final at some definite date fixed by law. 11 (underscoring in the original, emphasis
supplied)1avvphi1
At all events, on the merits, the petition just the same fails.
As found by the POEA Administrator and the Secretary of Labor, through Undersecretary Danilo P. Cruz, petitioners
refusal to board the M/T Haruna on November 30, 2004 constituted unjustified breach of his contract of employment under
Section 1 (A-2) Rule II, Part VI [sic] of the POEA Seabased Rules and Regulations. 12 That petitioner believed that
respondent company violated his rights when the period of his earlier Maritina contract was not followed and his "stand-by
fees" were not fully paid did not justify his refusal to abide by the valid and existing Haruna contract requiring him to serve
aboard M/T Haruna. For, as noted in the assailed DOLE Order, "if petitioners rights has been violated as he claims, he
has various remedies under the contract which he did not avail of."
Parenthetically, the Undersecretary of Labor declared that "the real reason [petitioner] refused to re-join Haruna on
November 30, 2004, is that he left the Philippines on November 29, 2004 to join MT Adriatiki, a vessel of another manning
agency," which declaration petitioner has not refuted.
WHEREFORE, the petition is DENIED.
SO ORDERED.
CASE 12
66

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 183122
June 15, 2011
GENERAL
MILLING
CORPORATION-INDEPENDENT
vs.
GENERAL MILLING CORPORATION, Respondent.
LABOR
UNION
(GMC-ILU), Petitioner,
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 183889
GENERAL
MILLING
CORPORATION, Petitioner,
vs.
GENERAL MILLING CORPORATION-INDEPENDENT LABOR UNION (GMC-ILU), ET. AL, Respondents.
DECISION
PEREZ, J.:
Assailed in these petitions for review on certiorari filed pursuant to Rule 45 of the 1997 Rules of Civil Procedure are the
Court of Appeals(CA) resolution of the separate petitions for certiorari questioning the 20 July 2006 Decision 1 rendered
and the 23 August 2006 Resolution 2 issued by the Fourth Division of the National Labor Relations Commission (NLRC),
Cebu City, in NLRC Case No. V-000632-2005. In G.R. No. 183122, petitioner General Milling Corporation-Independent
Labor Union (the Union) seeks the reversal of the 10 October 2007 Decision rendered by the Special Twentieth Division of
the CA in CA-G.R. CEB-SP No. 02226,3 the dispositive portion of which states:
WHEREFORE, all the foregoing premises considered, the instant Petition is hereby PARTIALLY GRANTED.
The July 20, 2006 Decision of respondent NLRC in NLRC Case No. V-000632-2005 is hereby AFFIRMED insofar as it
affirmed the October 27, 2005 Order of Executive Labor Arbiter Ortiz in RAB Case No. VII-06-0475-1992 with the
modification of: a) excluding the vacation leave salary rate differentials, sick leave salary rate differentials, b) excluding
employees who have executed quitclaims which are hereby declared valid, and c) deducting salary increases and other
employment benefits voluntarily given by respondent GMC in the computation of benefits.
Accordingly, the instant case is hereby REFERRED to the GRIEVANCE MACHINERY under the imposed CBA for the
recomputation of benefits claimed by petitioner GMC-ILU under the said imposed CBA taking into consideration the
guidelines laid down by the Court in this Decision as well as the validity of the subject quitclaims hereinbefore discussed.
SO ORDERED.4
In G.R. No. 183889, petitioner General Milling Corporation (GMC) prays for the setting aside of the 16 November 2007
Decision rendered by the Eighteenth Division of the CA in CA-G.R. CEB-SP No. 02232, 5 the decretal portion of which
states:
WHEREFORE, the Decision dated July 20, 2006 and the Resolution dated August 23, 2006 of public respondent NLRC
are hereby AFFIRMED IN TOTO and the instant petition is DISMISSED.
SO ORDERED.6
The Facts
67
On 28 April 1989, GMC and the Union entered into a collective bargaining agreement (CBA) which provided, among other
terms, the latters representation of the collective bargaining unit for a three-year term made to retroact to 1 December
1988. On 29 November 1991 or one day before the expiration of the subject CBA, the Union sent a draft CBA proposal to
GMC, with a request for counter-proposals from the latter, for the purpose of renegotiating the existing CBA between the
parties. In view of GMCs failure to comply with said request, the Union commenced the complaint for unfair labor practice
which, under docket of RAB Case No. VII-06-0475-92, was dismissed for lack of merit in a decision dated 21 December
1993 issued by the Regional Arbitration Branch-VII (RAB-VII) of the National Labor Relations Commission (NLRC). 7 On
appeal, however, said dismissal was reversed and set aside in the 30 January 1998 decision rendered by the Fourth
Division of the NLRC in NLRC Case No. V-0112-94,8 the dispositive portion of which states:
WHEREFORE, premises considered, the instant appeal is hereby GRANTED. The Decision dated December 21, 1993 is
hereby VACATED and SET ASIDE and a new one issued ordering the imposition upon the respondent company of the
complainant union[s] draft CBA proposal for the remaining two years duration of the original CBA which is from December
1, 1991 to November 30, 1993; and for the respondent to pay attorneys fees.
SO ORDERED.9
With the reconsideration and setting aside of the foregoing decision in the NLRCs resolution dated 6 October 1998, 10 the
Union filed the petitions for certiorari docketed before the CA as CA-G.R. SP Nos. 50383 and 51763. In a decision dated
19 July 2000, the then Fourteenth Division of the CA reversed and set aside the NLRCs 6 October 1998 resolution and
reinstated the aforesaid 30 January 1998 decision, except with respect to the undetermined award of attorneys fees
which was deleted for lack of statement of the basis therefor in the assailed decision. 11 Aggrieved by the CAs 26 October
2000 resolution denying its motion for reconsideration, GMC elevated the case to this Court via the petition for review on
certiorari docketed before this Court as G.R. No. 146728. In a decision dated 11 February 2004 rendered by the Courts
then Second Division, the CAs 30 January 1998 decision and 26 October 2000 resolution were affirmed, 12 upon the
following findings and conclusions, to wit:
GMCs failure to make a timely reply to the proposals presented by the union is indicative of its utter lack of interest in
bargaining with the union. Its excuse that it felt the union no longer represented the worker, was mainly dilatory as it
turned out to be utterly baseless.
We hold that GMCs refusal to make a counter proposal to the unions proposal for CBA negotiation is an indication of its
bad faith. Where the employer did not even bother to submit an answer to the bargaining proposals of the union, there is a
clear evasion of the duty to bargain collectively.
Failing to comply with the mandatory obligation to submit a reply to the unions proposals, GMC violated its duty to bargain
collectively, making it liable for unfair labor practice. Perforce, the Court of Appeals did not commit grave abuse of
discretion amounting to lack or excess of jurisdiction in finding that GMC is, under the circumstances, guilty of unfair labor
practice.
xxxx
x x x (I)t would be unfair to the union and its members if the terms and conditions contained in the old CBA would continue
to be imposed on GMCs employees for the remaining two (2) years of the CBAs duration. We are not inclined to gratify
GMC with an extended term of the old CBA after it resorted to delaying tactics to prevent negotiations. Since it was GMC
which violated the duty to bargain collectively, based on Kiok Loy and Divine World University of Tacloban, it had lost its
statutory right to negotiate or renegotiate the terms and conditions of the draft CBA proposed by the union.
xxxx
Under ordinary circumstances, it is not obligatory upon either side of a labor controversy to precipitately accept or agree to
the proposals of the other. But an erring party should not be allowed with impunity to schemes feigning negotiations by
going through empty gestures. Thus, by imposing on GMC the provisions of the draft CBA proposed by the union, in our
view, the interests of equity and fair play were properly served and both the parties regained equal footing, which was lost
when GMC thwarted the negotiations for new economic terms of the CBA. 13
68
With the ensuing finality of the foregoing decision, the Union filed a motion for issuance of a writ of execution dated 21
March 2005, to enforce the claims of the covered employees which it computed in the sum of P433,786,786.36 and to
require GMC to produce said employees time cards for the purpose of computing their overtime pay, night shift
differentials and labor standard benefits for work rendered on rest days, legal holidays and special holidays. 14 On 18 April
2005, however, GMC opposed said motion on the ground, among other matters, that the bargaining unit no longer exist in
view of the resignation, retrenchment, retirement and separation from service of workers who have additionally executed
waivers and quitclaims acknowledging full settlement of their claims; that the covered employees have already received
salary increases and benefits for the period 1991 to 1993; and, that aside from the aforesaid supervening events which
precluded the enforcement thereof, the decision rendered in the case simply called for the execution of a CBA
incorporating the Unions proposal, not the outright computation of benefits thereunder. 15
In a "Submission" dated 27 May 2005, GMC further manifested that the Union membership in the bargaining unit did not
exceed 286 and that following employees should be excluded from the coverage of the decision sought to be enforced:
(a) 47 employees who were hired after 1992; (b) 234 employees who had been separated from the service; (c) 37
employees who, as daily paid rank and file employees, were represented by another union and covered by a different
CBA; and, (d) 41 workers holding managerial/supervisory/confidential positions. 16 In its comment to the foregoing
"Submission", however, the Union argued that the benefits derived from its proposed CBA extended to both union
members and non-members; that the newly hired employees were entitled to the benefits accruing after their employment
by GMC; that the employees who had, in the meantime, been separated from service could not have validly waived the
benefits which were only determined with finality in the 11 February 2004 decision rendered in G.R. No. 146728; that the
CBA benefits can be extended the daily paid employees upon their re-classification as monthly paid employees as well as
to GMCs managerial and supervisory employees, prior to their promotion; and, that the imposition of its CBA proposals
necessarily calls for the computation of the benefits therein provided. 17
Acting on the memoranda the parties filed in support of their respective positions, 18 Executive Labor Arbiter Violeta OrtizBantug issued the 27 October 2005 order, limiting the computation of the benefits of the Unions CBA proposal to the
remaining two years of the duration of the original CBA or from 1 December 1991 up to 30 November 1993. The
computation covered the 436 employees included in the Unions list, less the following: (a) 77 employees who were hired
or regularized after 30 November 1993; (b) 36 daily paid rank and file employees who were covered by a separate CBA;
(c) 41 managerial/supervisory employees; and (d) 1 employee for whom no salary-rate information was submitted in the
premises.19 As a consequence, said Executive Labor Arbiter disposed of the aforesaid pending motion and incidents in the
following wise:
Based on all the foregoing, computations have been made, details of which are prepared and reflected in separate pages
but which still form part of this Order. By way of summary, the grand total consists of the following:
Salary Increase Differentials
P17,575,000.00
Rest Day
4,320,148.50
Vacation Leave Differentials
920,013.42
Sick Leave Differentials
920,013.42
School Opening Bonus
5,094,044.69
13th Month Pay Differentials
1,468,999.98
Christmas Bonus
4,560,816.78
Signing Bonus
1,310,000.00
Total Money Claims
P36,169,036.79
69
Sacks of Rice
6,372
Issue the appropriate writ of execution based on the foregoing computations.

SO ORDERED.20
Aggrieved, the Union filed a partial appeal dated 2 November 2005, on the ground that the Executive Labor Arbiter
abused her discretion in: (a) confining the computation of the benefits from 1 December 1991 to 30 November 1993 in
favor of only 281 employees out of the 436 included in its list; (b) computing only 10 out of the 15 benefits provided under
its CBA proposal; and (c) failing to direct the GMC to produce the employees time cards and other pertinent documents
essential for the computation of the benefits due in the premises. 21 In turn, GMC filed its 17 November 2005 "Objections"
to the aforesaid 22 October 2005 order, arguing that the Executive Labor Arbiter not only varied the dispositive portion of
the NLRC decision dated 30 January 1998 but also ignored the quitclaims executed and the benefits actually paid in the
premises.22 Reiterating the foregoing arguments in its 16 May 2006 opposition to the Unions partial appeal, GMC further
maintained that its not being duly heard on the computation of the award in the subject 27 October 2005 order rendered
the Unions partial appeal premature; and, that its CBA with the Union had expired on 30 November 1993, with the latter
exerting no effort at all for its renewal. 23
On 20 July 2006, the NLRC rendered a decision in NLRC Case No. V-000632-2005, affirming the aforesaid 27 October
2005 order of execution. Finding that the duty to maintain the status quo and to continue in full force and effect the terms
of the existing agreement under Article 253 of the Labor Code of the Philippines applies only when the parties agreed to
the terms and conditions of the CBA, the NLRC upheld the Executive Labor Arbiters computation on the ground, among
others, that the decision sought to be enforced covered only the remaining two years of the duration of the original CBA,
i.e., from 1 December 1991 to 30 November 1993; that like GMCs supposed grant of additional benefits during the
remaining term of the original CBA, the Unions claims for payment of vacation leave salary differentials, sick leave salary
rate differentials, dislocation allowance, separation pay for voluntary resignation and separation pay salary rate
differentials were not sufficiently established; that required by law to preserve its records for a period of five years, GMC
cannot possibly be expected to preserve employees records for the period 1 December 1991 to 30 November 1993; and,
that the claimant has the burden of proving entitlement to holiday pay, premium for holiday and rest day as well night shift
differentials. Giving short shrift to GMCs objections as aforesaid, the NLRC likewise ruled that computation of the
monetary award was necessary for the enforcement of this Courts 11 February 2004 decision and avoidance of
multiplicity of suits.24
Dissatisfied with the NLRCs 23 August 2006 denial of their motions for reconsideration of the foregoing decision, 25 GMC
and the Union filed separate Rule 65 petitions for certiorari before the CA. Docketed as CA-G.R. CEB-SP No. 02226
before the CAs Special Twentieth Division, the Unions petition was partially granted in the 10 October 2007 decision
rendered in the case,26 upon the finding that the parties old CBA was superseded by the imposed CBA which provided a
term of five years from 1 December 1991 and remained in force until a new CBA is concluded between the parties.
Brushing aside the Executive Labor Arbiters computation of the benefits as "too sweeping" and "inaccurate", the CA ruled
that: (a) employees hired after the effectivity of the imposed CBA are entitled to its benefits on their first day of work; (b)
daily paid employees are entitled to said benefits from the first day they became regular monthly paid employees; (c)
managerial and supervisory employees are entitled to the same benefits until their promotion as such; (d) employees for
whom no information as to salary rate were submitted are entitled to the CBA benefits upon submission of proof in respect
thereto; and, (e) employees who signed Deeds of waiver, release and quitclaim are no longer entitled to said benefits. 27
Rejecting the argument that the NLRC erred in upholding the Executive Labor Arbiters computation of only 10 out of the
15 benefits provided under the imposed CBA, the CA went on to take appropriate note of the fact that no proof was
submitted by the Union to justify the grant of said benefits. While ruling that the imposed CBA had the same force and
effect as a negotiated CBA, the CA, however, faulted the Union for its "hasty" and "premature" filing of its motion for
issuance of a writ of execution, instead of first demanding the enforcement of the imposed CBA from GMC and, failing the
same, referring the matter to the grievance machinery or voluntary arbitration provided under the imposed CBA, in
accordance with Articles 260 and 261 of the Labor Code. Acknowledging the difficulty of computing the benefits
demanded by the Union in the absence of evidence upon which to base the same, the CA referred the case to the
Grievance Machinery under the imposed CBA and directed the exclusion of the following items from said computation: (a)
the Unions claims for vacation leave salary rate differentials and sick leave salary rate differentials; (b) the benefits in
favor of the employees who have already executed quitclaims in favor of GMC; and (c) the salary increases and other
70
employment benefits GMC had, in the meantime, extended its employees. 28 Discontented with the CAs 14 May 2008
resolution denying its motion for reconsideration of the foregoing decision, 29 the Union filed its Rule 45 petition currently
docketed before this Court as G.R. No. 183122.30
On the other hand, GMCs petition for certiorari assailing the NLRCs 20 July 2006 decision was docketed as CA-G.R. SP
No. CEB-SP No. 02232 before the CAs Eighteenth Division 31 which subsequently rendered the decision dated on 16
November 2007, dismissing the same for lack of merit. Finding that both parties were given an opportunity to present their
respective positions during the pre-execution conference conducted a quo, the CA ruled that the Executive Labor Arbiters
27 October 2005 order had attained finality insofar as GMC is concerned, in view of its failure to perfect an appeal
therefrom by paying the required appeal fee and posting the cash or surety bond in an amount equivalent to the benefits
computed. In addition to rejecting GMCs argument that the quitclaims executed by its employees were in the nature of a
supervening event which rendered execution proceedings impossible, the CA held that said quitclaims did not extend to
the benefits provided under the imposed CBA and that the additional benefits supposedly received by GMCs employees
should not be deducted therefrom, for lack of sufficient evidence to prove the same. 32 Aggrieved by the denial of its motion
for reconsideration of the foregoing decision in the CAs resolution dated 10 July, 2008, 33 GMC filed the petition for review
on certiorari docketed before us as G.R. No. 183889.34
The Issues
In G.R. No. 183122, the Union proffers the following grounds for the grant of its petition, to wit:
I. THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND COMMITTED REVERSIBLE ERROR
IN AFFIRMING THE COMPUTATION OF THE NLRC IN ITS DECISION DATED JULY 20, 2006 AND
DISTORTING THE APPLICATION OF ARTICLE 253 OF THE LABOR CODE IN THE EXECUTION OF THE
DECISION OF THIS HONORABLE COURT IN G.R. NO. 146728.
II. THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND COMMITTED REVERSIBLE ERROR
IN EXCLUDING FROM THE COMPUTATION THE EMPLOYEES WHO HAVE EXECUTED QUITCLAIMS, IN
EXCLUDING FROM THE COMPUTATION VACATION AND SICK LEAVE SALARY DIFFERENTIALS, AND IN
DEDUCTING ALLEGED SALARY INCREASES AND OTHER BENEFITS GIVEN BY [GMC].
III. THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND COMMITTED REVERSIBLE ERROR
IN REFERRING THE INSTANT CASE TO THE GRIEVANCE MACHINERY FOR COMPUTATION OF THE
BENEFITS DUE UNDER THE IMPOSED CBA.
IV. THE DECISION IN THE INSTANT CASE IS IN DIRECT CONFLICT WITH THE DECISION OF ANOTHER
DIVISION OF THE COURT OF APPEALS INVOLVING THE SAME ISSUES. 35
In G.R. No. 183889, GMC prays for the setting aside of the CAs 16 November 2007 decision in CA-G.R. CEB-SP No.
02232, on the following grounds, to wit:
A. THE DECISION OF NOVEMBER 16, 2007 AND THE RESOLUTION OF JULY 10, 2008 OF THE COURT OF
APPEALS ARE CONTRARY TO LAW.
B. THE DECISION OF NOVEMBER 16, 2007 AND THE RESOLUTION OF JULY 10, 2008 OF THE COURT OF
APPEALS ARE NOT IN ACCORD WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT.
C. THE DECISION OF NOVEMBER 16, 2007 AND THE RESOLUTION OF JULY 10, 2008 OF THE COURT OF
APPEALS ARE CONTRARY TO THE ESTABLISHED FACTS.
D. THE DECISION OF NOVEMBER 16, 2007 AND THE RESOLUTION OF JULY 10, 2008 OF THE COURT OF
APPEALS VIOLATE THE LAW OF THE CASE.
E. THE DECISION OF NOVEMBER 16, 2007 AND THE RESOLUTION OF JULY 10, 2008 OF THE COURT OF
APPEALS CONTRAVENE THEIR OWN DECISION IN AN EXACTLY SIMILAR CASE INVOLVING THE SAME
PARTIES.36
71
As may be gleaned from the grounds GMC and the Union interpose in support of their respective petitions, it is evident
that we are called upon to determine the following matters: (a) the period of effectivity of the imposed CBA; (b) the
employees covered by the imposed CBA; and, (c) the benefits to be included in the execution of the 11 February 2004
decision rendered in G.R. No. 146728. Preliminary to the foregoing considerations is the effect of the rendition of
diametrically opposed decisions in CA-G.R. CEB. SP Nos. 02226 and 02232 by the CAs Special Twentieth and
Eighteenth Divisions on the parties conflicting claims.
The Courts Ruling
We find the reversal of the assailed decisions in order.
Both GMC and the Union call our attention to the fact that the 10 October 2007 decision rendered by the CAs Special
Twentieth Division in CA-G.R. CEB-SP No. 02226 is in conflict with the 16 November 2007 decision rendered by the same
courts Eighteenth Division in CA-G.R. CEB-SP No. 02232. In G.R. No. 183122, the Union argues that, given the identity
of parties and issues raised in said cases, the 16 November 2007 decision in CA-G.R. CEB-SP No. 02232 should have
been taken considered and adopted by the CAs Special Twentieth Division in resolving its motion for reconsideration of
the 10 October 2007 decision in CA-G.R. CEB-SP No. 02226. 37 In G.R. No. 183889, on the other hand, GMC maintains
that, having been rendered ahead of the 16 November 2007 decision in CA-G.R. CEB-SP No. 02232, the CAs Special
Twentieth Divisions 10 October 2007 in CA-G.R. CEB-SP No. 02226 is the law of the case which the Eighteenth Division
erroneously contravened when it dismissed its petition for certiorari. 38
The conflicting decisions in CA-G.R. CEB-SP Nos. 02226 and 02232 would have been, in the first place, avoided had the
CA consolidated said cases pursuant to Section 3, Rule III of its 2002 Internal Rules (IRCA). 39 Being intimately and
substantially related cases, their consolidation should have been ordered to avert the possibility of conflicting decisions in
the two cases.40 Although rendered on the merits by a court of competent jurisdiction acting within its authority, neither one
of said decisions can, however, be invoked as law of the case insofar as the other case is concerned. The doctrine of "law
of the case" means that whatever is once irrevocably established as the controlling legal rule or decision between the
same parties in the same case continues to be the law of the case, whether correct on general principles or not, 41 so long
as the facts on which such decision was predicated continue to be the facts of the case before the court. 42 Considering
that a decision becomes the law of the case once it attains finality, 43 it is evident that, without having achieved said status,
the herein assailed decisions cannot be invoked as the law of the case by either GMC or the Union.
Anent its period of effectivity, Article XIV of the imposed CBA provides that "(t)his Agreement shall be in full force and
effect for a period of five (5) years from 1 December 1991, provided that sixty (60) days prior to the lapse of the third year
of effectivity hereof, the parties shall open negotiations on economic aspect for the fourth and fifth years effectivity of this
Agreement."44 Considering that no new CBA had been, in the meantime, agreed upon by GMC and the Union, we find that
the CAs Special Twentieth Division correctly ruled in CA-G.R. CEB-SP No. 02226 that, pursuant to Article 253 of the
Labor Code,45 the provisions of the imposed CBA continues to have full force and effect until a new CBA has been entered
into by the parties. Article 253 mandates the parties to keep thestatus quo and to continue in full force and effect the terms
and conditions of the existing agreement during the 60-day period prior to the expiration of the old CBA and/or until a new
agreement is reached by the parties. 46 In the same manner that it does not provide for any exception nor qualification on
which economic provisions of the existing agreement are to retain its force and effect, 47 the law does not distinguish
between a CBA duly agreed upon by the parties and an imposed CBA like the one under consideration.
The foregoing disquisition notwithstanding, it bears emphasizing, however, that the dispositive portion of the 30 January
1998 decision rendered by the Fourth Division of the NLRC in NLRC Case No. V-0112-94 specifically ordered "the
imposition upon [GMC] of the [Unions] draft CBA proposal for the remaining two years duration of the original CBA which
is from 1 December 1991 to 30 November 1993." 48 Initially set aside in the 6 October 1998 resolution issued in the same
case by the NLRC49 and reinstated in the 19 July 2000 decision rendered by the CAs then Fourteenth Division in CA-G.R.
SP Nos. 50383 and 51763,50 said 30 January 1998 decision was upheld in the 11 February 2004 decision rendered by this
Court in G.R. No. 146728 which, in turn, affirmed the CAs 19 July 2000 decision as aforesaid. 51 Considering that the 30
January 1998 decision sought to be enforced confined the application of the imposed CBA to the remaining two-year
duration of the original CBA, we find that the computation of the benefits due GMCs covered employees was correctly
limited to the period 1 December 1991 to 30 November 1993 in the 27 October 2005 order issued by Executive Labor
Arbiter Violeta Ortiz-Bantug and the 20 July 2006 decision rendered by the NLRC in NLRC Case No. V-000632-2005.
72
Consequently, insofar as the execution of the 30 January 1998 decision is concerned, the Union is out on a limb in
espousing a computation which extends the benefits of the imposed CBA beyond the remaining two-year duration of the
original CBA. The rule is, after all, settled that an order of execution which varies the tenor of the judgment or exceeds the
terms thereof is a nullity.52 Since execution not in harmony with the judgment is bereft of validity,53it must conform, more
particularly, to that ordained or decreed in the dispositive portion of the decision sought to be enforced. Considering that
the decision sought to be enforced pertains to the period 1 December 1991 to 30 November 1993, it necessarily follows
that the computation of benefits under the imposed CBA should be limited to covered employees who were in GMCs
employ during said period of time. While it is true that the provisions of the imposed CBA extend beyond said remaining
two-year duration of the original CBA in view of the parties admitted failure to conclude a new CBA, the corresponding
computation of the benefits accruing in favor of GMCs covered employees after the term of the original CBA was correctly
excluded in the aforesaid 27 October 2005 order issued in RAB VII-06-0475-1992. Rather than the abbreviated preexecution proceedings before Executive Labor Arbiter Violeta Ortiz-Bantug, the computation of the same benefits beyond
30 November 1993 should, instead, be threshed out by GMC and the Union in accordance with the Grievance Procedure
outlined as follows under Article XII of the imposed CBA, to wit:
Article
GRIEVANCE PROCEDURE
XII
Section 1. Whenever an employee covered by the terms of this Agreement believes that the COMPANY has violated the
express terms thereof, or is aggrieved on the enforcement or application of the COMPANYs personnel policies, he/she
shall be required to follow the procedure hereinafter set forth in processing the grievance. The COMPANY will not be
required to consider a grievance unless it is presented within 7 days from the alleged breach of the express terms of this
Agreement or the COMPANY personnel policies,
STEP I. The employee, through the UNION Steward, shall present the alleged grievance in writing to the immediate
superior and they shall endeavor to settle the grievance within ten (10) days.
STEP II. Failing the settlement in Step I, the UNION President and the Personnel Officer shall meet and adjust the
grievance within fifteen (15) days.
STEP III. Any unresolved grievance shall be referred to the Arbitration Committee provided hereunder.
Section 2. Procedure before the Grievance Committee.
A. In the event a dispute arises concerning the application or interpretation of the terms of this Agreement or
enforcement/application of the COMPANY personnel policies which cannot be settled pursuant to Section I and II,
Section 1 hereof, an Arbitration Committee shall be formed for the purpose of settling that particular dispute only. The
Grievance Committee shall be composed of three (3) members, one to be appointed by the COMPANY as its
representative, another to be appointed by the UNION, and the third to be appointed by common agreement of the
two representatives selected from among the list of accredited voluntary arbitrators in the Province of Cebu, or from
government officials or civic leaders and responsible citizens in the community.
B. In all meetings of the Grievance Committee organized for the purpose of resolving a particular dispute, all members
must be present and no business shall be deliberated upon if any member thereof is absent. However, if any member
is unable to attend the meeting, he/she shall immediately appoint one to represent him/her, but if the one appointed by
agreement of both representatives of the COMPANY and the UNION is the one absent, the two representatives
present shall agree between themselves on any person to take the place of the absent member. Any business or
matter shall be considered as passed and approved by the Committee when there is a vote thereo[n] by at least two
(2) members present and the same shall be final and binding on the parties concerned.
C. All decisions of the Committee shall be final: provided, however, that all decisions of the Committee shall be limited
to the terms and provisions of this Agreement and in no event may the terms and provisions of this Agreement be
altered, amended or modified by the Committee. 54
Article II of the imposed CBA, relatedly, provides that "(t)he employees covered by this Agreement are those employed as
regular monthly paid employees at the [GMC] offices in Cebu City and Lapulapu City, including cadet engineers,
73
salesmen, veterinarians, field and laboratory workers, with the exception of managerial employees, supervisory
employees, executive and confidential secretaries, probationary employees and the employees covered by a separate
Collective Bargaining Agreement at the Companys Mill in Lapulapu City." 55 Gauged from the express language of the
foregoing provision, we find that Executive Labor Arbiter Violeta Ortiz-Bantug correctly excluded the following employees
from the list of 436 employees submitted by the Union 56 and the computation of the benefits for the period 1 December
1991 to 30 November 1993, to wit: (a) 77 employees who were hired or regularized after 30 November 1993; (b) 36 daily
paid rank and file employees who were covered by a separate CBA; (c) 41 managerial/supervisory employees; and, (d) 1
employee for whom no salary-rate information was submitted in the premises. 57 However, we find that the 234 employees
who had already been separated from GMCs employ by the time of the rendition of the 11 February 2004 decision in G.R.
No. 146728 should further be added to these excluded employees.
The record shows that said 234 employees were union members whose employment with GMC ceased as a
consequence of death, termination due to redundancy, termination due to closure of plant, termination for cause, voluntary
resignation, separation or dismissal from service as well as retirement. 58 Upon compliance with GMCs clearance
requirements59 and in consideration of sums ranging from P38,980.12 to P631,898.72, due payment and receipt of which
were duly acknowledged, it appears that said employees executed deeds of waiver, release and quitclaim 60 which
uniformly stated as follows:
THAT, for and in consideration of the said payment, I have remised, released and do hereby discharge, and by these
presents do for myself, my heirs, executors and administrators, remise, release and forever discharge said GENERAL
MILLING CORPORATION, its successors and assigns, and/or any of its officers or employees of and from any and all
manner of actions, cause or causes of actions, sum or sums of money, account damages, claims and demands
whatsoever by way of separation pay, benefits, bonuses, and all other rights to compensation, salary, wage, emolument,
reimbursement, or monetary benefits, which I ever had, now have or which my heirs , executors and administrators
hereafter can, shall or may have, upon or by reason of any matter, cause or things whatsoever in connection with my
former employment in and retirement from the said GENERAL MILLING CORPORATION.1avvphi1
THAT, I have signed this Deed of Waiver, Release and Quitclaim after I have read the contents thereof and understood
the same and its legal effects.
In its assailed 16 November 2007 decision in CA-G.R. CEB-SP No. 02232, the CAs then Eighteenth Division brushed
aside said deeds of waiver, release and quitclaim on the ground, among other matters, that the same only covered the
employees separation pay and retirement benefits but did not extend to the benefits which had accrued in their favor
under the imposed CBA; and, that to be valid, the waiver "should be couched in clear and unequivocal terms leaving no
doubt as to the intention of those giving up a right or a benefit that legally pertains to them." 61 In so doing, however, the
CAs Eighteenth Division egregiously disregarded the clear intent on the part of the employees who executed said deeds
of waiver, release and quitclaim to relinquish all present and future claims arising out of their employment with GMC.
Although generally looked upon with disfavor,62 it cannot be gainsaid that legitimate waivers that represent a voluntary and
reasonable settlement of laborers' claims should be so respected by the Court as the law between the parties. 63 It is only
where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of settlement
are unconscionable on its face, that the law will step in to annul the questionable transaction. 64 The absence of showing of
these factors in the case at bench impels us to uphold the validity of said deeds of waiver, release and quitclaim and, to
exclude the employees who executed the same from those still entitled to the benefits under the imposed CBA both
before and after the remaining term of the original CBA. The waiver was all inclusive. There was not even a hint of a
limitation of coverage.
Inasmuch as mere allegation is not evidence, the basic evidentiary rule is to the effect that the burden of evidence lies
with the party who asserts the affirmative of an issue has the burden of proving the same 65 with such quantum of evidence
required by law. In administrative or quasi-judicial proceedings like those conducted before the NLRC, the standard of
proof is substantial evidence which is understood to be more than just a scintilla or such amount of relevant evidence
which a reasonable mind might accept as adequate to justify a conclusion. 66 Since it does not mean just any evidence in
the record of the case for, otherwise, no finding of fact would be wanting in basis, the test to be applied is whether a
reasonable mind, after considering all the relevant evidence in the record of a case, would accept the findings of fact as
adequate.67 Viewed in the light of Unions failure to prove the factual bases for the computation of the same, we find that
the NLRC correctly affirmed Executive Labor Arbiter Violeta Ortiz-Bantugs exclusion of the following benefits from the
order dated 27 October, 2005, to wit: (a) vacation leave salary rate differentials; (b) sick leave salary rate differentials; (c)
dislocation allowance; (d) separation pay for voluntary resignation; and (e) separation pay salary rate differentials. 68 For
74
want of substantial evidence to prove the same, the CAs Eighteenth Division also correctly brushed aside GMCs
insistence on the deduction of the additional benefits it purportedly extended to its employees from 1 December 1991 to
30 November 1993.69
As for the benefits after the expiration of the term of the parties original CBA, we find that the extent thereof as well as
identity of the employees entitled thereto will be better and more thoroughly threshed out by the parties themselves in
accordance with the grievance procedure outlined in Article XII of the imposed CBA. Aside from being already beyond the
scope of the decision sought to be enforced, these matters will not be accurately ascertained from the summaries of
claims the parties have been wont to submit at the pre-execution conference conducted a quo. Taking into consideration
such factors as hiring of new employees, personnel movement and/or promotions as well as separations from
employment which may have, in the meantime, occurred after the expiration of the remaining term of the original CBA, the
identity of the covered employees as well as the extent of the benefits due them should clearly be reckoned from
acquisition and/or until loss of their status as regular monthly paid GMC employees. Since the computation must likewise
necessarily take into consideration the increases in salaries and benefits that may have been given in the intervening
period, both GMC and the Union are enjoined to make the pertinent employment and company records available to each
other, to facilitate the expeditious and accurate determination of said benefits.
WHEREFORE, premises considered the assailed decisions dated 10 October 2007 and 16 November 2007 are
REVERSED and SET ASIDE. In lieu thereof, the 27 October 2005 order issued by Labor Arbiter Violeta Ortiz-Bantug is
ordered REINSTATED and MODIFIED to further exclude the 234 employees who have executed deeds of waiver, release
and quitclaim from the computation of the benefits for the remaining term of the original CBA. SO ORDERED.
CASE 13
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 174158
June 27, 2011
WILLIAM ENDELISEO BARROGA, Petitioner,

vs.
DATA CENTER COLLEGE OF THE PHILIPPINES and WILFRED BACTAD, 1 Respondents.
DECISION
DEL CASTILLO, J.:
Our labor laws are enacted not solely for the purpose of protecting the working class but also the management by equally
recognizing its right to conduct its own legitimate business affairs.
This Petition for Review on Certiorari2 seeks the reversal of the Resolutions dated May 15, 2006 3 and August 4, 20064 of
the Court of Appeals (CA) in CA-G.R. SP No. 93991, which dismissed petitioner William Endeliseo Barrogas Petition
for Certiorari for procedural infirmities, as well as the Decision 5 dated August 25, 2005 and Resolution 6 dated January 31,
2006 of the National Labor Relations Commission (NLRC), with respect to the dismissal of petitioners claim of
constructive dismissal against respondents Data Center College of the Philippines and its President and General
Manager, Wilfred Bactad.
Factual Antecedents
On November 11, 1991, petitioner was employed as an Instructor in Data Center College Laoag City branch in Ilocos
Norte. In a Memorandum 7 dated June 6, 1992, respondents transferred him to University of Northern Philippines (UNP) in
Vigan, Ilocos Sur where the school had a tie-up program. Petitioner was informed through a letter 8 dated June 6, 1992
75
that he would be receiving, in addition to his monthly salary, a P1,200.00 allowance for board and lodging during his stint
as instructor in UNP-Vigan. In 1994, he was recalled to Laoag campus. On October 3, 2003, petitioner received a
Memorandum9 transferring him to Data Center College Bangued, Abra branch as Head for Education/Instructor due to an
urgent need for an experienced officer and computer instructor thereat.
However, petitioner declined to accept his transfer to Abra citing the deteriorating health condition of his father and the
absence of additional remuneration to defray expenses for board and lodging which constitutes implicit diminution of his
salary.10
On November 10, 2003, petitioner filed a Complaint 11 for constructive dismissal against respondents. Petitioner alleged
that his proposed transfer to Abra constitutes a demotion in rank and diminution in pay and would cause personal
inconvenience and hardship. He argued that although he was being transferred to Abra branch supposedly with the same
position he was then holding in Laoag branch as Head for Education, he later learned through a Memorandum 12 from the
administrator of Abra branch that he will be re-assigned merely as an instructor, thereby relegating him from an
administrative officer to a rank-and-file employee. Moreover, the elimination of his allowance for board and lodging will
result to an indirect reduction of his salary which is prohibited by labor laws. Petitioner also claimed that when he
questioned the indefinite suspension of the scholarship for post-graduate studies extended to him by respondents, 13 the
latter became indifferent to his legitimate grievances which eventually led to his prejudicial re-assignment. He averred that
his transfer is not indispensable to the schools operation considering that respondents even suggested that he take an
indefinite leave of absence in the meantime if only to address his personal difficulties. 14 Petitioner thus prayed for his
reinstatement and backwages. Further, as Head for Education at Data Center College Laoag branch, petitioner asked for
the payment of an overload honorarium as compensation for the additional teaching load in excess of what should have
been prescribed to him. Exemplary damages and attorneys fees were likewise prayed for.
For their part, respondents claimed that they were merely exercising their management prerogative to transfer employees
for the purpose of advancing the schools interests. They argued that petitioners refusal to be transferred to Abra
constitutes insubordination. They claimed that petitioners appointment as instructor carries a proviso of possible reassignments to any branch or tie-up schools as the schools necessity demands. Respondents argued that petitioners
designation as Head for Education in Laoag branch was merely temporary and that he would still occupy his original
plantilla item as instructor at his proposed assignment in Abra branch. Respondents denied liability to petitioners
monetary claims.
Ruling of the Labor Arbiter
On September 24, 2004, the Labor Arbiter rendered a Decision 15 dismissing the Complaint for lack of merit. The Labor
Arbiter ruled that there was no demotion in rank as petitioners original appointment as instructor on November 11, 1991
conferred upon respondents the right to transfer him to any of the schools branches and that petitioners designation as
Head for Education can be withdrawn anytime since he held such administrative position in a non-permanent capacity.
The Labor Arbiter held that the exclusion of his allowance for board, lodging and transportation was not constructive
dismissal, enunciating that the concept of non-diminution of benefits under Article 100 of the Labor Code prohibits the
elimination of benefits that are presently paid to workers to satisfy the requirements of prevailing minimum wage rates.
Since the benefit claimed by petitioner is beyond the coverage of the minimum wage law, its non-inclusion in his reassignment is not considered a violation. The Labor Arbiter also denied petitioners claim for overload honorarium for
failure to present sufficient evidence to warrant entitlement to the same. The claim for damages was likewise denied.
Ruling of the National Labor Relations Commission
In a Decision16 dated August 25, 2005, the NLRC affirmed the findings of the Labor Arbiter that there was no constructive
dismissal. It ruled that the management decision to transfer petitioner was well within the rights of respondents in
consonance with petitioners contract of employment and which was not sufficiently shown to have been exercised
arbitrarily by respondents. It agreed with the Labor Arbiter that petitioners designation as Head for Education was
temporary for which he could not invoke any tenurial security. Further, the NLRC held that it was not proven with certainty
that the transfer would unduly prejudice petitioners financial situation. The NLRC, however, found petitioner to be entitled
to overload honorarium pursuant to CHED Memorandum Order No. 25 for having assumed the position of Head for
Education, albeit on a temporary basis. The NLRC disposed of the case as follows:
76
WHEREFORE, premises considered, the decision under review is hereby MODIFIED by ordering the respondent Data
Center College of the Philippines, to pay the complainant the sum of SEVENTY THREE THOUSAND SEVEN
THUNDRED [sic] THIRTY and 39/100 Pesos (P73,730.39), representing overload honorarium.
All other claims are DISMISSED for lack of merit.
SO ORDERED.17
From this Decision, both parties filed their respective motion for partial reconsideration. Petitioner assailed the NLRC
Decision insofar as it dismissed his claims for reinstatement, backwages, damages and attorneys fees. 18Respondents, for
their part, questioned the NLRCs award of overload honorarium in favor of petitioner. These motions were denied by the
NLRC in a Resolution dated January 31, 2006.19
Both parties filed petitions for certiorari before the CA. Respondents petition for certiorari was docketed as CA-G.R. SP
No. 94205, which is not subject of the instant review. On the other hand, petitioner filed on April 7, 2006, a Petition
for Certiorari20 with the CA docketed as CA-G.R. SP No. 93991 assailing the NLRCs finding that no constructive dismissal
existed. Realizing his failure to attach the requisite affidavit of service of the petition upon respondents, petitioner filed on
April 27, 2006, an Ex-Parte Manifestation and Motion 21 to admit the attached affidavit of service and registry receipt in
compliance with the rules.
On May 15, 2006, the CA dismissed the petition in CA-G.R. SP No. 93991 in a Resolution which reads:
Petition is DISMISSED outright due to the following infirmities:
1. there is no statement of material dates as to when the petitioner received the assailed decision dated August
25, 2005 and when he filed a Motion for Reconsideration thereof;
2. there is no affidavit of service attached to the petition;
3. these initiatory pleadings and the respondents Motion for Reconsideration of the Decision dated August 25,
2005 are not attached to the petition.
SO ORDERED. 22
Petitioner filed a Motion for Reconsideration 23 alleging that the material dates of receipt of the NLRC Decision and the
filing of his motion for reconsideration are explicitly stated in his Partial Motion for Reconsideration which was attached as
an annex to the petition and was made an integral part thereof. As to the absence of the affidavit of service, petitioner
argued that there is no legal impediment for the belated admission of the affidavit of service as it was duly filed before the
dismissal of the petition. As for his failure to attach respondents motion for reconsideration, petitioner manifested that a
separate petition for certiorari has been filed by respondents and is pending with the CA, docketed as CA-G.R. SP No.
94205, where the denial of said motion is at issue.
On August 4, 2006, the CA issued the following Resolution:
Due to non-compliance despite opportunity afforded to comply, petitioners June 9, 2006 Motion for Reconsideration is
hereby DENIED for lack of merit.
SO ORDERED.24
Issues
Hence, this petition assigning the following errors:
77
THE HONORABLE COURT OF APPEALS PATENTLY COMMITTED REVERSIBLE ERROR IN DISMISSING THE
PETITION FOR CERTIORARI [UNDER RULE 65] OF THE PETITIONER BY GIVING PRECEDENT TO
TECHNICALITIES RATHER THAN THE MERITORIOUS GROUNDS ASSERTED THEREIN.
THE PUBLIC RESPONDENT, NATIONAL LABOR RELATIONS COMMISSION, SERIOUSLY ERRED IN ITS
CONSLUSIONS OF LAW IN RENDERING IT[S] ASSAILED DECISION AND RESOLUTION STATING THAT THE
PETITIONER WAS NOT CONSTRUCTIVELY DISMISSED, THUS, NOT ENTITLED TO REINSTATEMENT,
BACKWAGES, AND ATTORNEYS FEES.25
Petitioner imputes grave abuse of discretion on the CA in not giving due course to his petition despite substantial
compliance with the requisite formalities as well as on the NLRC in not ruling that he was constructively dismissed by
respondents.
Our Ruling
Petitioners substantial compliance calls
for the relaxation of the rules. Therefore, the CA should have given due course to the petition.
The three material dates which should be stated in the petition for certiorari under Rule 65 are the dates when the notice
of the judgment was received, when a motion for reconsideration was filed and when the notice of the denial of the motion
for reconsideration was received. 26 These dates should be reflected in the petition to enable the reviewing court to
determine if the petition was filed on time. 27 Indeed, petitioners petition before the CA stated only the date of his receipt of
the NLRCs Resolution denying his motion for partial reconsideration. It failed to state when petitioner received the
assailed NLRC Decision and when he filed his partial motion for reconsideration. However, this omission is not at all fatal
because these material dates are reflected in petitioners Partial Motion for Reconsideration attached as Annex "N" of the
petition. In Acaylar, Jr. v. Harayo,28 we held that failure to state these two dates in the petition may be excused if the same
are evident from the records of the case. It was further ruled by this Court that the more important material date which
must be duly alleged in the petition is the date of receipt of the resolution of denial of the motion for reconsideration. In the
case at bar, petitioner has duly complied with this rule.
Next, the CA dismissed the petition for failure to attach an affidavit of service. However, records show that petitioner timely
rectified this omission by submitting the required affidavit of service even before the CA dismissed his petition.
Thirdly, petitioners failure to attach respondents motion for reconsideration to the assailed NLRC decision is not sufficient
ground for the CA to outrightly dismiss his petition. The issue that was raised in respondents motion for reconsideration is
the propriety of the NLRCs grant of overload honorarium in favor of petitioner. This particular issue was not at all raised in
petitioners petition for certiorari with the CA, therefore, there is no need for petitioner to append a copy of this motion to
his petition. Besides, as already mentioned, the denial of respondents motion for reconsideration has been assailed by
respondents before the CA docketed as CA-G.R. SP No. 94205. At any rate, the Rules do not specify the documents
which should be appended to the petition except that they should be relevant to the judgment, final order or resolution
being assailed. Petitioner is thus justified in attaching the documents which he believed are sufficient to make out a prima
facie case.29
The Court has time and again upheld the theory that the rules of procedure are designed to secure and not to override
substantial justice.30 These are mere tools to expedite the decision or resolution of cases, hence, their strict and rigid
application which would result in technicalities that tend to frustrate rather than promote substantial justice must be
avoided.31 The CA thus should not have outrightly dismissed petitioners petition based on these procedural
lapses.1avvphi1
Petitioners transfer is not tantamount to constructive dismissal.
Nevertheless, the instant petition merits dismissal on substantial grounds. After a careful review of the records and the
arguments of the parties, we do not find any sufficient basis to conclude that petitioners re-assignment amounted to
constructive dismissal.
78
Constructive dismissal is quitting because continued employment is rendered impossible, unreasonable or unlikely, or
because of a demotion in rank or a diminution of pay. It exists when there is a clear act of discrimination, insensibility or
disdain by an employer which becomes unbearable for the employee to continue his employment. 32 Petitioner alleges that
the real purpose of his transfer is to demote him to the rank of an instructor from being the Head for Education performing
administrative functions. Petitioner further argues that his re-assignment will entail an indirect reduction of his salary or
diminution of pay considering that no additional allowance will be given to cover for board and lodging expenses. He
claims that such additional allowance was given in the past and therefore cannot be discontinued and withdrawn without
violating the prohibition against non-diminution of benefits.
These allegations are bereft of merit.
Petitioner was originally appointed as instructor in 1991 and was given additional administrative functions as Head for
Education during his stint in Laoag branch. He did not deny having been designated as Head for Education in a temporary
capacity for which he cannot invoke any tenurial security. Hence, being temporary in character, such designation is
terminable at the pleasure of respondents who made such appointment. 33 Moreover, respondents right to transfer
petitioner rests not only on contractual stipulation but also on jurisprudential authorities. The Labor Arbiter and the NLRC
both relied on the condition laid down in petitioners employment contract that respondents have the prerogative to assign
petitioner in any of its branches or tie-up schools as the necessity demands. In any event, it is management prerogative
for employers to transfer employees on just and valid grounds such as genuine business necessity. 34 It is also important to
stress at this point that respondents have shown that it was experiencing some financial constraints. Because of this,
respondents opted to temporarily suspend the post-graduate studies of petitioner and some other employees who were
given scholarship grants in order to prioritize more important expenditures. 35
Indeed, we cannot fully subscribe to petitioners contention that his re-assignment was tainted with bad faith. As a matter
of fact, respondents displayed commiseration over the health condition of petitioners father when they suggested that he
take an indefinite leave of absence to attend to this personal difficulty. Also, during the time when respondents directed all
its administrative officers to submit courtesy resignations, petitioners letter of resignation was not accepted. 36 This
bolsters the fact that respondents never intended to get rid of petitioner. In fine, petitioners assertions of bad faith on the
part of respondents are purely unsubstantiated conjectures.
The Court agrees with the Labor Arbiter that there was no violation of the prohibition on diminution of benefits. Indeed, any
benefit and perks being enjoyed by employees cannot be reduced and discontinued, otherwise, the constitutional
mandate to afford full protection to labor shall be offended. 37 But the rule against diminution of benefits is applicable only if
the grant or benefit is founded on an express policy or has ripened into a practice over a long period which is consistent
and deliberate.38
Petitioner was granted a monthly allowance for board and lodging during his stint as instructor in UNP-Vigan, Ilocos Sur
as evinced in a letter dated June 6, 1992 with the condition stated in the following tenor:
Please be informed that during your assignment at our tie-up at UNP-VIGAN, ILOCOS SUR , you will be receiving a
monthly Board and Lodging of Pesos: One Thousand Two Hundred x x x (P1,200.00).
However, you are only entitled to such allowance, if you are assigned to the said tie-up and the same will be changed or
forfeited depending upon the place of your next reassignment.39 (Italics supplied.)
Petitioner failed to present any other evidence that respondents committed to provide the additional allowance or that they
were consistently granting such benefit as to have ripened into a practice which cannot be peremptorily withdrawn.
Moreover, there is no conclusive proof that petitioners basic salary will be reduced as it was not shown that such
allowance is part of petitioners basic salary. Hence, there will be no violation of the rule against diminution of pay
enunciated under Article 100 of the Labor Code.40
WHEREFORE, the Resolutions dated May 15, 2006 and August 4, 2006 of the Court of Appeals in CA-G.R. SP No. 93991
are SET ASIDE. The Decision dated August 25, 2005 and Resolution dated January 31, 2006 of the National Labor
Relations Commission in NLRC Case No. RAB I-12-1242-03 (LC) insofar as it found respondents Data Center College of
the Philippines and Wilfred Bactad not liable for constructive dismissal, are AFFIRMED.
79
SO ORDERED.
CASE 14
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 169191
June 1, 2011
ROMEO VILLARUEL, Petitioner,

vs.
YEO HAN GUAN, doing business under the name and style YUHANS ENTERPRISES, Respondent.
DECISION
PERALTA, J.:
Assailed in the present petition are the Decision 1 and Resolution2 of the Court of Appeals (CA) dated February 16, 2005
and August 2, 2005, respectively, in CA-G.R. SP No. 79105. The CA Decision modified the March 31, 2003 Decision of
the National Labor Relations Commission (NLRC) in NLRC NCR CA 028050-01, while the CA Resolution denied
petitioner's Motion for Reconsideration.
80
The antecedents of the case are as follows:

On February 15, 1999, herein petitioner filed with the NLRC, National Capital Region, Quezon City a Complaint 3for
payment of separation pay against Yuhans Enterprises.
Subsequently, in his Amended Complaint and Position Paper 4 dated December 6, 1999, petitioner alleged that in June
1963, he was employed as a machine operator by Ribonette Manufacturing Company, an enterprise engaged in the
business of manufacturing and selling PVC pipes and is owned and managed by herein respondent Yeo Han Guan. Over
a period of almost twenty (20) years, the company changed its name four times. Starting in 1993 up to the time of the
filing of petitioner's complaint in 1999, the company was operating under the name of Yuhans Enterprises. Despite the
changes in the company's name, petitioner remained in the employ of respondent. Petitioner further alleged that on
October 5, 1998, he got sick and was confined in a hospital; on December 12, 1998, he reported for work but was no
longer permitted to go back because of his illness; he asked that respondent allow him to continue working but be
assigned a lighter kind of work but his request was denied; instead, he was offered a sum of P15,000.00 as his separation
pay; however, the said amount corresponds only to the period between 1993 and 1999; petitioner prayed that he be
granted separation pay computed from his first day of employment in June 1963, but respondent refused. Aside from
separation pay, petitioner prayed for the payment of service incentive leave for three years as well as attorney's fees.
On the other hand, respondent averred in his Position Paper 5 that petitioner was hired as machine operator from March 1,
1993 until he stopped working sometime in February 1999 on the ground that he was suffering from illness; after his
recovery, petitioner was directed to report for work, but he never showed up. Respondent was later caught by surprise
when petitioner filed the instant case for recovery of separation pay. Respondent claimed that he never terminated the
services of petitioner and that during their mandatory conference, he even told the latter that he could go back to work
anytime but petitioner clearly manifested that he was no longer interested in returning to work and instead asked for
separation pay.
On November 27, 2000, the Labor Arbiter handling the case rendered judgment in favor of petitioner. The dispositive
portion of the Labor Arbiter's Decision reads, thus:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the complainant and against herein
respondent, as follows:
1. Ordering the respondents to pay separation benefits equivalent to one-half () month salary per year of
service, a fraction of six months equivalent to one year to herein complainant based on the complainant's length
of service reckoned from June 1963 up to October 1998 as provided under Article 284 of the Labor Code, the
same computed by the Computation and Examination Unit which we hereby adopt and approved (sic) as our own
in the amount of NINETY-ONE THOUSAND FOUR HUNDRED FORTY-FIVE PESOS (P91,445.00);
2. Ordering the respondents to pay service incentive leave equivalent to fifteen days salary in the amount of
THREE THOUSAND FIFTEEN PESOS (P3,015.00).
All other claims are dismissed for lack of merit.
SO ORDERED.6
Aggrieved, respondent filed an appeal with the NLRC.
On March 31, 2003, the Third Division of the NLRC rendered its Decision 7 dismissing respondent's appeal and affirming
the Labor Arbiter's Decision.
Respondent filed a Motion for Reconsideration,8 but the same was denied by the NLRC in a Resolution 9 dated May 30,
2003.
Respondent then filed with the CA a petition for certiorari under Rule 65 of the Rules of Court.
81
On February 16, 2005, the CA promulgated its presently assailed Decision disposing as follows:
WHEREFORE, premises considered, the petition is partially GRANTED. The award of separation pay is hereby
DELETED, but the Decision insofar as it awards private respondent [herein petitioner] service incentive leave pay of three
thousand and fifteen pesos (P3,015.00) stands. The NLRC is permanently ENJOINED from partially executing its
Decision dated November 27, 2000 insofar as the award of separation pay is concerned; or if it has already effected
execution, it should order the private respondent to forthwith restitute the same.
SO ORDERED.10
Herein petitioner filed his Motion for Reconsideration 11 of the CA Decision, but it was denied by the CA via a
Resolution12 dated August 2, 2005.
Hence, the instant petition based on the following assignment of errors:
I
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS FAILURE TO APPRECIATE THE ADMISSION BY
[PETITIONER] OF THE FACT AND VALIDITY OF HIS TERMINATION BY THE [RESPONDENT].
II
[THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED] IN DENYING [PETITIONER'S] ENTITLEMENT TO
SEPARATION PAY UNDER ARTICLE 284 OF THE LABOR CODE AND UNDER THE OMNIBUS RULES
IMPLEMENTING THE LABOR CODE.
III
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE BURDEN OF PROOF THAT
AN EMPLOYEE IS SUFFERING FROM DISEASE THAT HAS TO BE TERMINATED REST[S] UPON THE EMPLOYER
IN ORDER FOR THE EMPLOYEE TO BE ENTITLED TO SEPARATION PAY.
IV
THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ORDERING THE DELETION OF THE AWARD OF
SEPARATION PAY TO THE [PETITIONER].13
The Court finds the petition without merit.
The assigned errors in the instant petition essentially boil down to the question of whether petitioner is entitled to
separation pay under the provisions of the Labor Code, particularly Article 284 thereof, which reads as follows:
An employer may terminate the services of an employee who has been found to be suffering from any disease and whose
continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees:
Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-half () month salary for
every year of service whichever is greater, a fraction of at least six months being considered as one (1) whole year.
A plain reading of the abovequoted provision clearly presupposes that it is the employer who terminates the services of
the employee found to be suffering from any disease and whose continued employment is prohibited by law or is
prejudicial to his health as well as to the health of his co-employees. It does not contemplate a situation where it is the
employee who severs his or her employment ties. This is precisely the reason why Section 8, 14 Rule 1, Book VI of the
Omnibus Rules Implementing the Labor Code, directs that an employer shall not terminate the services of the employee
unless there is a certification by a competent public health authority that the disease is of such nature or at such a stage
that it cannot be cured within a period of six (6) months even with proper medical treatment.
82
Hence, the pivotal question that should be settled in the present case is whether respondent, in fact, dismissed petitioner
from his employment.
A perusal of the Decisions of the Labor Arbiter and the NLRC would show, however, that there was no discussion with
respect to the abovementioned issue. Both lower tribunals merely concluded that petitioner is entitled to separation pay
under Article 284 of the Labor Code without any explanation. The Court finds no convincing justification, in the Decision of
the Labor Arbiter on why petitioner is entitled to such pay. In the same manner, the NLRC Decision did not give any
rationalization as the gist thereof simply consisted of a quoted portion of the appealed Decision of the Labor Arbiter.
On the other hand, the Court agrees with the CA in its observation of the following circumstances as proof that respondent
did not terminate petitioner's employment: first, the only cause of action in petitioner's original complaint is that he was
"offered a very low separation pay"; second, there was no allegation of illegal dismissal, both in petitioner's original and
amended complaints and position paper; and, third, there was no prayer for reinstatement.
In consonance with the above findings, the Court finds that petitioner was the one who initiated the severance of his
employment relations with respondent. It is evident from the various pleadings filed by petitioner that he never intended to
return to his employment with respondent on the ground that his health is failing. Indeed, petitioner did not ask for
reinstatement. In fact, he rejected respondent's offer for him to return to work. This is tantamount to resignation.
Resignation is defined as the voluntary act of an employee who finds himself in a situation where he believes that
personal reasons cannot be sacrificed in favor of the exigency of the service and he has no other choice but to
disassociate himself from his employment.15
It may not be amiss to point out at this juncture that aside from Article 284 of the Labor Code, the award of separation pay
is also authorized in the situations dealt with in Article 283 16 of the same Code and under Section 4 (b), Rule I, Book VI of
the Implementing Rules and Regulations of the said Code 17 where there is illegal dismissal and reinstatement is no longer
feasible. By way of exception, this Court has allowed grants of separation pay to stand as "a measure of social justice"
where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral
character.18 However, there is no provision in the Labor Code which grants separation pay to voluntarily resigning
employees. In fact, the rule is that an employee who voluntarily resigns from employment is not entitled to separation pay,
except when it is stipulated in the employment contract or CBA, or it is sanctioned by established employer practice or
policy.19 In the present case, neither the abovementioned provisions of the Labor Code and its implementing rules and
regulations nor the exceptions apply because petitioner was not dismissed from his employment and there is no evidence
to show that payment of separation pay is stipulated in his employment contract or sanctioned by established practice or
policy of herein respondent, his employer.
Since petitioner was not terminated from his employment and, instead, is deemed to have resigned therefrom, he is not
entitled to separation pay under the provisions of the Labor Code.
The foregoing notwithstanding, this Court, in a number of cases, has granted financial assistance to separated employees
as a measure of social and compassionate justice and as an equitable concession. Taking into consideration the factual
circumstances obtaining in the present case, the Court finds that petitioner is entitled to this kind of assistance.
Citing Eastern Shipping Lines, Inc. v. Sedan,20 this Court, in the more recent case of Eastern Shipping Lines v.
Antonio,21 held:
But we must stress that this Court did allow, in several instances, the grant of financial assistance. In the words of Justice
Sabino de Leon, Jr., now deceased, financial assistance may be allowed as a measure of social justice and exceptional
circumstances, and as an equitable concession. The instant case equally calls for balancing the interests of the employer
with those of the worker, if only to approximate what Justice Laurel calls justice in its secular sense.
In this instance, our attention has been called to the following circumstances: that private respondent joined the company
when he was a young man of 25 years and stayed on until he was 48 years old; that he had given to the company the
best years of his youth, working on board ship for almost 24 years; that in those years there was not a single report of him
transgressing any of the company rules and regulations; that he applied for optional retirement under the company's noncontributory plan when his daughter died and for his own health reasons; and that it would appear that he had served the
83
company well, since even the company said that the reason it refused his application for optional retirement was that it still
needed his services; that he denies receiving the telegram asking him to report back to work; but that considering his age
and health, he preferred to stay home rather than risk further working in a ship at sea.
In our view, with these special circumstances, we can call upon the same "social and compassionate justice" cited in
several cases allowing financial assistance. These circumstances indubitably merit equitable concessions, via the
principle of "compassionate justice" for the working class. x x x
In the present case, respondent had been employed with the petitioner for almost twelve (12) years.lawwphil On February
13, 1996, he suffered from a "fractured left transverse process of fourth lumbar vertebra," while their vessel was at the
port of Yokohama, Japan. After consulting a doctor, he was required to rest for a month. When he was repatriated to
Manila and examined by a company doctor, he was declared fit to continue his work. When he reported for work,
petitioner refused to employ him despite the assurance of its personnel manager. Respondent patiently waited for more
than one year to embark on the vessel as 2nd Engineer, but the position was not given to him, as it was occupied by
another person known to one of the stockholders. Consequently, for having been deprived of continued employment with
petitioner's vessel, respondent opted to apply for optional retirement. In addition, records show that respondent's
seaman's book, as duly noted and signed by the captain of the vessel was marked "Very Good," and "recommended for
hire." Moreover, respondent had no derogatory record on file over his long years of service with the petitioner.1avvphi1
Considering all of the foregoing and in line with Eastern, the ends of social and compassionate justice would be served
best if respondent will be given some equitable relief. Thus, the award of P100,000.00 to respondent as financial
assistance is deemed equitable under the circumstances. 22
While the abovecited cases authorized the grant of financial assistance in lieu of retirement benefits, the Court finds no
cogent reason not to employ the same guiding principle of compassionate justice applied by the Court, taking into
consideration the factual circumstances obtaining in the present case. In this regard, the Court finds credence in
petitioner's contention that he is in the employ of respondent for more than 35 years. In the absence of a substantial
refutation on the part of respondent, the Court agrees with the findings of the Labor Arbiter and the NLRC that respondent
company is not distinct from its predecessors but, in fact, merely continued the operation of the latter under the same
owners and the same business venture. The Court further notes that there is no evidence on record to show that petitioner
has any derogatory record during his long years of service with respondent and that his employment was severed not by
reason of any infraction on his part but because of his failing physical condition. Add to this the willingness of respondent
to give him financial assistance. Hence, based on the foregoing, the Court finds that the award of P50,000.00 to petitioner
as financial assistance is deemed equitable under the circumstances.
WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals are
AFFIRMED with MODIFICATION by awarding petitioner with financial assistance in the amount of P50,000.00.
SO ORDERED.
CASE 15
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 178409
June 8, 2011
YOLITO FADRIQUELAN, ARTURO EGUNA, ARMANDO MALALUAN, DANILO ALONSO, ROMULO DIMAANO, ROEL
MAYUGA, WILFREDO RIZALDO, ROMEO SUICO, DOMINGO ESCAMILLAS and DOMINGO BAUTRO,Petitioners,
84
vs.
MONTEREY FOODS CORPORATION, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 178434
MONTEREY FOODS CORPORATION, Petitioner,
vs.
BUKLURAN NG MGA MANGGAGAWA SA MONTEREY-ILAW AT BUKLOD NG MANGGAGAWA, YOLITO
FADRIQUELAN, CARLITO ABACAN, ARTURO EGUNA, DANILO ROLLE, ALBERTO CASTILLO, ARMANDO
MALALUAN, DANILO ALFONSO, RUBEN ALVAREZ, ROMULO DIMAANO, ROEL MAYUGA, JUANITO TENORIO,
WILFREDO RIZALDO, JOHN ASOTIGUE, NEMESIO AGTAY, ROMEO SUICO, DOMINGO ESCAMILLAS and
DOMINGO BAUTRO, Respondents.
DECISION
ABAD, J.:
These cases are about the need to clearly identify, for establishing liability, the union officers who took part in the illegal
slowdown strike after the Department of Labor and Employment (DOLE) Secretary assumed jurisdiction over the labor
dispute.
The Facts and the Case
On April 30, 2002 the three-year collective bargaining agreement or CBA between the union Bukluran ng Manggagawa sa
Monterey-Ilaw at Buklod ng Manggagawa (the union) and Monterey Foods Corporation (the company) expired. On March
28, 2003 after the negotiation for a new CBA reached a deadlock, the union filed a notice of strike with the National
Conciliation and Mediation Board (NCMB). To head off the strike, on April 30, 2003 the company filed with the DOLE a
petition for assumption of jurisdiction over the dispute in view of its dire effects on the meat industry. In an Order dated
May 12, 2003, the DOLE Secretary assumed jurisdiction over the dispute and enjoined the union from holding any strike.
It also directed the union and the company to desist from taking any action that may aggravate the situation.
On May 21, 2003 the union filed a second notice of strike before the NCMB on the alleged ground that the company
committed unfair labor practices. On June 10, 2003 the company sent notices to the union officers, charging them with
intentional acts of slowdown. Six days later or on June 16 the company sent new notices to the union officers, informing
them of their termination from work for defying the DOLE Secretarys assumption order.
On June 23, 2003, acting on motion of the company, the DOLE Secretary included the unions second notice of strike in
his earlier assumption order. But, on the same day, the union filed a third notice of strike based on allegations that the
company had engaged in union busting and illegal dismissal of union officers. On July 7, 2003 the company filed a petition
for certification of the labor dispute to the National Labor Relations Commission (NLRC) for compulsory arbitration but the
DOLE Secretary denied the motion. He, however, subsumed the third notice of strike under the first and second notices.
On November 20, 2003 the DOLE rendered a decision that, among other things, upheld the companys termination of the
17 union officers. The union and its officers appealed the decision to the Court of Appeals (CA).
On May 29, 2006 the CA rendered a decision, upholding the validity of the companys termination of 10 union officers but
declaring illegal that of the other seven. Both parties sought recourse to this Court, the union in G.R. 178409 and the
company in G.R. 178434.
The Issues Presented
The issues these cases present are:
85
1. Whether or not the CA erred in holding that slowdowns actually transpired at the companys farms; and
2. Whether or not the CA erred in holding that union officers committed illegal acts that warranted their dismissal
from work.
The Rulings of the Court
First. The law is explicit: no strike shall be declared after the Secretary of Labor has assumed jurisdiction over a labor
dispute. A strike conducted after such assumption is illegal and any union officer who knowingly participates in the same
may be declared as having lost his employment. 1 Here, what is involved is a slowdown strike. Unlike other forms of strike,
the employees involved in a slowdown do not walk out of their jobs to hurt the company. They need only to stop work or
reduce the rate of their work while generally remaining in their assigned post.
The Court finds that the union officers and members in this case held a slowdown strike at the companys farms despite
the fact that the DOLE Secretary had on May 12, 2003 already assumed jurisdiction over their labor dispute. The evidence
sufficiently shows that union officers and members simultaneously stopped work at the companys Batangas and Cavite
farms at 7:00 a.m. on May 26, 2003.
The union of course argues that it merely held assemblies to inform members of the developments in the CBA negotiation,
not protest demonstrations over it. But as the CA correctly observed, if the meetings had really been for the stated reason,
why did the union officers and members from separate company farms choose to start and end their meetings at the same
time and on the same day? And if they did not intend a slowdown, why did they not hold their meetings after work. There
is no allegation that the company prevented the union from holding meetings after working hours.
Second. A distinction exists, however, between the ordinary workers liability for illegal strike and that of the union officers
who participated in it. The ordinary worker cannot be terminated for merely participating in the strike. There must be proof
that he committed illegal acts during its conduct. On the other hand, a union officer can be terminated upon mere proof
that he knowingly participated in the illegal strike. 2
Still, the participating union officers have to be properly identified. 3 The CA held that the company illegally terminated
union officers Ruben Alvarez, John Asotigue, Alberto Castillo, Nemesio Agtay, Carlito Abacan, Danilo Rolle, and Juanito
Tenorio, there being no substantial evidence that would connect them to the slowdowns. The CA said that their part in the
same could not be established with certainty.
But, although the witnesses did not say that Asotigue, Alvarez, and Rolle took part in the work slowdown, these officers
gave no credible excuse for being absent from their respective working areas during the slowdown. Tenorio allegedly took
a break and never went back to work. He claimed that he had to attend to an emergency but did not elaborate on the
nature of such emergency. In Abacans case, however, he explained that he was not feeling well on May 26, 2003 and so
he decided to take a two-hour rest from work. This claim of Abacan is consistent with the report 4 that only one officer
(Tenorio) was involved in the slowdown at the Calamias farm.1avvphi1
At the Quilo farm, the farm supervisor did not include Castillo in the list of employees who failed to report for work on May
26, 2003.5 In Agtays case, the evidence is that he was on his rest day. There is no proof that the unions president, Yolito
Fadriquelan, did not show up for work during the slowdowns. The CA upheld his dismissal, relying solely on a security
guards report that the company submitted as evidence. But, notably, that report actually referred to a Rolly Fadrequellan,
another employee who allegedly took part in the Lipa farm slowdown. Besides, Yolito Fadriquelan was then assigned at
the General Trias farm in Cavite, not at the Lipa farm. In fact, as shown in the sworn statements 6 of the Cavite farm
employees, Fadriquelan even directed them not to do anything which might aggravate the situation. This clearly shows
that his dismissal was mainly based on his being the union president.
The Court sustains the validity of the termination of the rest of the union officers. The identity and participations of Arturo
Eguna,7 Armando
Malaluan,8 Danilo
Alonso,9 Romulo
Dimaano,10 Roel
Mayuga,11 Wilfredo
Rizaldo,12Romeo
13
14
15
Suico, Domingo Escamillas, and Domingo Bautro in the slowdowns were properly established. These officers simply
refused to work or they abandoned their work to join union assemblies.
86
In termination cases, the dismissed employee is not required to prove his innocence of the charges against him. The
burden of proof rests upon the employer to show that the employees dismissal was for just cause. The employers failure
to do so means that the dismissal was not justified. 16 Here, the company failed to show that all 17 union officers deserved
to be dismissed.
Ordinarily, the illegally dismissed employees are entitled to two reliefs: reinstatement and backwages. Still, the Court has
held that the grant of separation pay, instead of reinstatement, may be proper especially when as in this case such
reinstatement is no longer practical or will be for the best interest of the parties. 17 But they shall likewise be entitled to
attorneys fees equivalent to 10% of the total monetary award for having been compelled to litigate in order to protect their
interests.18
WHEREFORE, the Court MODIFIES the decision of the Court of Appeals in CA-G.R. SP 82526, DECLARESMonterey
Foods Corporations dismissal of Alberto Castillo, Nemesio Agtay, Carlito Abacan, and Yolito Fadriquelan illegal, and
ORDERS payment of their separation pay equivalent to one month salary for every year of service up to the date of their
termination. The Court also ORDERS the company to pay 10% attorneys fees as well as interest of 6% per annum on the
due amounts from the time of their termination and 12% per annum from the time this decision becomes final and
executory until such monetary awards are paid.
SO ORDERED.
CASE 16
SUPREME COURT
Manila
87
THIRD DIVISION
G.R. No. 190515
June 6, 2011
CIRTEK EMPLOYEES LABOR UNION-FEDERATION OF FREE WORKERS Petitioner,

vs.
CIRTEK ELECTRONICS, INC., Respondent.
RESOLUTION
CARPIO MORALES, J.:
This resolves the motion for reconsideration and supplemental motion for reconsideration filed by respondent, Cirtek
Electronics, Inc., of the Courts Decision dated November 15, 2010.
Respondent-movant avers that petitioner, in filing the petition for certiorari under Rule 65, availed of the wrong remedy,
hence, the Court should have dismissed the petition outright. It goes on to aver that the Court erred in resolving a factual
issue whether the August 24, 2005 Memorandum of Agreement (MOA) was validly entered into , which is not the office
of a petition for certiorari.
Respondent-movant further avers that the MOA 1 signed by the remaining officers of petitioner Union and allegedly ratified
by its members should have been given credence by the Court.
Furthermore, respondent-movant maintains that the Secretary of Labor cannot insist on a ruling beyond the compromise
agreement entered into by the parties; and that, as early as February 5, 2010, petitioner Union had already filed with the
Department of Labor and Employment (DOLE) a resolution of disaffiliation from the Federation of Free Workers resulting
in the latters lack of personality to represent the workers in the present case.
The motion is bereft of merit.
Respondent indeed availed of the wrong remedy of certiorari under Rule 65. Due, however, to the nature of the case, one
involving workers wages and benefits, and the fact that whether the petition was filed under Rule 65 or appeal by
certiorari under Rule 45 it was filed within 15 days (the reglementary period under Rule 45) from petitioners receipt of the
resolution of the Court of Appeals Resolution denying its motion for reconsideration, the Court resolved to give it due
course. As Almelor v. RTC of Las Pias, et al. 2 restates:
Generally, an appeal taken either to the Supreme Court or the CA by the wrong or inappropriate mode shall be dismissed.
This is to prevent the party from benefiting from ones neglect and mistakes. However, like most rules, it carries certain
exceptions. After all, the ultimate purpose of all rules of procedures is to achieve substantial justice as expeditiously as
possible. (emphasis and underscoring supplied)
Respecting the attribution of error to the Court in ruling on a question of fact, it bears recalling that a QUESTION OF FACT
arises when the doubt or difference arises as to the truth or falsehood of alleged facts, 3 while a QUESTION OF LAW
exists when the doubt or difference arises as to what the law is on a certain set of facts.
The present case presents the primordial issue of whether the Secretary of Labor is empowered to give arbitral awards in
the exercise of his authority to assume jurisdiction over labor disputes.
Ineluctably, the issue involves a determination and application of existing law, the provisions of the Labor Code, and
prevailing jurisprudence. Intertwined with the issue, however, is the question of validity of the MOA and its ratification
which, as movant correctly points out, is a question of fact and one which is not appropriate for a petition for review on
certiorari under Rule 45. The rule, however, is not without exceptions, viz:
This rule provides that the parties may raise only questions of law, because the Supreme Court is not a trier of facts.
Generally, we are not duty-bound to analyze again and weigh the evidence introduced in and considered by the tribunals
88
below. When supported by substantial evidence, the findings of fact of the CA are conclusive and binding on the parties
and are not reviewable by this Court, unless the case falls under any of the followingrecognized exceptions:
(1) When the conclusion is a finding grounded entirely on speculation, surmises and conjectures;
(2) When the inference made is manifestly mistaken, absurd or impossible;
(3) Where there is a grave abuse of discretion;
(4) When the judgment is based on a misapprehension of facts;
(5) When the findings of fact are conflicting;
(6) When the Court of Appeals, in making its findings, went beyond the issues of the case and the same is
contrary to the admissions of both appellant and appellee;
(7) When the findings are contrary to those of the trial court;
(8) When the findings of fact are conclusions without citation of specific evidence on which they are based;
(9) When the facts set forth in the petition as well as in the petitioners' main and reply briefs are not disputed by
the respondents; and
(10) When the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and
contradicted by the evidence on record. (emphasis and underscoring supplied)
In the present case, the findings of the Secretary of Labor and the appellate court on whether the MOA is valid and
binding are conflicting, the former giving scant consideration thereon, and the latter affording it more weight.
As found by the Secretary of Labor, the MOA came about as a result of the constitution, at respondents behest, of the
Labor-Management Council (LMC) which, he reminded the parties, should not be used as an avenue for bargaining but
for the purpose of affording workers to participate in policy and decision-making. Hence, the agreements embodied in the
MOA were not the proper subject of the LMC deliberation or procedure but of CBA negotiations and, therefore, deserving
little weight.
The appellate court, held, however, that the Secretary did not have the authority to give an arbitral award higher than what
was stated in the MOA. The conflicting views drew the Court to re-evaluate the facts as borne by the records, an
exception to the rule that only questions of law may be dealt with in an appeal by certiorari under Rule 45.
As discussed in the Decision under reconsideration, the then Acting Secretary of Labor Manuel G. Imson acted well within
his jurisdiction in ruling that the wage increases to be given are P10 per day effective January 1, 2004 and P15 per day
effective January 1, 2005, pursuant to his power to assume jurisdiction under Art. 263 (g) 4 of the Labor Code.
While an arbitral award cannot per se be categorized as an agreement voluntarily entered into by the parties because it
requires the interference and imposing power of the State thru the Secretary of Labor when he assumes jurisdiction, the
award can be considered as an approximation of a collective bargaining agreement which would otherwise have been
entered into by the parties. Hence, it has the force and effect of a valid contract obligation between the parties. 5
In determining arbitral awards then, aside from the MOA, courts considered other factors and documents including, as in
this case, the financial documents6 submitted by respondent as well as its previous bargaining history and financial
outlook and improvements as stated in its own website. 7
The appellate courts ruling that giving credence to the "Pahayag" and the minutes of the meeting which were not verified
and notarized would violate the rule on parol evidence is erroneous. The parol evidence rule, like other rules on evidence,
89
should not be strictly applied in labor cases. Interphil Laboratories Employees Union-FFW v. Interphil Laboratories,
Inc. 8 teaches:
[R]eliance on the parol evidence rule is misplaced. In labor cases pending before the Commission or the Labor Arbiter, the
rules of evidence prevailing in courts of law or equity are not controlling. Rules of procedure and evidence are not applied
in a very rigid and technical sense in labor cases. Hence, the Labor Arbiter is not precluded from accepting and evaluating
evidence other than, and even contrary to, what is stated in the CBA. (emphasis and underscoring supplied)
On the contention that the MOA should have been given credence because it was validly entered into by the parties, the
Court notes that even those who signed it expressed reservations thereto. A CBA (assuming in this case that the MOA can
be treated as one) is a contract imbued with public interest. It must thus be given a liberal, practical and realistic, rather
than a narrow and technical construction, with due consideration to the context in which it is negotiated and the purpose
for which it is intended.9
As for the contention that the alleged disaffiliation of the Union from the FFW during the pendency of the case resulted in
the FFW losing its personality to represent the Union, the same does not affect the Courts upholding of the authority of
the Secretary of Labor to impose arbitral awards higher than what was supposedly agreed upon in the MOA. Contrary to
respondents assertion, the "unavoidable issue of disaffiliation" bears no significant legal repercussions to warrant the
reversal of the Courts Decision.
En passant, whether there was a valid disaffiliation is a factual issue. Besides, the alleged disaffiliation of the Union from
the FFW was by virtue of a Resolution signed on February 23, 2010 and submitted to the DOLE Laguna Field Office on
March 5, 2010 two months after the present petition was filed on December 22, 2009, hence, it did not affect FFW and
its Legal Centers standing to file the petition nor this Courts jurisdiction to resolve the same.
At all events, the issue of disaffiliation is an intra-union dispute which must be resolved in a different forum in an action at
the instance of either or both the FFW and the Union or a rival labor organization, not the employer.
An intra-union dispute refers to any conflict between and among union members, including grievances arising from any
violation of the rights and conditions of membership, violation of or disagreement over any provision of the unions
constitution and by-laws, or disputes arising from chartering or disaffiliation of the union. Sections 1 and 2, Rule XI of
Department Order No. 40-03, Series of 2003 of the DOLE enumerate the following circumstances as inter/intra-union
disputes, viz:
RULE
INTER/INTRA-UNION
OTHER RELATED LABOR RELATIONS DISPUTES
DISPUTES
XI
AND
Section 1. Coverage. - Inter/intra-union disputes shall include:

(a) cancellation of registration of a labor organization filed by its members or by another labor organization;
(b) conduct of election of union and workers association officers/nullification of election of union and workers
association officers;
(c) audit/accounts examination of union or workers association funds;
(d) deregistration of collective bargaining agreements;
(e) validity/invalidity of union affiliation or disaffiliation;
(f) validity/invalidity of acceptance/non-acceptance for union membership;
(g) validity/invalidity of impeachment/expulsion of union and workers association officers and members;
90
(h) validity/invalidity of voluntary recognition;

(i) opposition to application for union and CBA registration;
(j) violations of or disagreements over any provision in a union or workers association constitution and by-laws;
(k) disagreements over chartering or registration of labor organizations and collective bargaining agreements;
(l) violations of the rights and conditions of union or workers association membership;
(m) violations of the rights of legitimate labor organizations, except interpretation of collective bargaining
agreements;
(n) such other disputes or conflicts involving the rights to self-organization, union membership and collective
bargaining
(1) between and among legitimate labor organizations;
(2) between and among members of a union or workers association.
Section 2. Coverage. Other related labor relations disputes shall include any conflict between a labor union and the
employer or any individual, entity or group that is not a labor organization or workers association. This includes: (1)
cancellation of registration of unions and workers associations; and (2) a petition for interpleader. 10(emphasis supplied)
Indeed, as respondent-movant itself argues, a local union may disaffiliate at any time from its mother federation, absent
any showing that the same is prohibited under its constitution or rule. Such, however, does not result in it losing its legal
personality altogether. Verily, Anglo-KMU v. Samahan Ng Mga Manggagawang Nagkakaisa Sa Manila Bay Spinning Mills
At J.P. Coats11 enlightens:
A local labor union is a separate and distinct unit primarily designed to secure and maintain an equality of bargaining
power between the employer and their employee-members. A local union does not owe its existence to the federation with
which it is affiliated. It is a separate and distinct voluntary association owing its creation to the will of its members. The
mere act of affiliation does not divest the local union of its own personality, neither does it give the mother federation the
license to act independently of the local union. It only gives rise to a contract of agency where the former acts in
representation of the latter. (emphasis and underscoring supplied)1avvphi1
Whether then, as respondent claims, FFW "went against the will and wishes of its principal" (the member-employees) by
pursuing the case despite the signing of the MOA, is not for the Court, nor for respondent to determine, but for the Union
and FFW to resolve on their own pursuant to their principal-agent relationship.
WHEREFORE, the motion for reconsideration of this Courts Decision of November 15, 2010 is DENIED.
SO ORDERED.
91
CASE 17
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 160138
July 13, 2011
AUTOMOTIVE ENGINE REBUILDERS, INC. (AER), ANTONIO T. INDUCIL, LOURDES T. INDUCIL, JOCELYN T.
INDUCIL and MA. CONCEPCION I. DONATO, Petitioners,
vs.
PROGRESIBONG UNYON NG MGA MANGGAGAWA SA AER, ARNOLD VILLOTA, FELINO E. AGUSTIN, RUPERTO
M. MARIANO II, EDUARDO S. BRIZUELA, ARNOLD S. RODRIGUEZ, RODOLFO MAINIT, JR., FROILAN B.
MADAMBA, DANILO D. QUIBOY, CHRISTOPHER R. NOLASCO, ROGER V. BELATCHA, CLEOFAS B. DELA
BUENA, JR., HERMINIO P. PAPA, WILLIAM A. RITUAL, ROBERTO CALDEO, RAFAEL GACAD, JAMES C.
CAAMPUED, ESPERIDION V. LOPEZ, JR., FRISCO M. LORENZO, JR., CRISANTO LUMBAO, JR., and RENATO
SARABUNO, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 160192
PROGRESIBONG UNYON NG MGA MANGGAGAWA SA AER, ARNOLD VILLOTA, FELINO E. AGUSTIN, RUPERTO
M. MARIANO II, EDUARDO S. BRIZUELA, ARNOLD S. RODRIGUEZ, RODOLFO MAINIT, JR., FROILAN B.
MADAMBA, DANILO D. QUIBOY, CHRISTOPHER R. NOLASCO, ROGER V. BELATCHA, CLEOFAS B. DELA
BUENA, JR., HERMINIO P. PAPA, WILLIAM A. RITUAL, ROBERTO CALDEO, RAFAEL GACAD, JAMES C.
CAAMPUED, ESPERIDION V. LOPEZ, JR., FRISCO M. LORENZO, JR., CRISANTO LUMBAO, JR., and RENATO
SARABUNO, Petitioners,
vs.
AUTOMOTIVE ENGINE REBUILDERS, INC., and ANTONIO T. INDUCIL, Respondents.
DECISION
MENDOZA, J.:
Challenged in these consolidated petitions for review is the October 1, 2003 Amended Decision 1 of the Court of
Appeals (CA), in CA-G.R. SP No. 73161, which modified the Resolution 2 of the National Labor Relations
Commission (NLRC), by ordering the immediate reinstatement of all the suspended employees of Automotive Engine
Rebuilders, Inc. (AER) without backwages.
Records show that AER is a company engaged in the automotive engine repair and rebuilding business and other
precision and engineering works for more than 35 years. Progresibong Unyon Ng Mga Manggagawa sa AER(Unyon) is
the legitimate labor union of the rank and file employees of AER which was formed in the year 1998.
92
Due to a dispute between the parties, both filed a complaint against each other before the NLRC. AER accused the Unyon
of illegal concerted activities (illegal strike, illegal walkout, illegal stoppage, and unfair labor practice) while Unyon accused
AER of unfair labor practice, illegal suspension and illegal dismissal.
AERs Managements Version
On January 28, 1999, eighteen (18) employees of AER, acting collectively and in concert, suddenly and without reason
staged a walkout and assembled illegally in the company premises.
Despite managements plea for them to go back to work, the concerned employees refused and, instead, walked out of
the company premises and proceeded to the office of the AER Performance and Service Center (AER-PSC)located on
another street. Upon arrival, they collectively tried to cart away one (1) line boring machine owned by AER out of the AERPSC premises. They threatened and forced the company guards and some company officers and personnel to open the
gate of the AER-PSC compound. They also urged the AER-PSC employees to likewise stop working.
The concerned employees occupied the AER-PSC premises for several hours, thus, disrupting the work of the other
employees and AERs services to its clients. They refused to stop their unlawful acts despite the intervention of the
barangay officers. They left the AER-PSC premises only when the police intervened and negotiated with them.
Subsequently, management issued a memorandum requiring the employees who joined the illegal walkout to explain in
writing why they should not be disciplined administratively and dismissed for their unjustified and illegal acts.
The concerned employees submitted their written explanation which contained their admissions regarding their unjustified
acts. Finding their explanation unsatisfactory, AER terminated the services of the concerned employees.
On February 22, 1999, the concerned employees started a wildcat strike, barricaded company premises, and prevented
the free ingress and egress of the other employees, officers, clients, and visitors and the transportation of company
equipments. They also tried to use force and inflict violence against the other employees. Their wildcat strike stopped after
the NLRC issued and served a temporary restraining order (TRO).
Meantime, six (6) of the concerned employees, namely: Oscar Macaranas, Bernardino Acosta, Ferdinand Flores, Benson
Pingol, Otillo Rabino, and Jonathan Taborda resigned from the company and signed quitclaims.
Unyons Version
On December 22, 1998, Unyon filed a petition for certification election before the Department of Labor and
Employment (DOLE) after organizing their employees union within AER. Resenting what they did, AER forced all of its
employees to submit their urine samples for drug testing. Those who refused were threatened with dismissal.
On January 8, 1999, the results of the drug test came out and the following employees were found positive for illegal
drugs: Froilan Madamba, Arnold Rodriguez, Roberto Caldeo, Roger Bilatcha, Ruperto Mariano, Edwin Fabian, and
Nazario Madala.
On January 12, 1999, AER issued a memorandum suspending these employees from work for violation of Article D, Item
2 of the Employees handbook which reads as follows:
Coming to work under the influence of intoxicating liquor or any drug or drinking any alcoholic beverages on the premises
on company time.
Out of the seven (7) suspended employees, only Edwin Fabian and Nazario Madala were allowed by AER to report back
to work. The other five (5) suspended employees were not admitted by AER without first submitting the required medical
certificate attesting to their fitness to work.
93
While they were in the process of securing their respective medical certificates, however, they were shocked to receive a
letter from AER charging them with insubordination and absence without leave and directing them to explain their acts in
writing. Despite their written explanation, AER refused to reinstate them.
Meanwhile, Unyon found out that AER was moving out machines from the main building to the AER-PSC compound
located on another street. Sensing that management was going to engage in a runaway shop, Unyon tried to prevent the
transfer of the machines which prompted AER to issue a memorandum accusing those involved of gross insubordination,
work stoppage and other offenses.
On February 2, 1999, the affected workers were denied entry into the AER premises by order of management. Because of
this, the affected workers staged a picket in front of company premises hoping that management would accept them back
to work. When their picket proved futile, they filed a complaint for unfair labor practice, illegal suspension and illegal
dismissal.
Ruling of the Labor Arbiter
On August 9, 2001, the Labor Arbiter (LA) rendered a decision3 in favor of Unyon by directing AER to reinstate the
concerned employees but without backwages effective October 16, 2001.
The LA ruled, among others, that the concerned employees were suspended from work without a valid cause and without
due process. In finding that there was illegal suspension, the LA held as follows:
There is no doubt that the hostile attitude of the management to its workers and vice versa started when the workers
began organizing themselves into a union. As soon as the management learned and received summons regarding the
petition for certification election filed by the employees, they retaliated by causing the employees to submit themselves to
drug test. And out of the seven who were found positive, five were placed on a 12 day suspension namely: (1) Froilan
Madamba; (2) Arnold Rodriguez; (3) Roberto Caldeo; (4) Roger Belatcha; and (5) Ruperto Mariano.
This is illegal suspension plain and simple. Even if they were found positive for drugs, they should have been caused to
explain why they were found so. It could have been that they have taken drugs as cure for ailment under a physicians
prescription and supervision. Doubts should be in favor of the working class in the absence of evidence that they are drug
addicts or they took prohibited or regulated drugs without any justifiable reason at all. In fact, there is not even a showing
by the company that the performance of these employees was already adversely affected by their use of drugs.
Lest be misunderstood that we are considering use of prohibited drug or regulated drugs, what we abhor is suspension
without valid cause and without due process.4
The LA further held that AER was guilty of illegal dismissal for refusing to reinstate the five (5) employees unless they
submit a medical certificate that they were fit to work. Thus:
x x x Firstly, the employer has not even established that the five employees are sick of ailments which are not curable
within six months, a burden which rests upon the employers and granting that they were sick or drug addicts, the remedy
is not dismissal but to allow them to be on sick leave and be treated of their illness and if not cured within 6 months, that is
the time that they may be separated from employment but after payment of months salary for every year of service by
way of separation pay.5
Finally, the LA held that the concerned employees were not totally without fault. The concerted slowdown of work that they
conducted in protesting their illegal suspension was generally illegal and unjustifiable. The LA, thus, ruled that both parties
were in pari delicto and, therefore, must suffer the consequences of the wrong they committed.
NLRC Ruling
Both parties filed their respective appeals with the NLRC. The concerned employees argued that the LA erred in 1) not
awarding backwages to them during the period of their suspension; 2) not holding that AER is guilty of unfair labor
practice; and 3) not holding that they were illegally dismissed from their jobs. 6 AER, on the other hand, claimed that the LA
94
erred in finding that there was illegal dismissal and in ordering the reinstatement of the concerned employees without
backwages.7
On March 5, 2002, the NLRC issued a Resolution 8 modifying the LA decision by setting aside the order of reinstatement
as it found no illegal dismissal.
The NLRC, however, considered only three (3) out of the eighteen concerned employees, (18) namely: Froilan Madamba,
Ruperto Mariano, and Roberto Caldeo because their names were commonly identified in the LA decision and in the
concerned employees position paper as those employees who were allegedly illegally suspended.
It wrote that these three (3) employees were validly suspended because they were found positive for illegal drugs in the
drug test conducted by AER. Management was just exercising its management prerogative in requiring them to submit a
medical fit-to-work certificate before they could be admitted back to work. The drug test was found to be not discriminatory
because all employees of AER were required to undergo the drug test. Neither was the drug test related to any union
activity.
Finally, the NLRC ruled that the concerned employees had no valid basis in conducting a strike. Considering that the
concerted activity was illegal, AER had the right to immediately dismiss them.
Unyon and the concerned employees filed a petition before the CA advancing the following
ARGUMENTS
PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN HOLDING THAT THERE ARE ONLY
THREE (3) REMAINING COMPLAINANTS IN THE CASE FILED BY THE PETITIONERS.
PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN HOLDING THAT THE SUSPENSION OF
SEVERAL PETITIONERS WAS VALID DESPITE THE ABSENCE OF DUE PROCESS.
PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN SUSTAINING THE VALIDITY OF THE
DISMISSAL OF EMPLOYEES WHO TESTED POSITIVE DURING THE DRUG TEST.
PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN ABSOLVING PRIVATE RESPONDENTS OF
THE OFFENSE OF UNFAIR LABOR PRACICE.
PUBLIC RESPONDENT ACTED WITH GRAVE ABUSE OF DISCRETION IN DISMISSING PETITIONERS COMPLAINT
FOR ILLEGAL DISMISSAL.
The CA Ruling
On June 27, 2003, the CA rendered a decision,9 the dispositive portion of which reads as follows:
WHEREFORE, premises considered, the petition is GRANTED. Respondents are hereby directed to reinstate the
petitioners effective immediately but without backwages, except those who were tested positive for illegal drugs and have
failed to submit their respective medical certificates.
SO ORDERED.10
The CA explained that there still remained 26 complaining employees and not just three (3) as claimed by the NLRC,
because 32 members of Unyon signed and filed the complaint, and from the 32 complaining members, only six (6)
voluntarily signed quitclaims in favor of AER. It reasoned out that the number of parties to a complaint would correspond
to the number of signatories thereto and not necessarily to the names commonly appearing or identified in the position
paper and the LA decision. Citing Section 6 of the Rules of Court, the CA held that all persons in whom or against whom
any right to relief in respect to or arising out of the same transaction or series of transactions is alleged to exist, whether
jointly, severally, or in the alternative, may join as plaintiffs or be joined as defendants in one complaint.
95
The CA, however, agreed with the NLRC on the legality and validity of the suspension. The CA wrote:
The petitioners themselves have admitted that all of them were ordered to give their urine samples for the drug test; that
the drug test was applicable to all the employees lends credence that such test was not related to any union activity. The
union members were not singled out for said drug testing.
The complainants who tested positive for illegal drugs were validly suspended under the company rules. The Employees
Handbook of Company Rules and Regulations prohibit employees from reporting for work under the influence of
intoxicating liquor and drugs.
With the finding that the petitioners tested positive for illegal drugs, AER merely exercised their management prerogative
to require a medical certificate that said employees were already fit to work before they can be admitted back to work.
Due to the failure of the affected petitioners to submit a medical certificate that they are already fit to work, they were
dismissed. Petitioners act of not reporting for duty upon presentation of the medical certificate that they are fit to work as
per agreement with the DOLE NCMB on January 25, 1999 had the marks of willful disobedience giving AER the right to
terminate employment.11
The CA further ruled that both parties were guilty of unfair labor practice. It stated that the hostile attitude of AER towards
its workers and vice-versa started when the workers began organizing themselves into a union. AER tried to have a
runaway shop when it transferred some of its machinery from the main building to the AER-PSC office located on another
street on the pretext that the main building was undergoing renovation. AER also prevented its employees, even those
who were excluded from its complaint, from going back to work for allegedly staging an illegal strike. On the other hand,
the concerted work slowdown staged by the concerned employees as a result of their alleged illegal suspension was
unjustified. Hence, both parties were found by the CA to be in pari delicto and must bear the consequences of their own
wrongdoing.
On October 1, 2003, upon the motion for partial reconsideration filed by Unyon praying for the payment of full backwages
and the reinstatement of all suspended employees, the CA rendered the assailed Amended Decision, the dispositive
portion of which reads, as follows:
WHEREFORE, the partial motion for reconsideration is GRANTED insofar as the reinstatement of the suspended
employees is concerned. This Courts decision dated June 27, 2003 is hereby MODIFIED. Private respondents are hereby
directed to reinstate all the petitioners immediately without backwages.
SO ORDERED.12
Unsatisfied, both parties filed the present consolidated petitions on the following
GROUNDS
FOR UNYON:
THE COURT OF APPEALS LEGALLY ERRED IN NOT AWARDING BACKWAGES TO INDIVIDUAL PETITIONERS
NOTWITHSTANDING HAVING ORDERED THEIR REINSTATEMENT TO THEIR PREVIOUS POSITIONS.
FOR AER:
THE HONORABLE COURT OF APPEALS ERRED GRIEVOUSLY WHEN IT GAVE SO MUCH WEIGHT ON THE
PRIVATE RESPONDENTS PARTIAL MOTION FOR RECONSIDERATION BY AMENDING ITS DECISION IN
ORDERING THEIR IMMEDIATE REINSTATEMENT INCLUDING THOSE WHO HAVE TESTED POSITIVE FOR
ILLEGAL DRUGS (DRUG ADDICTS) AND HAVE FAILED TO SUBMIT ANY MEDICAL CERTIFICATE.
G.R. No. 160138
96
AERs Position
AER questions the findings of the CA that there were 32 complaining employees, which number was reduced to only 26
because six (6) resigned and signed waivers and quitclaims. It argues that the CA should have respected the findings of
the LA and the NLRC that there were only 18 complaining employees, which was reduced to 12 due to the resignations
and signing of the corresponding Release and Quitclaims by six (6) of them. The figure was further reduced to 8, and
finally to just 3 complaining employees.
AER argues that the reinstatement of those employees who tested positive for drugs and refused to submit their
respective medical certificate certifying that they were fit to work, violated AERs rules and regulations, and the law in
general because it would allow the sheltering of drug addicts in company premises.
AER likewise insists that the drug test that it conducted was not related to any union activity because the test covered all
employees. The drug test was part of company rules and guidelines designed to instill discipline and good behavior
among its employees as contained in its Employees Manual Company Rules and Regulations. AER also claims that it
simply exercised its employers prerogative in requiring a medical certificate from the affected employees.
Finally, AER avers that the complaining employees, who did not report back to work despite their medical certificate
attesting that they were fit to work, committed willful disobedience. AER claims that the complainingemployees violated
their agreement with the DOLE-National Conciliation and Mediation Board (NCMB) dated January 25, 1999. AER likewise
contends that the complaining employees are deemed to have lost their employment status when they engaged in
unlawful activities such as abandonment of work, stoppage of work and the commission of attempted theft involving its
boring machine. Hence, the termination of their employment was valid.
Unyons Position
Unyon argues that the complaint it filed indicated that there were 32 complainants who signed the complaint. Out of the
32, six (6) executed waivers and quitclaims leaving 26 complainants, not 3 as claimed by AER.
Unyon likewise avers that the dismissal of the affected employees was unlawful for lack of valid ground and prior notice.
Although it admits that some of the complainant employees tested positive for drugs, it posits that AER should have, at
least, required those affected employees to explain why they tested positive for drugs because it could be possible that
the drug taken was a regulated drug for an ailment and prescribed by a doctor. Therefore, prior notice or due process was
still necessary.
Unyon further asserts that the penalty for testing positive for illegal drugs was only a 15-day suspension, which was
already served by the affected employees. It also points out that AER never imposed the policy of drug examination on its
employees before the union was organized. Clearly, AER adopted a hostile attitude towards the workers when they
organized themselves into a union.
Moreover, of the 32 complaining employees in the illegal dismissal case against AER, only 18 were charged by AER with
illegal strike. Unyon argues that AER should have admitted back to work those employees who were not included in the
charge. There was no allegation either that those excluded were involved in the January 28, 1999 incident.
Lastly, Unyon claims that the penalty of outright dismissal against the eighteen (18) employees charged with illegal strike
was grossly disproportionate to their offense.
G.R. 160192
Unyons Position
Unyon basically argues that there was enough proof that AER acted in bad faith and it was guilty of illegal lock-out for
preventing the affected employees from going back to work. Hence, the complaining employees are entitled to
backwages.
97
AERs Position
AER counters that there are only three (3) remaining complaining employees who were validly suspended, namely:
Froilan Madamba, Ruperto Mariano and Roberto Caldeo. AER claims that these employees are not entitled to backwages
or even reinstatement because their separation from work was valid due to their unlawful activities and willful
disobedience. AER further states that Unyon failed to properly file a verified position paper. Hence, the complaining
employees who failed to file a verified position paper should be excluded from the petition.
In sum, the main issue to be resolved in these consolidated cases is whether or not the CA erred in ruling for the
reinstatement of the complaining employees but without grant of backwages.
The Courts Ruling
The Court agrees with the ruling of the CA that there were 32 complaining employees who filed and signed their complaint
dated February 18, 1999 for unfair labor practice, illegal dismissal and illegal suspension. 13 Out of the 32, six (6)
undeniably resigned and signed waivers and quitclaims, leaving 26 remaining complainant employees. Thus, the Court
adopts and affirms the following CA ruling on this matter:
The number of parties to a complaint corresponds to the number of signatories thereto and not necessarily to the names
commonly appearing or identified in the position paper. All persons in whom or against whom any right to relief in respect
to or arising out of the same transaction or series of transactions is alleged to exist whether jointly, severally, or in the
alternative, may, except as otherwise provided in these Rules, join as plaintiffs or be joined as defendants in one
complaint, where any question of law or fact common to all such plaintiffs or to all such defendants may arise in the action;
but the court may make such orders as may be just to prevent any plaintiff or defendant from being embarrassed or put to
expense in connection with any proceedings in which he may have no interest. 14
This Court likewise affirms the ruling of the CA favoring the reinstatement of all the complaining employees including those
who tested positive for illegal drugs, without backwages. The Court is in accord with the ruling of the LA and the CA that
neither party came to court with clean hands. Both were in pari delicto.
It cannot be disputed that both parties filed charges against each other, blaming the other party for violating labor laws.
AER filed a complaint against Unyon and its 18 members for illegal concerted activities. It likewise suspended 7 union
members who tested positive for illegal drugs. On the other hand, Unyon filed a countercharge accusing AER of unfair
labor practice, illegal suspension and illegal dismissal. In other words, AER claims that Unyon was guilty of staging an
illegal strike while Unyon claims that AER committed an illegal lockout.
AERs fault is obvious from the fact that a day after the union filed a petition for certification election before the DOLE, it hit
back by requiring all its employees to undergo a compulsory drug test. Although AER argues that the drug test was
applied to all its employees, it was silent as to whether the drug test was a regular company policy and practice in their 35
years in the automotive engine repair and rebuilding business. As the Court sees it, it wasAERs first ever drug test of its
employees immediately implemented after the workers manifested their desire to organize themselves into a union.
Indeed, the timing of the drug test was suspicious.
Moreover, AER failed to show proof that the drug test conducted on its employees was performed by an authorized drug
testing center. It did not mention how the tests were conducted and whether the proper procedure was employed. The
case of Nacague v. Sulpicio Lines,15 is instructive:
Contrary to Sulpicio Lines allegation, Nacague was already questioning the credibility of S.M. Lazo Clinic as early as the
proceedings before the Labor Arbiter. In fact, the Labor Arbiter declared that the S.M. Lazo Clinic drug test result was
doubtful since it is not under the supervision of the Dangerous Drug Board.
The NLRC and the Court of Appeals ruled that Sulpicio Lines validly terminated Nacagues employment because he was
found guilty of using illegal drugs which constitutes serious misconduct and loss of trust and confidence. However, we find
that Sulpicio Lines failed to clearly show that Nacague was guilty of using illegal drugs. We agree with the Labor Arbiter
that the lack of accreditation of S.M. Lazo Clinic made its drug test results doubtful.
98
Section 36 of R.A. No. 9165 provides that drug tests shall be performed only by authorized drug testing centers.
Moreover, Section 36 also prescribes that drug testing shall consist of both the screening test and the
confirmatory test. Section 36 of R.A. No. 9165 reads:
SEC. 36. Authorized Drug Testing. Authorized drug testing shall be done by any government forensic laboratories
or by any of the drug testing laboratories accredited and monitored by the DOH to safeguard the quality of test
results. The DOH shall take steps in setting the price of the drug test with DOH accredited drug testing centers to further
reduce the cost of such drug test. The drug testing shall employ, among others, two (2) testing methods, the
screening test which will determine the positive result as well as the type of drug used and the confirmatory test
which will confirm a positive screening test. x x x (Emphases supplied)
Department Order No. 53-03 further provides:
Drug Testing Program for Officers and Employees
Drug testing shall conform with the procedures as prescribed by the Department of Health (DOH) (www.doh.gov.ph). Only
drug testing centers accredited by the DOH shall be utilized. A list of accredited centers may be accessed through the
OSHC website (www.oshc.dole.gov.ph).
Drug testing shall consist of both the screening test and the confirmatory test; the latter to be carried out should
the screening test turn positive. The employee concerned must be informed of the test results whether positive or
negative.
In Social Justice Society v. Dangerous Drugs Board, we explained:
As to the mechanics of the test, the law specifies that the procedure shall employ two testing methods, i.e., the screening
test and the confirmatory test, doubtless to ensure as much as possible the trustworthiness of the results. But
the more important consideration lies in the fact that the tests shall be conducted by trained professionals in accesscontrolled laboratories monitored by the Department of Health (DOH) to safeguard against results tampering and to
ensure an accurate chain of custody.
The law is clear that drug tests shall be performed only by authorized drug testing centers. In this case, Sulpicio Lines
failed to prove that S.M. Lazo Clinic is an accredited drug testing center. Sulpicio Lines did not even deny Nacagues
allegation that S.M. Lazo Clinic was not accredited. Also, only a screening test was conducted to determine if Nacague
was guilty of using illegal drugs. Sulpicio Lines did not confirm the positive result of the screening test with a confirmatory
test. Sulpicio Lines failed to indubitably prove that Nacague was guilty of using illegal drugs amounting to serious
misconduct and loss of trust and confidence. Sulpicio Lines failed to clearly show that it had a valid and legal cause for
terminating Nacagues employment. When the alleged valid cause for the termination of employment is not clearly proven,
as in this case, the law considers the matter a case of illegal dismissal. (Emphases supplied)
Furthermore, AER engaged in a runaway shop when it began pulling out machines from the main AER building to the
AER-PSC compound located on another street on the pretext that the main building was undergoing renovation. Certainly,
the striking workers would have no reason to run and enter the AER-PSC premises and to cause the return of the
machines to the AER building if they were not alarmed that AER was engaging in a runaway shop.
AER committed another infraction when it refused to admit back those employees who were not included in its complaint
against the union. Thirty-two (32) employees filed a complaint for illegal dismissal, illegal suspension and unfair labor
practice against AER. AER charged 18 employees with illegal strike. AER should have reinstated the 14 employees
excluded from its complaint.
Regarding AERs contention that the affected workers abandoned their jobs, the Court has thoroughly reviewed the
records and found no convincing proof that they deliberately abandoned their jobs. Besides, this Court has consistently
declared in a myriad of labor cases that abandonment is totally inconsistent with the immediate filing of a complaint for
illegal dismissal.
99
In any event, the penalty of dismissal imposed by AER against the striking employees, who, by the way, only staged a one
day walkout, was too severe. The pronouncement in the case of Tupas Local Chapter No. 979 v. NLRC 16 is worth
reiterating:
Neither respondent commission's decision nor the labor arbiter's decision as affirmed with modification by it cites any
substantial facts or evidence to warrant the terribly harsh imposition of the capital penalty of dismissal and forfeiture of
employment on twenty-two of forty-four workers for having staged the so-called one-day (more accurately, a onemorning) "sitdown strike" on August 19, 1980 to inform respondent employer of their having formed their own union and
to present their just requests for allowances, overtime pay and service incentive leave pay. Prescinding from respondent
commission's misappreciation of the facts and evidence and accepting for the nonce its factual conclusion that the
petitioners staged a one-morning sit-down strike instead of making a mass representation for the employer to recognize
their newly formed union and negotiate their demands, respondent commission's decision is not in consonance with the
constitutional injunction that the Court has invariably invoked and applied to afford protection to labor and assure the
workers' rights to self-organization, collective bargaining, security of tenure and just and humane conditions of work. The
said decision likewise is not in accordance with settled and authoritative doctrine and legal principles that a mere finding
of the illegality of a strike does not automatically warrant a wholesale dismissal of the strikers from their
employment and that a premature or improvident strike should not be visited with a consequence so severe as
dismissal where a penalty less punitive would suffice. Numerous precedents to this effect have been cited and
reaffirmed x x x.
x x x x.
In the analogous case of PBM Employees Organization vs. PBM Co., Inc., 17[10]/ the Court, in setting aside the questioned
industrial court's orders held that "the dismissal or termination of the employment of the petitioning eight (8) leaders
of the union is harsh for a one-day absence from work." They had been ordered dismissed for having carried out a
mass demonstration at Malacaang on March 4, 1969 in protest against alleged abuses of the Pasig police department,
upon two days' prior notice to respondent employer company, as against the latter's insistence that the first shift should
not participate but instead report for work, under pain of dismissal. The Court held that they were merely exercising their
basic human rights and fighting for their very survival "in seeking sanctuary behind their freedom of expression as well as
their right of assembly and of petition against alleged persecution of local officialdom." We ruled that "(T)he appropriate
penalty - if it deserves any penalty at all - should have been simply to charge said one-day absence against their vacation
or sick leave. But to dismiss the eight (8) leaders of the petitioner Union is a most cruel penalty, since as aforestated the
Union leaders depend on their wages for their daily sustenance as well as that of their respective families aside from the
fact that it is a lethal blow to unionism, while at the same time strengthening the oppressive hand of the petty tyrants in the
localities." [Emphases supplied]
It must also be noted that there were no injuries during the brief walkout. Neither was there proof that the striking workers
inflicted harm or violence upon the other employees. In fact, the Police Memorandum 18 dated January 29, 1999 reported
no violent incidents and stated that all parties involved in the January 28, 1999 incident were allowed to go home and the
employees involved were just given a stern warning.
To the Courts mind, the complaining workers temporarily walked out of their jobs because they strongly believed that
management was committing an unfair labor practice. They had no intention of hurting anybody or steal company
property. Contrary to AERs assertion, the striking workers did not intend to steal the line boring machine which they tried
to cart away from the AER-PSC compound; they just wanted to return it to the main AER building.
Like management, the union and the affected workers were also at fault for resorting to a concerted work slowdown and
walking out of their jobs of protest for their illegal suspension. It was also wrong for them to have forced their way to the
AER-PSC premises to try to bring out the boring machine. The photos 19 shown by AER are enough proof that the
picketing employees prevented the entry and exit of non-participating employees and possibly AERs clients. Although the
unions sudden work stoppage lasted a day, it surely caused serious disturbance and tension within AERs premises and
could have adversely affected AERs clients and business in general.
The in pari delicto doctrine in labor cases is not novel to us. It has been applied in the case of Philippines Inter-Fashion,
Inc. v NLRC,20 where the Court held:
100
The Solicitor General has correctly stated in his comment that "from these facts are derived the following conclusions
which are likewise undisputed: that petitioner engaged in an illegal lockout while the NAFLU engaged in an illegal
strike; that the unconditional offer of the 150 striking employees to return to work and to withdraw their complaint of illegal
lockout against petitioner constitutes condonation of the illegal lock-out; and that the unqualified acceptance of the offer of
the 150 striking employees by petitioner likewise constitutes condonation of the illegal strike insofar as the reinstated
employees are concerned."
The issues at bar arise, however, from respondent commission's approval of its commissioner's conclusions that (1)
petitioner must be deemed to have waived its right to pursue the case of illegal strike against the 114 employees who
were not reinstated and who pursued their illegal lockout claim against petitioner; and (2) the said 114 employees are
entitled to reinstatement with three months' backwages.
The Court approves the stand taken by the Solicitor General that there was no clear and unequivocal waiver on the part of
petitioner and on the contrary the record shows that it tenaciously pursued its application for their dismissal, but
nevertheless in view of the undisputed findings of illegal strike on the part of the 114 employees and illegal lockout on
petitioner's part, both parties are in pari delicto and such situation warrants the restoration of the status quo ante
and bringing the parties back to the respective positions before the illegal strike and illegal lockout through the
reinstatement of the said 114 employees, as follows:
The Bisaya case (102 Phil. 438) is inapplicable to the present case, because in the former, there were only two strikers
involved who were both reinstated by their employer upon their request to return to work. However, in the present case,
there were more than 200 strikers involved, of which 150 who desired to return to work were reinstated. The rest were not
reinstated because they did not signify their intention to return to work. Thus, the ruling cited in the Bisaya case that the
employer waives his defense of illegality of the strike upon reinstatement of strikers is applicable only to strikers who
signified their intention to return to work and were accepted back ...
Truly, it is more logical and reasonable for condonation to apply only to strikers who signified their intention to return and
did return to work. The reason is obvious. These strikers took the initiative in normalizing relations with their employer and
thus helped promote industrial peace. However, as regards the strikers who decided to pursue with the case, as in the
case of the 114 strikers herein, the employer could not be deemed to have condoned their strike, because they had not
shown any willingness to normalize relations with it. So, if petitioner really had any intention to pardon the 114 strikers, it
would have included them in its motion to withdraw on November 17, 1980. The fact that it did not, but instead continued
to pursue the case to the end, simply means that it did not pardon the 114 strikers.
xxx
xxx
xxx
The finding of illegal strike was not disputed. Therefore, the 114 strikers employees who participated therein are liable for
termination (Liberal Labor Union v. Phil. Can Co., 91 Phil. 72; Insurefco Employees Union v. Insurefco, 95 Phil. 761). On
the other hard, the finding of illegal lockout was likewise not disputed. Therefore, the 114 employees affected by the
lockout are also subject to reinstatement. Petitioner, however, contends that the application for readmission to work by the
150 strikers constitutes condonation of the lockout which should likewise bind the 114 remaining strikers. Suffice it to say
that the 150 strikers acted for themselves, not on behalf of the 114 remaining strikers, and therefore the latter could not be
deemed to have condoned petitioner's lockout.
The findings show that both petitioner and the 114 strikers are in pari delicto, a situation which warrants the maintenance
of the status quo. This means that the contending parties must be brought back to their respective positions before the
controversy; that is, before the strike. Therefore, the order reinstating the 114 employees is proper.
With such restoration of the status quo ante it necessarily follows, as likewise submitted by the Solicitor General, that the
petition must be granted insofar as it seeks the setting aside of the award of three months' backwages to the 114
employees ordered reinstated on the basis of the general rule that strikers are not entitled to backwages (with some
exceptions not herein applicable, such as where the employer is guilty of oppression and union-busting activities and
strikers ordered reinstated are denied such reinstatement and therefore are declared entitled to backwages from the date
of such denial). More so, is the principle of "no work, no pay" applicable to the case at bar, in view of the undisputed
finding of illegality of the strike.
101
Likewise, the in pari delicto doctrine was applied in the case of First City Interlink Transportation Co. Inc. v The Honorable
Secretary,21 thus:
3) Petitioner substantially complied with the Return to Work Order. The medical examination, NBI, Police and Barangay
Clearances as well as the driver's and conductor's/conductress licenses and photographs required as conditions for
reinstatement were reasonable management prerogatives. However, the other requirements imposed as condition for
reinstatement were unreasonable considering that the employees were not being hired for the first time, although the
imposition of such requirements did not amount to refusal on the part of the employer to comply with the Return to Work
Order or constitute illegal lockout so as to warrant payment of backwages to the strikers. If at all, it is the employees'
refusal to return to work that may be deemed a refusal to comply with the Return to Work Order resulting in loss of their
employment status. As both the employer and the employees were, in a sense, at fault or in pari delicto, the
nonreturning employees, provided they did not participate in illegal acts; should be considered entitled to reinstatement.
But since reinstatement is no longer feasible, they should be given separation pay computed up to March 8, 1988 (the
date set for the return of the employees) in lieu of reinstatement.1avvphi1 [Emphases and underscoring supplied]
In the case at bar, since both AER and the union are at fault or in pari delicto, they should be restored to their respective
positions prior to the illegal strike and illegal lockout. Nonetheless, if reinstatement is no longer feasible, the concerned
employees should be given separation pay up to the date set for the return of the complaining employees in lieu of
reinstatement.
WHEREFORE, the petitions are DENIED. Accordingly, the complaining employees should be reinstated without
backwages. If reinstatement is no longer feasible, the concerned employees should be given separation pay up to the
date set for their return in lieu of reinstatement.
SO ORDERED.
CASE 18
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 146206
August 1, 2011
SAN MIGUEL FOODS, INCORPORATED, Petitioner,

vs.
SAN MIGUEL CORPORATION SUPERVISORS and EXEMPT UNION, Respondent.
DECISION
PERALTA, J.:
102
The issues in the present case, relating to the inclusion of employees in supervisor levels 3 and 4 and the exempt
employees in the proposed bargaining unit, thereby allowing their participation in the certification election; the application
of the "community or mutuality of interests" test; and the determination of the employees who belong to the category of
confidential employees, are not novel.
In G.R. No. 110399, entitled San Miguel Corporation Supervisors and Exempt Union v. Laguesma, 1 the Court held that
even if they handle confidential data regarding technical and internal business operations, supervisory employees 3 and 4
and the exempt employees of petitioner San Miguel Foods, Inc. (SMFI) are not to be considered confidential employees,
because the same do not pertain to labor relations, particularly, negotiation and settlement of grievances. Consequently,
they were allowed to form an appropriate bargaining unit for the purpose of collective bargaining. The Court also declared
that the employees belonging to the three different plants of San Miguel Corporation Magnolia Poultry Products Plants in
Cabuyao, San Fernando, and Otis, having "community or mutuality of interests," constitute a single bargaining unit. They
perform work of the same nature, receive the same wages and compensation, and most importantly, share a common
stake in concerted activities. It was immaterial that the three plants have different locations as they did not impede the
operations of a single bargaining representative.2
Pursuant to the Court's decision in G.R. No. 110399, the Department of Labor and Employment National Capital Region
(DOLE-NCR) conducted pre-election conferences. 3 However, there was a discrepancy in the list of eligible voters, i.e.,
petitioner submitted a list of 23 employees for the San Fernando plant and 33 for the Cabuyao plant, while respondent
listed 60 and 82, respectively.4
On August 31, 1998, Med-Arbiter Agatha Ann L. Daquigan issued an Order 5 directing Election Officer Cynthia Tolentino to
proceed with the conduct of certification election in accordance with Section 2, Rule XII of Department Order No. 9.
On September 30, 1998, a certification election was conducted and it yielded the following results, 6 thus:
Cabuyao
Plant
San
Plant
Fernando Total
Yes
23
23
46
No
Spoiled
Segregated
41
35
76
Total Votes Cast
66
58
124
On the date of the election, September 30, 1998, petitioner filed the Omnibus Objections and Challenge to
Voters,7 questioning the eligibility to vote by some of its employees on the grounds that some employees do not belong to
the bargaining unit which respondent seeks to represent or that there is no existence of employer-employee relationship
with petitioner. Specifically, it argued that certain employees should not be allowed to vote as they are: (1) confidential
employees; (2) employees assigned to the live chicken operations, which are not covered by the bargaining unit; (3)
employees whose job grade is level 4, but are performing managerial work and scheduled to be promoted; (4) employees
who belong to the Barrio Ugong plant; (5) non-SMFI employees; and (6) employees who are members of other unions.
On October 21, 1998, the Med-Arbiter issued an Order directing respondent to submit proof showing that the employees
in the submitted list are covered by the original petition for certification election and belong to the bargaining unit it seeks
to represent and, likewise, directing petitioner to substantiate the allegations contained in its Omnibus Objections and
Challenge to Voters.8
In compliance thereto, respondent averred that (1) the bargaining unit contemplated in the original petition is the Poultry
Division of San Miguel Corporation, now known as San Miguel Foods, Inc.; (2) it covered the operations in Calamba,
103
Laguna, Cavite, and Batangas and its home base is either in Cabuyao, Laguna or San Fernando, Pampanga; and (3) it
submitted individual and separate declarations of the employees whose votes were challenged in the election. 9
Adding the results to the number of votes canvassed during the September 30, 1998 certification election, the final tally
showed that: number of eligible voters 149; number of valid votes cast 121; number of spoiled ballots - 3; total number
of votes cast 124, with 118 (i.e., 46 + 72 = 118 ) "Yes" votes and 3 "No" votes. 10
The Med-Arbiter issued the Resolution11 dated February 17, 1999 directing the parties to appear before the Election
Officer of the Labor Relations Division on March 9, 1999, 10:00 a.m., for the opening of the segregated ballots. Thereafter,
on April 12, 1999, the segregated ballots were opened, showing that out of the 76 segregated
votes, 72 were cast for "Yes" and 3 for "No," with one "spoiled" ballot. 12
Based on the results, the Med-Arbiter issued the Order 13 dated April 13, 1999, stating that since the "Yes" vote received
97% of the valid votes cast, respondent is certified to be the exclusive bargaining agent of the supervisors and exempt
employees of petitioner's Magnolia Poultry Products Plants in Cabuyao, San Fernando, and Otis.
On appeal, the then Acting DOLE Undersecretary, in the Resolution 14 dated July 30, 1999, in OS-A-2-70-91 (NCR-OD-M9010-017), affirmed the Order dated April 13, 1999, with modification that George C. Matias, Alma Maria M. Lozano,
Joannabel T. Delos Reyes, and Marilyn G. Pajaron be excluded from the bargaining unit which respondent seeks to
represent. She opined that the challenged voters should be excluded from the bargaining unit, because Matias and
Lozano are members of Magnolia Poultry Processing Plants Monthly Employees Union, while Delos Reyes and Pajaron
are employees of San Miguel Corporation, which is a separate and distinct entity from petitioner.
Petitioners Partial Motion for Reconsideration 15 dated August 14, 1999 was denied by the then Acting DOLE
Undersecretary in the Order16 dated August 27, 1999.
In the Decision17 dated April 28, 2000, in CA-G.R. SP No. 55510, entitled San Miguel Foods, Inc. v. The Honorable Office
of the Secretary of Labor, Bureau of Labor Relations, and San Miguel Corporation Supervisors and Exempt Union, the
Court of Appeals (CA) affirmed with modification the Resolution dated July 30, 1999 of the DOLE Undersecretary, stating
that those holding the positions of Human Resource Assistant and Personnel Assistant are excluded from the bargaining
unit.
Petitioners Motion for Partial Reconsideration 18 dated May 23, 2000 was denied by the CA in the Resolution 19dated
November 28, 2000.
Hence, petitioner filed this present petition raising the following issues:
I.
WHETHER THE COURT OF APPEALS DEPARTED FROM JURISPRUDENCE WHEN IT EXPANDED THE
SCOPE OF THE BARGAINING UNIT DEFINED BY THIS COURT'S RULING IN G.R. NO. 110399.
II.
WHETHER THE COURT OF APPEALS DEPARTED FROM JURISPRUDENCE - SPECIFICALLY, THIS
COURT'S DEFINITION OF A "CONFIDENTIAL EMPLOYEE" - WHEN IT RULED FOR THE INCLUSION OF THE
"PAYROLL MASTER" POSITION IN THE BARGAINING UNIT.
III.
WHETHER THIS PETITION IS A "REHASH" OR A "RESURRECTION" OF THE ISSUES RAISED IN G.R. NO.
110399, AS ARGUED BY PRIVATE RESPONDENT.
104
Petitioner contends that with the Court's ruling in G.R. No. 110399 20 identifying the specific employees who can participate
in the certification election, i.e., the supervisors (levels 1 to 4) and exempt employees of San Miguel Poultry Products
Plants in Cabuyao, San Fernando, and Otis, the CA erred in expanding the scope of the bargaining unit so as to include
employees who do not belong to or who are not based in its Cabuyao or San Fernando plants. It also alleges that the
employees of the Cabuyao, San Fernando, and Otis plants of petitioners predecessor, San Miguel Corporation, as stated
in G.R. No. 110399, were engaged in "dressed" chicken processing, i.e., handling and packaging of chicken meat, while
the new bargaining unit, as defined by the CA in the present case, includes employees engaged in "live" chicken
operations, i.e., those who breed chicks and grow chickens.
Respondent counters that petitioners proposed exclusion of certain employees from the bargaining unit was a rehashed
issue which was already settled in G.R. No. 110399. It maintains that the issue of union membership coverage should no
longer be raised as a certification election already took place on September 30, 1998, wherein respondent won with 97%
votes.
Petitioners contentions are erroneous. In G.R. No. 110399, the Court explained that the employees of San Miguel
Corporation Magnolia Poultry Products Plants of Cabuyao, San Fernando, and Otis constitute a single bargaining unit,
which is not contrary to the one-company, one-union policy. An appropriate bargaining unit is defined as a group of
employees of a given employer, comprised of all or less than all of the entire body of employees, which the collective
interest of all the employees, consistent with equity to the employer, indicate to be best suited to serve the reciprocal
rights and duties of the parties under the collective bargaining provisions of the law. 21
In National Association of Free Trade Unions v. Mainit Lumber Development Company Workers Union United Lumber
and General Workers of the Phils, 22 the Court, taking into account the "community or mutuality of interests" test, ordered
the formation of a single bargaining unit consisting of the Sawmill Division in Butuan City and the Logging Division in
Zapanta Valley, Kitcharao, Agusan [Del] Norte of the Mainit Lumber Development Company. It held that while the
existence of a bargaining history is a factor that may be reckoned with in determining the appropriate bargaining unit, the
same is not decisive or conclusive. Other factors must be considered. The test of grouping is community or mutuality of
interest. This is so because the basic test of an asserted bargaining units acceptability is whether or not it is
fundamentally the combination which will best assure to all employees the exercise of their collective bargaining
rights.23 Certainly, there is a mutuality of interest among the employees of the Sawmill Division and the Logging Division.
Their functions mesh with one another. One group needs the other in the same way that the company needs them both.
There may be differences as to the nature of their individual assignments, but the distinctions are not enough to warrant
the formation of a separate bargaining unit.24
Thus, applying the ruling to the present case, the Court affirms the finding of the CA that there should be only one
bargaining unit for the employees in Cabuyao, San Fernando, and Otis 25 of Magnolia Poultry Products Plant involved in
"dressed" chicken processing and Magnolia Poultry Farms engaged in "live" chicken operations. Certain factors, such as
specific line of work, working conditions, location of work, mode of compensation, and other relevant conditions do not
affect or impede their commonality of interest. Although they seem separate and distinct from each other, the specific
tasks of each division are actually interrelated and there exists mutuality of interests which warrants the formation of a
single bargaining unit.
Petitioner asserts that the CA erred in not excluding the position of Payroll Master in the definition of a confidential
employee and, thus, prays that the said position and all other positions with access to salary and compensation data be
excluded from the bargaining unit.
This argument must fail. Confidential employees are defined as those who (1) assist or act in a confidential capacity, in
regard (2) to persons who formulate, determine, and effectuate management policies in the field of labor relations. 26 The
two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee - that is, the
confidential relationship must exist between the employee and his supervisor, and the supervisor must handle the
prescribed responsibilities relating to labor relations. The exclusion from bargaining units of employees who, in the normal
course of their duties, become aware of management policies relating to labor relations is a principal objective sought to
be accomplished by the "confidential employee rule." 27
A confidential employee is one entrusted with confidence on delicate, or with the custody, handling or care and protection
of the employers property.28 Confidential employees, such as accounting personnel, should be excluded from the
105
bargaining unit, as their access to confidential information may become the source of undue advantage. 29 However, such
fact does not apply to the position of Payroll Master and the whole gamut of employees who, as perceived by petitioner,
has access to salary and compensation data. The CA correctly held that the position of Payroll Master does not involve
dealing with confidential labor relations information in the course of the performance of his functions. Since the nature of
his work does not pertain to company rules and regulations and confidential labor relations, it follows that he cannot be
excluded from the subject bargaining unit.
Corollarily, although Article 24530 of the Labor Code limits the ineligibility to join, form and assist any labor organization to
managerial employees, jurisprudence has extended this prohibition to confidential employees or those who by reason of
their positions or nature of work are required to assist or act in a fiduciary manner to managerial employees and, hence,
are likewise privy to sensitive and highly confidential records. 31 Confidential employees are thus excluded from the rankand-file bargaining unit. The rationale for their separate category and disqualification to join any labor organization is
similar to the inhibition for managerial employees, because if allowed to be affiliated with a union, the latter might not be
assured of their loyalty in view of evident conflict of interests and the union can also become company-denominated with
the presence of managerial employees in the union membership. 32 Having access to confidential information, confidential
employees may also become the source of undue advantage. Said employees may act as a spy or spies of either party to
a collective bargaining agreement.331avvphi1
In this regard, the CA correctly ruled that the positions of Human Resource Assistant and Personnel Assistant belong to
the category of confidential employees and, hence, are excluded from the bargaining unit, considering their respective
positions and job descriptions. As Human Resource Assistant, 34 the scope of ones work necessarily involves labor
relations, recruitment and selection of employees, access to employees' personal files and compensation package, and
human resource management. As regards a Personnel Assistant, 35 one's work includes the recording of minutes for
management during collective bargaining negotiations, assistance to management during grievance meetings and
administrative investigations, and securing legal advice for labor issues from the petitioners team of lawyers, and
implementation of company programs. Therefore, in the discharge of their functions, both gain access to vital labor
relations information which outrightly disqualifies them from union membership.
The proceedings for certification election are quasi-judicial in nature and, therefore, decisions rendered in such
proceedings can attain finality.36 Applying the doctrine of res judicata, the issue in the present case pertaining to the
coverage of the employees who would constitute the bargaining unit is now a foregone conclusion.
It bears stressing that a certification election is the sole concern of the workers; hence, an employer lacks the personality
to dispute the same. The general rule is that an employer has no standing to question the process of certification election,
since this is the sole concern of the workers. 37 Law and policy demand that employers take a strict, hands-off stance in
certification elections. The bargaining representative of employees should be chosen free from any extraneous influence
of management. A labor bargaining representative, to be effective, must owe its loyalty to the employees alone and to no
other.38 The only exception is where the employer itself has to file the petition pursuant to Article 258 39 of the Labor Code
because of a request to bargain collectively.40
With the foregoing disquisition, the Court writes finis to the issues raised so as to forestall future suits of similar nature.
WHEREFORE, the petition is DENIED. The Decision dated April 28, 2000 and Resolution dated November 28, 2000 of
the Court of Appeals, in CA-G.R. SP No. 55510, which affirmed with modification the Resolutions dated July 30, 1999 and
August 27, 1999 of the Secretary of Labor, are AFFIRMED. SO ORDERED.
CASE 19
SUPREME COURT
Manila
106
FIRST DIVISION
G.R. No. 174631
October 19, 2011
JHORIZALDY UY, Petitioner,

vs.
CENTRO CERAMICA CORPORATION AND/OR RAMONITA Y. SY and MILAGROS U. GARCIA, Respondents.
DECISION
VILLARAMA, JR., J.:
Before us is a petition for review on certiorari under Rule 45 assailing the Decision1 dated April 21, 2006 and
Resolution2 dated September 7, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 88061. The CA annulled and set
aside the Decision3 dated July 29, 2004 rendered by the National Labor Relations Commission (NLRC) in NLRC NCR CA
No. 035557-03 which reversed the Labor Arbiters ruling that petitioner was not illegally dismissed.
Factual Antecedents
Petitioner Jhorizaldy Uy was hired by respondent Centro Ceramica Corporation as full-time sales executive on March 21,
1999 under probationary employment for six months. He became a regular employee on May 1, 2000 with monthly salary
of P7,000.00 and P1,500.00 transportation allowance, plus commission.
On March 18, 2002, petitioner filed a complaint for illegal dismissal against the respondent company, its President
Ramonita Y. Sy (Sy) and Vice-President Milagros Uy-Garcia (Garcia).
Petitioner alleged that his predicament began when former VP Garcia was rehired by respondent company in the last
quarter of 2001. Certain incidents involving longtime clients led to a strained working relationship between him and
Garcia. On February 19, 2002 after their weekly sales meeting, he was informed by his superior, Sales Supervisor
Richard Agcaoili, that he (petitioner) was to assume a new position in the marketing department, to which he replied that
he will think it over. His friends had warned him to be careful saying "mainit ka kay Ms. Garcia." That same day, he was
summoned by Sy and Garcia for a closed-door meeting during which Sy informed him of the termination of his services
due to "insubordination" and advised him to turn over his samples and files immediately. Sy even commented that
"member ka pa naman ng [S]ingles for [C]hrist pero napakatigas naman ng ulo mo." On February 21, 2002, he was
summoned again by Sy but prior to this he was already informed by Agcaoili that the spouses Sy will give him all that is
due to him plus goodwill money to settle everything. However, during his meeting with Sy, he asked for his termination
paper and thereupon Sy told him that "If thats what you want I will give it to you". She added that "pag-isipan mo ang
gagawin mo dahil kilala mo naman kami we are powerful." 4
Petitioner further narrated that on February 22, 2002, he turned over company samples, accounts and receivables to
Agcaoili. Thereafter, he did not report for work anymore. But on March 6, 2002, an employee of respondent company
presented to him at his apartment the following memorandum:
MEMO OF NOTICE OF CHARGES
MEMORANDUM:
TO: JHORIZALDY B. UY
FROM: RAMONITA Y. SY
RE: FAILURE TO MEET QUOTA FOR SALES EXECUTIVE
DATE: February 21, 2002
107
Records show that you have failed to meet the quota for sales executives, set for the period from 1999 to 2001 in violation
of your contract of employment.
In view of the foregoing, please explain in writing within twenty[-]four (24) hours from receipt hereof, why the company
should not terminate your contract of employment. 5
He did not receive said memo because it was not written on the company stationery and besides he had already been
dismissed. As to his alleged low output, he was surprised considering that last January 2002, he was informed by Agcaoili
that management was satisfied with his performance and he ranked second to the top performer, Edwin I. Hirang. By that
time, all of the sales people of the company could not meet the P1.5 Million sales quota, so respondents are clearly
zeroing in on him.
Finally, on March 13, 2002, respondents sent him another memo, which reads:
MEMO OF NOTICE OF CHARGES
INTER-OFFICE MEMORANDUM NO. 2:
TO: JHORIZALDY B. UY
THRU: RICHARD B. AGCAOILI
FROM: RAMONITA Y. SY
RE: NOTICE OF CHARGE OF ABSENCE WITHOUT LEAVE
DATE: March 13, 2002
Records show that since February 22, 2002, to date, you have failed to report for work, without informing your employer of
the reason therefor and without securing proper leave in violation of your contract of employment and existing company
rules and regulations. Further, you have refused to receive any of your monetary entitlements such as salary, commission
and other amounts due to you despite notice that the same are available to you for payment.
Further, to this date, you have not submitted any explanation in writing in response to our Memo dated February 21, 2002,
requiring you to explain your failure to meet your quota as Sales Executive.
In view of the foregoing, please explain in writing twenty four (24) hours from receipt hereof, why the company should not
terminate your contract of employment for serious violations of your employment contract as indicated above. 6
He referred the above letter to his counsel who sent the following letter-reply:
MS.
Centro
225
Mandaluyong City
RAMONITA
Y.
Ceramica
EDSA,
East
SY
Corporation
Greenhills
We are writing you in behalf of Mr. Jhorizaldy B. Uy who used to be a Sales Executive of your firm.
On February 19, 2002, you informed him that from Sales Executive he was to assume a new position in the marketing
department. He refused and when he later said that "pag-iisipan ko pa" you charged him with insubordination. Your Ms.
Nita Garcia even lamented in this wise "single (for Christ) ka pa naman." Right then you terminated his services and was
directed to turn over everything that he had which was company owned and it was on February 22, 2002 that the turn over
was made.
108
On or about March 6, 2002 an employee of your company saw him in his apartment giving him a memorandum to explain
his alleged failure to meet the quota as Sales Executive. He admits with c[a]ndor that he did not receive the said
memorandum because it was written not on the company stationary. Just the same the contents of the said letter has
bec[o]me irrelevant because he has been already dismissed as of February 19, 2002 and as regards the low output he
says that all of the sales people could not meet the quota and why zero in on him.
Then on Mach 13, 2002 you sent him a memorandum to explain in writing within twenty four (24) hours why he should not
be dismissed for his alleged absence without leave.
You must have been advised by someone that your dismissal of Mr. Uy on February 19, 2002 is doubly illegal, i.e., for lack
of due process and sufficient cause and the March 13, 2002 memorandum is to make up for such lapse so that if Mr. Uy
files a case of illegal dismissal, you can conveniently say that he violated his contract of employment and that he was on
absence without leave. Nice move, but it may not be nice later on.
x x x x7
For his illegal termination, petitioner asserted that he is entitled to his unpaid commission, tax refund, back wages and
reinstatement.
On the other hand, respondents denied dismissing petitioner. They countered that petitioners poor sales performance did
not improve even after he was regularized. On February 18, 2002, management met with the Sales Group on a per agent
basis to discuss sales performance, possible salary realignment and revamp of the Sales Group. Agcaoili relayed to
petitioner the poor assessment of his sales performance and the possibility that he will be transferred to another
department although there was yet no official decision on the matter. Petitioner then told Agcaoili that he was aware of the
problem and his possible termination, prompting the latter to convince the former to consider voluntarily resigning from the
company rather than be terminated. The next day, February 19, 2002, petitioner talked anew to Agcaoili and informed the
latter that he will just resign from the company and sought an appointment with Sy. When petitioner inquired how much he
will get if he will resign, Sy advised him that he would get salaries and commissions to which he is legally entitled; hence,
for items sold and already delivered, he will be receiving the commission in full, but for those sold but yet to be delivered,
as per company policy, he will receive the commissions only upon delivery of the items. Upon hearing this, petitioner
suddenly got mad and said that if that is the case, the company president should just terminate him and walked out.
Petitioner was given a chance, through the two memos issued to him, to explain his failure to meet the prescribed sales
quota and his failure to report for work without informing the company of the reason therefor. But he never submitted his
explanations to his violations of the contract of employment, and abandoned his job which is another ground for
terminating his employment. While it would appear that petitioner aimed to secure his alleged money claims from the
respondents, this does not justify abandonment of his work as respondents never had the intention of terminating his
services. Respondents maintained that petitioner voluntarily left his workplace and refused to report for work as in fact he
indicated to his sales supervisor that he will just resign; however, he never submitted a letter of resignation. 8
Respondents also denied the claims of petitioner regarding an alleged souring of his relations with Garcia, as in fact it was
petitioner who clearly had a personal grudge against her and not the other way around. The alleged incidents with client
actually showed it was petitioner who was discourteous and abusive. There was likewise no reason for respondent Sy to
say they were powerful because petitioner did not at all threaten to sue or do something to their prejudice. To refute
petitioners unfounded allegations, respondents presented the affidavits of the following: (1) co-employee Rommel
Azarraga who admitted he was the person who warned petitioner to be careful and told him "mainit ka kay Mrs. Garcia"
and explained that he only made such statement in order to scare petitioner and convince him to change his attitude; the
truth is that Mrs. Garcia had not spoken to him about harbouring any ill feelings towards petitioner and neither does he
know of any incident or circumstance which may give rise to such ill feeling of Mrs. Garcia towards petitioner; (2) Richard
Agcaoili who corroborated the respondents claims, denying that petitioner was terminated due to insubordination; he
further denied having told petitioner that management was satisfied with his performance, the truth being that while
petitioner may have ranked second to the top performer, there was actually only two remaining senior sales agents while
the rest have more or less six months experience; considering the number of years of his service to the company,
petitioner should have improved as against other agents most of whom were newly-hired and still under probation; and (3)
Arnulfo Merecido, respondent companys employee (warehouse helper) who claimed that he had a fistfight with petitioner
sometime in June 2000 which arose from the latters insulting remarks regarding his family.9
109
Labor Arbiters Ruling

In his decision10 dated April 8, 2003, Labor Arbiter Elias H. Salinas dismissed petitioners complaint on the basis of his
finding that it was petitioner who opted not to report for work since February 22, 2002, after offering to resign (as told to
his supervisor) because he could not accept his possible transfer to another department.
NLRCs Ruling
Petitioner appealed to the NLRC which reversed the Labor Arbiters ruling. The NLRC found that the dismissal of
petitioner was made under questionable circumstances, thus giving weight to petitioners assertion that he was being
singled out notwithstanding that all sales personnel similarly could not meet the P1.5 million monthly sales quota. Such
finding is reinforced by the fact that no sanction was imposed on petitioner or any other employee for the supposed failure
to meet the quota, thereby creating the impression that the situation was tolerated by the respondents. The NLRC thus
decreed:
WHEREFORE, premises considered, the Decision dated April 8, 2003 is set aside and reversed. A new one is entered
finding complainant to have been illegally dismissed and thus entitled to reinstatement with backwages. Respondent
Centro Ceramica Corporation is hereby ordered to pay complainant his backwages reckoned from the date of his
dismissal on February 19, 2002 up to the date of the promulgation of this decision. As reinstatement is no longer feasible,
complainant should instead be paid separation pay equivalent to one half (1/2) month pay for every year of service. In
addition, respondents company should pay complainant his unpaid commission in the amount of P16,581.00.
SO ORDERED.11
Court of Appeals Ruling
Respondents elevated the case to the CA which reversed the NLRC and dismissed petitioners complaint. According to
the CA, petitioner by his own account had admitted that it was he who asked for his dismissal when he narrated that
during his meeting with Sy, he had asked for his termination paper and she threatened to do so if that was what he
wanted. It also noted the affidavit of Agcaoili who attested that petitioner was merely informed of the decision to transfer
him to another department, which is not denied by the petitioner; said witness also said that the turnover of company
documents and files was voluntary on the part of petitioner who expressed desire to resign from the company. Another
statement considered by the CA is that made by witness Azarraga who explained that he only mentioned the name of Ms.
Garcia to petitioner when he warned the latter to be careful, simply because she is a member of the Couples for Christ
who may have an influence over petitioner who is a member of the Singles for Christ. As to the memos sent by the
company to petitioners residence, this shows that it has not yet terminated the employment of petitioner. Thus, the CA
held that the evidence on record supports the Labor Arbiters finding that petitioner "informally severed" the employment
relationship as manifested by his voluntary transfer of his accountabilities to his supervisor and thereafter his act of not
reporting for work anymore.
Petitioners motion for reconsideration having been denied, the present petition was filed in this Court.
Issue
The sole issue to be addressed is whether petitioner was dismissed by the respondents or voluntarily severed his
employment by abandoning his job.
Arguments of the Parties
Petitioner assails the CAs misappreciation of the facts, completely relying on respondents allegations particularly on what
transpired during the meeting with respondents Sy and Garcia, of which the appellate court made a "twisted" interpretation
of their conversation. Hence, instead of decreeing petitioners illegal termination based on Sys verbal dismissal without
just cause and due process, the CA proceeded to conclude that petitioner voluntarily and informally severed his relation
with the company. As to the affidavit of Agcaoili, his statement that he merely informed petitioner of the decision to transfer
110
him to another department is of no moment because what matters is the action of Sy who dismissed petitioner outright.
Moreover, Agcaoili, being under the employ of respondents, would logically be biased and he would naturally tend to
protect the company by his statements regarding petitioners case. On the other hand, Azarragas confusing and
inconsistent statements only confirmed that Garcia indeed had a grudge against petitioner, as he could not give a rational
explanation for warning petitioner to be careful with Garcia.
Petitioner further contends that his act of turning over his accountabilities to his supervisor cannot be considered voluntary
on his part as it was done by him knowing that he was already terminated and upon the specific instructions of Sy and
Garcia. The CA therefore erred in relying on the unbelievable submission of respondents that such transfer of company
documents and samples was indicative of petitioners desire to resign. It failed to see that petitioners reaction to his
impending transfer to another department ("pag-iisipan ko pa") was due to his not coming to terms with Garcia and aware
of the warning earlier given by his friends. Under this scenario, the animosity between petitioner and Garcia was evident
such that Garcia eventually prevailed upon Sy to terminate petitioners services. Unfortunately, it was on the very same
day that petitioner was verbally terminated by Sy on the ground of insubordination and ordered to immediately turn over
his files and samples. It was on February 21, 2002 that Agcaoili told petitioner that the company will give him all that is
due him plus goodwill money, and in a meeting with Sy he had asked for his termination paper because he was in fact
already terminated on February 19, 2002 but she responded by saying that if that was what he wanted she will give it to
him and even threatened him to think because respondents are powerful.
In their Comment, respondents assert that the CA committed no reversible error in concluding that petitioner was not
illegally terminated. They stress that the evidence clearly established that petitioner was not dismissed but required
merely to explain why he failed to report for work after meeting the company president. As to petitioners act of turning
over his accountabilities, respondents argue that this cannot be considered proof of his illegal dismissal because it was
done voluntarily in line with his proposed resignation. Respondent company was about to conduct its investigation on
petitioner who went AWOL since February 19, 2002 but then he refused to accept the memos sent to him, thus confirming
categorically that respondents were investigating his failure to report for work and giving him all the opportunity to explain
his absence.
The Courts Ruling
We grant the petition.
As a general rule, only questions of law may be allowed in a petition for review on certiorari. 12 Considering, however, that
the Labor Arbiters findings were reversed by the NLRC, whose Decision was in turn overturned by the CA, reinstating the
Labor Arbiters Decision, it behooves the Court to reexamine the records and resolve the conflicting rulings. 13
Scrutinizing the records, we find that the NLRCs finding of illegal dismissal is supported by the totality of evidence and
more consistent with logic and ordinary human experience than the common finding of the CA and Labor Arbiter that
petitioner informally severed his employment relationship with the company. It hardly convinces us that after declining his
supposed transfer to another department as per the information relayed to him by his supervisor, petitioner would readily
turn over his files and samples unless something critical indeed took place in his subsequent closed-door meeting with Sy
and Garcia. As correctly pointed out by petitioner, it is irrelevant whether or not he had earlier inquired from his supervisor
what he will receive if he offers instead to resign upon being told of his impending transfer, for what matters is the action of
Sy on his employment status. If ever petitioner momentarily contemplated resignation and such was the impression he
conveyed in his talk with his supervisor prior to the meeting with Sy, such is borne by circumstances indicating Garcias
antagonism towards petitioner. In any event, whether such perception of a strained working relationship with Garcia was
mistaken or not is beside the point. The crucial factor is the verbal order directly given by Sy, the company president, for
petitioner to immediately turn over his accountabilities. Notably, Sy got irked when petitioner asked for his termination
paper. Petitioner apparently wanted to ascertain whether such summary dismissal was official, and it was well within his
right to demand that he be furnished with a written notice in order to apprise him of the real ground for his termination.
Contrary to respondents theory that petitioners act of turning over the company files and samples is proof of his voluntary
informal resignation rather than of the summary dismissal effected by management, no other plausible explanation can be
made of such immediate turn over except that petitioner directly confirmed from the company president herself that he
was already being dismissed. The subsequent memos sent to petitioners residence after he did not anymore report for
work only reinforce the conclusion that the belated written notice of the charge against him his alleged failure to meet
111
the prescribed sales quota was an afterthought on the part of respondents who may have realized that they failed to
observe due process in terminating him. That respondents would still require a written explanation for petitioners poor
sales performance after the latter already complied with Sys directive to turn over all his accountabilities is simply
inconsistent with their claim that petitioner offered to resign and voluntarily relinquished possession of company files and
samples when told of his impending transfer. In other words, petitioner was not given any opportunity to defend himself
from whatever charges hurled by management against him, such as poor sales performance as relayed to him by his
supervisor, when Sy unceremoniously terminated him which must have shocked him considering that his supervisor
earlier advised that he would just be transferred to another department. Under this scenario, petitioners decision not to
report for work anymore was perfectly understandable, as the sensible reaction of an employee fired by no less than the
company president. It was indeed a classic case of dismissal without just cause and due process, which is proscribed
under our labor laws.
As to the affidavits submitted by the respondents, these are at best self-serving having been executed by employees
beholden to their employer and which evidence by themselves did not refute petitioners main cause of action -- the fact of
his summary dismissal on February 19, 2002. Respondents effort to present the case as one of an erring employee about
to be investigated for poor sales performance must likewise fail. The NLRC duly noted the discriminatory treatment
accorded to petitioner when it declared that there is no evidence at all that other sales personnel who failed to meet the
prescribed sales quota were similarly reprimanded or penalized. Incidentally, the question may be asked if petitioner
whose performance was assessed by management as "poor" yet admittedly ranked second to the top sales agent of the
company, why was it that no evidence was submitted by respondents to show the comparative sales performance of all
sales agents? Given the strained working relationship with Garcia, or at least a perception of such gap on the part of
petitioner, the latter could not have been properly informed of the actual ground for his dismissal. But more importantly,
respondents terminated petitioner first and only belatedly sent him written notices of the charge against him. Fairness
requires that dismissal, being the ultimate penalty that can be meted out to an employee, must have a clear basis. Any
ambiguity in the ground for the termination of an employee should be interpreted against the employer, who ordained such
ground in the first place.14
Resignation is defined as"the voluntary act of employees who are compelled by personal reasons to disassociate
themselves from their employment. It must be done with the intention of relinquishing an office, accompanied by the act of
abandonment."15 In this case, the evidence on record suggests that petitioner did not resign; he was orally dismissed by
Sy. It is this lack of clear, valid and legal cause, not to mention due process, that made his dismissal illegal, warranting
reinstatement and the award of backwages. 16 Moreover, the filing of a complaint for illegal dismissal just three weeks later
is difficult to reconcile with voluntary resignation. Had petitioner intended to voluntarily relinquish his employment after
being unceremoniously dismissed by no less than the company president, he would not have sought redress from the
NLRC and vigorously pursued this case against the respondents. 17
When there is no showing of a clear, valid and legal cause for the termination of employment, the law considers it a case
of illegal dismissal. Furthermore, Article 4 of the Labor Code expresses the basic principle that all doubts in the
interpretation and implementation of the Labor Code should be interpreted in favor of the workingman. This principle has
been extended by jurisprudence to cover doubts in the evidence presented by the employer and the employee. 18 Thus we
have held that if the evidence presented by the employer and the employee are in equipoise, the scales of justice must be
tilted in favor of the latter.19 Accordingly, the NLRCs finding of illegal dismissal must be upheld.
However, the award of back wages and separation pay in lieu of reinstatement should be modified.1avvphil Under the
doctrine of strained relations, the payment of separation pay has been considered an acceptable alternative to
reinstatement when the latter option is no longer desirable or viable. 20 Under the facts established, petitioner is entitled to
the payment of full back wages, inclusive of allowances, and other benefits or their monetary equivalent, computed from
the date of his dismissal on February 19, 2002 up to the finality of this decision, and separation pay in lieu of
reinstatement equivalent to one month salary for every year of service, computed from the time of his engagement by
respondents on March 21, 1999 up to the finality of this decision. 21
WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated April 21, 2006 and Resolution dated
September 7, 2006 of the Court of Appeals in CA-G.R. SP No. 88061 are SET ASIDE. The Decision dated July 29, 2004
of the National Labor Relations Commission in NLRC NCR CA No. 035557-03 is REINSTATED and AFFIRMED WITH
MODIFICATIONS in that in addition to the unpaid commission of P16,581.00, respondent Centro Ceramica Corporation is
hereby ordered to pay petitioner Jhorizaldy Uy his full back wages, inclusive of allowances, and other benefits or their
monetary equivalent, computed from the date of his dismissal on February 19, 2002 up to the finality of this decision, and
112
separation pay in lieu of reinstatement equivalent to one monthsalary for every year of service, computed from the time of
his engagement by respondent corporation on March 21, 1999 up to the finality of this decision.
SO ORDERED.
CASE 20
SUPREME COURT
Manila
THIRD DIVISION
G.R. Nos. 191138-39
October 19, 2011
MAGDALA MULTIPURPOSE & LIVELIHOOD COOPERATIVE and SANLOR MOTORS CORP., Petitioners,
vs.
KILUSANG MANGGAGAWA NG LGS, MAGDALA MULTIPURPOSE & LIVELIHOOD CORPERATIVE (KMLMS) and
UNION MEMBERS/ STRIKERS, namely: THOMAS PADULLON, HERBERT BAUTISTA, ARIEL DADIA, AVELINO
PARENAS, DENNIS MONTEALEGRE, SONNY CONSTANTINO, SHANDY CONSTANTINO, JOSEPH PERNIA, PETER
ALCOY, EDILBERTO CERILLE, FERNANDO LEONOR, TEOTIMAR REGINIO, ALBERTO BAJETA, ALLAN
MENESES, RONEL FABUL, JESUS COMENDADOR, JERRY PERNIA, OSCAR RIVERA, LEO MELGAR, ENRICO
LAYGO, RICKY PALMERO, ROWELL GARCIA, LEOPITO MERANO, ALEJANDRO DE LARA, JOEL GARCIA,
BONIFACIO PEREDA, REMEGIO CONSTANTINO, DICKSON PILAPIL, RANDY CORDANO, DARIUS PILAPIL,
VENICE LUCERO, GREGORIO REANZARES, EULOGIO REGINIO, MICHAEL JAVIER, DENNIS MOSQUERA,
FREDDIE AZORES, ROGELIO CABRERA, AURELIO TAGUINOD, OSCAR TAGUINOD, DEWELL PILAPIL, JOEL
MAS-ING, EDUARDO LOPEZ, GLICERIO REANZAREZ, JOSEPH FLORES,BUENATO CASAS, ROMEO AZAGRA,
ALFREDO ROSALES, ESTELITO BAJETA, PEDY GEMINA, FERNANDO VELASCO, ALBERTO CANEZA,
ALEJANDRO CERVANTES, ERICK CARVAJAL, RONALDO BERNADEZ, JERRY COROSA, JAYSON COROSA,
JAYSON JUANSON, SHELLY NAREZ, EDGARDO GARCIA, ARIEL LLOSALA, ROMMEL ILAYA, RODRIGO
PAULETE, MERVIN PANGUINTO, MARVIN SENATIN, JAYSON RILLORA, RAFAEL SARMIENTO, FREDERICK
PERMEJO, NICOLAS BERNARDO, LEONCIO PAZ DE LEON, EDWARD DENNIS MANAHAN, ANTONIO BALDAGO,
ALEXANDER BAJETA, Respondents.
DECISION
VELASCO, JR., J.:
The Case
Petitioners Magdala Multipurpose & Livelihood Cooperative and Sanlor Motors Corp. assail and seek the modification of
the June 30, 2009 Decision1 and January 28, 2010 Resolution 2 of the Court of Appeals (CA) in CA-G.R. SP Nos. 88614
and 88645, which affirmed in toto the October 15, 2004 Decision 3 of the National Labor Relations Commission (NLRC) in
NLRC CA No. 040560-04 (NLRC RAB IV-9-1265-02-R).
The Facts
Respondent Kilusang Manggagawa ng LGS, Magdala Multipurpose and Livelihood Cooperative (KMLMS) is the union
operating in Magdala Multipurpose & Livelihood Cooperative and Sanlor Motors Corp.
113
KMLMS filed a notice of strike on March 5, 2002 and conducted its strike-vote on April 8, 2002. However, KMLMS only
acquired legal personality when its registration as an independent labor organization was granted on April 9, 2002 by the
Department of Labor and Employment under Registration No. RO-400-200204-UR-002. 4 On April 19, 2002, it became
officially affiliated as a local chapter of the Pambansang Kaisahan ng Manggagawang Pilipino when its application was
granted by the Bureau of Labor Relations.5
Thereafter, on May 6, 2002, KMLMSnow a legitimate labor organization (LLO)staged a strike where several
prohibited and illegal acts were committed by its participating members.
On the ground of lack of valid notice of strike, ineffective conduct of a strike-vote and commission of prohibited and illegal
acts, petitioners filed their Petition to Declare the Strike of May 6, 2002 Illegal 6 before the NLRC Regional Arbitration
Board (RAB) No. IV in Quezon City, docketed as NLRC RAB IV-9-1265-02-R. In their petition, as well as their Position
Paper,7 petitioners prayed, inter alia, that the officers and members of respondent KMLMS who participated in the illegal
strike and who knowingly committed prohibited and illegal activities, respectively, be declared to have lost or forfeited their
employment status.
The Ruling of the Labor Arbiter
In her March 26, 2004 Decision, 8 Executive Labor Arbiter Lita V. Aglibut (LA Aglibut) found the May 6, 2002 strike illegal
and declared 41 workers to have lost their employment, the dispositive portion reading:
WHEREFORE, this Office finds the strike conducted by the Kilusang Manggagawa ng LGS, Magdala / Sanlor MotorsKMLMS, now known and registered as Kilusang [Manggagawa] Ng LGS/Magdala Sanlor Motors Corporation PKMP,
illegal and the employment status of the following workers are hereby declared forfeited: x x x.
SO ORDERED.9
On the ground of non-compliance with the strict and mandatory requirements for a valid conduct of a strike under Article
263(c), (d) and (f) of the Labor Code and Rule XXII, Book V of the Omnibus Rules Implementing the Labor Code, LA
Aglibut found the May 6, 2002 strike illegal and accordingly dismissed all the 14 union officers of KMLMS. LA Aglibut
likewise found 27 identified members of KMLMS to have committed prohibited and illegal acts proscribed under Art. 264 of
the Labor Code and accordingly declared them to have forfeited their employment.
Both parties appealed the Decision of LA Aglibut before the NLRC.
The Ruling of the NLRC
On October 15, 2004, the NLRC rendered its Decision affirming with modification LA Aglibuts Decision by declaring an
additional seven (7) union members to have forfeited their employment status. The decretal portion reads:
WHEREFORE, premises considered, the decision appealed from is affirmed with modification in that [said seven union
members] are also declared to have lost their employment status for having committed prohibited acts.
SO ORDERED.10
Unsatisfied, both parties again filed their respective appeals before the CA.
The Ruling of the CA
The CA rendered the assailed Decision on June 30, 2009 affirming in toto the NLRC Decision, the fallo reading:
WHEREFORE, in view of the following disquisition, the respective petitions for certiorari in CA-G.R. SP. No. 88614 and
CA-G.R. SP. No. 88645 are hereby DISMISSED for lack of merit. Accordingly, the assailed Decision, dated 15 October
114
2004, of the National Labor Relations Commission (NLRC) in NLRC CA No. 040560-04 (NLRC RAB IV-9-1265-02-R) is
hereby AFFIRMED in toto.
SO ORDERED.11
Thus, petitioners have come to Us, praying for a partial modification of the assailed CA Decision by declaring additional
7312 similarly erring KMLMS members to have lost their employment.
The Issues
A
THE COURT OF APPEALS ERRED IN REFUSING TO SIMILARLY DECLARE AS HAVING LOST THEIR EMPLOYMENT
STATUS THE REST OF THE UNION STRIKERS WHO HAVE PARTICIPATED IN THE ILLEGAL STRIKE AND
COMMITTED PROHIBITED/ILLEGAL ACTS, TO THE PREJUDICE OF PETITIONERS[] BUSINESS OPERATIONS.
B
THE COURT OF APPEALS ERRED IN REFUSING TO AWARD DAMAGES AND ATTORNEYS FEES AS A RESULT OF
THE ILLEGAL STRIKE THAT NEARLY CRIPPLED THE BUSINESS OPERATIONS OF PETITIONERS. 13
The Courts Ruling
First Issue: The May 6, 2002 Strike Was Illegal
There is no question that the May 6, 2002 strike was illegal, first, because when KMLMS filed the notice of strike on March
5 or 14, 2002, it had not yet acquired legal personality and, thus, could not legally represent the eventual union and its
members. And second, similarly when KMLMS conducted the strike-vote on April 8, 2002, there was still no union to
speak of, since KMLMS only acquired legal personality as an independent LLO only on April 9, 2002 or the day after it
conducted the strike-vote. These factual findings are undisputed and borne out by the records.
Consequently, the mandatory notice of strike and the conduct of the strike-vote report were ineffective for having been
filed and conducted before KMLMS acquired legal personality as an LLO, violating Art. 263(c), (d) and (f) of the Labor
Code and Rule XXII, Book V of the Omnibus Rules Implementing the Labor Code. The Labor Code provisos pertinently
provide:
ART. 263. Strikes, Picketing and Lockouts. (a) x x x
(c) In case of bargaining deadlocks, the duly certified or recognized bargaining agent may file a notice of strike or
the employer may file a notice of lockout with the Ministry at least 30 days before the intended date thereof. In
case of unfair labor practice, the period of notice shall be 15 days and in absence of a duly certified or recognized
bargaining agent, the notice of strike may be filed by any legitimate labor organization in behalf of its members.
However, in case of dismissal from employment of union officers duly elected in accordance with the union
constitution and by-laws, which may constitute union busting, where the existence of the union is threatened, the
15-day cooling-off period shall not apply and the union may take action immediately. (As amended by Executive
Order No. 111, December 24, 1986.)
(d) The notice must be in accordance with such implementing rules and regulations as the Ministry of Labor and
Employment may promulgate.
xxxx
115
(f) A decision to declare a strike must be approved by a majority of the total union membership in the bargaining
unit concerned, obtained by secret ballot in meetings or referenda called for that purpose. A decision to declare a
lockout must be approved by a majority of the board of directors of the corporation or association or of the
partners in a partnership, obtained by secret ballot in a meeting called for that purpose. The decision shall be valid
for the duration of the dispute based on substantially the same grounds considered when the strike or lockout vote
was taken. The Ministry may, at its own initiative or upon the request of any affected party, supervise the conduct
of the secret balloting. In every case, the union or the employer shall furnish the Ministry the results of the voting
at least seven days before the intended strike or lockout, subject to the cooling-off period herein provided. (As
amended by Batas Pambansa Bilang 130, August 21, 1981 and further amended by Executive Order No. 111,
December 24, 1986.)
On the other hand, Rule XXII, Book V of the Omnibus Rules Implementing the Labor Code likewise pertinently provides:
RULE
CONCILIATION, STRIKES AND LOCKOUTS
XXII
xxxx
SEC. 6. Who may declare a strike or lockout. Any certified or duly recognized bargaining representative may declare a
strike in cases of bargaining deadlocks and unfair labor practices. The employer may declare a lockout in the same cases.
In the absence of a certified or duly recognized bargaining representative, any legitimate labor organization in the
establishment may declare a strike but only on grounds of unfair labor practice. (Emphasis supplied.)
It is, thus, clear that the filing of the notice of strike and the conduct of the strike-vote by KMLMS did not comply with the
aforequoted mandatory requirements of law and its implementing rules. Consequently, the May 6, 2002 strike is illegal. As
the Court held in Hotel Enterprises of the Philippines, Inc. (HEPI) v. Samahan ng mga Manggagawa sa Hyatt-National
Union of Workers in the Hotel and Restaurant and Allied Industries (SAMASAH-NUWHRAIN), 14 these requirements are
mandatory and failure of a union to comply renders the strike illegal.
Striking KMLMS Members Committed Prohibited Acts
There is likewise no dispute that when the May 6, 2002 illegal strike was conducted, the members of respondent KMLMS
committed prohibited and illegal acts which doubly constituted the strike illegal. This is the unanimous factual finding of the
courts a quo which the Court accords finality, as supported by evidence on record.
The proscribed acts during a strike are provided under Art. 264 of the Labor Code, thus:
ART. 264. Prohibited Activities. (a) No Labor organization or employer shall declare a strike or lockout without first
having bargained collectively in accordance with Title VII of this Book or without first having filed the notice required in the
preceding Article or without the necessary strike or lockout vote first having been obtained and reported to the Ministry.
No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister or after certification
or submission of the dispute to compulsory or voluntary arbitration or during the pendency of case involving the same
grounds for the strike or lockout.
Any worker whose employment has been terminated as a consequence of any unlawful lockout shall be entitled to
reinstatement with full backwages. Any union officer who knowingly participates in an illegal strike and any worker or union
officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his
employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for
termination of his employment, even if a replacement had been hired by the employer during such lawful strike.
xxxx
(e) No person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free ingress
to or egress from the employers premises for lawful purposes, or obstruct public thoroughfares. (As amended by Batas
Pambansa Bilang 227, June 1, 1982).
116
Here, the striking workers committed acts of (1) interference by obstructing the free ingress to or egress from petitioners
compound and (2) coercion and intimidation. As aptly pointed out by the appellate court:
This is clear from the Police Blotter Certifications, including a Complaint for Grave Coercion, Affidavits from several
workers, including one from a proprietor, all of whom were prevented from entering the company premises and doing their
work or conducting their business, and the countless photographs which show the striking workers blocking the gates of
the company premises which became the basis of the judgment of the Labor Arbiter and NLRC. 15
Thus, We agree with the CA that the arguments of respondent KMLMS are bereft of merit as the May 6, 2002 strike was
properly declared an illegal strike and the prohibited and illegal acts committed by union members during said strike were
duly proved by substantial evidence on record. Substantial evidence is that amount of relevant evidence which a
reasonable mind might accept as adequate to justify a conclusion. 16
Proper Sanctions for the Illegal Strike
We now come to the proper sanctions for the conduct of union officers in an illegal strike and for union members who
committed illegal acts during a strike. The above-cited Art. 264 of the Code presents a substantial distinction of the
consequences of an illegal strike between union officers and mere members of the union. For union officers, knowingly
participating in an illegal strike is a valid ground for termination of their employment. But for union members who
participated in a strike, their employment may be terminated only if they committed prohibited and illegal acts during the
strike and there is substantial evidence or proof of their participation, i.e., that they are clearly identified to have committed
such prohibited and illegal acts.
As earlier explained, the May 6, 2002 strike is illegal for non-compliance with provisions of law and its implementing rules.
Consequently, the termination of employment of the 14 union officers is proper.
In the case of union members who participated in the May 6, 2002 strike and committed prohibited and illegal acts of
interference by obstructing the free ingress to or egress from petitioners compound, coercion and intimidation, the
forfeiture of their employment is also proper.
LA Aglibut found 27 union members to have committed the illegal acts and properly declared the forfeiture of their
employment status. The NLRC found additional seven (7) union members committing illegal acts and likewise declared
the forfeiture of their employment status. Thus, a total of 34 union members have been declared to have lost their
employment due to their commission of prohibited and illegal acts during the illegal strike of May 6, 2002. Petitioners,
however, take umbrage for the non-declaration of the forfeiture of employment of 72 other union members who were
similarly situated as the 34 union members whose employment was declared forfeited in committing prohibited and illegal
acts during the May 6, 2002 strike.
In affirming the NLRC Decision and refusing to declare the other strikers as dismissed, the appellate court found that not
all of the photographs in evidence sufficiently show the strikers committing illegal acts and that the identification of said
strikers is questionable considering that some were still identified even when their faces were indiscernible from the
photographs.
We, however, cannot agree with the appellate courts view that there is no substantial proof of the identity of the other 72
striking union members who committed prohibited and illegal activities. The prohibited and illegal acts are undisputed. It is
only the identity of the striking union workers who committed said acts that is the crux of the partial modification prayed for
by petitioners.
In the instant case, We have pored over the attachments to the pleadings of the parties and We find that petitioners have
substantially proved the identity of 72 other union members who committed prohibited and illegal acts during the May 6,
2002 illegal strike, thus:
First, the photographs17 submitted by petitioners graphically depict and show the identities of the union members who
committed prohibited and illegal acts. Second, the identities of these union members were substantially proved through
the eyewitnesses18 of petitioners who personally knew and recognized them as those who committed the prohibited and
illegal acts. Thus, the identities of these 72 other union members who participated in the strike and committed prohibited
117
and illegal acts are not only shown through the photographs, but are also sufficiently supported, as earlier cited, by police
blotter certifications,19 a criminal complaint for grave coercion, 20and affidavits of several workers 21 and a proprietor.22 As
aptly pointed out by petitioners, while several union members were penalized, other union members with them who are
identifiable in the photographs and attested to by witnesses were not so penalized. This must be corrected, for these other
unpenalized union members were similarly situated with those penalized in that they all committed the same prohibited
and illegal acts during the strike. Absent any exculpating circumstance, they must all suffer the same fate with the
statutorily provided consequence of termination of employment.
Thus, We find that there was patent misappreciation of evidence both by the LA and the NLRC, but it was not corrected by
the CA.
Second Issue: Damages and Attorneys Fees
Anent the issue of the award of damages and attorneys fees, We affirm the courts a quos uniform findings and rulings
that while petitioners prayed for damages and attorneys fees, they failed to substantiate their claims.
Indeed, the grant of damages and attorneys fees requires factual, legal and equitable justification; its basis cannot be left
to speculation or conjecture. 23 Petitioners simply bank their claims on the Affidavit 24 of Julito Sioson. The claim for actual
damages for losses of PhP 10,000 daily or PhP 260,000 a month, as averred by Sioson, cannot be sustained by a mere
affidavit of the owner without being buttressed by other documentary evidence or unassailable substantiation. Even if
attested to in an affidavit, the amount claimed for actual damages is merely speculative at most. To be recoverable, actual
damages must not only be capable of proof, but must actually be proved with reasonable degree of certainty. The Court
cannot simply rely on speculation, conjecture, or guesswork in determining the amount of damages. 25 Without any factual
basis, it cannot be granted.
That petitioners had to litigate on the occasion of the illegal strike does not necessarily mean that attorneys fees will
automatically be granted. On one hand, in labor cases, attorneys fees granted under Art. 111 26 of the Labor Code apply to
unlawful withholding of wages, which indubitably does not apply to the instant case. On the other hand, Art. 2208(2) of the
Civil Code does not ipso facto grant the award of damages in the form of attorneys fees to a winning party, for the
exercise of protection of ones right is not compensable.
Besides, jurisprudence instructs that for the award of attorneys fees to be granted, there must be factual, legal and
equitable justification.27 As the Court held in Filipinas Broadcasting Network, Inc. v. Ago Medical and Educational CenterBicol Christian College of Medicine (AMEC-BCCM):
It is an accepted doctrine that the award thereof as an item of damages is the exception rather than the rule, and
counsels fees are not to be awarded every time a party wins a suit. The power of the court to award attorneys fees under
Article 2208 of the Civil Code demands factual, legal and equitable justification, without which the award is a conclusion
without a premise, its basis being improperly left to speculation and conjecture. In all events, the court must explicitly state
in the text of the decision, and not only in the decretal portion thereof, the legal reason for the award of attorneys fees. 28
The fact that the courts a quo did not award attorneys fees to petitioners persuasively shows that they found no factual,
legal and equitable justification for it. Neither do We find any.
WHEREFORE, the instant petition is hereby PARTIALLY GRANTED. The assailed June 30, 2009 CA Decision in CA-G.R.
SP Nos. 88614 and 88645 is AFFIRMED with MODIFICATION in that the following additional 72 union members who
committed prohibited and illegal acts during the May 6, 2002 strike are also declared to have forfeited their employment:
Thomas Padullon, Herbert Bautista, Ariel Dadia, Avelino Parenas, Dennis Montealegre, Sonny Constantino, Shandy
Constantino, Joseph Pernia, Peter Alcoy, Edilberto Cerille, Fernando Leonor, Teotimar Reginio, Alberto Bajeta, Allan
Meneses, Ronel Fabul, Jesus Comendador, Jerry Pernia, Oscar Rivera, Leo Melgar, Enrico Laygo, Ricky Palmero, Rowell
Garcia, Leopito Merano, Alejandro de Lara, Joel Garcia, Bonifacio Pereda, Remegio Constantino, Dickson Pilapil, Randy
Cordano, Aurelio Taguinod, Oscar Taguinod, Dewell Pilapil, Joel Mas-ing, Eduardo Lopez, Glicerio Reanzarez, Joseph
Flores, Buenato Casas, Romeo Azagra, Alfredo Rosales, Estelito Bajeta, Pedy Gemina, Fernando Velasco, Alberto
Caneza, Alejandro Cervantes, Erick Carvajal, Ronaldo Bernadez, Jerry Corosa, Jayson Corosa, Jayson Juanson, Shelly
Narez, Alexander Bajeta, Edgardo Garcia, Ariel Llosala, Rommel Ilaya, Rodrigo Paulete, Mervin Paquinto, Marvin Senatin,
Jayson Rillora, Darius Pilapil, Venice Lucero, Gregorio Reanzares, Eulogio Reginio, Michael Javier, Dennis Mosquera,
118
Freddie Azores, Rogelio Cabrera, Rafael Sarmiento, Frederick Permejo, Nicolas Bernardo, Leoncio Paz de Leon, Edward
Dennis Manahan and Antonio Baldago.
SO ORDERED.
CASE 21
SUPREME COURT
Manila
EN BANC
G.R. No. 164301
October 19, 2011
BANK OF THE PHILIPPINE ISLANDS, Petitioner,

vs.
BPI EMPLOYEES UNION-DAVAO CHAPTER-FEDERATION OF UNIONS IN BPI UNIBANK, Respondent.
RESOLUTION
In the present incident, petitioner Bank of the Philippine Islands (BPI) moves for reconsideration 1 of our Decision dated
August 10, 2010, holding that former employees of the Far East Bank and Trust Company (FEBTC) "absorbed" by BPI
pursuant to the two banks merger in 2000 were covered by the Union Shop Clause in the then existing collective
bargaining agreement (CBA)2 of BPI with respondent BPI Employees Union-Davao Chapter-Federation of Unions in BPI
Unibank (the Union).
To recall, the Union Shop Clause involved in this long standing controversy provided, thus:
ARTICLE II
xxxx
119
Section 2. Union Shop - New employees falling within the bargaining unit as defined in Article I of this Agreement, who
may hereafter be regularly employed by the Bank shall, within thirty (30) days after they become regular employees, join
the Union as a condition of their continued employment. It is understood that membership in good standing in the Union is
a condition of their continued employment with the Bank. 3 (Emphases supplied.)
The bone of contention between the parties was whether or not the "absorbed" FEBTC employees fell within the definition
of "new employees" under the Union Shop Clause, such that they may be required to join respondent union and if they fail
to do so, the Union may request BPI to terminate their employment, as the Union in fact did in the present case. Needless
to state, BPI refused to accede to the Unions request. Although BPI won the initial battle at the Voluntary Arbitrator level,
BPIs position was rejected by the Court of Appeals which ruled that the Voluntary Arbitrators interpretation of the Union
Shop Clause was at war with the spirit and rationale why the Labor Code allows the existence of such provision. On
review with this Court, we upheld the appellate courts ruling and disposed of the case as follows:
WHEREFORE, the petition is hereby DENIED, and the Decision dated September 30, 2003 of the Court of Appeals is
AFFIRMED, subject to the thirty (30) day notice requirement imposed herein. Former FEBTC employees who opt not to
become union members but who qualify for retirement shall receive their retirement benefits in accordance with law, the
applicable retirement plan, or the CBA, as the case may be. 4
Notwithstanding our affirmation of the applicability of the Union Shop Clause to former FEBTC employees, for reasons
already extensively discussed in the August 10, 2010 Decision, even now BPI continues to protest the inclusion of said
employees in the Union Shop Clause.
In seeking the reversal of our August 10, 2010 Decision, petitioner insists that the parties to the CBA clearly intended to
limit the application of the Union Shop Clause only to new employees who were hired as non-regular employees but later
attained regular status at some point after hiring. FEBTC employees cannot be considered new employees as BPI merely
stepped into the shoes of FEBTC as an employer purely as a consequence of the merger.5
Petitioner likewise relies heavily on the dissenting opinions of our respected colleagues, Associate Justices Antonio T.
Carpio and Arturo D. Brion. From both dissenting opinions, petitioner derives its contention that "the situation of absorbed
employees can be likened to old employees of BPI, insofar as their full tenure with FEBTC was recognized by BPI and
their salaries were maintained and safeguarded from diminution" but such absorbed employees "cannot and should not
be treated in exactly the same way as old BPI employees for there are substantial differences between them." 6 Although
petitioner admits that there are similarities between absorbed and new employees, they insist there are marked
differences between them as well. Thus, adopting Justice Brions stance, petitioner contends that the absorbed FEBTC
employees should be considered "a sui generis group of employees whose classification will not be duplicated until BPI
has another merger where it would be the surviving corporation." 7 Apparently borrowing from Justice Carpio, petitioner
propounds that the Union Shop Clause should be strictly construed since it purportedly curtails the right of the absorbed
employees to abstain from joining labor organizations. 8
Pursuant to our directive, the Union filed its Comment 9 on the Motion for Reconsideration. In opposition to petitioners
arguments, the Union, in turn, adverts to our discussion in the August 10, 2010 Decision regarding the voluntary nature of
the merger between BPI and FEBTC, the lack of an express stipulation in the Articles of Merger regarding the transfer of
employment contracts to the surviving corporation, and the consensual nature of employment contracts as valid bases for
the conclusion that former FEBTC employees should be deemed new employees. 10 The Union argues that the creation of
employment relations between former FEBTC employees and BPI (i.e., BPIs selection and engagement of former FEBTC
employees, its payment of their wages, power of dismissal and of control over the employees conduct) occurred after the
merger, or to be more precise, after the Securities and Exchange Commissions (SEC) approval of the merger. 11 The
Union likewise points out that BPI failed to offer any counterargument to the Courts reasoning that:
The rationale for upholding the validity of union shop clauses in a CBA, even if they impinge upon the individual
employee's right or freedom of association, is not to protect the union for the union's sake. Laws and jurisprudence
promote unionism and afford certain protections to the certified bargaining agent in a unionized company because a
strong and effective union presumably benefits all employees in the bargaining unit since such a union would be in a
better position to demand improved benefits and conditions of work from the employer. x x x.
120
x x x Nonetheless, settled jurisprudence has already swung the balance in favor of unionism, in recognition that ultimately
the individual employee will be benefited by that policy. In the hierarchy of constitutional values, this Court has repeatedly
held that the right to abstain from joining a labor organization is subordinate to the policy of encouraging unionism as an
instrument of social justice.12
While most of the arguments offered by BPI have already been thoroughly addressed in the August 10, 2010 Decision, we
find that a qualification of our ruling is in order only with respect to the interpretation of the provisions of the Articles of
Merger and its implications on the former FEBTC employees security of tenure.
Taking a second look on this point, we have come to agree with Justice Brions view that it is more in keeping with the
dictates of social justice and the State policy of according full protection to labor to deem employment contracts as
automatically assumed by the surviving corporation in a merger, even in the absence of an express stipulation in the
articles of merger or the merger plan. In his dissenting opinion, Justice Brion reasoned that:
To my mind, due consideration of Section 80 of the Corporation Code, the constitutionally declared policies on work, labor
and employment, and the specific FEBTC-BPI situation i.e., a merger with complete "body and soul" transfer of all that
FEBTC embodied and possessed and where both participating banks were willing (albeit by deed, not by their written
agreement) to provide for the affected human resources by recognizing continuity of employment should point this
Court to a declaration that in a complete merger situation where there is total takeover by one corporation over another
and there is silence in the merger agreement on what the fate of the human resource complement shall be, the latter
should not be left in legal limbo and should be properly provided for, by compelling the surviving entity to absorb these
employees. This is what Section 80 of the Corporation Code commands, as the surviving corporation has the legal
obligation to assume all the obligations and liabilities of the merged constituent corporation.
Not to be forgotten is that the affected employees managed, operated and worked on the transferred assets and
properties as their means of livelihood; they constituted a basic component of their corporation during its existence. In a
merger and consolidation situation, they cannot be treated without consideration of the applicable constitutional
declarations and directives, or, worse, be simply disregarded. If they are so treated, it is up to this Court to read and
interpret the law so that they are treated in accordance with the legal requirements of mergers and consolidation, read in
light of the social justice, economic and social provisions of our Constitution. Hence, there is a need for the surviving
corporation to take responsibility for the affected employees and to absorb them into its workforce where no appropriate
provision for the merged corporation's human resources component is made in the Merger Plan. 13
By upholding the automatic assumption of the non-surviving corporations existing employment contracts by the surviving
corporation in a merger, the Court strengthens judicial protection of the right to security of tenure of employees affected by
a merger and avoids confusion regarding the status of their various benefits which were among the chief objections of our
dissenting colleagues. However, nothing in this Resolution shall impair the right of an employer to terminate the
employment of the absorbed employees for a lawful or authorized cause or the right of such an employee to resign, retire
or otherwise sever his employment, whether before or after the merger, subject to existing contractual obligations. In this
manner, Justice Brions theory of automatic assumption may be reconciled with the majoritys concerns with the successor
employers prerogative to choose its employees and the prohibition against involuntary servitude.1avvphi1
Notwithstanding this concession, we find no reason to reverse our previous pronouncement that the absorbed FEBTC
employees are covered by the Union Shop Clause.
Even in our August 10, 2010 Decision, we already observed that the legal fiction in the law on mergers (that the surviving
corporation continues the corporate existence of the non-surviving corporation) is mainly a tool to adjudicate the rights
and obligations between and among the merged corporations and the persons that deal with them. 14 Such a legal fiction
cannot be unduly extended to an interpretation of a Union Shop Clause so as to defeat its purpose under labor law.
Hence, we stated in the Decision that:
In any event, it is of no moment that the former FEBTC employees retained the regular status that they possessed while
working for their former employer upon their absorption by petitioner. This fact would not remove them from the scope of
the phrase "new employees" as contemplated in the Union Shop Clause of the CBA, contrary to petitioner's insistence
that the term "new employees" only refers to those who are initially hired as non-regular employees for possible regular
employment.
121
The Union Shop Clause in the CBA simply states that "new employees" who during the effectivity of the CBA "may be
regularly employed" by the Bank must join the union within thirty (30) days from their regularization. There is nothing in the
said clause that limits its application to only new employees who possess non-regular status, meaning probationary
status, at the start of their employment. Petitioner likewise failed to point to any provision in the CBA expressly excluding
from the Union Shop Clause new employees who are "absorbed" as regular employees from the beginning of their
employment. What is indubitable from the Union Shop Clause is that upon the effectivity of the CBA, petitioner's new
regular employees (regardless of the manner by which they became employees of BPI) are required to join the Union as a
condition of their continued employment.15
Although by virtue of the merger BPI steps into the shoes of FEBTC as a successor employer as if the former had been
the employer of the latters employees from the beginning it must be emphasized that, in reality, the legal consequences
of the merger only occur at a specific date, i.e., upon its effectivity which is the date of approval of the merger by the SEC.
Thus, we observed in the Decision that BPI and FEBTC stipulated in the Articles of Merger that they will both continue
their respective business operations until the SEC issues the certificate of merger and in the event no such certificate is
issued, they shall hold each other blameless for the non-consummation of the merger. 16 We likewise previously noted that
BPI made its assignments of the former FEBTC employees effective on April 10, 2000, or after the SEC approved the
merger.17 In other words, the obligation of BPI to pay the salaries and benefits of the former FEBTC employees and its
right of discipline and control over them only arose with the effectivity of the merger. Concomitantly, the obligation of
former FEBTC employees to render service to BPI and their right to receive benefits from the latter also arose upon the
effectivity of the merger. What is material is that all of these legal consequences of the merger took place during the life of
an existing and valid CBA between BPI and the Union wherein they have mutually consented to include a Union Shop
Clause.
From the plain, ordinary meaning of the terms of the Union Shop Clause, it covers employees who (a) enter the employ of
BPI during the term of the CBA; (b) are part of the bargaining unit (defined in the CBA as comprised of BPIs rank and file
employees); and (c) become regular employees without distinguishing as to the manner they acquire their regular status.
Consequently, the number of such employees may adversely affect the majority status of the Union and even its existence
itself, as already amply explained in the Decision.
Indeed, there are differences between (a) new employees who are hired as probationary or temporary but later
regularized, and (b) new employees who, by virtue of a merger, are absorbed from another company as regular and
permanent from the beginning of their employment with the surviving corporation. It bears reiterating here that these
differences are too insubstantial to warrant the exclusion of the absorbed employees from the application of the Union
Shop Clause. In the Decision, we noted that:
Verily, we agree with the Court of Appeals that there are no substantial differences between a newly hired non-regular
employee who was regularized weeks or months after his hiring and a new employee who was absorbed from another
bank as a regular employee pursuant to a merger, for purposes of applying the Union Shop Clause. Both employees were
hired/employed only after the CBA was signed. At the time they are being required to join the Union, they are both already
regular rank and file employees of BPI. They belong to the same bargaining unit being represented by the Union. They
both enjoy benefits that the Union was able to secure for them under the CBA. When they both entered the employ of BPI,
the CBA and the Union Shop Clause therein were already in effect and neither of them had the opportunity to express
their preference for unionism or not. We see no cogent reason why the Union Shop Clause should not be applied equally
to these two types of new employees, for they are undeniably similarly situated. 18
Again, it is worthwhile to highlight that a contrary interpretation of the Union Shop Clause would dilute its efficacy and put
the certified union that is supposedly being protected thereby at the mercy of management. For if the former FEBTC
employees had no say in the merger of its former employer with another bank, as petitioner BPI repeatedly decries on
their behalf, the Union likewise could not prevent BPI from proceeding with the merger which undisputedly affected the
number of employees in the bargaining unit that the Union represents and may negatively impact on the Unions majority
status. In this instance, we should be guided by the principle that courts must place a practical and realistic construction
upon a CBA, giving due consideration to the context in which it is negotiated and purpose which it is intended to serve. 19
We now come to the question: Does our affirmance of our ruling that former FEBTC employees absorbed by BPI are
covered by the Union Shop Clause violate their right to security of tenure which we expressly upheld in this Resolution?
We answer in the negative.
122
In Rance v. National Labor Relations Commission,20 we held that:

It is the policy of the state to assure the right of workers to "security of tenure" (Article XIII, Sec. 3 of the New Constitution,
Section 9, Article II of the 1973 Constitution). The guarantee is an act of social justice. When a person has no property, his
job may possibly be his only possession or means of livelihood. Therefore, he should be protected against any arbitrary
deprivation of his job. Article 280 of the Labor Code has construed security of tenure as meaning that "the employer
shall not terminate the services of an employee except for a just cause or when authorized by" the Code. x x x
(Emphasis supplied.)
We have also previously held that the fundamental guarantee of security of tenure and due process dictates that no
worker shall be dismissed except for a just and authorized cause provided by law and after due process is
observed.21 Even as we now recognize the right to continuous, unbroken employment of workers who are absorbed into a
new company pursuant to a merger, it is but logical that their employment may be terminated for any causes provided for
under the law or in jurisprudence without violating their right to security of tenure. As Justice Carpio discussed in his
dissenting opinion, it is well-settled that termination of employment by virtue of a union security clause embodied in a CBA
is recognized in our jurisdiction.22 In Del Monte Philippines, Inc. v. Saldivar,23 we explained the rationale for this policy in
this wise:
Article 279 of the Labor Code ordains that "in cases of regular employment, the employer shall not terminate the services
of an employee except for a just cause or when authorized by [Title I, Book Six of the Labor Code]." Admittedly, the
enforcement of a closed-shop or union security provision in the CBA as a ground for termination finds no
extension within any of the provisions under Title I, Book Six of the Labor Code. Yet jurisprudence has
consistently recognized, thus: "It is State policy to promote unionism to enable workers to negotiate with
management on an even playing field and with more persuasiveness than if they were to individually and separately
bargain with the employer. For this reason, the law has allowed stipulations for 'union shop' and 'closed shop' as means of
encouraging workers to join and support the union of their choice in the protection of their rights and interests vis-a-vis the
employer."24 (Emphasis supplied.)
Although it is accepted that non-compliance with a union security clause is a valid ground for an employees dismissal,
jurisprudence dictates that such a dismissal must still be done in accordance with due process. This much we decreed in
General Milling Corporation v. Casio,25 to wit:
The Court reiterated in Malayang Samahan ng mga Manggagawa sa M. Greenfield v. Ramos that:
While respondent company may validly dismiss the employees expelled by the union for disloyalty under the union
security clause of the collective bargaining agreement upon the recommendation by the union, this dismissal should not
be done hastily and summarily thereby eroding the employees' right to due process, self-organization and security of
tenure. The enforcement of union security clauses is authorized by law provided such enforcement is not characterized by
arbitrariness, and always with due process. Even on the assumption that the federation had valid grounds to expel the
union officers, due process requires that these union officers be accorded a separate hearing by respondent company.
The twin requirements of notice and hearing constitute the essential elements of procedural due process. The law
requires the employer to furnish the employee sought to be dismissed with two written notices before termination of
employment can be legally effected: (1) a written notice apprising the employee of the particular acts or omissions for
which his dismissal is sought in order to afford him an opportunity to be heard and to defend himself with the assistance of
counsel, if he desires, and (2) a subsequent notice informing the employee of the employer's decision to dismiss him. This
procedure is mandatory and its absence taints the dismissal with illegality.
Irrefragably, GMC cannot dispense with the requirements of notice and hearing before dismissing Casio, et al. even when
said dismissal is pursuant to the closed shop provision in the CBA. The rights of an employee to be informed of the
charges against him and to reasonable opportunity to present his side in a controversy with either the company or his own
union are not wiped away by a union security clause or a union shop clause in a collective bargaining agreement. x x
x26 (Emphases supplied.)
In light of the foregoing, we find it appropriate to state that, apart from the fresh thirty (30)-day period from notice of finality
of the Decision given to the affected FEBTC employees to join the Union before the latter can request petitioner to
123
terminate the formers employment, petitioner must still accord said employees the twin requirements of notice and
hearing on the possibility that they may have other justifications for not joining the Union. Similar to our August 10, 2010
Decision, we reiterate that our ruling presupposes there has been no material change in the situation of the parties in the
interim.
WHEREFORE, the Motion for Reconsideration is DENIED. The Decision dated August 10, 2010 is AFFIRMED, subject to
the qualifications that:
(a) Petitioner is deemed to have assumed the employment contracts of the Far East Bank and Trust Company
(FEBTC) employees upon effectivity of the merger without break in the continuity of their employment, even
without express stipulation in the Articles of Merger; and
(b) Aside from the thirty (30) days, counted from notice of finality of the August 10, 2010 Decision, given to former
FEBTC employees to join the respondent, said employees shall be accorded full procedural due process before
their employment may be terminated.
SO ORDERED.
CASE 22
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 182295
June 26, 2013
7K CORPORATION, Petitioner,
vs.
EDDIE ALBARICO, Respondent.
DECISION
124
SERENO, CJ.:
This is a Petition for Review on Certiorari filed under Rule 45 of the Revised Rules of Court, asking the Court to determine
whether a voluntary arbitrator in a labor dispute exceeded his jurisdiction in deciding issues not specified in the
submission agreement of the parties. It assails the Decision 1 dated 18 September 2007 and the Resolution 2 dated 17
March 2008 of the Court of Appeals (CA).3
FACTS
When he was dismissed on 5 April 1993, respondent Eddie Albarico (Albarico) was a regular employee of petitioner 7K
Corporation, a company selling water purifiers. He started working for the company in 1990 as a salesman. 4 Because of
his good performance, his employment was regularized. He was also promoted several times: from salesman, he was
promoted to senior sales representative and then to acting team field supervisor. In 1992, he was awarded the Presidents
Trophy for being one of the companys top water purifier specialist distributors.
In April of 1993, the chief operating officer of petitioner 7K Corporation terminated Albaricos employment allegedly for his
poor sales performance.5 Respondent had to stop reporting for work, and he subsequently submitted his money claims
against petitioner for arbitration before the National Conciliation and Mediation Board (NCMB). The issue for voluntary
arbitration before the NCMB, according to the parties Submission Agreement dated 19 April 1993, was whether
respondent Albarico was entitled to the payment of separation pay and the sales commission reserved for him by the
corporation.6
While the NCMB arbitration case was pending, respondent Albarico filed a Complaint against petitioner corporation with
the Arbitration Branch of the National Labor Relations Commission (NLRC) for illegal dismissal with money claims for
overtime pay, holiday compensation, commission, and food and travelling allowances. 7 The Complaint was decided by the
labor arbiter in favor of respondent Albarico, who was awarded separation pay in lieu of reinstatement, backwages and
attorneys fees.8
On appeal by petitioner, the labor arbiters Decision was vacated by the NLRC for forum shopping on the part of
respondent Albarico, because the NCMB arbitration case was still pending. 9 The NLRC Decision, which explicitly stated
that the dismissal was without prejudice to the pending NCMB arbitration case, 10 became final after no appeal was taken.
On 17 September 1997, petitioner corporation filed its Position Paper in the NCMB arbitration case. 11 It denied that
respondent was terminated from work, much less illegally dismissed. The corporation claimed that he had voluntarily
stopped reporting for work after receiving a verbal reprimand for his sales performance; hence, it was he who was guilty of
abandonment of employment. Respondent made an oral manifestation that he was adopting the position paper he
submitted to the labor arbiter, a position paper in which the former claimed that he had been illegally dismissed. 12
On 12 January 2005, almost 12 years after the filing of the NCMB case, both parties appeared in a hearing before the
NCMB.13 Respondent manifested that he was willing to settle the case amicably with petitioner based on the decision of
the labor arbiter ordering the payment of separation pay in lieu of reinstatement, backwages and attorneys fees. On its
part, petitioner made a counter-manifestation that it was likewise amenable to settling the dispute. However, it was willing
to pay only the separation pay and the sales commission according to the Submission Agreement dated 19 April 1993. 14
The factual findings of the voluntary arbitrator, as well as of the CA, are not clear on what happened afterwards. Even the
records are bereft of sufficient information.
On 18 November 2005, the NCMB voluntary arbitrator rendered a Decision finding petitioner corporation liable for illegal
dismissal.15 The termination of respondent Albarico, by reason of alleged poor performance, was found invalid. 16 The
arbitrator explained that the promotions, increases in salary, and awards received by respondent belied the claim that the
latter was performing poorly.17 It was also found that Albarico could not have abandoned his job, as the abandonment
should have been clearly shown. Mere absence was not sufficient, according to the arbitrator, but must have been
accompanied by overt acts pointing to the fact that the employee did not want to work anymore. It was noted that, in the
present case, the immediate filing of a complaint for illegal dismissal against the employer, with a prayer for reinstatement,
showed that the employee was not abandoning his work. The voluntary arbitrator also found that Albarico was dismissed
from his work without due process.
125
However, it was found that reinstatement was no longer possible because of the strained relationship of the
parties.18 Thus, in lieu of reinstatement, the voluntary arbitrator ordered the corporation to pay separation pay for two
years at P4,456 for each year, or a total amount of P8,912.
Additionally, in view of the finding that Albarico had been illegally dismissed, the voluntary arbitrator also ruled that the
former was entitled to backwages in the amount of P90,804.19 Finally, the arbitrator awarded attorneys fees in
respondents favor, because he had been compelled to file an action for illegal dismissal. 20
Petitioner corporation subsequently appealed to the CA, imputing to the voluntary arbitrator grave abuse of discretion
amounting to lack or excess of jurisdiction for awarding backwages and attorneys fees to respondent Albarico based on
the formers finding of illegal dismissal. 21 The arbitrator contended that the issue of the legality of dismissal was not
explicitly included in the Submission Agreement dated 19 April 1993 filed for voluntary arbitration and resolution. It prayed
that the said awards be set aside, and that only separation pay of P8,912.00 and sales commission of P4,787.60 be
awarded.
The CA affirmed the Decision of the voluntary arbitrator, but eliminated the award of attorneys fees for having been made
without factual, legal or equitable justification. 22 Petitioners Motion for Partial Reconsideration was denied as well. 23
Hence, this Petition.
ISSUE
The issue before the Court is whether the CA committed reversible error in finding that the voluntary arbitrator properly
assumed jurisdiction to decide the issue of the legality of the dismissal of respondent as well as the latters entitlement to
backwages, even if neither the legality nor the entitlement was expressedly claimed in the Submission Agreement of the
parties.
The Petition is denied for being devoid of merit.
DISCUSSION
Preliminarily, we address petitioners claim that under Article 217 of the Labor Code, original and exclusive jurisdiction
over termination disputes, such as the present case, is lodged only with the labor arbiter of the NLRC. 24
Petitioner overlooks the proviso in the said article, thus:
Art. 217. Jurisdiction of the Labor Arbiters and the Commission.
a. Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear
and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension,
even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or
nonagricultural:
xxxx
2. Termination disputes;
xxxx
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims arising
from employer-employee relations, including those of persons in domestic or household service, involving an amount
exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.
(Emphases supplied)
126
Thus, although the general rule under the Labor Code gives the labor arbiter exclusive and original jurisdiction over
termination disputes, it also recognizes exceptions. One of the exceptions is provided in Article 262 of the Labor Code. In
San Jose v. NLRC,25 we said:
The phrase "Except as otherwise provided under this Code" refers to the following exceptions:
A. Art. 217. Jurisdiction of Labor Arbiters . . .
xxxx
(c) Cases arising from the interpretation or implementation of collective bargaining agreement and those arising from the
interpretation or enforcement of company procedure/policies shall be disposed of by the Labor Arbiter by referring the
same to the grievance machinery and voluntary arbitrator as may be provided in said agreement.
B. Art. 262. Jurisdiction over other labor disputes. The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon
agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and
bargaining deadlocks. (Emphasis supplied)
We also said in the same case that "the labor disputes referred to in the same Article 262 of the Labor Code can include
all those disputes mentioned in Article 217 over which the Labor Arbiter has original and exclusive jurisdiction." 26
From the above discussion, it is clear that voluntary arbitrators may, by agreement of the parties, assume jurisdiction over
a termination dispute such as the present case, contrary to the assertion of petitioner that they may not.
We now resolve the main issue. Petitioner argues that, assuming that the voluntary arbitrator has jurisdiction over the
present termination dispute, the latter should have limited his decision to the issue contained in the Submission
Agreement of the parties the issue of whether respondent Albarico was entitled to separation pay and to the sales
commission the latter earned before being terminated. 27 Petitioner asserts that under Article 262 of the Labor Code, the
jurisdiction of a voluntary arbitrator is strictly limited to the issues that the parties agree to submit. Thus, it contends that
the voluntary arbitrator exceeded his jurisdiction when he resolved the issues of the legality of the dismissal of respondent
and the latters entitlement to backwages on the basis of a finding of illegal dismissal.
According to petitioner, the CA wrongly concluded that the issue of respondents entitlement to separation pay was
necessarily based on his allegation of illegal dismissal, thereby making the issue of the legality of his dismissal implicitly
submitted to the voluntary arbitrator for resolution. 28 Petitioner argues that this was an erroneous conclusion, because
separation pay may in fact be awarded even in circumstances in which there is no illegal dismissal.
We rule that although petitioner correctly contends that separation pay may in fact be awarded for reasons other than
illegal dismissal, the circumstances of the instant case lead to no other conclusion than that the claim of respondent
Albarico for separation pay was premised on his allegation of illegal dismissal. Thus, the voluntary arbitrator properly
assumed jurisdiction over the issue of the legality of his dismissal.
True, under the Labor Code, separation pay may be given not only when there is illegal dismissal. In fact, it is also given
to employees who are terminated for authorized causes, such as redundancy, retrenchment or installation of labor-saving
devices under Article 28329 of the Labor Code. Additionally, jurisprudence holds that separation pay may also be awarded
for considerations of social justice, even if an employee has been terminated for a just cause other than serious
misconduct or an act reflecting on moral character.30 The Court has also ruled that separation pay may be awarded if it
has become an established practice of the company to pay the said benefit to voluntarily resigning employees 31 or to
those validly dismissed for non-membership in a union as required in a closed-shop agreement. 32
The above circumstances, however, do not obtain in the present case. There is no claim that the issue of entitlement to
separation pay is being resolved in the context of any authorized cause of termination undertaken by petitioner
corporation. Neither is there any allegation that a consideration of social justice is being resolved here. In fact, even in
instances in which separation pay is awarded in consideration of social justice, the issue of the validity of the dismissal still
needs to be resolved first. Only when there is already a finding of a valid dismissal for a just cause does the court then
127
award separation pay for reason of social justice. The other circumstances when separation pay may be awarded are not
present in this case.
The foregoing findings indisputably prove that the issue of separation pay emanates solely from respondents allegation of
illegal dismissal. In fact, petitioner itself acknowledged the issue of illegal dismissal in its position paper submitted to the
NCMB.
Moreover, we note that even the NLRC was of the understanding that the NCMB arbitration case sought to resolve the
issue of the legality of the dismissal of the respondent. In fact, the identity of the issue of the legality of his dismissal,
which was previously submitted to the NCMB, and later submitted to the NLRC, was the basis of the latters finding of
forum shopping and the consequent dismissal of the case before it. In fact, petitioner also implicitly acknowledged this
when it filed before the NLRC its Motion to Dismiss respondents Complaint on the ground of forum shopping. Thus, it is
now estopped from claiming that the issue before the NCMB does not include the issue of the legality of the dismissal of
respondent. Besides, there has to be a reason for deciding the issue of respondents entitlement to separation pay. To
think otherwise would lead to absurdity, because the voluntary arbitrator would then be deciding that issue in a vacuum.
The arbitrator would have no basis whatsoever for saying that Albarico was entitled to separation pay or not if the issue of
the legality of respondents dismissal was not resolve first.
Hence, the voluntary arbitrator correctly assumed that the core issue behind the issue of separation pay is the legality of
the dismissal of respondent. Moreover, we have ruled in Sime Darby Pilipinas, Inc. v. Deputy Administrator Magsalin 33 that
a voluntary arbitrator has plenary jurisdiction and authority to interpret an agreement to arbitrate and to determine the
scope of his own authority when the said agreement is vague subject only, in a proper case, to the certiorari jurisdiction
of this Court.
Having established that the issue of the legality of dismissal of Albarico was in fact necessarily albeit not explicitly
included in the Submission Agreement signed by the parties, this Court rules that the voluntary arbitrator rightly assumed
jurisdiction to decide the said issue.
Consequently, we also rule that the voluntary arbitrator may award backwages upon a finding of illegal dismissal, even
though the issue of entitlement thereto is not explicitly claimed in the Submission Agreement. Backwages, in general, are
awarded on the ground of equity as a form of relief that restores the income lost by the terminated employee by reason of
his illegal dismissal.34
In Sime Darby we ruled that although the specific issue presented by the parties to the voluntary arbitrator was only "the
issue of performance bonus," the latter had the authority to determine not only the issue of whether or not a performance
bonus was to be granted, but also the related question of the amount of the bonus, were it to be granted. We explained
that there was no indication at all that the parties to the arbitration agreement had regarded "the issue of performance
bonus" as a two-tiered issue, of which only one aspect was being submitted to arbitration. Thus, we held that the failure of
the parties to limit the issues specifically to that which was stated allowed the arbitrator to assume jurisdiction over the
related issue.
Similarly, in the present case, there is no indication that the issue of illegal dismissal should be treated. as a two-tiered
issue whereupon entitlement to backwages must be determined separately. Besides, "since arbitration is a final resort for
the adjudication of disputes," the voluntary arbitrator in the present case can assume that he has the necessary power to
make a final settlement.35 Thus, we rule that the voluntary arbitrator correctly assumed jurisdiction over the issue of
entitlement of respondent Albarico to backwages on the basis of the former's finding of illegal dismissal.
WHEREFORE, premises considered, the instant Petition is DENIED. The 18 September 2007 Decision and 17 March
2008 Resolution of the Court of Appeals in CA-G.R. SP No. 92526, are hereby AFFIRMED.
SO ORDERED.
CASE 23
128

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 194795
June 13, 2012
EVER ELECTRICAL MANUFACTURING, INC., (EEMI) and VICENTE GO, Petitioners,

vs.
SAMAHANG MANGGAGAWA NG EVER ELECTRICAL/ NAMAWU LOCAL 224 Represented by Felimon
Panganiban, Respondents.
DECISION
MENDOZA, J.:
This petition for review on certiorari1 under Rule 45 of the 1997 Rules of Civil Procedure assails the August 31, 2010
Decision2 and the December 16, 2010 Resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 108978.
Petitioner Ever Electrical Manufacturing, Inc. (EEMI) is a corporation engaged in the business of manufacturing electrical
parts and supplies. On the other hand, the respondents are members of Samahang Manggagawa ng Ever
Electrical/NAMAWU Local 224 (respondents) headed by Felimon Panganiban.
The controversy started when EEMI closed its business operations on October 11, 2006 resulting in the termination of the
services of its employees. Aggrieved, respondents filed a complaint for illegal dismissal with prayer for payment of 13th
month pay, separation pay, damages, and attorneys fees. Respondents alleged that the closure was made without any
warning, notice or memorandum and in full disregard of the requirements of the Labor Code.
In its defense, EEMI explained that it had closed the business due to various factors. In 1995, it invested in Orient
Commercial Banking Corporation (Orient Bank) the sum of P500,000,000.00 and during the Asian Currency crises,
various economies in the South East Asian Region were hurt badly. EEMI was one of those who suffered huge losses. In
November 1996, it obtained a loan in the amount of P121,400,000.00 from United Coconut Planters Bank (UCPB). As
security for the loan, EEMIs land and its improvements, including the factory, were mortgaged to UCPB.
EEMIs business suffered further losses due to the continued entry of cheaper goods from China and other Asian
countries. Adding to EEMIs financial woes was the closure of Orient Bank where most of its resources were invested. As
a result, EEMI was not able to meet its loan obligations with UCPB.
In an attempt to save the company, EEMI entered into a dacion en pago arrangement with UCPB which, in effect,
transferred ownership of the companys property to UCPB as reflected in TCT No. 429159. Originally, EEMI wanted to
lease the premises to continue its business operation but under UCPBs policy, a previous debtor who failed to settle its
loan obligation was not eligible to lease its acquired assets. Thus, UCPB agreed to lease it to an affiliate corporation, EGO
Electrical Supply Co, Inc. (EGO), for and in behalf of EEMI. On February 2, 2002, a lease agreement was entered into
between UCPB and EGO.4 The said lease came to a halt when UCPB instituted an unlawful detainer suit against EGO
before the Metropolitan Trial Court, Branch 5, Makati City (MeTC) docketed as Civil Case No. 88602. On August 11, 2006,
the MeTC ruled in favor of UCPB and ordered EGO to vacate the leased premises and pay rentals to UCPB in the amount
of P21,473,843.65.5 On September 19, 2006, a writ of execution was issued. 6 Consequently, on October 11, 2006, the
Sheriff implemented the writ by closing the premises and, as a result, EEMIs employees were prevented from entering
the factory.
On April 25, 2007, the Labor Arbiter (LA) ruled that respondents were not illegally dismissed. It, however, ordered EEMI
and its President, Vicente Go (Go), to pay their employees separation pay and 13th month pay respectively. 7 The decretal
portion of the LA decision, reads:
129
CONFORMABLY WITH THE FOREGOING, Judgment is hereby rendered ordering the respondent[s] in solidum to pay
the complainants their separation pay, 13th month pay of the three (3) workers and the balance of their 13th month pay as
computed which computation is made a part of this disposition.
On September 15, 2008, the NLRC reversed and set aside the decision of the LA. The NLRC dismissed the complaint for
lack of merit and ruled that since EEMIs cessation of business operation was due to serious business losses, the
employees were not entitled to separation pay.8
Respondents moved for reconsideration of the NLRC decision, but the NLRC denied the motion in its March 23, 2009
Resolution.9
Unperturbed, respondents elevated the case before the CA via a petition for certiorari under Rule 65. 10
On August 31, 2010, the CA granted the petition. 11 It nullified the decision of the NLRC and reinstated the LA decision. The
dispositive portion of the CA decision reads:
ACCORDINGLY, the petition is GRANTED. The Decision dated September 15, 2008 and Resolution dated March 23,
2009 of the National Labor Relations Commission are NULLIFIED and the Decision dated April 25, 2007 of Labor Arbiter
Melquiades Sol Del Rosario, REINSTATED.
The CA held that respondents were entitled to separation pay and 13th month pay because the closure of EEMIs
business operation was effected by the enforcement of a writ of execution and not by reason of business losses. The CA,
citing Restaurante Las Conchas v. Lydia Llego,12 upheld the solidary liability of EEMI and Go, declaring that "when the
employer corporation is no longer existing and unable to satisfy the judgment in favor of the employees, the officers
should be held liable for acting on behalf of the corporation." 13
EEMI and Go filed a motion for reconsideration but it was denied in the CA Resolution dated December 16, 2010. 14
Hence, this petition.15
Issues:
1. Whether the CA erred in finding that the closure of EEMIs operation was not due to business losses; and
2. Whether the CA erred in finding Vicente Go solidarily liable with EEMI.
Article 283 of the Labor Code provides:
Art. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of
any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one
(1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or
redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay
or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses
and in cases of closures or cessation of operations of establishment or under taking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half ( 1/2) month pay for
every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.
Article 283 of the Labor Code identifies closure or cessation of operation of the establishment as an authorized cause for
terminating an employee. Similarly, the said provision mandates that employees who are laid off from work due to
closures that are not due to business insolvency should be paid separation pay equivalent to one-month pay or to at least
130
one-half month pay for every year of service, whichever is higher. A fraction of at least six months shall be considered one
whole year.
Although business reverses or losses are recognized by law as an authorized cause, it is still essential that the alleged
losses in the business operations be proven convincingly; otherwise, this ground for termination of employment would be
susceptible to abuse by conniving employers, who might be merely feigning business losses or reverses in their business
ventures in order to ease out employees.16
In this case, EEMI failed to establish that the main reason for its closure was business reverses. As aptly observed by the
CA, the cessation of EEMIs business was not directly brought about by serious business losses or financial reverses, but
by reason of the enforcement of a judgment against it. Thus, EEMI should be required to pay separation pay to its affected
employees.
As to whether or not Go should be held solidarily liable with EEMI, the Court agrees with the petitioner.
As a general rule, corporate officers should not be held solidarily liable with the corporation for separation pay for it is
settled that a corporation is invested by law with a personality separate and distinct from those of the persons composing
it as well as from that of any other legal entity to which it may be related. Mere ownership by a single stockholder or by
another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding
the separate corporate personality.17
The LA was of the view that Go, as President of the corporation, actively participated in the management of EEMIs
corporate obligations, and, accordingly, rendered judgment ordering EEMI and Go "in solidum to pay the
complainants"18 their due. He explained that "[r]espondent Gos negligence in not paying the lease rental of the plant in
behalf of the lessee EGO Electrical Supply, Inc., where EEMI was operating and reimburse expenses of UCPB for real
estate taxes and the like, prompted the bank to file an unlawful detainer case against the lessee, EGO Electrical Supply
Co. This evasion of an existing obligation, made respondent Go as liable as respondent EEMI, for complainants money
awards."19 Added the LA, "being the President and the one actively representing respondent EEMI, in major contracts i.e.
Real Estate Mortgage, loans, dacion en pago, respondent Go has to be liable in the case." 20 As earlier stated, the CA
affirmed the LA decision citing the case of Restaurante Las Conchas v. Llego,21 where it was held that "when the employer
corporation is no longer existing and unable to satisfy the judgment in favor of the employees, the officers should be held
liable for acting on behalf of the corporation." 22
A study of Restaurante Las Conchas case, however, bares that it was an application of the exception rather than the
general rule. As stated in the said case, "as a rule, the officers and members of a corporation are not personally liable for
acts done in the performance of their duties." 23 The Court therein explained that it applied the exception because of the
peculiar circumstances of the case. If the rule would be applied, the employees would end up in an empty victory because
as the restaurant had been closed for lack of venue, there would be no one to pay its liability as the respondents therein
claimed that the restaurant was owned by a different entity, not a party in the case. 24
In two subsequent cases, the Courts ruling in Restaurante Las Conchas was invoked but the Court refused to consider it
reasoning out that it was the exception rather than the rule. The two cases were Mandaue Dinghow Dimsum House, Co.,
Inc. and/or Henry Uytengsu v. National Labor Relations Commission 25 and Pantranco Employees Association (PEAPTGWO) v. National Labor Relations Commission.26
In Mandaue Dinghow Dimsum House, Co., Inc., the Court declined to apply the ruling in Restaurante Las
Conchasbecause there was no evidence that the respondent therein, Henry Uytrengsu, acted in bad faith or in excess of
his authority. It stressed that a corporation is invested by law with a personality separate and distinct from those of the
persons composing it as well as from that of any other legal entity to which it may be related. For said reason, the doctrine
of piercing the veil of corporate fiction must be exercised with caution. 27 Citing Malayang Samahan ng mga Manggagawa
sa M. Greenfield v. Ramos,28 the Court explained that corporate directors and officers are solidarily liable with the
corporation for the termination of employees done with malice or bad faith. It stressed that bad faith does not connote bad
judgment or negligence; it imports a dishonest purpose or some moral obliquity and conscious doing of wrong; it means
breach of a known duty through some motive or interest or ill will; it partakes of the nature of fraud.
131
In Pantranco Employees Association, the Court also rejected the invocation of Restaurante Las Conchas and refused to
pierce the veil of corporate fiction. It explained:
As between PNB and PNEI, petitioners want us to disregard their separate personalities, and insist that because the
company, PNEI, has already ceased operations and there is no other way by which the judgment in favor of the
employees can be satisfied, corporate officers can be held jointly and severally liable with the company. Petitioners rely on
the pronouncement of this Court in A.C. Ransom Labor Union-CCLU v. NLRC and subsequent cases.
This reliance fails to persuade. We find the aforesaid decisions inapplicable to the instant case.
For one, in the said cases, the persons made liable after the companys cessation of operations were the officers and
agents of the corporation. The rationale is that, since the corporation is an artificial person, it must have an officer who can
be presumed to be the employer, being the person acting in the interest of the employer. The corporation, only in the
technical sense, is the employer. In the instant case, what is being made liable is another corporation (PNB) which
acquired the debtor corporation (PNEI).
Moreover, in the recent cases Carag v. National Labor Relations Commission and McLeod v. National Labor Relations
Commission, the Court explained the doctrine laid down in AC Ransom relative to the personal liability of the officers and
agents of the employer for the debts of the latter. In AC Ransom, the Court imputed liability to the officers of the
corporation on the strength of the definition of an employer in Article 212(c) (now Article 212[e]) of the Labor Code. Under
the said provision, employer includes any person acting in the interest of an employer, directly or indirectly, but does not
include any labor organization or any of its officers or agents except when acting as employer. It was clarified in Carag
and McLeod that Article 212(e) of the Labor Code, by itself, does not make a corporate officer personally liable for the
debts of the corporation. It added that the governing law on personal liability of directors or officers for debts of the
corporation is still Section 31 of the Corporation Code.
More importantly, as aptly observed by this Court in AC Ransom, it appears that Ransom, foreseeing the possibility or
probability of payment of backwages to its employees, organized Rosario to replace Ransom, with the latter to be
eventually phased out if the strikers win their case. The execution could not be implemented against Ransom because of
the disposition posthaste of its leviable assets evidently in order to evade its just and due obligations. Hence, the Court
sustained the piercing of the corporate veil and made the officers of Ransom personally liable for the debts of the latter.
Clearly, what can be inferred from the earlier cases is that the doctrine of piercing the corporate veil applies only in three
(3) basic areas, namely: 1) defeat of public convenience as when the corporate fiction is used as a vehicle for the evasion
of an existing obligation; 2) fraud cases or when the corporate entity is used to justify a wrong, protect fraud, or defend a
crime; or 3) alter ego cases, where a corporation is merely a farce since it is a mere alter ego or business conduit of a
person, or where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an
instrumentality, agency, conduit or adjunct of another corporation. In the absence of malice, bad faith, or a specific
provision of law making a corporate officer liable, such corporate officer cannot be made personally liable for corporate
liabilities.29 [Emphasis supplied]
Similarly, in the case at bench, the records do not warrant an application of the exception. The rule, which requires the
presence of malice or bad faith, must still prevail. In the recent case of Wensha Spa Center and/or Xu Zhi Jie v.
Yung,30 the Court absolved the corporations president from liability in the absence of bad faith or malice. In the said case,
the Court stated:
In labor cases, corporate directors and officers may be held solidarily liable with the corporation for the termination of
employment only if done with malice or in bad faith. 31 Bad faith does not connote bad judgment or negligence; it imports a
dishonest purpose or some moral obliquity and conscious doing of wrong; it means breach of a known duty through some
motive or interest or ill will; it partakes of the nature of fraud. 32
In the present case, Go may have acted in behalf of EEMI but the companys failure to operate cannot be equated to bad
faith. Cessation of business operation is brought about by various causes like mismanagement, lack of demand,
negligence, or lack of business foresight. Unless it can be shown that the closure was deliberate, malicious and in bad
faith, the Court must apply the general rule that a corporation has, by law, a personality separate and distinct from that of
its owners. As there is no evidence that Go, as EEMIs President, acted maliciously or in bad faith in handling their
132
business affairs and in eventually implementing the closure of its business, he cannot be held jointly and solidarily liable
with EEMI.
WHEREFORE, the petition is PARTIALLY GRANTED. The August 31, 2010 Decision of the Court of Appeals
isAFFIRMED with MODIFICATION that Vicente Go is not solidarily liable with Ever Electrical Manufacturing, Inc.
SO ORDERED.
CASE 24
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 185335
June 13, 2012
PRUDENTIAL GUARANTEE AND ASSURANCE EMPLOYEE LABOR UNION and SANDY T. VALLOTA,Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, PRUDENTIAL GUARANTEE AND ASSURANCE INC., and/or
JOCELYN RETIZOS, Respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 filed by petitioners Prudential Guarantee and Assurance Employee
Labor Union (Union) and Sandy T. Vallota (Vallota) seeking to set aside the September 16, 2008 Decision 1 and November
10, 2008 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 102699.
The Facts
Vallota commenced his employment with respondent Prudential Guarantee and Assurance, Inc. (PGAI) on May 16, 1995
as a Junior Programmer assigned to the Electronic Data Processing (EDP) Department. He reported directly to Gerald Dy
Victory, then head of the EDP, until his replacement by respondent Jocelyn Retizos (Retizos)sometime in 1997.
In August of 2005, Vallota was elected to the Board of Directors of the Union.
On November 11, 2005, PGAIs Human Resource Manager, Atty. Joaquin R. Rillo (Atty. Rillo), invited Union President,
Mike Apostol (Apostol) to his office. Atty. Rillo informed Apostol that PGAI was going to conduct an on-the-spot security
check in the Information and Technology (IT) Department. Atty. Rillo also requested that Union representatives witness the
inspection to which Apostol agreed.
The inspection team proceeded to the IT Department, and the EDP head, through PGAI network administrator Angelo
Gutierrez (Gutierrez), initiated the spot check of IT Department computers, beginning with the one assigned to Vallota.
After exploring the contents of all the folders and subfolders in the "My Documents" folder, Gutierrez apparently did not
find anything unusual with Vallotas computer and said "Wala naman, saan dito?" Retizos insisted, "Nandyan yan," and
took over the inspection until she found a folder named "MAA." She then exclaimed, "Heto oh! Ano to? Bakit may MAA
dito?" Retizos asked Vallota, "Are you working for MAA?" Vallota replied, "Hindi po, MAA mutual life po yan na makikita po
sa internet." Gutierrez saved a copy of the contents of the MAA folder in a floppy disk. 3
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Sensing that Vallota was being singled out, Apostol insisted that all the computers in the IT Department, including that of
Retizos, be also subjected to a spot security check. Later, at Retizos office, and in the presence of Atty. Rillo, Vallota was
informed that Retizos and Atty. Rillo would print the files found in his computer under the folder "MAA." Vallota did not
object. After the files were printed, Vallota and the Union Secretary were asked to sign each page of the printout. Vallota,
however, was not given a copy of the printed file.
On November 14, 2005, Vallota received a memorandum 4 directing him to explain within 72 hours why highly confidential
files were stored in his computer. The case was assigned Reference No. AC-05-02. The same memorandum also
informed him that he was being placed under preventive suspension for 30 days effective upon receipt of the said notice.
A second memorandum,5 also dated November 14, 2005, notified Vallota of the extension of his preventive suspension for
another 30 days, in view of the fact that the management needed more time to evaluate the administrative case against
him.
Vallota responded in writing on November 21, 2005. 6 Three days later, on November 24, 2005, PGAI sent him another
memorandum7 requesting further details on some of the matters he raised in his response. In a letter 8dated December 6,
2005, Vallota requested a conference, to be attended by a Union representative and counsel. In reply, PGAI sent Vallota
another memorandum9 dated December 7, 2005, which, among others, set a new deadline for Vallota to submit his reply
and evidence in his defense.
In compliance with the deadline set, Vallota submitted his reply-memorandum 10 dated December 12, 2005, outlining his
response to the charges.
Meanwhile, the Union sent a letter11 to PGAI President Philip K. Rico (Rico) requesting that a grievance committee be
convened and that the contents of the computers of other IT personnel be similarly produced. The request for the
convening of a grievance committee was ignored. On December 21, 2005, Vallota was given a notice of termination of his
employment effective January 10, 2006 on the ground of loss of trust and confidence. The decision (AC-05-02) was
embodied in a memorandum12 dated December 21, 2005.
Thus, the petitioners filed a complaint for illegal dismissal with claims for full backwages, moral and exemplary damages,
and attorneys fees. The case was docketed as NLRC-NCR Case No. 00-01-00387-06.
On March 31, 2006, Labor Arbiter Aliman D. Mangandog (LA) rendered a decision13 in favor of the petitioners, the
dispositive portion of which reads:
WHEREFORE, the foregoing premises considered, judgment is hereby rendered, declaring the dismissal of complainant
Vallota illegal and holding the respondents for the following:
1. to reinstate complainant Vallota to his former position without loss of benefits and seniority rights.
2. to pay complainant Vallota full backwages from the time of his dismissal until actual reinstatement partially
computed as of this date amount[ing] to P 60,856.00 (P 18,400/mo. x 3 mos. & 8 days).
3. to pay complainants attorneys fee equivalent to 10% of the total monetary award.
SO ORDERED.14
The LA held that PGAI failed to meet its burden of evidence, and the conflicting claims of the parties were resolved in
favor of Vallota for failure of PGAI to adduce substantial evidence to support its claim. The LA further held that the
dismissal was not commensurate to the misconduct complained of, especially considering that it was Vallotas first
offense.15
On the matter of the blank gate pass stored in Vallotas computer, the LA found as satisfactory his explanation that Joseph
Tolentino (Tolentino), a PGAI employee, requested him, from time to time, to print a gate pass whenever he had to bring
tools outside of the company premises. The LA cited Vallotas argument that "it is quite odd [that] despite the fact that the
gate pass form was admitted by the respondents in [their] Reply as their exclusive property, complainants possession of
the same was not considered x x x Possession of Company property without authorization." 16
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The LA further found that the respondents were not able to establish that Vallota used company property for his personal
benefit. Nothing on record could show that he made an attempt to defraud his employer. With regard to the charge that,
without authorization, he misused or removed company documents, the LA opined that if this were true, the respondents
should have conducted a thorough investigation to determine the liable persons. 17
Finally, the LA ruled that Vallota was denied due process since the respondents refused to conduct a hearing, despite
Vallotas request, to thresh out the matters raised by him in his memoranda. 18
The respondents filed their Memorandum of Appeal 19 dated May 19, 2006. The case was docketed as NLRC NCR CA No.
049107-06(7).
On June 30, 2006, the National Labor Relations Commission (NLRC) issued its Resolution20 dismissing the appeal on the
ground that the respondents failed to submit a certificate of non-forum shopping in accordance with the Rules of
Procedure of the NLRC.
The respondents filed their Motion for Reconsideration21 dated July 17, 2006,22 which the Union opposed.
On October 31, 2007, the NLRC granted the respondents motion for reconsideration and reversed and set aside the
decision of the LA.23 The dispositive portion of the resolution reads:
WHEREFORE, premises considered, respondents Motion for Reconsideration from the Resolution of June 30, 2006 is
GRANTED. The appealed decision is hereby REVERSED and SET ASIDE. However, respondent is hereby ordered to
pay complainant financial assistance equivalent to one-half (1/2) month pay for every year of service or xx the amount of
ninety two thousand pesos (P 92,000.00.)
10 yrs.
P 18,400 x
= P 92,000.00
2
SO ORDERED.
The NLRC reasoned out that the respondents had submitted substantial and sufficient evidence to prove that there
existed grounds for the PGAI to lose trust and confidence in Vallota. The NLRC also found grave abuse of discretion on
the part of the LA to disregard the affidavits of Tolentino, Retizos and Allan Unson, as the LA himself did not set a hearing
for the purpose of cross-examining the said witnesses or verifying the statements made in their affidavits. As reflected in
the decretal portion, although the NLRC ruled that the dismissal was valid, it still directed the respondents to grant Vallota
financial assistance of one-half (1/2) month pay for every year of his ten (10) years of service. 24
The petitioners moved for a reconsideration25 of the decision, but their motion was denied in a resolution 26 dated
December 28, 2007.
Dejected, the petitioners filed a petition for certiorari 27 with the CA which was docketed as CA-G.R. SP. No. 102699. On
September 16, 2008, the CA denied the petition for lack of merit, and sustained the award of the NLRC.
The petitioners motion for reconsideration was denied in a resolution dated November 10, 2008.
Hence, this petition.
ISSUES
The petitioners raise the following issues:
I
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WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF

DISCRETION IN GIVING LIBERALITY TO PRIVATE RESPONDENTS['] FOUR BLATANT VIOLATIONS OF
THE NLRC RULES OF PROCEDURE.
II
WHETHER OR NOT THE HONORABLE COURT OF APPEALS GROSSLY MISAPPRECIATED THE FACT
THAT NO SUBSTANTIAL EVIDENCE EXIST[S] TO JUSTIFY THE DISMISSAL OF PETITIONER VALLOTA. 28
RULING OF THE COURT
First, the allegation of grave abuse of discretion is misplaced, as this is an issue appropriate for a petition for certiorari
under Rule 65, not a petition for review on certiorari under Rule 45. There is no question that grave abuse of discretion or
errors of jurisdiction may be corrected only by the special civil action of certiorari. Such special remedy does not avail in
instances of error of judgment which can be corrected by appeal or by a petition for review. Because the petitioners
availed of the remedy under Rule 45, recourse to Rule 65 cannot be allowed either as an add-on or as a substitute for
appeal.29
Regarding illegal dismissal, the core issues to be resolved here are: (1) whether Vallota was validly dismissed on the
ground of loss of trust and confidence; and (2) whether the requirements of procedural due process for termination were
observed.
Whether the petitioner was validly dismissed on the ground of loss of trust and confidence
The Courts discussion in Mabeza v. National Labor Relations Commission 30 is instructive:
Loss of confidence as a just cause for dismissal was never intended to provide employers with a blank check for
terminating their employees. Such a vague, all-encompassing pretext as loss of confidence, if unqualifiedly given the seal
of approval by this Court, could readily reduce to barren form the words of the constitutional guarantee of security of
tenure. Having this in mind, loss of confidence should ideally apply only to cases involving employees occupying positions
of trust and confidence or to those situations where the employee is routinely charged with the care and custody of the
employer's money or property. To the first class belong managerial employees, i.e., those vested with the powers or
prerogatives to lay down management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or
discipline employees or effectively recommend such managerial actions; and to the second class belong cashiers,
auditors, property custodians, etc., or those who, in the normal and routine exercise of their functions, regularly handle
significant amounts of money or property. Evidently, an ordinary chambermaid who has to sign out for linen and other
hotel property from the property custodian each day and who has to account for each and every towel or bedsheet utilized
by the hotel's guests at the end of her shift would not fall under any of these two classes of employees for which loss of
confidence, if ably supported by evidence, would normally apply. Illustrating this distinction, this Court, in Marina Port
Services, Inc. vs. NLRC, has stated that:
To be sure, every employee must enjoy some degree of trust and confidence from the employer as that is one reason why
he was employed in the first place. One certainly does not employ a person he distrusts. Indeed, even the lowly janitor
must enjoy that trust and confidence in some measure if only because he is the one who opens the office in the morning
and closes it at night and in this sense is entrusted with the care or protection of the employer's property. The keys he
holds are the symbol of that trust and confidence.
By the same token, the security guard must also be considered as enjoying the trust and confidence of his employer,
whose property he is safeguarding. Like the janitor, he has access to this property. He too, is charged with its care and
protection.
Notably, however, and like the janitor again, he is entrusted only with the physical task of protecting that property. The
employer's trust and confidence in him is limited to that ministerial function. He is not entrusted, in the Labor Arbiter's
words, 'with the duties of safekeeping and safeguarding company policies, management instructions, and company
secrets such as operation devices.' He is not privy to these confidential matters, which are shared only in the higher
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echelons of management. It is the persons on such levels who, because they discharge these sensitive duties, may be
considered holding positions of trust and confidence. The security guard does not belong in such category.
More importantly, we have repeatedly held that loss of confidence should not be simulated in order to justify what would
otherwise be, under the provisions of law, an illegal dismissal. "It should not be used as a subterfuge for causes which are
illegal, improper and unjustified. It must be genuine, not a mere afterthought to justify an earlier action taken in bad
faith."31
(Citations omitted. Emphases supplied.)
In Bristol Myers Squibb (Phils.), Inc. v. Baban,32 the Court discussed the requisites for a valid dismissal on the ground of
loss of trust and confidence:
It is clear that Article 282(c) of the Labor Code allows an employer to terminate the services of an employee for loss of
trust and confidence. The right of employers to dismiss employees by reason of loss of trust and confidence is well
established in jurisprudence.
The first requisite for dismissal on the ground of loss of trust and confidence is that the employee concerned must
be one holding a position of trust and confidence. Verily, We must first determine if respondent holds such a position.
There are two (2) classes of positions of trust. The first class consists of managerial employees. They are defined as
those vested with the powers or prerogatives to lay down management policies and to hire, transfer suspend, lay-off,
recall, discharge, assign or discipline employees or effectively recommend such managerial actions. The second class
consists of cashiers, auditors, property custodians, etc. They are defined as those who in the normal and routine exercise
of their functions, regularly handle significant amounts of money or property.
xxx
The second requisite is that there must be an act that would justify the loss of trust and confidence. Loss of trust and
confidence to be a valid cause for dismissal must be based on a willful breach of trust and founded on clearly established
facts. The basis for the dismissal must be clearly and convincingly established but proof beyond reasonable doubt is not
necessary.33
(Citations omitted. Emphases supplied.)
Thus, the first question to be addressed is whether Vallota held a position of trust and confidence. In previous cases, the
following positions were classified under the second class of holders of positions of trust and confidence: a
pharmaceutical companys district manager employed to handle pharmaceutical products for distribution to medical
practitioners and sale to drug outlets, 34 a bank manager,35 and an employee tasked with purchasing supplies and
equipment.36 The position of a contract claims assistant tasked with monitoring enforcement of contracts involving large
sums of money was also classified to be analogous to this second class of holders of positions of trust and confidence. 37
Vallota was employed by PGAI as a Junior Programmer assigned to the EDP Department. His functions included the
following:
- Installation of PGAI System38 on all designated branches
- Development of internal programs as required by the organization
- Handling and maintenance of all programs as per advise.
- Conduct[s] operation training on PGAI systems on all PGAI branches
- Generates and handles renewal list of all applicable lines.
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- Generates and produces renewal notice of all lines as required.

- Generates paid premium production of all agents.
- Generates outstanding production reports of all agents.
- Generates report on top account executive per I.T. supervisor instruction.
- Generates and handle[s] data on top agents per AE premium production.
- Handles and maintains uploading system, accounting data per advise, account receivable system, motor car
policy system, claims motor car system, check disbursement system, cash call system, R.I. outgoing and
incoming system, facultative systems.
- All other task[s] as may be assigned to him from time to time. 39
Based on the standards set by previous jurisprudence, Vallotas position as Junior Programmer is analogous to the
second class of positions of trust and confidence. Though he did not physically handle money or property, he became
privy to confidential data or information by the nature of his functions. At a time when the most sensitive of information is
found not printed on paper but stored on hard drives and servers, an employee who handles or has access to data in
electronic form naturally becomes the unwilling recipient of confidential information.
Having addressed the nature of his position, the next question is whether the act complained of justified the loss of trust
and confidence of Vallotas employer so as to constitute a valid cause for dismissal. It must, thus, be determined whether
the alleged basis for dismissal was based on clearly established facts.
The act alleged to have caused the loss of trust and confidence of PGAI in Vallota was the presence in his computers
hard drive of a folder named "MAA" allegedly containing files with information on MAA Mutual Life Philippines, a domestic
corporation selling life insurance policies to the buying public, and files relating to PGAIs internal affairs:
1. MAA Mutualife Philippines, Inc. prospectus consisting of five (5) pages
2. MAA Mutualife Philippines, Inc. corporate profile consisting of six (6) pages
3. PGAI clients (sic) questionnaire consisting of five (5) pages
4. PGAI values and strategy
5. PGAI Client Servising (sic): Proposed Service Standard consisting of seven (7) pages
6. PGAI Marketing Department Division consisting of twenty (20) pages
6.1 Marketing Department present set-up
6.2 Present Table of Organization
6.3 How is the market evolving? How does it affect PGAI?
6.4 The strategy of change
6.5 Segmentation
6.6 Proposed Table of Organization
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6.7 Proposed PGA Super Branch

6.7.a Objectives
6.7.b Accounts to be service
6.8 Proposed Chart for the Retail Division
6.8.a Dual Objective
6.9 Marketing Administration
6.10 Analysis of Statistics
6.11 Proposed Corporate Accounts Servicing Division
6.11.a Facts
6.11.b 2003 and 2004 Dealership Production Statistics
6.11.c 2003 -2004 Budget Analysis
7. PGAI Marketing Division: An Analysis & Proposed Solution consisting of seven (7) pages
8. PGAI Customer Service Commitment consisting of six (6) pages
9. PGAI Gate Pass Form40
Following such discovery, Vallota was charged with the following violations of Company Rules on Company Property:
1. Possession of company property without authorization;
2. Securing or obtaining Prudential materials or supplies fraudulently;
3. Using Company equipment, property, or material to perform or create something for personal gain or purpose;
and
4. Misuse or removal from company premises without proper authorization of Prudential records or confidential
information of any nature.41
Vallota and the Union argue, among others, that (1) the respondents failed to prove by substantial evidence that Vallotas
position did not allow him to access confidential information and that the data found in his computer had been used for his
personal gain; (2) Vallota did not deliberately get the files from other departments; instead, such files were acquired in the
process of fixing diskettes and printing information as requested by his co-employees; (3) no evidence was presented to
prove that Vallota sold or was about to sell corporate documents to MAA Mutual Life Corporation or to any company; and
(4) the respondents refusal to convene a grievance machinery was a clear abuse of management prerogative. 42
The respondents, on the other hand, counter that Vallota admitted ownership of the files found in his computer. They also
argue that it was the Data Center Technical Support Staff, and not the Junior Programmer, who handled
recovery/fixing/printing of files of the nature of those found in Vallotas possession; that it was a remote possibility that the
Junior Programmer would be directly requested to assist employees, since the Methods Analyst would have been the
designee for such task; that Vallotas functions as Junior Programmer did not include matters relating to web
development; that under standard IT procedure and company practice, the employees who requested assistance from the
IT Department were required to fill up a Job Request Form (JRF), which was then submitted for prior approval by the IT
Head; that Retizos, as IT Head, could not recall signing or approving any request pertaining to the recovered PGAI files;
139
that Vallota could not produce a single JRF when he was asked to do so and explained the lack of JRFs by stating that
such file repairs, file recovery, or printing jobs were merely "little favors" and that such were considered as company
"practice"; and that he, however, refused to reveal the names of the employees who had sought assistance in the
fixing/printing/recovery of the PGAI files.43
The respondents aver that Vallota also had in his computer the PGAI Gate Pass Form template, 44 a company property
that could not be copied, stored, or reproduced without company permission. They also claim that Vallota was guilty of
using company equipment, property or material to perform or create something for personal gain or purpose. MAA files,
alleged to be highly confidential and sensitive, were found in Vallotas computer which he explained were downloaded
from the MAA website outside of company premises merely for information. Upon searching the MAA website, however,
they (respondents) did not find any of the said files. They also found that the MAA website was accessible only to certain
users and was not open to the public as claimed by Vallota. Given all of these, the respondents concluded that Vallotas
possession of the PGAI and MAA files appeared to be part of a plan to take advantage of the said documents for personal
gain.45
While the law and this Court recognize the right of an employer to dismiss an employee based on loss of trust and
confidence, the evidence of the employer must clearly and convincingly establish the facts upon which the loss of trust
and confidence in the employee is based.46
To be a valid ground for dismissal, loss of trust and confidence must be based on a willful breach of trust and founded on
clearly established facts. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. 47 It must rest on substantial grounds
and not on the employers arbitrariness, whims, caprices or suspicion; otherwise, the employee would remain eternally at
the mercy of the employer.48 Further, in order to constitute a just cause for dismissal, the act complained of must be workrelated and show that the employee concerned is unfit to continue working for the employer. 49 Such ground for dismissal
has never been intended to afford an occasion for abuse because of its subjective nature. 50
It must also be remembered that in illegal dismissal cases like the one at bench, the burden of proof is upon the employer
to show that the employees termination from service is for a just and valid cause. 51 The employers case succeeds or fails
on the strength of its evidence and not the weakness of that adduced by the employee, 52in keeping with the principle that
the scales of justice should be tilted in favor of the latter in case of doubt in the evidence presented by them. 53 Often
described as more than a mere scintilla, 54 the quantum of proof is substantial evidence which is understood as such
relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other equally
reasonable minds might conceivably opine otherwise. 55Failure of the employer to discharge the foregoing onus would
mean that the dismissal is not justified and, therefore, illegal. 56
In this case, there was no other evidence presented to prove fraud in the manner of securing or obtaining the files found in
Vallotas computer. In fact, aside from the presence of these files in Vallotas hard drive, there was no other evidence to
prove any gross misconduct on his part. There was no proof either that the presence of such files was part of an attempt
to defraud his employer or to use the files for a purpose other than that for which they were intended. If anything, the
presence of the files reveals some degree of carelessness or neglect in his failure to delete them, but it is an extremely
farfetched conclusion bordering on paranoia to state that it is part of a larger conspiracy involving corporate espionage.
Moreover, contrary to the respondents allegations, the MAA files found in Vallotas computer, the prospectus and
corporate profile, are not sensitive corporate documents. These are documents routinely made available to the public, and
serve as means to inform the public about the company and to disseminate information about the products it sells or the
services it provides, in order that potential clients may make a sound and informed decision whether or not to purchase or
avail of such goods and services.
If anything, the presence of the files would merely merit the development of some suspicion on the part of the employer,
but should not amount to a loss of trust and confidence such as to justify the termination of his employment. Such act is
not of the same class, degree or gravity as the acts that have been held to be of such character. While Vallotas act or
omission may have been done carelessly, it falls short of the standard required for termination of employment. It does not
manifest either that the employee concerned is unfit to continue working for his employer.
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Termination of employment is a drastic measure reserved for the most serious of offenses. When the act complained of is
not so grave as to result in a complete loss of trust and confidence, a lower penalty such as censure, warning, or even
suspension, would be more circumspect. This is of particular significance here where during Vallotas ten years of service
to PGAI, not once was he ever warned or reprimanded for such printing services.
Whether the procedural due process requirements for termination were observed
The petitioners allege that Vallota was denied due process of law, as the records of the case clearly show that his request
for an administrative hearing was denied without reason by PGAI. Citing Rule 1, Section 2(d) of the Implementing Rules of
Book VI of the Labor Code, the petitioners argue that a hearing or conference must be conducted to afford the employee
an opportunity to respond to the charge, and to present or rebut evidence presented against him. The petitioners are of
the position that the unjustified refusal of PGAI to conduct a hearing violated the said provision of the Rules implementing
the Labor Code, as well as Vallotas right to defend himself before an impartial investigating body.57
The Court explained the concept of the opportunity to be heard in the case of Perez v. Philippine Telegraph and
Telephone Company:58
After receiving the first notice apprising him of the charges against him, the employee may submit a written explanation
(which may be in the form of a letter, memorandum, affidavit or position paper) and offer evidence in support thereof, like
relevant company records (such as his 201 file and daily time records) and the sworn statements of his witnesses. For this
purpose, he may prepare his explanation personally or with the assistance of a representative or counsel. He may also
ask the employer to provide him copy of records material to his defense. His written explanation may also include a
request that a formal hearing or conference be held. In such a case, the conduct of a formal hearing or conference
becomes mandatory, just as it is where there exist substantial evidentiary disputes 59 or where company rules or practice
requires an actual hearing as part of employment pretermination procedure. To this extent, we refine the decisions we
have rendered so far on this point of law.
This interpretation of Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code reasonably implements
the "ample opportunity to be heard" standard under Article 277(b) of the Labor Code without unduly restricting the
language of the law or excessively burdening the employer. This not only respects the power vested in the Secretary of
Labor and Employment to promulgate rules and regulations that will lay down the guidelines for the implementation of
Article 277(b). More importantly, this is faithful to the mandate of Article 4 of the Labor Code that "[a]ll doubts in the
implementation and interpretation of the provisions of [the Labor Code], including its implementing rules and regulations
shall be resolved in favor of labor."
In sum, the following are the guiding principles in connection with the hearing requirement in dismissal cases:
(a) "ample opportunity to be heard" means any meaningful opportunity (verbal or written) given to the employee to
answer the charges against him and submit evidence in support of his defense, whether in a hearing, conference
or some other fair, just and reasonable way.
(b) a formal hearing or conference becomes mandatory only when requested by the employee in writing or
substantial evidentiary disputes exist or a company rule or practice requires it, or when similar circumstances
justify it.
(c) the "ample opportunity to be heard" standard in the Labor Code prevails over the "hearing or conference"
requirement in the implementing rules and regulations.
(Emphasis original. Underscoring supplied.)60
In this case, the two-notice requirement was complied with. By the petitioners own admission, PGAI issued to Vallota a
written Notice of Charges & Preventive Suspension (Ref. No. AC-05-02) dated November 14, 2005. After an exchange of
memoranda, PGAI then informed Vallota of his dismissal in its decision dated December 21, 2005.
Given, however, that the petitioners expressly requested a conference or a convening of a grievance committee, following
the Courts ruling in the Perez case, which was later cited in the recent case of Lopez v. Alturas Group of
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Companies,61 such formal hearing became mandatory. After PGAI failed to affirmatively respond to such request, it follows
that the hearing requirement was not complied with and, therefore, Vallota was denied his right to procedural due process.
In light of the above discussion, Vallota is entitled to reinstatement and backwages, reckoned from the date he was
illegally dismissed until the finality of this decision in accordance with jurisprudence. 62
In view of the strained relations between Vallota and PGAI, however, it is not in the best interest of the parties, nor is it
advisable or practical to order reinstatement. Where reinstatement is no longer viable as an option, separation pay
equivalent to one (1) month salary for every year of service should be awarded as an alternative. It must be stressed,
however, that an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement, which are separate
and distinct. In Golden Ace Builders v. Tagle,63 it was written:
Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two reliefs
provided are separate and distinct. In instances where reinstatement is no longer feasible because of strained relations
between the employee and the employer, separation pay is granted. In effect, an illegally dismissed employee is entitled
to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and backwages.
The normal consequences of respondents illegal dismissal, then, are reinstatement without loss of seniority
rights, and payment of backwages computed from the time compensation was withheld up to the date of actual
reinstatement. Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) month
salary for every year of service should be awarded as an alternative. The payment of separation pay is in addition
to payment of backwages. (emphasis, italics and underscoring supplied)
Velasco v. National Labor Relations Commission, emphasizes:
The accepted doctrine is that separation pay may avail in lieu of reinstatement if reinstatement is no longer
practical or in the best interest of the parties. Separation pay in lieu of reinstatement may likewise be awarded if the
employee decides not to be reinstated. (Emphasis in the original; italics supplied)
Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to
reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the employee
from what could be a highly oppressive work environment. On the other hand, it releases the employer from the grossly
unpalatable obligation of maintaining in its employ a worker it could no longer trust. 64
(Emphasis, underscoring and comments in the original.)
This has been the consistent ruling in the award of separation pay to illegally dismissed employees in lieu of
reinstatement, in addition to the award of backwages.
Finally, Vallota, having been compelled to litigate in order to seek redress, is entitled, as he had prayed early on, to the
award of attorneys fees equivalent to 10% of the total monetary award.
WHEREFORE, the petition is GRANTED. The September 16, 2008 Decision and November 10, 2008 Resolution of the
Court of Appeals in CA-G.R. SP No. 102699 are REVERSED and SET ASIDE, and the Decision of the Labor Arbiter
dated March 31, 2006 is REINSTATED but MODIFIED to the effect that, in addition to backwages, petitioner Sandy T.
Vallota is entitled to be awarded separation pay equivalent to one (1) month salary for every year of service in lieu of
reinstatement.
SO ORDERED.
142
CASE 25
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 176184
June 13, 2012
ROMEO E. PAULINO, Petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and PHILIPPINE LONG DISTANCE TELEPHONE COMPANY,
INCORPORATED. Respondents.
DECISION
SERENO, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, seeking a review of
the Court of Appeals (CA) 31 August 2006 Decision and 29 December 2006 Resolution in CA-G.R. SP No. 89267. The
143
appellate court affirmed the 23 September 2002 Decision of the National Labor Relations Commission (NLRC) in Case
No. NLRC NCR CA No. 022744-00, which upheld the dismissal of petitioners Complaint for Illegal Dismissal.
The undisputed facts are as follows:
On 16 January 1995, petitioner, who was then employed by private respondent Philippine Long Distance Telephone
Company, Inc. (PLDT) as Cable Splicer III, 1 surrendered his service vehicle to PLDTs motor pool for body repairs. For this
reason, he unloaded the company-issued plant materials contained in the vehicle and stored them at his residence for
safekeeping.2
For 1 month and 11 days, PLDTs properties were in the custody of petitioner. Thus, on 27 February 1995, members of
the Philippine National Police (PNP), armed with a search warrant, 3 searched his house where the following items were
taken:4
a) 95 pcs soldering wire
b) 4 pcs electrical tape
c) 1 roll aluminum tape
d) 1 box drive ring & C-nob
e) roll C-R tape
f) 19 pcs. 12x20 lead sheets
g) 4 pcs. Protector
h) 61 pcs single drove
i) 9 boxes staple wire
j) 40 pcs span clamps
k) 2 pcs safety belt
l) 1 chipping (skinning) knife
m) 2 manhole ladders
n) 1 PLDT yellow tool box
o) 1/3 roll jacketed wire
p) 2 pcs. bandage
q) 4 pcs. C-clamps
r) 1 pc. 5x10 Aerial Tent
s) 1 roll parallel wire
t) 2 pcs. 17x20 lead sheets
144
u) 5 pcs. Connecting blocks

v) 2 boxes screws
w) 7 pcs. Briddle ring
x) 1 yellow hard hat
y) 1 gun tacker
z) 1 wooden dresser
aa) 2 telephone instruments
bb) Aerial cable (Piece Out Wire)
At that time, based on the investigation by the PNP, petitioner did not present any documents or requisition slips that
would justify his possession of the materials. 5 Consequently, PLDT caused the filing of an Information for qualified theft
against him.6
The next day, PLDT issued an invitation to V. Pesayco, the manager of petitioner, requesting him to make petitioner
available to clarify certain matters. 7 Petitioner attended this meeting along with his lawyer, but PLDTs investigators merely
talked with the counsel.8 PLDT then received a security report stating that petitioner had engaged in the illicit disposal of
its plant materials, which were recovered during the search conducted at his residence. 9
On 3 April 1995, PLDT issued an Inter-Office Memo requiring petitioner to explain why he should not be terminated from
employment for serious misconduct (theft of company property). 10 The Memo also gave him the option to ask for a formal
hearing of his case. In reply, he requested that the proceedings be held in abeyance until the criminal case against him
had been concluded.11
Then, on 26 May 1995, Pesayco informed petitioner in writing that since his reply did not provide any clarification
whatsoever that would have warranted an evaluation of his case, the company was terminating his services effective on
the said date.12
Three years later, after the criminal case for qualified theft had been terminated for failure of the prosecution to prove his
guilt beyond reasonable doubt, petitioner filed a Complaint for Illegal Dismissal which the Labor Arbiter (LA) dismissed for
utter lack of merit.13 The LA found petitioners possession of valuable and material company properties to be highly
suspect.14 In addition, it was "fully irregular that a highly efficient Company, such as herein respondent, would allow any of
its employees to place expensive and necessary properties for personal safe-keeping." 15
Aggrieved, petitioner pursued his action before the NLRC. The labor court, however, affirmed the LAs Decision in
toto.16 Thus, petitioner appealed to the CA.
Ruling against petitioner, the CA held thus:17
To our mind, the fact alone that several company properties were found in petitioners residence is sufficient circumstance
to put any employer on guard and is already reasonable basis for private respondents loss of trust and confidence that
would justify his dismissal from employment.
Before this Court, petitioner raises the sole issue of whether or not the CA gravely erred in upholding his dismissal as valid
based on just cause.
The Labor Code recognizes that an employer, for just cause, may validly terminate the services of an employee for
serious misconduct or willful disobedience of the lawful orders of the employer or representative in connection with the
145
employees work.18 Fraud or willful breach by the employee of the trust reposed by the employer in the former, or simply
loss of confidence, also justifies an employees dismissal from employment. 19
The LA, the NLRC and the CA all acknowledged that, notwithstanding petitioners acquittal in the criminal case for
qualified theft,20 respondent PLDT had adequately established the basis for the companys loss of confidence as a just
cause to terminate petitioner. This Court finds that approach to be correct, since proof beyond reasonable doubt of an
employees misconduct is not required in dismissing an employee. 21 Rather, as opposed to the "proof beyond reasonable
doubt" standard of evidence required in criminal cases, labor suits require only substantial evidence to prove the validity of
the dismissal.22
Willful breach of trust or loss of confidence requires that the employee (1) occupied a position of trust or (2) was routinely
charged with the care of the employers property.23 As correctly appreciated by the CA, petitioner was charged with the
care and custody of PLDTs property.
To warrant dismissal based on loss of confidence, there must be some basis for the loss of trust or the employer must
have reasonable grounds to believe that the employee is responsible for misconduct that renders the latter unworthy of
the trust and confidence demanded by his or her position. 24 Here, petitioner disputes the sufficiency of PLDTs basis for
loss of trust and confidence. He alleges that he did not steal the plant materials, considering that he had lawful
possession.25
However, assuming that he lawfully possessed the materials, PLDT still had ample reason or basis to already distrust
petitioner. For more than a month, he did not even inform PLDT of the whereabouts of the plant materials. Instead, he
stocked these materials at his residence even if they were needed in the daily operations of the company. In keeping with
the honesty and integrity demanded by his position, he should have turned over these materials to the plants warehouse.
The fact that petitioner did not present any documents or requisition slips at the time that the PNP took the plant materials
logically excites suspicion. In addition, PLDT received a security report stating that petitioner had engaged in the illicit
disposal of its plant materials, which were recovered during the search conducted at his residence
Thus, PLDT reasonably suspected petitioner of stealing the companys property. At that juncture, the employer may
already dismiss the employee since it had reasonable grounds to believe or to entertain the moral conviction that the latter
was responsible for the misconduct, and the nature of his participation therein rendered him absolutely unworthy of the
trust and confidence demanded by his position.26
In a final effort to impugn his dismissal, petitioner claims that he could only be faulted for breaching PLDTs rules and
regulations which prohibited the employees from bringing home company materials. 27
In this regard, petitioner exacerbates his position. By admitting that he breached company rules, he buttressed his
employers claim that he committed serious misconduct.
Employees cannot take company rules for granted, especially in this case where petitioners breach involved various plant
materials that may cause major disruption in the companys operations. Indeed, an employer may discharge an employee
for refusal to obey a reasonable company rule. 28 As a rule, although this Court leans over backwards to help workers and
employees continue with their employment, acts of dishonesty in the handling of company property are a different
matter.29
Given these circumstances, it would have been unfair for PLDT to keep petitioner in its employ. Petitioner displayed
actions that made him untrustworthy. Thus, as a measure of self-protection, 30 PLDT validly terminated his services for
serious misconduct and loss of confidence.
Having established the validity of petitioners dismissal, we sustain the rulings of the tribunals a quo. To emphasize, "our
empathy with the cause of labor should not blind us to the rights of management. This Court should stamp out, rather than
tolerate, the commission of irregular acts wherever these are noted. Malpractices should not be allowed to continue but
should be rebuked."31
146
IN VIEW THEREOF, the assailed 31 August 2006 Decision and 29 December 2006 Resolution of the Court of Appeals in
CA-G.R. SP No. 8926 7 are AFFIRMED. The 23 February 2007 Petition for Review filed by Romeo E. Paulino is hereby
denied for lack of merit.
SO ORDERED.
CASE 26
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 168208
June 13, 2012
147
VIVIAN T. RAMIREZ, ALBERTO B. DIGNO, DANILO M. CASQUITE, JUMADIYA A. KADIL, FAUJIA SALIH, ANTONIO
FABIAN, ROMEL DANAG, GINA PANTASAN, ARTHUR MATUGAS, VIRGILIA OSARIO, ORLANDO EBRADA,
ROSANA CABATO, WILFREDO LUNA, LILIA BARREDO, ISABEL ALBERTO, NORA BONIAO, PILAR OSARIO,
LYDIA ESLIT, AMMAN SALI, AKMAD AKIL, ROGELIO LAZARO, ISABEL CONCILLADO, MARLON ABIAL,
HERMOCILLO NAPALCRUZ, WALTER BUHIAN, ELISEO AMATORIO, JOSE CASTRO, JAMIL LAGBAY, MA. EVELYN
SANTOS, LEDENIA T. BARON, ELSA AMATORIO, SARAH F. BUCOY, EXPEDITO L. RELUYA, ARNULFO ALFARO,
EDGARDO F. BORGONIA, DANILO R. MANINGO, ABDUSAID H. DAMBONG, LORINDA M. MUTIA, DOMINADOR
DEL ROSARIO, JOEL E. TRONO, HUSSIN A. JAWAJI, JUL-ASNAM JAKARIA, LUZVIMINDA A. NOLASCO, VILMA
G. GASCO, MORITA S. MARMETO, PROCESA JUANICO, ANTONIO A. MONDRAGON, JR., JESSICA F. QUIACHON,
PACITA G. MEDINA, ARNEL S. SANTOS, ANECITA T. TARAS, TOMINDAO T. TARAS, NULCA C. SABDANI, AKMAD
A. SABDANI, ROWENA J. GARCIA, LINA P. CASAS, MARLYN G. FRANCISCO, MERCEDITA MAQUINANO,
NICOLAS T. RIO, TERESITA A. CASINAS, VIRGILIO F. IB-IB, PANTALEON S. ROJAS, JR., EVELYN V. BEATINGO,
MATILDE G. HUSSIN, ESPERANZA I. LLEDO, ADOLFINA DELA MERCED, LAURA E. SANTOS, ROGACIANA
MAQUILING, ALELIE D. SAMSON, SHIRLEY L. ALVAREZ, MAGDALENA A. MARCOS, VIRGINIA S. ESPINOSA,
ANTONIO C. GUEVARA, AUGUSTA S. DE JESUS, SERVILLA A. BANCALE, PROSERFINA GATINAO, RASMA A.
FABRIGA, ROLANDO D. GATINAO, ANALISA G. MEA, SARAH A. SALCEDO, ALICIA M. JAYAG, FERNANDO G.
CABEROY, ROMEO R. PONCE, EDNA S. PONCE, TEODORA T. LUY, WALDERICO F. ARIO, MELCHOR S. BUCOY,
EDITA H. CINCO, RUDY I. LIMBAROC, PETER MONTOJO, MARLYN S. ATILANO, REGIDOR MEDALLO, EDWIN O.
DEMASUAY, DENNIS M. SUICANO, ROSALINA Q. ATILANO, ESTRELLA FELICIANO, IMELDA T. DAGALEA,
MARILYN RUFINO, JOSE AGUSTIN, EFREN RIVERA, CRISALDO VALERO, SAFIA HANDANG, LUCENA R.
MEDINA, DANNY BOY B. PANGASIAN, ABDURASA HASIL, ROEL ALTA, JOBERT BELTRAN, EDNA FAUSTO,
TAJMAHAR HADJULA, ELENA MAGHANOY, ERIC B. QUITIOL, JESSE D. FLORES, GEMMA CANILLAS, ERNITO
CANILLAS, MARILOU JAVIER, MARGANI MADDIN, RICHARD SENA, FE D. CANOY, GEORGE SALUD, EDGARDO
BORGONIA, JR., ANTONIO ATILANO, JOSE CASTRO, and LIBERATO BAGALANON, Petitioners,
vs.
MAR FISHING CO., INC., MIRAMAR FISHING CO., INC., ROBERT BUEHS AND JEROME SPITZ. Respondents.
DECISION
SERENO, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, seeking a review of
the Court of Appeals (CA) 19 March 2004 and 12 May 2005 Resolutions in CA-G.R. SP NO. 82651. The appellate court
had dismissed the Petition for Review on the ground that it lacked a Verification and Certification against forum shopping.
The pertinent facts are as follows:
On 28 June 2001, respondent Mar Fishing Co., Inc. (Mar Fishing), engaged in the business of fishing and canning of tuna,
sold its principal assets to co-respondent Miramar Fishing Co., Inc. (Miramar) through public bidding. 1 The proceeds of the
sale were paid to the Trade and Investment Corporation of the Philippines (TIDCORP) to cover Mar Fishings outstanding
obligation in the amount of P 897,560,041.26.2 In view of that transfer, Mar Fishing issued a Memorandum dated 23
October 2001 informing all its workers that the company would cease to operate by the end of the month. 3 On 29 October
2001 or merely two days prior to the months end, it notified the Department of Labor and Employment (DOLE) of the
closure of its business operations.4
Thereafter, Mar Fishings labor union, Mar Fishing Workers Union NFL and Miramar entered into a Memorandum of
Agreement.5 The Agreement provided that the acquiring company, Miramar, shall absorb Mar Fishings regular rank and
file employees whose performance was satisfactory, without loss of seniority rights and privileges previously enjoyed. 6
Unfortunately, petitioners, who worked as rank and file employees, were not hired or given separation pay by
Miramar.7 Thus, petitioners filed Complaints for illegal dismissal with money claims before the Arbitration Branch of the
National Labor Relations Commission (NLRC).
In its 30 July 2002 Decision, the Labor Arbiter (LA) found that Mar Fishing had necessarily closed its operations,
considering that Miramar had already bought the tuna canning plant. 8 By reason of the closure, petitioners were legally
dismissed for authorized cause.9 In addition, even if Mar Fishing reneged on notifying the DOLE within 30 days prior to its
148
closure, that failure did not make the dismissals void. Consequently, the LA ordered Mar Fishing to give separation pay to
its workers.10
The LA held thus:11
WHEREFORE, in view of the foregoing considerations, judgment is hereby rendered in these cases:
1. Ordering Mar Fishing Company, Inc., through its president, treasurer, manager or other proper officer or
representative, to pay the complainants their respective separation pay, as computed in page 12 to 33 hereof, all
totaling SIX MILLION THREE HUNDRED THIRTY SIX THOUSAND FIVE HUNDRED EIGHTY SEVEN & 77/100
PESOS (P 6,336,587.77);
2. Dismissing these case [sic] as against Miramar Fishing Company, Inc., as well as against Robert Buehs and
Jerome Spitz, for lack of cause of action;
3. Dismissing all other charges and claims of the complainants, for lack of merit.
SO ORDERED.
Aggrieved, petitioners pursued the action before the NLRC, which modified the LAs Decision. Noting that Mar Fishing
notified the DOLE only two days before the business closed, the labor court considered petitioners dismissal as
ineffectual.12 Hence, it awarded, apart from separation pay, full back wages to petitioners from the time they were
terminated on 31 October 2001 until the date when the LA upheld the validity of their dismissal on 30 July 2002. 13
Additionally, the NLRC pierced the veil of corporate fiction and ruled that Mar Fishing and Miramar were one and the same
entity, since their officers were the same.14 Hence, both companies were ordered to solidarily pay the monetary claims. 15
On reconsideration, the NLRC modified its ruling by imposing liability only on Mar Fishing. The labor court held that
petitioners had no cause of action against Miramar, since labor contracts cannot be enforced against the transferee of an
enterprise in the absence of a stipulation in the contract that the transferee assumes the obligation of the
transferor.16 Hence, the dispositive portion reads:17
WHEREFORE, foregoing premises considered, the assailed resolution is MODIFIED in that only Mar Fishing Company,
Inc. through its responsible officers, is ordered to pay complainants their separation pay, and full backwages from the date
they were terminated from employment until 30 July 2002, subject to computation during execution stage of proceedings
at the appropriate Regional Arbitration Branch.
SO ORDERED.
Despite the award of separation pay and back wages, petitioners filed a Rule 65 Petition before the CA. This time, they
argued that both Mar Fishing and Miramar should be made liable for their separation pay, and that their back wages
should be up to the time of their actual reinstatement. However, finding that only 3 of the 228 petitioners 18signed the
Verification and Certification against forum shopping, the CA instantly dismissed the action for certiorari against the 225
other petitioners without ruling on the substantive aspects of the case. 19
By means of a Manifestation with Omnibus Motion, 20 petitioners submitted a Verification and Certification against forum
shopping executed by 161 signatories. In the said pleading, petitioners asked the CA to reconsider by invoking the rule
that technical rules do not strictly apply to labor cases. 21 Still, the CA denied petitioners contentions and held thus: 22
Anent the liberality in application of the rules, as alleged by petitioners, the same deserves scant consideration. x x x.
xxx. While litigation is not a game of technicalities, and that the rules of procedure should not be enforced strictly at the
cost of substantial justice, still it does not follow that the Rules of Court may be ignored at will and at random to the
prejudice of the orderly presentation, assessment and just resolution of the issues. xxx.
149
Before this Court, 124 petitioners raise the issue of whether the CA gravely erred in dismissing their Petition for Review on
the ground that their pleading lacked a Verification and Certification against forum shopping. 23
The Rules of Court provide that a petition for certiorari must be verified and accompanied by a sworn certification of nonforum shopping.24 Failure to comply with these mandatory requirements shall be sufficient ground for the dismissal of the
petition.25 Considering that only 3 of the 228 named petitioners signed the requirement, the CA dismissed the case against
them, as they did not execute a Verification and Certification against forum shopping.
Petitioners invoke substantial compliance with procedural rules when their Manifestation already contains a Verification
and Certification against forum shopping executed by 161 signatories. They heavily rely on Jaro v. Court of
Appeals,26 citing Piglas-Kamao v. National Labor Relations Commission and Cusi-Hernandez v. Diaz, in which we
discussed that the subsequent submission of the missing documentary attachments with the Motion for Reconsideration
amounted to substantial compliance.
However, this very case does not involve a failure to attach the Annexes. Rather, the procedural infirmity consists of
omission the failure to sign a Verification and Certification against forum shopping. Addressing this defect squarely, we
have already resolved that because of noncompliance with the requirements governing the certification of non-forum
shopping, no error could be validly attributed to the CA when it ordered the dismissal of the special civil action for
certiorari.27 The lack of certification against forum shopping is not curable by mere amendment of a complaint, but shall be
a cause for the dismissal of the case without prejudice. 28 Indeed, the general rule is that subsequent compliance with the
requirements will not excuse a party's failure to comply in the first instance. 29 Thus, on procedural aspects, the appellate
court correctly dismissed the case.
However, this Court has recognized that the merit of a case is a special circumstance or compelling reason that justifies
the relaxation of the rule requiring verification and certification of non-forum shopping. 30 In order to fully resolve the issue,
it is thus necessary to determine whether technical rules were brushed aside at the expense of substantial justice. 31 This
Court will then delve into the issue on (1) the solidary liability of Mar Fishing and Miramar to pay petitioners monetary
claims and (2) the reckoning period for the award of back wages.
For a dismissal based on the closure of business to be valid, three (3) requirements must be established. Firstly, the
cessation of or withdrawal from business operations must be bona fide in character. Secondly, there must be payment to
the employees of termination pay amounting to at least one-half (1/2) month pay for each year of service, or one (1)
month pay, whichever is higher. Thirdly, the company must serve a written notice on the employees and on the DOLE at
least one (1) month before the intended termination. 32
In their Petition for Review on Certiorari, petitioners did not dispute the conclusion of the LA and the NLRC that Mar
Fishing had an authorized cause to dismiss its workers. Neither did petitioners challenge the computation of their
separation pay.
Rather, they questioned the holding that only Mar Fishing was liable for their monetary claims. 33
Basing their conclusion on the Memorandum of Agreement and Supplemental Agreement between Miramar and Mar
Fishings labor union, as well as the General Information Sheets and Company Profiles of the two companies, petitioners
assert that Miramar simply took over the operations of Mar Fishing. In addition, they assert that these companies are one
and the same entity, given the commonality of their directors and the similarity of their business venture in tuna canning
plant operations.34
At the fore, the question of whether one corporation is merely an alter ego of another is purely one of fact generally
beyond the jurisdiction of this Court. 35 In any case, given only these bare reiterations, this Court sustains the ruling of the
LA as affirmed by the NLRC that Miramar and Mar Fishing are separate and distinct entities, based on the marked
differences in their stock ownership.36 Also, the fact that Mar Fishings officers remained as such in Miramar does not by
itself warrant a conclusion that the two companies are one and the same. As this Court held in Sesbreo v. Court of
Appeals, the mere showing that the corporations had a common director sitting in all the boards without more does not
authorize disregarding their separate juridical personalities. 37
150
Neither can the veil of corporate fiction between the two companies be pierced by the rest of petitioners submissions,
namely, the alleged take-over by Miramar of Mar Fishings operations and the evident similarity of their businesses. At this
point, it bears emphasizing that since piercing the veil of corporate fiction is frowned upon, those who seek to pierce the
veil must clearly establish that the separate and distinct personalities of the corporations are set up to justify a wrong,
protect a fraud, or perpetrate a deception. 38 This, unfortunately, petitioners have failed to do. In Indophil Textile Mill
Workers Union vs. Calica, we ruled thus:39
In the case at bar, petitioner seeks to pierce the veil of corporate entity of Acrylic, alleging that the creation of the
corporation is a devi[c]e to evade the application of the CBA between petitioner Union and private respondent company.
While we do not discount the possibility of the similarities of the businesses of private respondent and Acrylic, neither are
we inclined to apply the doctrine invoked by petitioner in granting the relief sought. The fact that the businesses of private
respondent and Acrylic are related, that some of the employees of the private respondent are the same persons manning
and providing for auxiliary services to the units of Acrylic, and that the physical plants, offices and facilities are situated in
the same compound, it is our considered opinion that these facts are not sufficient to justify the piercing of the corporate
veil of Acrylic. (Emphasis supplied.)
Having been found by the trial courts to be a separate entity, Mar Fishing and not Miramar is required to compensate
petitioners. Indeed, the back wages and retirement pay earned from the former employer cannot be filed against the new
owners or operators of an enterprise.40
Evidently, the assertions of petitioners fail on both procedural and substantive aspects. Therefore, no special reasons
exist to reverse the CAs dismissal of the case due to their failure to abide by the mandatory procedure for filing a petition
for review on certiorari. Given the correctness of the appellate courts ruling and the lack of appropriate remedies, this
Court will no longer dwell on the exact computation of petitioners claims for back wages, which have been sufficiently
threshed out by the LA and the NLRC. Judicial review of labor cases does not go beyond an evaluation of the sufficiency
of the evidence upon which labor officials' findings rest. 41
While we sympathize with the situation of the workers in this case, we cannot disregard, absent compelling reasons, the
factual determinations and the legal doctrines that support the findings of the courts a quo. Generally, the findings of fact
and the conclusion of the labor courts are not only accorded great weight and respect, but are even clothed with finality
and deemed binding on this Court, as long as they are supported by substantial evidence. 42
On a final note, this Court reminds the parties seeking the ultimate relief of certiorari to observe the rules, since
nonobservance thereof cannot be brushed aside as a "mere technicality." 43 Procedural rules are not to be belittled or
simply disregarded, for these prescribed procedures ensure an orderly and speedy administration of justice. 44
IN VIEW THEREOF, the assailed 19 March 2004 and 12 May 2005 Resolutions of the Court of Appeals in CA-GR SP NO.
82651 are AFFIRMED. Hence, the 04 July 2005 Petition for Review filed by petitioners is hereby denied for lack of merit.
SO ORDERED.
151
CASE 27
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 172642
June 13, 2012
ESTATE OF NELSON R. DULAY, represented by his wife MERRIDY JANE P. DULAY, Petitioner,
vs.
ABOITIZ JEBSEN MARITIME, INC. and GENERAL CHARTERERS, INC., Respondents.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and set aside
the Decision1 and Resolution2 dated July 11, 2005 and April 18, 2006 of the Court of Appeals (CA) in CA-G.R. SP No.
76489.
The factual and procedural antecedents of the case, as summarized by the CA, are as follows:
Nelson R. Dulay (Nelson, for brevity) was employed by [herein respondent] General Charterers Inc. (GCI), a subsidiary of
co-petitioner [herein co-respondent] Aboitiz Jebsen Maritime Inc. since 1986. He initially worked as an ordinary seaman
and later as bosun on a contractual basis. From September 3, 1999 up to July 19, 2000, Nelson was detailed in
petitioners vessel, the MV Kickapoo Belle.
On August 13, 2000, or 25 days after the completion of his employment contract, Nelson died due to acute renal failure
secondary to septicemia. At the time of his death, Nelson was a bona fide member of the Associated Marine Officers and
Seamans Union of the Philippines (AMOSUP), GCIs collective bargaining agent. Nelsons widow, Merridy Jane,
thereafter claimed for death benefits through the grievance procedure of the Collective Bargaining Agreement (CBA)
between AMOSUP and GCI. However, on January 29, 2001, the grievance procedure was "declared deadlocked" as
petitioners refused to grant the benefits sought by the widow.
On March 5, 2001, Merridy Jane filed a complaint with the NLRC Sub-Regional Arbitration Board in General Santos City
against GCI for death and medical benefits and damages.
On March 8, 2001, Joven Mar, Nelsons brother, received P20,000.00 from [respondents] pursuant to article 20(A)2 of the
CBA and signed a "Certification" acknowledging receipt of the amount and releasing AMOSUP from further liability.
Merridy Jane contended that she is entitled to the aggregate sum of Ninety Thousand Dollars ($90,000.00) pursuant to
[A]rticle 20 (A)1 of the CBA x x x
xxxx
Merridy Jane averred that the P20,000.00 already received by Joven Mar should be considered advance payment of the
total claim of US$90,000.[00].
[Herein respondents], on the other hand, asserted that the NLRC had no jurisdiction over the action on account of the
absence of employer-employee relationship between GCI and Nelson at the time of the latters death. Nelson also had no
152
claims against petitioners for sick leave allowance/medical benefit by reason of the completion of his contract with GCI.
They further alleged that private respondent is not entitled to death benefits because petitioners are only liable for such "in
case of death of the seafarer during the term of his contract pursuant to the POEA contract" and the cause of his death is
not work-related. Petitioners admitted liability only with respect to article 20(A)2 [of the CBA]. x x x
xxxx
However, as petitioners stressed, the same was already discharged.
The Labor Arbiter ruled in favor of private respondent. It took cognizance of the case by virtue of Article 217 (a), paragraph
6 of the Labor Code and the existence of a reasonable causal connection between the employer-employee relationship
and the claim asserted. It ordered the petitioner to pay P4,621,300.00, the equivalent of US$90,000.00 less P20,000.00,
at the time of judgment x x x
xxxx
The Labor Arbiter also ruled that the proximate cause of Nelsons death was not work-related.
On appeal, [the NLRC] affirmed the Labor Arbiters decision as to the grant of death benefits under the CBA but reversed
the latters ruling as to the proximate cause of Nelsons death. 3
Herein respondents then filed a special civil action for certiorari with the CA contending that the NLRC committed grave
abuse of discretion in affirming the jurisdiction of the NLRC over the case; in ruling that a different provision of the CBA
covers the death claim; in reversing the findings of the Labor Arbiter that the cause of death is not work-related; and, in
setting aside the release and quitclaim executed by the attorney-in-fact and not considering the P20,000.00 already
received by Merridy Jane through her attorney-in-fact.
On July 11, 2005, the CA promulgated its assailed Decision, the dispositive portion of which reads as follows:
WHEREFORE, in view of the foregoing, the petition is hereby GRANTED and the case is REFERRED to the National
Conciliation and Mediation Board for the designation of the Voluntary Arbitrator or the constitution of a panel of Voluntary
Arbitrators for the appropriate resolution of the issue on the matter of the applicable CBA provision.
SO ORDERED.4
The CA ruled that while the suit filed by Merridy Jane is a money claim, the same basically involves the interpretation and
application of the provisions in the subject CBA. As such, jurisdiction belongs to the voluntary arbitrator and not the labor
arbiter.
Petitioner filed a Motion for Reconsideration but the CA denied it in its Resolution of April 18, 2006.
Hence, the instant petition raising the sole issue of whether or not the CA committed error in ruling that the Labor Arbiter
has no jurisdiction over the case.
Petitioner contends that Section 10 of Republic Act (R.A.) 8042, otherwise known as the Migrant Workers and Overseas
Filipinos Act of 1995, vests jurisdiction on the appropriate branches of the NLRC to entertain disputes regarding the
interpretation of a collective bargaining agreement involving migrant or overseas Filipino workers. Petitioner argues that
the abovementioned Section amended Article 217 (c) of the Labor Code which, in turn, confers jurisdiction upon voluntary
arbitrators over interpretation or implementation of collective bargaining agreements and interpretation or enforcement of
company personnel policies.
The pertinent provisions of Section 10 of R.A. 8042 provide as follows:
SEC. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor
Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90)
153
calendar days after filing of the complaint, the claims arising out of an employer-employee relationship or by virtue of any
law or contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other
forms of damages.
Article 217(c) of the Labor Code, on the other hand, states that:
xxxx
(c) Cases arising from the interpretation or implementation of collective bargaining agreements and those arising
from the interpretation or enforcement of company personnel policies shall be disposed by the Labor Arbiter by
referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements.
On their part, respondents insist that in the present case, Article 217, paragraph (c) as well as Article 261 of the Labor
Code remain to be the governing provisions of law with respect to unresolved grievances arising from the interpretation
and implementation of collective bargaining agreements. Under these provisions of law, jurisdiction remains with voluntary
arbitrators.
Article 261 of the Labor Code reads, thus:
ARTICLE 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. The Voluntary Arbitrator or panel of
Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising
from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation
or enforcement of company personnel policies referred to in the immediately preceding article. Accordingly, violations of a
Collective Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair labor
practice and shall be resolved as grievances under the Collective Bargaining Agreement. For purposes of this article,
gross violations of Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the
economic provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the Department of Labor and Employment shall not
entertain disputes, grievances or matters under the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of
Voluntary Arbitrators and shall immediately dispose and refer the same to the Grievance Machinery or Voluntary
Arbitration provided in the Collective Bargaining Agreement.
The petition is without merit.
It is true that R.A. 8042 is a special law governing overseas Filipino workers. However, a careful reading of this special
law would readily show that there is no specific provision thereunder which provides for jurisdiction over disputes or
unresolved grievances regarding the interpretation or implementation of a CBA. Section 10 of R.A. 8042, which is cited by
petitioner, simply speaks, in general, of "claims arising out of an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment including claims for actual, moral, exemplary and other forms
of damages." On the other hand, Articles 217(c) and 261 of the Labor Code are very specific in stating that voluntary
arbitrators have jurisdiction over cases arising from the interpretation or implementation of collective bargaining
agreements. Stated differently, the instant case involves a situation where the special statute (R.A. 8042) refers to a
subject in general, which the general statute (Labor Code) treats in particular. 5 In the present case, the basic issue raised
by Merridy Jane in her complaint filed with the NLRC is: which provision of the subject CBA applies insofar as death
benefits due to the heirs of Nelson are concerned. The Court agrees with the CA in holding that this issue clearly involves
the interpretation or implementation of the said CBA. Thus, the specific or special provisions of the Labor Code govern.
In any case, the Court agrees with petitioner's contention that the CBA is the law or contract between the parties. Article
13.1 of the CBA entered into by and between respondent GCI and AMOSUP, the union to which petitioner belongs,
provides as follows:
The Company and the Union agree that in case of dispute or conflict in the interpretation or application of any of
the provisions of this Agreement, or enforcement of Company policies, the same shall be settled through
negotiation, conciliation or voluntary arbitration. The Company and the Union further agree that they will use their
best endeavor to ensure that any dispute will be discussed, resolved and settled amicably by the parties hereof within
154
ninety (90) days from the date of filing of the dispute or conflict and in case of failure to settle thereof any of the parties
retain their freedom to take appropriate action. 6 (Emphasis supplied)
From the foregoing, it is clear that the parties, in the first place, really intended to bring to conciliation or voluntary
arbitration any dispute or conflict in the interpretation or application of the provisions of their CBA. It is settled that when
the parties have validly agreed on a procedure for resolving grievances and to submit a dispute to voluntary arbitration
then that procedure should be strictly observed.7
It may not be amiss to point out that the abovequoted provisions of the CBA are in consonance with Rule VII, Section 7 of
the present Omnibus Rules and Regulations Implementing the Migrant Workers and Overseas Filipinos Act of 1995, as
amended by Republic Act No. 10022, which states that "[f]or OFWs with collective bargaining agreements, the case shall
be submitted for voluntary arbitration in accordance with Articles 261 and 262 of the Labor Code." The Court notes that
the said Omnibus Rules and Regulations were promulgated by the Department of Labor and Employment (DOLE) and the
Department of Foreign Affairs (DFA) and that these departments were mandated to consult with the Senate Committee on
Labor and Employment and the House of Representatives Committee on Overseas Workers Affairs.
In the same manner, Section 29 of the prevailing Standard Terms and Conditions Governing the Employment of Filipino
Seafarers on Board Ocean Going Vessels, promulgated by the Philippine Overseas Employment Administration (POEA),
provides as follows:
Section 29. Dispute Settlement Procedures. In cases of claims and disputes arising from this employment, the
parties covered by a collective bargaining agreement shall submit the claim or dispute to the original and
exclusive jurisdiction of the voluntary arbitrator or panel of arbitrators. If the parties are not covered by a collective
bargaining agreement, the parties may at their option submit the claim or dispute to either the original and exclusive
jurisdiction of the National Labor Relations Commission (NLRC), pursuant to Republic Act (RA) 8042, otherwise known as
the Migrant Workers and Overseas Filipinos Act of 1995 or to the original and exclusive jurisdiction of the voluntary
arbitrator or panel of arbitrators. If there is no provision as to the voluntary arbitrators to be appointed by the parties, the
same shall be appointed from the accredited voluntary arbitrators of the National Conciliation and Mediation Board of the
Department of Labor and Employment.
The Philippine Overseas Employment Administration (POEA) shall exercise original and exclusive jurisdiction to hear and
decide disciplinary action on cases, which are administrative in character, involving or arising out of violations of
recruitment laws, rules and regulations involving employers, principals, contracting partners and Filipino seafarers.
(Emphasis supplied)
It is clear from the above that the interpretation of the DOLE, in consultation with their counterparts in the respective
committees of the Senate and the House of Representatives, as well as the DFA and the POEA is that with respect to
disputes involving claims of Filipino seafarers wherein the parties are covered by a collective bargaining agreement, the
dispute or claim should be submitted to the jurisdiction of a voluntary arbitrator or panel of arbitrators. It is only in the
absence of a collective bargaining agreement that parties may opt to submit the dispute to either the NLRC or to voluntary
arbitration. It is elementary that rules and regulations issued by administrative bodies to interpret the law which they are
entrusted to enforce, have the force of law, and are entitled to great respect. 8 Such rules and regulations partake of the
nature of a statute and are just as binding as if they have been written in the statute itself. 9 In the instant case, the Court
finds no cogent reason to depart from this rule.
The above interpretation of the DOLE, DFA and POEA is also in consonance with the policy of the state to promote
voluntary arbitration as a mode of settling labor disputes. 10
No less than the Philippine Constitution provides, under the third paragraph, Section 3, Article XIII, thereof that "[t]he State
shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary
modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial
peace."
Consistent with this constitutional provision, Article 211 of the Labor Code provides the declared policy of the State "[t]o
promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary arbitration,
mediation and conciliation, as modes of settling labor or industrial disputes."
155
On the basis of the foregoing, the Court finds no error in the ruling of the CA that the voluntary arbitrator has jurisdiction
over the instant case.
WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 76489
dated July 11, 2005 and April 18, 2006, respectively, are AFFIRMED.
SO ORDERED.
CASE 28
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 174809
June 27, 2012
DUTY FREE PHILIPPINES SERVICES, INC., Petitioner,

vs.
MANOLITO Q. TRIA, Respondent.
DECISION
PERALTA, J.:
Assailed in this petition for review on certiorari under Rule 45 of the Rules of Court are the Court of Appeals (CA)
Decision1 dated May 31, 2006 and Resolution2 dated September 21, 2006 in CA-G.R. SP No. 70839. The assailed
decision affirmed the National Labor Relations Commission (NLRC) Resolution 3 dated March 15, 2002 in NLRC NCR
Case No. 00-12-009965-98, while the assailed resolution denied petitioner Duty Free Philippines Services, Inc.s
(DFPSIs) motion for reconsideration.
The facts, as found by the CA, are as follows:
Petitioner Duty Free Philippines Services, Inc. is a manpower agency that provides personnel to Duty Free Philippines
(DFP).
On March 16, 1989, [respondent] Manolo Tria was employed by Petitioner and was seconded to DFP as a Warehouse
Supervisor.
In an Audit Report, dated January 16, 1998, it was revealed that 1,020 packs of Marlboro bearing Merchandise Code No.
020101 under WRR No. 36-04032 were not included in the condemnation proceedings held on December 27, 1996 and
that there were "glaring discrepancies" in the related documents which "indicate a malicious attempt to conceal an
anomalous irregularity." The relevant Request for Condemnation was found to have been fabricated and all signatories
therein, namely, Ed Garcia, Stockkeeper; Catherino A. Bero, DIU Supervisor; and Constantino L. Cruz, were held
"accountable for the irregular loss of the unaccounted Marlboro KS Pack of 5"
After further investigation, it was discovered that the subject merchandise was illegally brought out of the warehouse and
it was made to appear that in all the documents prepared said goods were legally condemned on December 27, 1996. Ed
Garcia, one of the respondents in the Audit Review, implicated [respondent] and [two] others. Garcia claimed that he was
unaware of the illegality of the transaction as he was only obeying the orders of his superiors who included [respondent].
156
Garcia disclosed that it was [respondent] who ordered him to look for a van for the supposed "direct condemnation" of the
subject merchandise.
Consequently, the Discipline Committee requested [respondent] to submit a written reply/explanation regarding the
findings in the Audit Report and the allegations of Garcia.
[Respondent] denied his participation in the illegal transaction. Although he admitted that he instructed Garcia to look for a
van, it was for the purpose of transferring the damaged merchandise from the main warehouse to the proper warehouse
for damaged goods.
On August 27, 1998, the DFP Discipline Committee [DFPDC] issued a Joint Resolution holding [respondent] "GUILTY OF
DISHONESTY for (his) direct participation in the fake condemnation" and pilferage of the missing 1,020 Marlboro Pack of
5s cigarettes and orders (his) DISMISSAL from the service for cause and for loss of trust and confidence, with
forfeiture of all rights and privileges due them from the company, except earned salaries and leave credits."
On September 18, 1998, Petitioner sent [respondent] a memorandum terminating his employment with Petitioner and his
secondment to DFP "on the basis of the findings and recommendation of the (DFPs) Discipline Committee."
Aggrieved, [respondent] filed a Complaint against Petitioner for Illegal Dismissal and for payment of backwages, attorneys
fees and damages.4
On May 31, 1999, the Labor Arbiter (LA) rendered a Decision 5 finding respondent to have been illegally dismissed from
employment. The dispositive portion of the decision reads:
WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered ordering the respondent
company to reinstate complainant to his former position with all the rights, privileges, and benefits appertaining thereto,
including seniority, plus full backwages which as of May 31, 1999 already amount to P172,672.50. Further, the respondent
is ordered to pay complainant the equivalent of ten percent (10%) of the total backwages as and for attorneys fees.
The claim for damages is denied for lack of merit.
SO ORDERED.6
On appeal, the NLRC affirmed7 the LA decision, but deleted the award of attorneys fees. Petitioners motion for
reconsideration was also denied8 on March 15, 2002.
When petitioner elevated the case to the CA, it denied for the first time the existence of employer-employee relationship
and pointed to DFP as respondents real employer. The appellate court, however, considered said defense barred by
estoppel for its failure to raise the defense before the LA and the NLRC. 9 It nonetheless ruled that although DFPDC
conducted the investigation, petitioners dismissal letter effected respondents termination from employment. 10 On the
validity of respondents dismissal from employment, the CA respected the LA and NLRC findings and reached the same
conclusion that respondent was indeed illegally dismissed from employment. 11 Petitioners motion for reconsideration was
likewise denied in a Resolution12 dated September 21, 2006.
Undaunted, petitioner elevates the case before the Court in this petition for review on certiorari based on the following
grounds:
THE COURT OF APPEALS GRAVELY ERRED WHEN IT RULED THAT PETITIONER DFPSI IS LIABLE FOR ILLEGAL
DISMISSAL AND DECLARE THAT:
A. DFPSI IS THE DIRECT EMPLOYER OF RESPONDENT INSTEAD OF DUTY FREE PHILIPPINES ("DFP");
AND
B. THE ISSUE AS TO WHO TERMINATED RESPONDENT WAS RAISED ONLY FOR THE FIRST TIME ON
APPEAL.
157
THE COURT OF APPEALS GRAVELY ERRED AND RULED CONTRARY TO LAW AND JURISPRUDENCE WHEN IT
FAILED TO RULE ON THE LIABILITY OF DFP, AS AN INDISPENSABLE PARTY TO THE COMPLAINT FOR ILLEGAL
DISMISSAL.
THE COURT OF APPEALS GRAVELY ERRED AND RULED CONTRARY TO LAW AND JURISPRUDENCE WHEN IT
HELD THAT RESPONDENTS EMPLOYMENT WAS ILLEGALLY TERMINATED.13
Petitioner insists that the CA erred in not considering its argument that it is not the employer of respondent. It likewise
faults the CA in not ruling on the liability of DFP as an indispensable party.
We cannot sustain petitioners contention. In its Position Paper,14 petitioner highlighted respondents complicity and
involvement in the alleged "fake condemnation" of damaged cigarettes as found by the DFPDC. This, according to
petitioner, was a just cause for terminating an employee.
In its Motion for Reconsideration and/or Appeal, 15 petitioner insisted that there was basis for the termination of
respondents employment. Even in its Supplemental Appeal 16 with the NLRC, petitioner reiterated its stand that
respondent was terminated for a just and valid cause and due process was strictly observed in his dismissal. It further
questioned the reinstatement aspect of the LA decision allegedly because of strained relations between them.
With the aforesaid pleadings submitted by petitioner, together with the corresponding pleadings filed by respondent, the
LA and the NLRC declared the dismissal of respondent illegal. These decisions were premised on the finding that there
was an employer-employee relationship. 17 Nowhere in said pleadings did petitioner deny the existence of said
relationship. Rather, the line of its defense impliedly admitted said relationship. The issue of illegal dismissal would have
been irrelevant had there been no employer-employee relationship in the first place.
It was only in petitioners Petition for Certiorari before the CA did it impute liability on DFP as respondents direct employer
and as the entity who conducted the investigation and initiated respondents termination proceedings. Obviously, petitioner
changed its theory when it elevated the NLRC decision to the CA. The appellate court, therefore, aptly refused to consider
the new theory offered by petitioner in its petition. As the object of the pleadings is to draw the lines of battle, so to speak,
between the litigants, and to indicate fairly the nature of the claims or defenses of both parties, a party cannot
subsequently take a position contrary to, or inconsistent, with its pleadings. 18 It is a matter of law that when a party adopts
a particular theory and the case is tried and decided upon that theory in the court below, he will not be permitted to
change his theory on appeal. The case will be reviewed and decided on that theory and not approached and resolved
from a different point of view.19
The review of labor cases is confined to questions of jurisdiction or grave abuse of discretion. 20 The alleged absence of
employer-employee relationship cannot be raised for the first time on appeal. 21 The resolution of this issue requires the
admission and calibration of evidence and the LA and the NLRC did not pass upon it in their decisions. 22 We cannot
permit petitioner to change its theory on appeal. It would be unfair to the adverse party who would have no more
opportunity to present further evidence, material to the new theory, which it could have done had it been aware earlier of
the new theory before the LA and the NLRC. 23 More so in this case as the supposed employer of respondent which is DFP
was not and is not a party to the present case.
In Pamplona Plantation Company v. Acosta,24 petitioner therein raised for the first time in its appeal to the NLRC that
respondents therein were not its employees but of another company. In brushing aside this defense, the Court held:
x x x Petitioner is estopped from denying that respondents worked for it. In the first place, it never raised this defense in
the proceedings before the Labor Arbiter. Notably, the defense it raised pertained to the nature of respondents
employment, i.e., whether they are seasonal employees, contractors, or worked under the pakyaw system. Thus, in its
Position Paper, petitioner alleged that some of the respondents are coconut filers and copra hookers or sakadors; some
are seasonal employees who worked as scoopers or lugiteros; some are contractors; and some worked under the pakyaw
system. In support of these allegations, petitioner even presented the companys payroll which will allegedly prove its
allegations.
By setting forth these defenses, petitioner, in effect, admitted that respondents worked for it, albeit in different capacities.
Such allegations are negative pregnant denials pregnant with the admission of the substantial facts in the pleading
158
responded to which are not squarely denied, and amounts to an acknowledgment that respondents were indeed
employed by petitioner. 25 (Emphasis supplied.)
Also in Telephone Engineering & Service Co., Inc. v. WCC, et al., 26 the Court held that the lack of employer-employee
relationship is a matter of defense that the employer should properly raise in the proceedings below. The determination of
this relationship involves a finding of fact, which is conclusive and binding and not subject to review by this Court. 27
In this case, petitioner insisted that respondent was dismissed from employment for cause and after the observance of the
proper procedure for termination. Consequently, petitioner cannot now deny that respondent is its employee. While
indeed, jurisdiction cannot be conferred by acts or omission of the parties, petitioners belated denial that it is the
employer of respondent is obviously an afterthought, a devise to defeat the law and evade its obligations. 28
It is a fundamental rule of procedure that higher courts are precluded from entertaining matters neither alleged in the
pleadings nor raised during the proceedings below, but ventilated for the first time only in a motion for reconsideration or
on appeal.29 Petitioner is bound by its submissions that respondent is its employee and it should not be permitted to
change its theory. Such change of theory cannot be tolerated on appeal, not due to the strict application of procedural
rules, but as a matter of fairness.30
As to the legality of respondents dismissal, it is well settled that under Rule 45 of the Rules of Court, only questions of law
may be raised, the reason being that this Court is not a trier of facts, and it is not for this Court to reexamine and
reevaluate the evidence on record. 31 Findings of fact and conclusions of the Labor Arbiter as well as those of the NLRC or,
for that matter, any other adjudicative body which can be considered as a trier of facts on specific matters within its field of
expertise, should be considered as binding and conclusive upon the appellate courts. 32
Petitioner dismissed respondent from employment based on the recommendation of the DFPDC holding respondent guilty
of dishonesty for his direct participation in the "fake condemnation" and "pilferage" of the missing 1,020 Marlboro Pack of
5 cigarettes.33 Respondent was implicated in the anomalous transaction by his co-employees who pointed to the former as
the one who ordered the other suspects to look for a vehicle that would be used to transport the subject cigarettes. This,
according to the DFPDC, was odd and strange. With this act alone and by reason of his position, the DFPDC concluded,
and affirmed by petitioner, that respondent definitely had knowledge of the "fake condemnation." From these
circumstances, petitioner sustained the findings of dishonesty and dismissed respondent from employment.
Again, we agree with the appellate court that DFPDCs conclusions are not supported by clear and convincing evidence to
warrant the dismissal of respondent. In illegal dismissal cases, the employer is burdened to prove just cause for
terminating the employment of its employee with clear and convincing evidence. This principle is designed to give flesh
and blood to the guaranty of security of tenure granted by the Constitution to employees under the Labor Code. 34 In this
case, petitioner failed to submit clear and convincing evidence of respondents direct participation in the alleged fake
condemnation proceedings. To be sure, unsubstantiated suspicions, accusations, and conclusions of employers do not
provide for legal justification for dismissing employees. In case of doubt, such cases should be resolved in favor of labor,
pursuant to the social justice policy of labor laws and the Constitution. 35
WHEREFORE, premises considered, the petition is DENIED for lack of merit. The Court of Appeals Decision dated May
31, 2006 and Resolution dated September 21, 2006, in CA-G.R. SP No. 70839, are AFFIRMED.
SO ORDERED.
159
CASE 29
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 189082
July 11, 2012
JOSEPHINE
RUIZ, Petitioner,
vs.
WENDEL OSAKA REALTY CORP., D.M. WENCESLAO AND ASSOCIATES, INC. and DELFIN J. WENCESLAO,
JR., Respondents.
DECISION
SERENO, J.:
This is a Petition filed under Rule 45 of the 1997 Rules of Civil Procedure, praying for the reversal of the Decision 1of the
Court of Appeals (CA) dated 29 October 2008 and its subsequent Resolution 2 dated 10 August 2009. The CA reversed the
Decision rendered by the National Labor Relations Commission (NLRC) against petitioners Wendel Osaka Realty Corp.
(WORC), D.M. Wenceslao and Associates, Inc. (DMWAI), and Delfin Wenceslao (respondents) and reinstated the
Decision of the Labor Arbiter, which ruled than petitioner Josephine Ruiz (petitioner) was not illegally dismissed.
Petitioner was hired on 1 February 1982 as secretary to respondent Delfin J. Wenceslao, Jr. (Delfin), the president of
DMWAI.3 After a few years, she expressed her intention to resign, because she could not get along with her co-workers.
Instead of allowing her to leave, Delfin decided to transfer her. 4 Thus, on 1 November 1989, she was appointed as
executive assistant to the president of respondent WORC, who happens to be respondent Delfin also. 5 She was its only
employee.6
At that time, and even up to the present, the only undertaking of WORC has been its reclamation project in Cavite City
known as the Ciudad Nuevo Project.7
160
Delfin supposedly promoted petitioner to Office Manager of DMWAI effective 1 August 2001. 8 On 21 October 2002, she
was assigned to be a member of a task force formed for the implementation of the marketing campaign for the Ciudad
Nuevo Project.9
Sometime in 2002, the BIR informed Delfin of the tax deficiency allegations against his companies. Its investigators
supposedly had information that could only be verified in its business files. 10 He was further informed by the BIR that the
bases for its allegations against his companies were the latters very own records. This information prompted him to check
the company files and records. On November 2002, he discovered that "various very important files" 11 of DMWAI were
missing.
It must be noted that the foregoing allegations were first raised in the Comment of respondents. In the Position
Paper12 they filed with the Labor Arbiter, they claimed that the chairperson of the board of directors of WORC had ordered
a check of the companys files, because a number of them appeared to be missing. 13
Respondents claim that they received a call from a woman, who later turned out to be the wife of a former employeeone
who was close friends with petitioner. The caller supposedly wanted to report that there were records of DMWAI in her
bedroom, and that it was her husband who had brought them there. He allegedly told her that these files were handed to
him by another woman.14
The aforementioned female informant turned out to be Mrs. Miguela S. Sunico. Her husband was a former DMWAI
employee, who is currently a BIR officer. She testified that the missing files were with her husband, who allegedly told her
that these documents had been handed to him by petitioner.
In order to determine who was responsible for the unauthorized taking of the files, Delfin required all the employees who
had access to the files to fill up a questionnaire he had drawn up. Out of the 15 employees who were asked to submit their
answers, 14 complied.15 Petitioner was the only one who failed to answer the questionnaire.
According to petitioner, she filled up the questionnaire, but wanted to talk to Delfin first before submitting it. She asked him
if there was truth to the rumor that she was being suspected of stealing company records. He admitted that he had indeed
received this kind of information. Petitioner thus requested that she be allowed to confront her accuser.
However, Delfin informed her that all she needed to do was submit the questionnaire. She decided not to submit it.
Delfin claims, on the other hand, that he was the one who called petitioner to ask why she did not answer the
questionnaire. She allegedly said that accomplishing it would have been an acknowledgment of wrongdoing, and that it
was not lawful for her to be compelled to fill it up. 16
Thus, on 3 December 2002, Delfin sent a letter17 to petitioner informing her that she would be placed under a 30-day
preventive suspension. He explained therein that he saw no reason why she refused to fill up the questionnaire, and that
her refusal was equivalent to an admission that she took the corporate files, to wit:
x x x. Only you have not filled your copy up and you told me in person that you do not wish to answer the questionnaire.
For me, there is no reason why you do not wish to accomplish the form. Your not doing so only serves to make you
acknowledge that you have gotten corporate files for purposes inimical to the interest of the company. This is serious
misconduct for which you should be dismissed for cause. You will accordingly face an investigation for the charge and the
panel to inquire into the matter shall be convened shortly.
Petitioner refused to accept the letter when a copy was served upon her.
On 9 December 2002, petitioner, through one of the employees of DMWAI, submitted the questionnaire the former had
filled up. Thereafter, specifically on 10 December 2002, petitioner filed an illegal suspension case with the Labor Arbiter
against respondent corporations.
Meanwhile respondent corporations formed a panel of investigators to look into the matter.
161
When the 30-day preventive suspension of petitioner ended, there was still an ongoing investigation on the matter. Thus,
in a 2 January 2003 letter,18 she was informed by Andrew M. Taningco, a member of the panel of investigators, that the
company had decided to put her on "vacation leave with pay for a period of fifteen (15) days." The letter also mentioned
that its contents had been conveyed to petitioner on 26 December 2002, and that she did "not voice any objections."
Petitioner was furnished a copy of the Sworn Statement 19 of Mrs. Sunico and was given three days from her receipt of the
statement to submit her written explanation.20
Petitioner denied the accusations of Mrs. Sunico through a letter dated 13 January 2003 and addressed to Andrew M.
Taningco.21 Petitioner insisted that Mr. Sunico had explicitly denied that the documents came from the
former.22 Respondents alleged, however, that "Mr. Francisco
Sunico never denied that the files were found in his house. Much less did he deny that Ms. Ruiz gave them to him," 23 to
wit:
x x x. Petitioner said she wanted to confront her accuse [sic]. x x x the panel decided to accommodate her.
xxx
xxx
xxx
x x x. However, as Mrs. Sunico repeated her written statement that she saw the files in their bedroom and Mr. Sunico told
her it was petitioner who gave the files to him, petitioner never, never confronted Mr. Francisco Sunico to ask him if he
really gave such information to his wife. Much less did she take him to task for making such a statement to Mrs. Sunico.
And all throughout the session, Mr. Sunico never denied that he made a statement to Mrs. Sunico that it was petitioner
who gave the files to him. Neither did he deny that petitioner turned them over to him. (Underscoring in the original) 24
Thereafter, respondents reported the matter to the National Bureau of Investigation (NBI). 25
Delfin then informed petitioner that her 15-day vacation leave had ended on 18 January 2003. She was further informed
that she should report for work on 20 January 2003, and so she did. On that same day, though, she was given a
letter26 dated 18 January 2003 informing her that she had been assigned to WORCs Ciudad Nuevo Project in Cavite City.
She was further informed that the investigation was still ongoing and was expected to be completed within 30-45 working
days.
Petitioner, in a letter27 dated 20 January 2003, wrote to Delfin reiterating her claim that she had no knowledge of how the
missing files had ended up in Mr. Sunicos possession. She also requested that Delfins decision to transfer her to Cavite
City be reconsidered, considering that she lived in Bulacan.
Petitioner continued to work in Cavite until 15 April 2003. She claims that she had to quit her job because of "poor health
and the humiliation she was subjected to" in her workplace. She further alleged that the transportation allowance given by
respondents was simply not sufficient.
Thereafter, petitioner amended her Complaint for illegal suspension to include constructive illegal dismissal; nonpayment
of proportionate 13th month pay, confidential allowance, and separation pay; moral and exemplary damages; and
attorneys fees.
In a Decision28 promulgated on 31 March 2004, the Labor Arbiter found that petitioner had not been illegally dismissed, but
that she was entitled to her claim for prorata 13th month pay, to wit:
Under the circumstances, complainant was not illegally dismissed.
She was the prime suspect in a case involving the leaking of company files to the BIR, which is still pending investigation
before the NBI. If found culpable, complainant may be administratively, civilly, and even criminally liable.
162
Complainant was preventively suspended and was reassigned to a ongoing project outside the office to protect company
interests.
It was complainant who opted not to work, claiming constructive dismissal, harassments, demotion and non-payment of
benefits.
Only her money claims for pro-rata 13th month pay, has factual legal basis.
WHEREFORE, premises considered, instant complaint is hereby dismissed for lack of merit.
Respondent corporations, unless they have proof of payment, are directed to pay complainants pro-rata 13th month pay
for year 2003.
SO ORDERED.29
Petitioner filed her Appeal30 with the NLRC on 3 May 2004. Through its 11 July 2007 Decision, 31 it reversed the Labor
Arbiters Decision. The dispositive portion of the NLRC Decision reads:
WHEREFORE, the Decision, dated 31 March 2004, of Labor Arbiter Edgardo M. Madriaga is hereby SET ASIDE, and a
new judgment is rendered directing respondents WENDEL OSAKA REALTY CORP., D.M. WENCESLAO AND
ASSOCIATES, INC. and DELFIN J. WENCESLAO, JR., to jointly and severally pay complainant separation pay
equivalent to one (1) month salary for every year of service, and full backwages, inclusive of allowances, computed from
the time her
compensation was withheld from her up to the finality of this Decision.
SO ORDERED.32
Respondents filed their Motion for Reconsideration (MR), 33 but it was likewise denied through the NLRCs 28 September
2007 Resolution.34
Respondents appealed to the CA, which granted their Petition 35 and reinstated the Labor Arbiters Decision. According to
the CA, the suspension of petitioner pending investigation and her transfer to respondents Cavite office was justified by
the gravity of her offense.36 It held that "letting her petitioner stay in Quezon City did not make petitioners respondents
secure about their files and records."37
Petitioner filed an MR,38 but it was denied through a Resolution.
Hence, the present Petition for Review 39 under Rule 45.
For consideration in the present Petition is the sole issue of whether or not petitioner was constructively dismissed when
she was reassigned to respondents Cavite branch.
The NLRC ruled that petitioners assignment to Cavite City was not for legitimate business reasons, but it was "simply
because respondent believed that she was guilty, and that she was undesirable, unreliable, and a security risk." 40 The CA
ruled, however, that the transfer of petitioner was justified, considering the gravity of the offense she was being charged
with.41
We agree with the appellate court.
An employer has the inherent right to transfer or assign an employee in pursuance of its legitimate business interest,
subject only to the condition that the move be not motivated by bad faith. 42
Insisting that there was no valid ground for her transfer,43 petitioner claims thus:
163
As it was, there was really no business necessity to transfer petitioner. The only reason behind the transfer, as private
respondents admitted, was that they suspected petitioner of taking out company records. Unsubstantiated suspicious and
baseless conclusions of the employer do not provide legal justifications for transferring an employee. There was clearly no
business urgency that necessitated the transfer. Proof of this was the fact that the complainant was not given any job to
perform after her transfer to Cavite City. She was reduced into a mere office dcor, the only female among the throng of
male project workers.44
She also claims that respondents act of transferring her was motivated by bad faith 45 and thus amounted to constructive
dismissal, viz:
The underlying purpose behind the transfer was plainly to humiliate petitioner into giving up her job. The disdain and
embarrassment she was made to suffer all the more established the fact that she was constructively dismissed. 46
To further prove that her transfer or reassignment was motivated by bad faith, petitioner avers that what made everything
worse was that she was not given a single task for the four months she was working in Cavite. 47 She had no chair to sit on
or table to work ata fact, she claims, that only proves respondents intention to humiliate her. 48 She concludes: "There
was no justifiable reason why private respondent failed to give petitioner any task if her transfer was due to legitimate
business reasons."49
In answering these allegations, respondents explained that the only undertaking of WORC was its reclamation project in
Cavite City. When petitioner was transferred to Cavite, she was supposed to continue with what she was doing in Quezon
City. None of her earlier functions was withheld from her. She was further given the task to assist those who were
undertaking the reclamation project. Thus, they contend, it is not true that she was never given a job to perform.
Besides, as the appellate court found and as petitioner admitted, 50 the project manager of the Ciudad Nuevo Project had
given her job description.51
As to the claim of petitioner that her transfer was without valid basis, we disagree.
As the executive assistant of the president, petitioner undeniably occupied a sensitive position that required her
employer's utmost trust and confidence. Respondents had the right to reassign her the moment that confidence was
breached. It has been shown that such breach proved that she was no longer fit to discharge her assigned tasks, to wit:
x x x Breach of trust and confidence as a ground for reassignment must be related to the performance of the duties of the
employee such as would show him to be thereby unfit to discharge the same task. 52
Having lost his trust and confidence in petitioner, respondent Delfin had the right to transfer her to ensure that she would
no longer have access to the companies confidential files.
Although it is true that petitioner has yet to be proven guilty, respondents had the authority to reassign her, pending
investigation. As held in Blue Dairy Corporation and/or Aviguetero and Miguel v. NLRC and Recalde:
Re-assignments made by management pending investigation of irregularities allegedly committed by an employee fall
within the ambit of management prerogative. The purpose of reassignments is no different from that of preventive
suspension which management could validly impose as a disciplinary measure for the protection of the company's
property pending investigation of any alleged malfeasance or misfeasance committed by the employee. 53
Substantial proof, and not clear and convincing evidence or proof beyond reasonable doubt, is a sufficient basis for the
imposition of any disciplinary action upon the employee. The standard of substantial evidence is satisfied where the
employer has reasonable ground to believe that the employee is responsible for the misconduct that renders the latter
unworthy of the trust and confidence demanded by his or her position. 54
When petitioner was assigned to Cavite, there was an ongoing investigation of the charges filed against her. It is
undisputed that she refused to fill up, for no justifiable reasons, the questionnaire distributed by her employer to determine
who among those who had access to the confidential files was responsible for their taking. Furthermore, a witness had
executed an Affidavit claiming that she found the missing files, and that her husband told her that it was petitioner who
164
handed those files to him. Lastly, the person who supposedly received these documents from petitioner did not deny or
rebuke the statements made by his wife.
We rule that the foregoing reasons and circumstances are sufficient to justify respondents transfer of petitioner.
Still, for the transfer to be valid, petitioner asks this Court to rule that respondents should prove that it was not
inconvenient or prejudicial to her. She insists that the validity or legality of the transfer of an employee is negated by the
demotion or the withdrawal or decrease of the latters salaries, benefits, and other privileges. 55
Petitioner claims that the transfer was inconvenient or prejudicial to her, because "her health suffered and she became
sickly because of the extended travel she was made to undergo every working day between her home in Bulacan and her
assignment in Cavite City."56
She also claims that the justification of private respondents that she should have rented a house in Cavite City is adding
insult to injury.57
An employers decision to transfer an employee, if made in good faith, is a valid exercise of a management prerogative,
although it may result in personal inconvenience or hardship to the employee. 58 We have already ruled that the transfer of
the employment of petitioner to Cavite was not motivated by bad faith. Thus, any resulting inconvenience or hardship on
her part is of no moment.
Petitioner also claims that her transfer was coupled with a diminution in the benefits previously granted to her, to wit:
It is an established fact that petitioner has been enjoying a "confidential" allowance of P2,000.00 a month for more than a
decade. This benefit was suddenly withdrawn when she was transferred. 59
However, respondents were able to prove that, for her position in Cavite, petitioner received a P2,554 per month travelling
allowance, which was more than the P2,000 she received as monthly allowance prior to her transfer.60
Petitioner says that her transfer resulted in her demotionfrom a managerial to a clerical position, viz:
The matter is completely factual. It is beyond dispute that petitioner held the position of Office Manager. She was
transferred to a position that was merely clerical in nature. Evidence of this fact was also submitted in the proceedings a
quo.61
As proof of her appointment to a managerial position, petitioner attached a 31 July 2001 letter 62 printed on a sheet of
paper carrying the DMWAI letterhead. This letter signed by respondent Delfin informed her that she was being appointed
as DMWAIs office manager effective 1 August 2001.
In their Reply to Complainants Position Paper,63 respondents allege that they cannot recall the circumstances surrounding
the writing of the letter, and why it was written on a sheet of paper with the DMWAI letterhead. 64 They deny her allegation
that she was promoted to the position of office manager. According to them, such a promotion should have been preceded
by the submission of an application for the position and by a document "severing the employer-employee relationship
between WORC and the complainant."65
Respondents add that that they never saw the need to appoint an office manager. Even on the assumption that the
appointment became necessary, that position was usually assigned to companies and not to individuals, to wit:
x x x. It has been his policy to assign companies, not individuals, to act as Office Managers . Besides, there was already
somebody -- his own son, Carlos Delfin C. Wenceslao --- who was already discharging the position in the DMWAI
quarterbacked by his two (2) other children, Edwin Michael C. Wenceslao and Paolo Vincent C. Wenceslao. In other
words, there was absolutely no need therefor.66
165
Petitioner failed to present evidence to prove that she was holding a managerial position. In fact, respondents aver that
she was the only employee of WORC. 67 They also aver that that she received her salaries from that companyher Social
Security System records, withholding tax forms, and income tax returns state that WORC was her employer. 68
Petitioner herself, being its only employee, was the one who executed all the foregoing documents. It is important to note
that petitioner worked for four months in Cavite before giving up on her job. 69 Initially, she accepted the reassignment and
had no issues with the fact that her residence was far from her new workplace. She was never dismissed from
employment; she simply decided to stop going to work. It is obvious from the facts of this case that she resigned from
work. Inevitably, her Complaint for illegal dismissal should be dismissed.
It is clear that the filing of an illegal dismissed case by petitioner was a mere afterthought. It was filed not because she
wanted to return to work, but to claim separation pay and back wages.
Lastly, petitioner argues that respondent Delfin should be held jointly and severally liable with respondent corporations
because of the "dilution of the identity employer." 70
In labor cases, directors and officers are solidarily liable with the corporation for the termination of employment of
corporate employees if their termination was committed with malice or bad faith. The ruling applies when a corporate
officer acts with malice or bad faith in suspending an employee. 71 Such malice or bad faith is not present in this case.
WHEREFORE, the instant Petition is DENIED. The 29 October 2008 Decision of the Court of Appeals reversing the 11
July 2007 Decision of the National Labor Relations Commission----which had earlier directed respondents Wendel Osaka
Realty Corporation, D.M. Wenceslao and Associates, Inc., and Deltin J. Wenceslao, Jr. to jointly and severally pay
petitioner Josephine Ruiz separation pay and full back wages---is hereby AFFIRMED.
SO ORDERED.
166

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CASE 1

Republic of the Philippines

LEPANTO CERAMICS, INC., Petitioner,

Bachelor of Laws IV-A

Cases in Labor Law Review Volume I

Bachelor of Laws IV-A

Cases in Labor Law Review Volume I

Bachelor of Laws IV-A

Cases in Labor Law Review Volume I

Bachelor of Laws IV-A

January 19, 2011

RENATO REAL, Petitioner,

Bachelor of Laws IV-A

Bachelor of Laws IV-A

Bachelor of Laws IV-A

Bachelor of Laws IV-A

Cases in Labor Law Review Volume I

Bachelor of Laws IV-A

Bachelor of Laws IV-A

Bachelor of Laws IV-A

Bachelor of Laws IV-A

January 26, 2011

Bachelor of Laws IV-A

Cases in Labor Law Review Volume I

Bachelor of Laws IV-A

Bachelor of Laws IV-A

Cases in Labor Law Review Volume I

Bachelor of Laws IV-A

Bachelor of Laws IV-A

Cases in Labor Law Review Volume I

Bachelor of Laws IV-A

Republic of the Philippines

January 12, 2011

Bachelor of Laws IV-A

Bachelor of Laws IV-A

Cases in Labor Law Review Volume I

Bachelor of Laws IV-A

Bachelor of Laws IV-A

Cases in Labor Law Review Volume I

Bachelor of Laws IV-A

Cases in Labor Law Review Volume I

Bachelor of Laws IV-A

February 23, 2011

Bachelor of Laws IV-A

Ruling of the Med-Arbiter

Cases in Labor Law Review Volume I

Bachelor of Laws IV-A

Bachelor of Laws IV-A

Bachelor of Laws IV-A

Bachelor of Laws IV-A

FILIPINAS PALMOIL PROCESSING, INC. and DENNIS T. VILLAREAL, Petitioners,

Bachelor of Laws IV-A

Bachelor of Laws IV-A

Cases in Labor Law Review Volume I

Bachelor of Laws IV-A

Bachelor of Laws IV-A

Bachelor of Laws IV-A

NELSON A. CULILI, Petitioner,

Bachelor of Laws IV-A

Bachelor of Laws IV-A

Bachelor of Laws IV-A

b. 13th Month Pay (P692,720.96/12)

1. Vacation Leave (30 days/annum) P1,116.54 x 60 days

2. Sick Leave (30 days/annum) P1,116.54 x 60 days